NSW is state of uncertainty

LABOR'S leadership woes are dogging the party in NSW, but the Liberals have their own problems.

THERE is no certainty about who will lead the Labor Party to the next NSW election in 18 months. Premier Nathan Rees has been in the job for less than a year, yet the backbiting and undermining of his leadership has been relentless.

Speculation about possible replacements throws up a shopping list of contenders. Labor's factional hard-heads can't agree which of them is best able to do the job, but they do agree there is a growing air of inevitability about the need to find a new premier if Labor wants to revive its electoral prospects.

Of course, a Labor victory is unlikely, no matter which way the party jumps when arranging its leadership. The government is travelling poorly in the opinion polls with its primary vote in the low 30 per cent range. Rees has a dissatisfaction rating of over 50 per cent, considered terminal by Labor strategists. The betting agencies have all but written the government off, and the public and the media have switched off to the political messages Labor is running, adding to the degree of difficulty for it to turn around voting intentions.

But the party does have one rather large factor in its favour: the inability of the opposition to develop a coherent narrative.

Despite the consistently poor performance by Labor and its leader in the polls this year, Rees and Liberal leader Barry O'Farrell are level pegging on the preferred-premier ratings. How can this be?

O'Farrell has been Liberal leader since Peter Debnam was defeated at the 2007 election. O'Farrell took over straight after the defeat, and initially voters warmed to his leadership.

However, it didn't take long for the public to realise he wasn't working towards a coherent narrative, and that failure soon led to speculation about alternative leadership options.

Federal frontbencher Joe Hockey has long been touted as an option to move from Canberra to lead the state Liberal Party to victory in 2011, but he has always denied having any ambitions in that direction.

Now that he is in the mix for the Liberal leadership federally, his interest in state politics looks even more remote.

More recently NSW shadow treasurer Mike Baird has also been named as a leadership contender, but he has also shied away from such speculation, at least publicly.

In reality the Liberals are probably stuck with O'Farrell between now and polling day. An indication of this was on display when I spoke to a range of senior Liberals on this subject.

The collective wisdom is that O'Farrell has not made much of a fist of the leadership, but not one of them was willing to put their name to a criticism of the job he is doing. "There's no point getting the next premier of NSW offside," was the way one put it.

But just because the government looks like it is heading towards defeat doesn't mean the opposition won't panic and replace O'Farrell, that is, if the polls tighten in the months ahead.

A similar situation occurred federally ahead of the 1983 federal election. Bill Hayden was not cutting through as opposition leader, despite the woes of the Fraser government. Bob Hawke took over the Labor leadership on the day the election was called, with Hayden subsequently declaring a "drover's dog" could have won the election.

If O'Farrell wants to guarantee he doesn't suffer a similar fate, senior Liberals say he should present a clear blueprint for government to bolster his lead in the polls. If he can't, they say, the pressure on his leadership will mount, even if no ready-made Hawke is waiting in the wings.

John Hewson's Fightback manifesto of the 1993 federal election has given the concept of the large-scale policy manifesto from opposition a bad name. If an opposition policy manifesto doesn't carry a 15 per cent tax on almost everything, it can be a useful tool to convince voters that untested MPs deserve a chance to form a government.

The conventional wisdom now is that an opposition leader should curl up into a ball to avoid losing an election. This approach has been tried unsuccessfully by Liberal oppositions right across the country, and O'Farrell is nothing if not conventional.

The NSW Liberals have been given numerous opportunities to carve out a policy niche, but on each occasion they have avoided doing so.

Last year, when former premier Morris Iemma was trying to convince his party to privatise the NSW electricity industry, O'Farrell flinched when asked to spell out the Liberal position. In the end, he joined the Labor unions in opposing the privatisation, a decision seen by many Liberals as a sellout for a conservative leader to take.

More recently O'Farrell had the chance to take the initiative on the publishing of school "league tables", a policy position the federal Liberal Party has advocated for many years. But when the vote on league tables was called for in the upper house, O'Farrell squibbed, telling his parliamentary colleagues to oppose it, which they dutifully did.

Brendan Nelson was one of a long line of Liberals who came out publicly and condemned the NSW Liberal leader for turning his back on the philosophy he claims to represent.

In June this year, Debnam got stuck into O'Farrell, albeit not by name.

"Voters want to know what NSW Liberals stand for and after watching the ducking and weaving of the last two years; voters probably at best see NSW Liberals as simply saying 'we're not Labor'," Debnam said.

Debnam's contempt for O'Farrell is well known in Liberal circles, but that shouldn't detract from the value of the point he was making. After more than 14 years in opposition, voters might have expected the NSW Liberals to have worked out what they stand for.

"I haven't got a bloody clue what Barry (O'Farrell) believes in. I never really did, to be honest. I know he would like to be premier, but that's about it," a senior former Liberal minister tells The Australian.

No one doubts O'Farrell's ambition. But ambition should be matched with plans on how to redesign NSW after what can only be described as a long period of poor governance.

And O'Farrell may face a number of obstacles that are not a problem at present.

The Right in NSW is splitting badly, and it could make a number of preselection contests messy to the point of damaging the Liberal brand.

The federal woes of the Liberal Party could spill over to affect the state contest. And if the Coalition splits federally, as reports suggest it might, the difficulties of the state Coalition maintaining a working relationship could be tested.

There are any number of ways the conservatives can make life difficult for themselves in the run-up to the NSW election.

For all of Labor's difficulties managing NSW over the past decade and a half, at the moment they aren't doing a bad job of it. This should worry Liberals. It might be unusual in the media to refer to positive things Labor in NSW is doing, but there are examples.

Public transport suffered a serious meltdown a few years ago; trains for example were running late 30 per cent of the time. Now 93 per cent of trains are on time and differences with the transport unions are beginning to recede.

The state economy continues to be held back by the ailing financial sector, but that is hardly the government's fault; the global financial crisis can be blamed for that.

Yet unlike Queensland, for example, NSW has not lost its AAA credit rating, and the

debt position of the government is recognised by most economists as being sustainable.

The health system nationally is under significant stress. It is one of the reasons Kevin Rudd is threatening a federal takeover of the entire system. Yet a recent Auditor-General's report suggested NSW is the best performing state when it comes to elective surgery.

On the education front the quality of the NSW HSC curriculum is such that Julia Gillard has set up the National Curriculum Centre in NSW, recognising it has the best year-12 leaving accreditation in the country.

Finally, the stimulus spending the federal government has put in place to help ward off recession has been activated in NSW far more quickly than it has in other states. This is a point federal Labor ministers - who like to distance themselves from their NSW counterparts - are willing to concede.

Labor is getting its act together in NSW, at least in a policy sense. One NSW minister says: "For all the shit we are copping at the moment I can honestly say the cabinet is working better now than it has in years. We are actually getting things done."

What's left for Labor is for it to pull together politically: to turn attention on the failure of the Liberal Party and O'Farrell to develop a narrative worthy of winning government.

The Labor Party leading up to the past three elections in government faced serious policy problems. However, political cohesion allowed it to pull it together for the campaign, delivering swings in their favour in 1999 and 2003.

In 2007, despite suffering a swing away from it, Labor managed to maintain most of its majority.

Now it is the politics that is a mess for Labor, not its recent policy record. Divisions over the Labor leadership are toxic, and the factions are at war.

The one-time clarity of strength of the Labor Right is no more: the John Della Bosca and Joe Tripodi wings of the faction don't see eye to eye and don't seem capable of setting aside their differences to come together for the looming campaign.

Added to the factional difficulties is a split in purpose between the parliamentary party and the union movement.

But Labor has shown us before that when it needs to move into campaign mode it can put internal differences aside. If Labor can do so again, Liberals should be worried.

Peter van Onselen is The Australian's contributing editor.