Harmony as solid as a bank

Helen Clark talks about this year being one of consolidation for the Government. In your dreams, Prime Minister. The Alliance seeks salvation. For your struggling Coalition partner, consolidation sounds like an armchair ride from obscurity to oblivion.

Enter stage-left Jim Anderton's cherished People's Bank - a state-owned "Kiwi Bank" operated through New Zealand Post's branch network and out to lure customers through cheaper fees.

The proposal is poised to go on the cabinet agenda after months in gestation. An expensive capital investment with uncertain viability, it screams "political risk" and something thrifty Labour would not normally entertain.

Labour wants to chill the political temperature through 2001 and into election year - not stoke it.

But the Alliance, stuck in the "polldrums," cannot afford to be as subservient as it was last year when Clark too easily got away with unilaterally scuttling a host of Alliance initiatives.

Anderton's prime goal then was building public confidence in the Coalition's stability and demonstrating that the Alliance can be trusted in Government.

Notwithstanding Phillida Bunkle's taxpayer-funded extravagance, a high degree of credibility has been established and the Alliance has different goals this year as it tries to move out of Labour's shadow.

And not just the People's Bank. The Alliance wants to secure four or five high-profile policy "trophies" that it can call its own and wave in front of the electorate. The rule-of-thumb is that such policies be popular and easily identifiable, as well as reflecting core Alliance principles.

They cannot be Labour policy, but neither can they be anathema to Labour.

Voters are notoriously ungrateful. They are more likely to remember Bunkle's hemp curtains than thank Anderton for bringing banking services back to their small town - just as they vilified Tuku Morgan for his $89 boxer shorts and forgot that New Zealand First also introduced free healthcare for children under 6.

The Alliance realises this - which is why it needs more policy concessions from Labour. The party is averaging about 5 per cent in the polls - down from 8 per cent at the 1999 election.

Its research shows another 5 to 10 per cent of voters might be categorised as "Alliance sympathisers." They have yet to be convinced that the Alliance is making a real difference. Anderton must persuade at least some of them otherwise.

An Alliance caucus strategy session early next month will try to nut out trophies that could sit alongside the People's Bank, Laila Harre's hoped-for paid parental leave scheme and Anderton's "jobs machine" thrust.

Ideas being tossed around include bonding tertiary students into jobs or further training in exchange for wiping student loans, and easing benefit abatement rates to get beneficiaries into part-time jobs. The possibilities may be signalled in a state of the nation-style speech by Anderton on Waitangi Day.

The Alliance leader also intends barnstorming the country with a series of public rallies that will showcase his party's achievements in the Coalition. Anderton has stressed that this belated profile-raising will not see him taking pokes at Labour. But he accepts that Alliance rank-and-file members are sick of Labour getting all the credit for the Government's strong performance.

All this points to a role-reversal by the two Coalition partners compared with the previous 12 months. Anderton is likely to be more outspoken, while the Prime Minister has become less so.

Obviously, the pressures on the Alliance hierarchy to do better will create tensions within the Coalition, more so because the partners have committed themselves to a path of fiscal restraint which leaves little room for new spending initiatives over the next two years.

The People's Bank will be an instructive lesson in how differences can be resolved.

Monday's cabinet meeting may debate the proposal, but is more likely to refer the matter to a cabinet committee for more rigorous scrutiny.

The Alliance is relatively relaxed about the delays, preferring not to hurry Labour. Given its partner's nervousness, it does not want to frighten the horses.

In fact, some Labour ministers, including Finance Minister Michael Cullen, have already given an informal nod to the proposal. But the Prime Minister is rumoured to be extremely wary, conscious of the immediate downside for Labour of being seen to be agreeing to invest taxpayer capital in a high-risk venture only months after repairing relations with sceptical business sentiment. For her, economic credibility is paramount and she obviously wants to distance Labour from the bank as much as she can.

Labour is between a rock and a hard place. The People's Bank is the most public test of Coalition goodwill to date.

Arguments surrounding Cullen's superannuation fund were thrashed out behind the scenes. There was polite disagreement about the free-trade deal with Singapore. The Alliance invoked the agree-to-disagree clause in the Coalition agreement. Labour still got what it wanted because it could rely on National's support for the trade deal.

Technically, Labour could re-invoke the clause to block what the Alliance now wants. To do so over the People's Bank would be like pushing the nuclear-attack button. It would mean humiliating Anderton, who has upped the stakes by confidently predicting that he will get a fully fledged banking service.

He has boxed Labour into a corner. A knockback would not necessarily destroy the Coalition, but it would turn it into an uneasy arrangement reduced to crude horse-trading and haunted by mutual suspicion of the kind that bedevilled National and New Zealand First.

The sensitivities are such that pre-cabinet discussions about the People's Bank this week prompted a meeting between the Coalition's three most senior ministers - Clark, Anderton and Cullen.

To protect itself from criticism, Labour has insisted that the new bank must stand or fall on its commercial merits.

As one Government source notes, the Coalition's success has resulted from each partner's policies being implemented on their merits rather than on the basis of mere ideology. This has made policies harder to attack - and opponents have found it harder to drive a wedge between the Coalition partners.

But the People's Bank is fundamental to the Alliance. In this case, political imperative ought to dictate that Anderton's pet project gets the green light. Given the Prime Minister's caution, however, that should not be assumed.