Party's rebirth must begin with return to core social policies and choosing a leader in tune with modern NZ.

The election was an absolute disaster for Labour. The party's inability to deal with the result is apparent for all to see.

Renewal needs to start with a recognition of what went wrong. Labour needs to acknowledge that:

*It has lost touch with the feelings, concerns and expectations of voters and, in the process, lost credibility.
*A lack of policy and communications consistency cost it dearly.
*Winning back lost credibility will take time and consistency will be vital.
*Voters often saw Labour as the voice of vested-interest groups, rather than average New Zealanders.
*It failed to state clearly what it was trying to achieve and how it would implement new approaches.

Labour needs to start by restating the social goals it stands for today, goals likely to be very similar to those spelled out by Walter Nash in 1939.

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They include a reasonable standard of living, access to an adequate education, a good health service, a good income in retirement, a social welfare system that gives people a hand up rather than a handout and a society that gives people opportunities for self-fulfilment.

But how does the party make those goals the foundation of a serious programme to transform New Zealand?

It needs a vision of where it wants New Zealand to be in 25 years and to decide whether the current or preferred means are capable of achieving this.

Electing a new leader is not enough. The party needs one who is in tune with the new realities in New Zealand. Positioning and consistency of policy and communication are vital and this needs to reflect and be in tune with the feelings, expectations and concerns of most New Zealanders.

The party needs to explain several things, including:

*The importance of productivity and efficiency.
*How it will deal with privilege, which remains widespread, and how it will be the champion of ordinary New Zealanders, not the unions, teachers, nurses or social workers, as it is today.
*How it will deal with the fact that huge increases in spending on health and education have benefited providers rather than consumers.
*Why high tax rates have a negative effect on jobs and real wages, and tend to lower productivity, which is essential if wages are to rise.
*How it will deal with middle-class capture in areas like university education where most of the beneficiaries of state spending are the children of people who could afford to pay more towards educating their offspring.
*How it will free people from welfare dependency put there by institutions created in the 1930s and stoked by policies devised in the 1970s.
*Why competition in the provision of government-funded services is just as important as it is in the private sector.
*That there is no such thing as a free lunch -- for example, telling people that health care now takes 56c of every dollar of all personal tax they pay instead of 40c a few years ago, and what Labour will do about it.
*How it will shift resources in education, housing, health and welfare in response to changing demands.
*Whether it will continue to provide universal access to many health and welfare services or move towards targeted assistance.
*How it will deal with state waste.

Recognising that the present welfare system has changed people's attitudes and, in the process, society will be vital for Labour.

This isn't simply moving into National Party territory, for several reasons.

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National is the party of the status quo: it has added to New Zealand's debt by $60 billion over the past six years rather than get to grips with wasteful expenditure; borrowed billions to fund consumption rather than investment; and spent billions each year on corporate welfare with few or no beneficial results, all at the expense of the average New Zealander.

National's do-nothing, status-quo approach to economic and social policy provides Labour with a real opportunity to get back up on its feet.

It will take an upfront admission that Labour has got a lot of things wrong in the last nine to 15 years and a set of principles to guide its policy decision-making that New Zealanders understand.

Such principles would drive policy-making towards:

*No personal income tax for low-income earners.
*A guaranteed minimum income for those in work.
*Risk and healthcare savings accounts for all with a view towards retirement.

This would be paid for by an end to corporate welfare, an end to middle-class welfare capture, moving the retirement age to 70 over 20 years, better efficiencies in health, education and welfare and an end to Working for Families once a guaranteed minimum income arrangement has been worked out.

Most of all, New Zealanders need to believe Labour is for real. Working through these principles will take time. A good strategy would be to have a locum tenens leader while the necessary work is undertaken.

Always remember that any extreme left-wing policies usually hurt the poor, and the poor know it. Such policies would quickly see Labour back to where it is now.

Above all, a top-class opposition would be great for New Zealand. What's the chance of that?

Sir Roger Douglas was Labour Minister of Finance from 1984-1988 and MP for Manurewa from 1978-1990 before becoming the first leader of the Act Party.
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