Labour Party Leader David Shearer must have blown into Prime Minister Julia Gillard's office this week like a fresh breeze.

Earlier in the day she had been hammering out ideas with the nation's captains of industry - not all by any means friendly to Labor or her policies - and a meeting with the overwhelmingly hostile state Premiers lay ahead.

Shearer found a "very relaxed, very friendly" leader awaiting him. This was their first meeting, but more than a century of common history, close transtasman ties and a raft of similar challenges smoothed the way.

The pair had much to discuss: both face the urgent need to reform their parties in the face of falling memberships, a sense of growing irrelevancy, changing demographics and shifting political sands.


Australian Labor is already well into the process, although with little yet to show for it. The New Zealand party is just getting started.

There are differences. Australian federal politics operate under a preferential voting system with two Houses, New Zealand is under MMP in a single House.

But for the first time for decades Australian Labor is ruling as a minority Government, and the Greens control the Senate.

In the states Labor has been cast into the wilderness in Queensland, New South Wales, Victoria and Western Australia, with their conservative Governments determined to frustrate key Gillard reforms.

And Labour in New Zealand is struggling to rebuild after its devastating defeats.

Shearer's discussion with Gillard veered into some broader areas, including the generally healthy state of transtasman relations, demonstrated from New Zealand's point of view by Gillard's address to Parliament, Australia's response to the Christchurch earthquake, and new Foreign Minister Bob Carr's visit to New Zealand.

Shearer and Gillard also discussed Australia's decision to exclude Huawei from the rollout of its new broadband network for security reasons, confirming Shearer's belief that New Zealand should also now reconsider the Chinese telco's involvement in its own ultra-fast project.

"I think in light of Australia's decision we need to look at it in New Zealand before going ahead," he said.


But the focus of the meeting was politics and the future of the labour movement.

"Both are losing membership, and we discussed ways of addressing that. I believe the answer lies in building from grassroots up, and that's their feeling too."

In both countries Labour has been hammered in what were once safe seats, and by sweeping changes in both demographics and the nature of society.

Although firm numbers are hard to obtain, party membership has plummeted.

After a mid-70s slump membership of New Zealand Labour rose to about 50,000, perhaps higher, in the early 1980s, but has since again dived to what some estimates place as low as 10,000.

The losses have been heavy among traditional blue-collar voters, and union influence has diminished.

Across the Tasman, Labor has reportedly lost about 20,000 members in the past two decades, falling to about 37,000, while the party has increasingly been forced to rely more heavily on second-preference votes.

The Greens have emerged as major players, attracting votes from the left, while - as in New Zealand - the unions are shrinking: from 50 per cent of the workforce to about 18 per cent in the past three decades.

Shearer said centre-left parties in Australia, New Zealand, the United Kingdom and Canada were facing similar experiences and were working together to find answers.

British Labour heavily reformed itself during its years in Opposition between 1979 and 1997, and with continued reform has reversed its losses, increasing membership.

Shearer met one of the key UK reformers, former minister Peter Haine, during a visit to Australia last year, bearing the message that unless the parties forgot the models of the past century and embraced change, extinction loomed.

The old base of unions and blue collar workers had melted with rising affluence, the mushrooming of middle class suburbs and aspirations, and a fierce new battleground in the centre of politics.

Haine's message was that centre-left parties need to make their values of economic and social reform appealing to mainstream voters.

He advocates a greater say for members and supporters in policy formation, selecting candidates, campaigning and electing party leaders, recommendations also included in a report for Australia's federal party that has so far seen little action.

In New Zealand, the process is just beginning but Shearer agrees with the need to move the party back to the people.

"I think reform has to be from the community up," he said. "Whenever we've done that it has worked ...

"The Labour Party is a party of working people, right across the board. Variety is strength, not the characterisations of the past."