Like his boss, former premier Morris Iemma, who has also quit politics, former treasurer Michael Costa crashed and burned over their doomed attempt to privatise New South Wales’ electricity industry. Earlier this month, in the most tumultuous week in state politics since the 1930s, Mr Iemma told Mr Costa he was being dropped from the ministry 12 hours before Mr Iemma himself was decapitated by Labor’s dominant Right faction.

Kevin Rudd and former New South Wales premier Morris Iemma struck a secret deal last October to cut the unions down to size after the federal election. But once safely elected on November 24, the Prime Minister squibbed on the undertaking, leaving Mr Iemma fatally exposed in his battle to privatise the state’s electricity assets.

There is now a dual message that is more lethal than the Labor Party anticipated, and which offers fresh hope for the Liberal Party. It is caused by the combination of ineffective state ALP governments, the absence of any Liberal incumbent on which to cast blame, and the disposition of the Australian voter for political balance.

The restructured New South Wales cabinet was sworn in by Lieutenant-Governor Jim Spigelman, in a ceremony at Government House in Sydney. With six new ministers and significant changes to the portfolios of several others, the cabinet is a radical change to the line-up of former premier Morris Iemma.

This week saw big problems emerge for the Labor Party in New South Wales and Western Australia, while federally the Nationals shrank even further with the loss of Lyne. In the Senate, Steve Fielding voted down the luxury car tax increase, while in the United States, Sarah Palin has garnered an immediate and positive reaction.

Nathan Rees, the 40-year-old water minister who has been in the New South Wales Parliament for nearly 18 months, was elected unanimously by Labor MPs yesterday, in an unprecedented move in which both the Premier and Deputy Premier, Carmel Tebbutt, were drafted from the party’s Left faction.

Labor called the state election one day after Colin Barnett was elected Liberal leader, making this year’s election the earliest in 100 years. The first half of the campaign was timed to overlap the Olympic Games, to drown out the Opposition. That tactic backfired and Barnett got a two-week honeymoon.

Hard as Premier Morris Iemma will struggle to blame him for mugging state finances, New South Wales Opposition Leader Barry O’Farrell knows the public will blame Iemma, not him, for any dip in the state’s bottom line and consequent deterioration in services. After 13 years of Labor, they would be crazy to blame anyone else.

Mr Costa’s sacking ends the career of one of the most controversial and unusual figures in Australian politics - a former head of the New South Wales trade union movement who became an avowed economic rationalist and admirer of former US president Ronald Reagan.

Nathan Rees, who entered New South Wales Parliament only 18 months ago, is to replace Morris Iemma as NSW premier. Mr Iemma fell on his sword this morning after losing his Right faction’s support, the first time in the 117-year history of the Labor Party a premier has been forced out.