The situation in New South Wales is similar to the state of affairs when Jeff Kennett came to office in 1992. For years, Victoria had been an economic basket case. Did Kennett respond, as Barry O’Farrell has done, by ignoring policy and presenting a small target? He did not. Instead, he and his supporters prepared to govern.

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.

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.

New South Wales Premier Morris Iemma appears to have outmanoeuvered his political rival by opting for a partial auction of power assets - meaning a firesale will occur despite the Opposition Leader’s blocking tactics. But Mr. O’Farrell said yesterday he had no regrets about making his controversial stand.

The framework for a partial sell-off had already been laid out in the Owen Report, which the Government commissioned when it began work on the sale last year. A similar sell-off had recently gone ahead in Queensland without a hitch. By Wednesday night, the partial sell-off had become the Government’s least worst option.

It cost an estimated $500,000 to recall the New South Wales Parliament to vote on the Iemma Government’s privatisation proposal, but after less than an hour of discussion in the upper house, the debate was suspended. However, the Premier and his Treasurer, Michael Costa, were not prepared to accept defeat.

The New South Wales Premier, Morris Iemma, withdrew the electricity industry privatisation legislation from a special sitting of parliament earlier today, when it became clear it would be defeated by a combination of the Coalition, Independent and minor party MPs, and Labor Party renegades.

On May 8, the NSW Opposition set down five clear criteria for supporting the privatisation. All five have been met. End of story? You’d think so, but there are machiavellians in the Liberal Party who can see angles invisible to the rest of us. They think that the privatisation plans are a Labor plot and are urging Barry O’Farrell to vote against them at tomorrow’s sitting of parliament.

New South Wales Premier Morris Iemma has recalled parliament a month early to vote on his $25 billion electricity sell-off proposal. Mr Iemma may need the support of the Liberal Party opposition to get his legislation through parliament, with some Labor MPs in both houses threatening to cross the floor to defeat the bill.