Gillard’s Labor Plunges to Near Record Low in Opinion Poll

Support for Australian Prime Minister Julia Gillard’s Labor party fell to a near-record low in an opinion poll today as lawmaker scandals overshadow government plans to deliver the federal budget next week.

Public backing for Labor dropped two percentage points to 27 percent, while support for Tony Abbott’s Liberal National coalition rose three points to an 11-year high of 51 percent, according to a Newspoll published in the Australian newspaper.

After fending off a leadership challenge by predecessor Kevin Rudd in February, Australia’s first female prime minister is concentrating on delivering on her pledge to end four years of deficits in the fiscal year that begins July 1. Gillard’s bid to focus voters’ attention on her economic management has been derailed by scandals that have eroded her minority government’s hold on power in the lower house of parliament.

“The government’s position looks irreparable,” said Zareh Ghazarian, a political analyst at Melbourne’s Monash University, in a phone interview. “Gillard just doesn’t seem to be able to make a positive impression on voters. Labor will be starting to ask questions on whether she should go.”

On a two-party preferred basis, which takes into account the country’s preferential voting system, the opposition increased its lead over Labor by six percentage points to an 18- point margin, according to Newspoll.

Gillard trails Abbott as preferred prime minister by five percentage points, compared with a two-point margin in the previous survey conducted two weeks ago.

The Newspoll survey of 1,148 people, conducted April 27-29, had a margin of error of plus or minus 3 percentage points. Support for Labor hit a record low of 26 percent in a Newspoll taken on Sept. 16-18 last year.

Minority Government

Former union lawyer Gillard, 50, was forced to cobble together a minority government with independents and Greens after the closest election in seven decades in August 2010.

Her control of the 150-seat lower house of parliament became more tenuous at the weekend when she told Labor lawmaker Craig Thomson to quit her party. Thomson has denied claims he used a labor union credit card to pay for prostitutes while working for the Health Services Union before becoming a lawmaker in 2007. Thomson says he will continue to vote with the government.

Parliamentary Speaker Peter Slipper stepped aside a week ago to deal with fraud and sexual harassment claims that he denies.

Abbott’s Boost

Abbott, a 54-year-old Rhodes Scholar and former amateur boxer, has called for new elections, saying that Thomson’s was now a “tainted vote” and Gillard has “no integrity.”

Abbott’s improved performance in today’s poll shows Australian voters now consider him to be an effective leader, Monash University’s Ghazarian said.

The opposition leader was “seen as a loose cannon who wasn’t really prime minister material,” he said. “Now he’s starting to consolidate his position as a genuine alternative leader.”

Treasurer Wayne Swan has promised to return federal finances to surplus over the year through June 2013 and the government is looking to the May 8 budget announcement for a boost.

Gillard, seeking a political dividend from lower borrowing costs in a nation where almost 90 percent of mortgages are variable rate loans, has said a return to surplus gives the central bank flexibility to cut rates.

Cutting Rates

The Reserve Bank of Australia today cut its benchmark rate by half a percentage point to 3.75 percent, delivering a bigger- than-forecast reduction that sent the local dollar and bond yields tumbling. That followed reductions in borrowing costs in November and December to buttress the housing market, support jobs and boost confidence among consumers who are saving more.

“Today’s interest rate cut and the two before it have been made possible by disciplined fiscal policy delivered by this government,” Swan told reporters in Canberra after the central bank’s announcement.

When parliament resumes May 8, Gillard will be looking to add to her record of legislative success, which includes the implementation of taxes on carbon emissions and resources profits from July 1. Her challenge deepened in March when Labor suffered its worst defeat at a state election in Queensland, leaving the party out of power in all but the two smallest of Australia’s six states.

To contact the reporters on this story: Jason Scott in Canberra at jscott14@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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