Gillard Momentum Halted as Support for Labor Party Falls

Support for Australia’s governing Labor Party fell for the first time in six weeks, halting Prime Minister Julia Gillard’s political momentum before elections due next year.

Labor’s primary vote dropped 2 percentage points to 33 percent, while Tony Abbott’s Liberal-National coalition gained 1 point to 46 percent, according to a Newspoll survey published in the Australian newspaper today. Taking preference votes into account, Labor was 10 points behind the opposition, compared with 6 points in the previous survey.

Australia’s first female prime minister is trying to gain traction with voters after a challenge to her leadership this year, criticism of new taxes on carbon emissions and mining profits and an increase in the number of asylum seekers trying to reach Australia by boat. Support for Labor rose 7 points in the period from July 22 to Aug. 19 as Gillard sought to focus voters’ attention on her economic management and education policies, before falling back in the latest poll.

“Gillard’s team may be worried that the improved performances in the past couple of months may have just been a blip on the radar,” said Zareh Ghazarian, a political analyst in Melbourne at Monash University. “The coalition is still leading comfortably and Gillard is still struggling to build Labor’s core support. Labor has got on with the job of governing but it seems unable to deliver a broad narrative that voters can follow.”

Greens Slide

Gillard was preferred over Abbott by 1 percentage point at 39 percent when respondents were asked who would make the better prime minister. The survey of 1,151 people, conducted Aug. 31- Sept. 2, had a margin of error of plus or minus 3 percentage points.

Labor’s poll ratings slid after the prime minister backtracked on a pledge before the 2010 election not to introduce a carbon tax, to win the backing of the Greens for her minority government. The Greens, who changed leadership in April when Christine Milne took over from the retiring Bob Brown, today had their worst performance in the poll since March 2009, dropping 3 points to 8 percent.

Gillard has been trying to bolster Labor’s ratings with policy initiatives. Yesterday the prime minister announced plans to draft legislation that would see education spending increase by about A$6.5 billion ($6.7 billion) a year to create one of the top five schooling systems in the world by 2025.

Asylum Seekers

Last month, the government said it would reopen camps on the South Pacific island of Nauru and Papua New Guinea to process asylum seekers in an effort to deter refugees trying to reach Australia by boat. Almost 1,000 people, often from war- torn Middle Eastern and South Asian nations, are known to have drowned in the waters between Indonesia and Australia since 2001.

While Australia is in its 22nd year without recession, Gillard’s role as a sound economic manager has been questioned by Abbott, who says her introduction of taxes on carbon emissions and coal and iron-ore profits on July 1 is deterring investment.

Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest iron ore producer, today cut its full-year capital spending forecast by 26 percent. It joins rivals including BHP Billiton Ltd. (BHP) in delaying projects as falling demand from China triggers a decline in commodity prices.

Rio Tinto Group (RIO), the world’s third-largest mining company, today said it plans to cut some jobs at the Argyle diamond mine in Western Australia to reduce costs and improve efficiency.

“Reports of the mining boom’s death have been exaggerated,” Gillard told business leaders at a conference in Perth today. “China is still only 50 percent through its process of urbanization and industrialization.”

Australian retail sales unexpectedly declined in July by the most in almost two years and company profits dropped for a third straight quarter. The nation’s unemployment rate probably rose to 5.3 percent in August, from 5.2 percent, economists said in a Bloomberg News survey before a Sept. 6 report.

To contact the reporter 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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