Bloomberg News

Australia’s Labor Party Faces Queensland Defeat in Gillard Blow

March 23, 2012

Australia’s Queensland state votes today in an election with polls showing the ruling Labor Party will lose power for the first time since 1996, deepening the challenge for Prime Minister Julia Gillard 20 months before a national ballot is due.

Queensland Premier Anna Bligh’s Labor trails the Liberal National Party by 20 percentage points, according to the most recent survey. A loss would leave Labor out of power in all but the two smallest of Australia’s six states.

“There’s a feeling in Queensland that the government’s energy levels have been drained and it’s time for a change,” said Stephen Stockwell, a political analyst at Brisbane’s Griffith University. “There are questions throughout Queensland on whether Labor can deliver good government.”

Queensland’s unemployment rate soared more than 2 percentage points during Bligh’s five years in power, as the local dollar’s climb to its strongest since the early 1980s hurt the tourism industry in the region known as the “Sunshine State.” The popularity of Australia’s first elected female premier has sunk since she led the state’s recovery from a cyclone and deadly floods last year amid voter anger over sales of state assets.

Seven federal seats in Queensland are held by Labor members with margins of less than 6 percent, electoral commission figures show. The northeastern state accounted for more than half the national seats lost by Labor in the most recent federal vote in 2010.

Gillard’s minority government, which trails the federal opposition by 12 percentage points according to the latest Newspoll, is struggling to revive Labor’s popularity before a national election that must be held by the end of 2013.

‘Hugely Important’

“It’s a hugely important state,” said John Wanna, a professor of public administration at the Canberra-based Australian National University and the author of a book on the state’s political history. “Bligh’s realized the election has been lost for a while now and has been in damage control, trying to reduce the margin of the loss.”

Queensland, Australia’s largest debtor state, lost its Aaa credit rating from Moody’s Investors Service in May 2009, which opposition leader and former Brisbane Mayor Campbell Newman has vowed to restore.

More than 2.3 million people are expected to cast votes at about 1,700 polling booths throughout the state, which is roughly the geographical size of Mexico, according to the electoral commission’s website. The booths open at 8 a.m. and close at 6 p.m. local time, with the winning party expected to be known later tonight, according to the electoral commission.

89 Seats

Labor currently holds 51 seats to the opposition’s 34 in the state legislature with 89 electorates up for grabs. Newman, 48, who led the state capital of Brisbane’s recovery efforts during last year’s floods, faces a fight to win the seat of Ashgrove, currently held by Labor’s Kate Jones with a margin of 7.1 percent.

The Liberal National party has refused to speculate on who would take the premiership should Newman lose.

During his campaign the opposition leader has countered allegations that a property developer who made seven donations to his re-election fund as mayor was also conducting business from a property owned by Newman’s family.

Agricultural Heartland

Queensland was an agricultural heartland for Australia until the late 1980s, when international tourism, led by Japan’s booming middle class, led to a development surge in Brisbane and the Gold Coast, which are now the nation’s third- and sixth- largest cities.

After winning power in 1989, the Labor Party has ruled for all but two years. In 1996, the main opposition party won a by- election that gave it a majority, which it lost in the next state election in 1998. Bligh, 51, took office in September 2007.

Bligh, who has raised A$15 billion from selling off state assets such as coal-train operator QR National Ltd. (QRN), has pledged to invest 50 percent of royalties from the state’s liquefied natural gas industry in schools and healthcare. She has vowed to add 3,000 doctors, nurses and health workers in three years and to protect rivers from industrial damage.

A former social worker who grew up in a single-parent home, Bligh won praise for her handling of the aftermath of Cyclone Yasi that hit Queensland in February 2011. The storm contributed to flooding that killed at least 35 people, affected 70 towns and cities and saw three-quarters of the state declared a disaster zone.

Since then, her support has dropped. Labor trails the opposition 40 percent to 60 percent in the two-party preferred vote, a Galaxy poll of 800 people conducted March 15-16 showed without giving a margin of error. The 20 percentage-point gap was unchanged from a month earlier.

Australia’s largest online betting agency has already effectively declared the election over. Sportsbet paid out all bets on the opposition to win on March 22, with a Labor victory set to return A$17 for every A$1 bet.

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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