COALITION POISED TO WIN FIRST BY-ELECTION

UNCLAS CANBERRA 000640

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV AS
SUBJECT: COALITION POISED TO WIN FIRST BY-ELECTION


1. (SBU) SUMMARY: The National Party candidate appears poised
to win a June 28 by-election that has been billed by the
media as a major test of Brendan Nelson's leadership and, to
a lesser extent, as a bellwether signaling the end of the
Rudd Government's honeymoon. Most observers expect The
Nationals to retain the regional Victorian seat of Gippsland
seat, which it has held since 1922. The Liberal-National
Coalition parties have been campaigning hard on Rudd's
"broken promises" on cost of living issues, and the threat to
local jobs from ill-considered approaches to climate change.
The Australian Labor Party (ALP) candidate is trying to
capitalize on the popularity of Kevin Rudd but he appears to
have gained little traction with the voters. A victory will
give the National Party and Brendan Nelson, both of whom are
facing questions over their long-term viability, a big boost.
As long as there is no significant swing against the ALP, a
loss should be of little consequence to the Rudd Government.
END SUMMARY.

ALP DOWNPLAYS ITS CHANCES WHILE NATIONALS GO ALL OUT


2. (SBU) The by-election followed the resignation of Howard
Government agriculture minister Peter McGauran, who had held
the seat since 1983. Gippsland, in the state of Victoria's
Southeast, is a regional seat that is agricultural but also
contains the La Trobe Valley, which is the heart of the
Victorian coal industry and the center of electricity
generation for Melbourne. The Nationals have gone all out to
retain Gippsland and the Liberals are putting in a big
effort, perhaps reflecting the pressure Brendan Nelson is
under. As expected, the Liberals and Nationals are giving
their second preferences to each other on their "how to vote
cards." For the Coalition, the by-election is crucial
because a loss would further destabilize Brendan Nelson's
leadership, and fuel talk about the Nationals' long-term
viability. Publicly and privately, the ALP is downplaying
its chances and has invested substantially less resources in
the seat than the Coalition (although the ALP has
substantially increased its presence in the last two weeks).


LOCAL FACTORS, NATIONAL ISSUES


3. (SBU) The Coalition candidates have been running hard on
protecting coal industry jobs, petrol prices, helping
pensioners who feel let down buy the budget, Rudd's tax hike
on premixed alcoholic drinks, and improving local services.
The Nationals are calling on voters to send a message to
Canberra "that Gippsland won't be taken for granted." In
Parliament this week, the Coalition has been talking up the
impact of the Government's proposed carbon trading scheme on
petrol prices, evidently with an eye on this weekend's
by-election. The ALP candidate is trying to capitalize on
Rudd's popularity, calling on voters to give Gippsland a
voice inside the Rudd Government, but he is hamstrung by the
fact that the local ALP rank-and-file is angry that ALP
Victorian head office parachuted him into the seat. The
candidate, a local city councilor, only joined the ALP the
day before he was chosen. As a result, some ALP rank and
file members have refused to help the campaign. The Liberals
and Nationals are screening advertisements featuring
disenchanted ALP members.

COALITION WILL WIN, BUT SHOULDN'T GET ITS HOPES UP


4. (SBU) COMMENT: While one Liberal Party insider told us
recently that Rudd's popularity would make this election
difficult for the Coalition, historically, by-elections
generally swing against governments. In the first year of
Qgenerally swing against governments. In the first year of
the ALP's Hawke Government there were six by-elections caused
by Coalition resignations. Hawke was highly popular at the
time, but the best result for the ALP was a 0.5 percent swing
against it. Rudd is indeed popular but Gippsland is a
conservative seat. The National Party is fielding the best
candidate and the local ALP is unhappy with its
representative. It will be interesting to see how much of an
impact the Coalition's scare campaign on carbon emission
controls has on the voters of the coal-mining,
electricity-generating Latrobe Valley. A Coalition loss, or
narrow Coalition victory, would hurt Coalition morale and
likely expedite the timetable for Brendan Nelson's removal.
On the other hand, a Nationals victory should not cause Rudd
to lose any sleep, provided there is not a substantial swing
against the government.


5. (U) This message was prepared by U.S. Consulate General
Melbourne in collaboration with U.S. Embassy Canberra.

MCCALLUM