LABOR COULD FALL IN QUEENSLAND STATE ELECTION

C O N F I D E N T I A L SYDNEY 000070


E.O. 12958: DECL: 03/18/2019
TAGS: PGOV PINR AS
SUBJECT: LABOR COULD FALL IN QUEENSLAND STATE ELECTION

REF: A. 07 SYDENY 409

B. 08 SYDNEY 142

Classified By: Political Officer Casey Mace for reasons 1.4 (b) and (d)

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Summary
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1. (C/NF) Queensland's Labor state government is dangerously
close to losing reelection in the state's March 21 polls.
The Labor party has dominated state politics for the last
eight years, winning three consecutive elections and amassing
a commanding 15-seat majority in Parliament. Public opinion
polls, however, reveal voters are tired of problems in the
state-run health system and concerned about a state budget
that just plunged into deficit. In contrast to previous
elections, a more unified, better organized, and well
resourced opposition is providing the voters with a
legitimate alternative. Moreover, a disciplined campaign by
the opposition Liberal National Party (LNP) gained momentum
early, but it will need to swing close to eight percent of
voters on election day. Although the LNP needs to win 20
additional seats -- nearly doubling its 25-seat count in
parliament -- to gain outright control of government, a win
of 18 seats could allow it to form a minority government with
two conservative-leaning independent candidates likely to win
their contests. In the end, many observers believe the
margin is too large for the surging opposition, and the Labor
party will scrape back into power. Even if Bligh's
government scrapes out a win, the expected swing against
Labor will likely dampen speculation that Labor Prime
Minister Rudd will call an early national election. End
Summary.

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The Snap Election
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2. (SBU) This is Premier Anna Bligh's first election at the
helm of the Labor Party. After winning three elections,
popular Labor Premier Peter Beattie retired from politics and
handed over the reins to Bligh, his Treasurer and handpicked
successor, in 2007 (ref A). An able administrator, Bligh
enjoyed consistently high approval ratings through the end of
last year. Her cabinet has not been marred by any major
scandals, and the state economy had been growing at healthy
clip with unemployment below already very low national
levels. When the global economic downturn started to slow
business growth and cut into government revenue early this
year, however, Bligh and her treasurer Andrew Fraser made the
controversial decision to maintain government spending
priorities at the risk of a forecasted budget deficit. The
decision prompted Standard and Poors to downgrade
Queensland's credit rating from AAA to AA -- making it the
first Australian state to suffer a credit downgrade. Three
days later, the Premier decided to call a snap election on
February 27, nearly six months before the end of her term,
because she said she needed a renewed mandate to manage the
state under deteriorating economic conditions. Most
observers pointed out that the March 21 election is safely
scheduled two months before Bligh has to unveil the official
budget in deficit, which could be worse than expected, and
even harder to defend on the campaign trail.

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The Opposition
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3. (SBU) In contrast to the three previous elections,
Queensland's Labor government is facing a unified and
organized opposition. Unlike other states, Australia's two
main conservative parties, the Liberal Party and National
Party, have fought for primacy within their coalition in
Queensland. The National Party has always been the senior
partner at the state level, but in recent years, the Liberal
Party has been the senior partner at the Federal level. As a
result, the coalition has had trouble consistently presenting
one leader and one platform to the electorate. Last year,
however, the Liberal and National Parties formally merged in
Queensland under a rebranded Liberal National Party (ref B).
Although some Liberal party members grumbled the merger was a
takeover, a majority of the rank and file in both parties
supported the move. The Liberal National Party (LNP) quickly
consolidated resources and launched a rebranding campaign at
the end of 2008 that slightly lifted the conservatives'
dismal ratings in the polls. LNP leader Lawrence Springborg
has been actively traveling the state to raise his profile as
the leader of the new party, and to shake his old image as
National Party leader who lost two state elections at the
head of a more divided Coalition. Since the merger, the LNP
has avoided destabilizing internal power struggles.

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The Campaigns
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4. (C/NF) At the end of the first week of the campaign, the
LNP shocked most observers by pulling even with the Labor
party at 50 percent in the polls. One of Labor's campaign
organizers admitted that the LNP's aggressive campaign start
outperformed Labor. He pointed out that the LNP beat the
Labor party to voters' mailboxes, an important tactic in
Australian elections, by sending direct mail campaign
literature with mail-in ballots to registered voters in its
database. The Labor party, he said, had taken a week longer
to mail its literature to voters. LNP television ads
outnumbered Labor party ads by three to one the first week as
well. Labor party state director Anthony Chisholm told us
March 4 that he believed his party would be outspent by the
opposition for the first time in many elections. He
explained that the Labor Party's primary funding vehicle, an
investment fund seeded with capital raised by the sale of
formerly owned radio stations, had generated significantly
smaller revenue this year as a result of the financial
crisis. Moreover, the global economic downturn has reduced
the size of campaign donations from businesses.


5. (C/NF) Chisholm said that the two main campaign issues
have been economic management and healthcare. The opposition
has a decisive edge on healthcare, according to polls. A
series of news stories over the last year have exposed a
shortage of beds and nurses in many regional hospitals, and
Premier Bligh made the unpopular decision at the beginning of
the year to close a children's hospital in north Brisbane to
consolidate resources into a larger children's hospital in
south Brisbane. The Labor party had been hopeful that it
could own economic management as an issue, arguing the need
for experienced and proven leadership during a time of global
economic recession. However, the LNP has been relatively
effective in neutralizing the issue by criticizing the
government for running a deficit and pledging to bring more
austerity to the budget. Chisholm said that Labor's other
traditionally strong issues like the environment and
education have not rated high in voter polls.


6. (C/NF) Despite surging in the polls and sustaining a
disciplined campaign, the LNP still has to convince enough of
the electorate it is prepared to run the state. Federal LNP
MP from the Brisbane area, Michael Johnson, told us March 4
that the state LNP "lacks the punch of artillery to get
across the line." The state director of a leading business
organization, Dave Edwards, told us in a separate meeting on
March 3 that the business community has not been convinced
the LNP can win the election. As an example, he said that he
had to beg and cajole executives to fill a 140-seat breakfast
event with LNP leader Lawrence Springborg on March 3, where
he announced an important element of his economic plan for
the state. In contrast, Edwards said that he filled nearly
250 seats with little effort for an event with the Labor
Minister for resources later in the week. And although
support for both parties is evenly split, Bligh has
consistently outpolled Springborg by more than 10 points as
the voters' preferred premier.

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The Outcomes
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7. (C/NF) The LNP must hold all of its 25 existing seats and
win an additional 20 seats to take control of government.
Although an electoral redistricting in 2008 turned three LNP
seats into notional Labor party seats based on 2006 election
results, the LNP should be able to hold the seats in this
election. As a result of the district boundary changes, the
Labor Party is incumbent in 57 seats and stands to gain two
new seats with high Labor party margins. A net loss of 15 or
more of these seats would push Labor below the 45 seats
necessary for outright majority in the state parliament. At
least 11 Labor seats are vulnerable. The LNP is in striking
distance of at least five Labor seats in the Brisbane and
Gold Coast area, which comprise the highly populated
southeastern corner of Queensland. Another six Labor seats in
coastal and regional Queensland are within the LNP's reach.
So the LNP not only needs to make gains all throughout the
state, it needs to win another four Labor seats that are held
with margins of 5 percent or greater. The state director for
one of the largest labor unions, Andrew Dettmer, told us
March 2 that he believes Labor will lose at least 5-6 seats.
Labor party consultant and campaign organizer Dave Nelson had
a more sober outlook on March 3. He said that he could see
the Labor party losing at least seven, and possibly all 11 of
the vulnerable seats, but Labor may be able to hold off
defeat in the remaining four seats.


8. (C/NF) Under the new electoral boundaries, five seats are
held by independent MPs. The LNP has a good chance of winnig
two of these seats according to observers, but at least three
independents are likely to return to parliament. The
presence of independent MPs creates the prospects for a hung
parliament in which neither major party has an outright
majority. Observers believe that at least two of the three
remaining independent MPs would side with the LNP, but they
would each have the power to exact a hefty political price
for support and would have disproportionate influence over
legislation.

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Comment
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9. (C/NF) Neither candidate has proved to be electric on the
campaign trail. Bligh is articulate and smart on policies,
but she does not have the same media flair or campaign
charisma of her predecessor Peter Beattie. Springborg is
energetic but less articulate. Exceeding relatively low
expectations, Springborg has closed the gap as preferred
Premier, but Bligh still remains more popular. The LNP
sustained a disciplined campaign after a strong start, making
the contest between the parties very, very close. Labor may
just avoid defeat, but it will emerge bruised and much
weaker. Although Prime Minister Rudd's federal Labor
government remains popular, it will not take heart from the
Queensland election. A significant swing against Labor in
Queensland, following swings against Labor in Western
Australia and the Northern Territory last year, will give
pause to federal Labor party strategists contemplating the
merits of an early election for Prime Minister Rudd this
year. On the other side of politics, the merger experiment
between the conservative parties into one unified LNP should
endure in Queensland; the LNP's success in these elections
should lead counterparts in other states to consider the
merger path more seriously. In the meantime, however, the
federal opposition Coalition rife with divisions between
outspoken National MPs and Liberal MPs could continue to have
trouble reconciling itself with its merged identity in
Queensland at the next federal election. End Comment.


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