VZCZCXRO3459
PP RUEHPT
DE RUEHBY #0640 1780543
ZNR UUUUU ZZH
P 260543Z JUN 08
FM AMEMBASSY CANBERRA
TO RUEHC/SECSTATE WASHDC PRIORITY 9759
INFO RUEHBN/AMCONSUL MELBOURNE PRIORITY 5372
RUEHPT/AMCONSUL PERTH PRIORITY 3647
RUEHDN/AMCONSUL SYDNEY PRIORITY 3568
RHEHNSC/NSC WASHINGTON DC PRIORITY

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