Bad news piling up for once Teflon PM

CANBERRA - Fallout from the global economic crisis and a wilful Senate are starting to scrape the Teflon from the previously unscratchable Prime Minister Kevin Rudd.

With more bad news piling up as the Government prepares to bring down its second Budget next week, Rudd now faces a humiliating defeat on key environmental legislation that will leave him little to place before the world at December's climate change conference in Copenhagen, Denmark.

Speculation is already running high that as fortune continues to turn against Labor, Rudd may use an Upper House rebellion as the trigger for an early election.

The latest opinion polls indicate that while Rudd is far from any real threat, voters are beginning to lose faith in his policies, promises and handling of the deepening recession.

The Government is also being dented by the boatloads of asylum seekers setting out for Australia from Indonesia in a stream that has increased in frequency and numbers since Rudd eased the draconian laws of the former conservative Government.

Although pointing to international evidence that the resurgence has been spurred by worsening economic and humanitarian crises, Rudd has been accused of attracting asylum seekers by softening the nation's stance on illegal entrants.

Yesterday the Australian Navy intercepted a boatload of 50 asylum seekers, following two others last Wednesday carrying 79 people and bringing the total to 18 vessels since the rules were relaxed last August.

Last week a Morgan poll reported that while still in a commanding position, the Government's primary support had fallen by 1.5 per cent, a decline confirmed yesterday by a Newspoll in the Australian newspaper.

Newspoll said the Government's primary support had plunged 5 per cent in the previous two weeks to 42 per cent, below its 2007 election result of 43.3 per cent.

Labor still retains a lead of 55 per cent in the election-winning two-party preferred vote over the Opposition's 45 per cent and Rudd overwhelmingly remains the preferred prime minister over Opposition Leader Malcolm Turnbull.

Turnbull has struggled to impose his will on a party decimated by its loss to Labor and fraught with internal rivalries that have led to policy embarrassments and power struggles.

The spectre of former Treasurer Peter Costello continues to hang over the leadership - though with no real substance - and Turnbull had to quash a bid to oust his deputy, Julie Bishop.

But even with an Opposition that has yet to find any real traction, the winds appear to be starting to shift against Rudd as the reality of recession sinks in.

Newspoll said 47 per cent of voters believed Rudd should drop promised tax cuts from the Budget to help contain a ballooning deficit, and 78 per cent said any new stimulus package should eschew incentives such as the one-off payments of A$900 now being sent to taxpayers, focusing instead on job-creating infrastructure projects.

Rudd and Shadow Treasurer Wayne Swan are already preparing Australia for a tough Budget, hammered by plummeting tax revenues, soaring costs and payments, and unemployment now tipped to reach one million.

Forecasters are tipping a deficit of more than A$50 billion, amid deepening corporate gloom over economic conditions that yesterday pushed the monthly Commonwealth Bank-Australia Chamber of Commerce and Industry business expectations survey to its lowest level since it began in 1994.

Overlaying this is the rapidly developing political crisis over Rudd's besieged emissions trading scheme.

Battered by the economy and unrelenting political, business and environmental opposition, Rudd on Monday delayed the start of a now-revamped scheme by one year - but still insisted on its passage through Parliament to underwrite Australia's credentials in Copenhagen.

But the Opposition, Greens and independent senators have promised to block the legislation in the Upper House, effectively giving Rudd the option of accepting defeat or taking the nation to the polls well ahead of time.