Life is about to become even harder for Prime Minister Julia Gillard as her parliamentary majority is pared to the bone by the unfolding scandal surrounding the Labor-sponsored Speaker of the House of Representatives, Peter Slipper.

While her May 8 Budget is likely to survive, elements of it are at greater risk from independent MPs and the Greens as her margin over the Opposition is whittled to a single, uncertain vote.

Her wider legislative programme is also subject to far higher risk until the dust settles over Slipper's decision to step aside, while allegations of fraud against the Commonwealth are investigated, and civil claims of sexual harassment are tested in court.

Gillard's hopes of using the Budget and its promised surplus to slingshot past the debris of the disasters that have overtaken the Government since she ousted predecessor Kevin Rudd from office are also looking increasingly dim.


The Budget seems likely to be clouded by the lurid Slipper scandal, with Budget Day also the first day of the new parliamentary session and the Opposition raring to be unleashed on the floor of the House.

Gillard's association with Slipper is also likely to harden the view among many voters of a Prime Minister who gained power by betrayal and deceit, who has lied to the electorate and reneged on firm promises, and who has been unable to form a stable, effective government.

Opinion polls consistently rate Gillard and her party at record lows that would ensure a landslide victory for Opposition leader Tony Abbott in next year's election.

An analysis by a Labor strategist reported in yesterday's Sydney Morning Herald further predicted a similar disaster for the Government in the Senate, which would effectively hand Abbott an absolute mandate to dump Labor policy and replace it with his own agenda.

Abbott is already using Slipper to harden his attack on Gillard's qualifications for power.

Slipper began in Parliament as a National before sitting as a Liberal, later alienating both and sparking a bitter campaign to axe his preselection for his Sunshine Coast, Queensland, seat of Fisher.

Facing a precarious future as a minority Government, Labor reached a deal in which Slipper quit the Liberals, became an independent and was appointed Speaker, a role that gave him the casting vote in any deadlock on the floor.

The deal also effectively gave Gillard two extra votes - one from the return of former Speaker Harry Jenkins to the Government benches and one from the Opposition's loss of Slipper's vote - and, with Greens and independent MPs, an effective majority of 76-73.

Now, with Slipper unable to vote while standing aside, Labor MP Anna Burke acting as Speaker, and Tasmanian independent Andrew Wilkie ending his deal with Gillard, the Government's margin on the floor is just 74-73.

If Wilkie supported the Opposition the vote would be deadlocked and saved only by Burke's casting vote.

In the background, Gillard also faces continuing uncertainty over the future of MP Craig Thomson, who is being investigated over financial irregularities during his time as national secretary of the Health Services Union.

"Again, we are left with huge question marks over the judgment and the integrity of the Prime Minister," Abbott said.

The scandal broke at the weekend when News Ltd newspapers reported that one of Slipper's aides, James Ashby, had lodged a claim for compensation in the Federal Court for alleged sexual harassment.

Yesterday the Daily Telegraph published further allegations that Slipper breached rules governing his parliamentary entitlements, using Commonwealth funds to campaign for a friend in Tasmania, paying for taxi rides in Townsville while he was in Canberra, and for other luxury travel and meals.

Slipper has denied the allegations, which are being investigated by the Finance Department.

The Government, while supporting Slipper's decision to step aside as "appropriate", has defended his right to the presumption of innocence.