Labor suffers setback

By GREG ANSLEY


CANBERRA - Labor's chances of snatching government from Prime Minister John Howard have been dealt a serious blow by leader Mark Latham's eagerness to shore up support from the Greens.

Already losing ground to Howard in razor's-edge opinion polling, Latham bowed to mainland environmental pressure with a new A$800 million ($860 million) policy aimed at saving Tasmania's old growth forests and retraining forestry workers.

But the proposal has enraged all sides of politics in Tasmania - including the state Labor government and unions - and will almost certainly cost Labor support, and possibly seats, on the island.

Resources Minister Bryan Green said the policy was the worst possible for Tasmania.

In Victoria, union-backed independent Peter Kelly has announced he will direct his preferences to the Government rather than Labor in the marginal seat of Gippsland held by Federal Science Minister Peter McGauran.

With McGauran managing only a wafer-thin majority of 2.6 per cent at the last election, Gippsland was one of the electorates targeted by Labor in a bid to pick up the 12 extra seats it needs to win power.

But the decision could have an even wider impact.

Latham's policy is similar to proposals put forward by the Wilderness Society and has sparked claims by critics that it had been tailored specifically to attract green voters.

Its release came as the Government launched a new campaign warning of an "unholy alliance" between Labor and the Greens.

Polling continues to show that Latham cannot afford any mistakes in the final days of the campaign, with his initial lead now completely eroded by the Government and his standing as preferred prime minister still well below Howard's.