Tony Abbott has attributed the Government's sharp drop in the polls to public anxiety about a tough Budget but indicated the repeat WA Senate election will not deter him from making difficult decisions.
Just days from naming a date for the Statewide by-election, the Prime Minister said his Government had inherited an economy in even worse shape than his mentor John Howard did in 1996.
Mr Abbott's admission of electoral headwinds came as Labor opted to dodge a brawl with the coalition on the carbon tax amid demands from WA MP Alannah MacTiernan that the ALP reposition itself on the mining tax.
The latest Newspoll has the ALP ahead of the coalition 54-46 on two-party preferred status. Both recorded primary support of 39 per cent - a 6.6 point drop for the coalition since the election and a 5.7 point increase for the ALP.
Mr Abbott told coalition MPs yesterday that the build-up to its first Budget was always difficult for a new Government.
"When it's a coalition government's, it's usually more difficult because when we come into office our first Budget is invariably a fiscal repair job," he said.
"The public are not hostile or unhappy with the Government but predictably, understandably they are anxious about what the Budget might contain."
Opposition Leader Bill Shorten played down Labor's gains in the polls, telling caucus there were still 87 to 90 Newspolls to go until the next election .
"Polls are like trying to use the second hand to tell the time," Mr Shorten told MPs.
He also rejected Ms MacTiernan's demand for Labor to re- think its support for the mining tax to help rebuild the party's brand in WA.
But Labor MPs unanimously decided they would not join the Greens in seeking to overturn Environment Minister Greg Hunt's decision to cancel three carbon permit auctions due before July 1.
Mr Hunt said Labor had begun to crabwalk from the carbon tax and should now allow the Government to repeal it.
Shadow environment minister Mark Butler said that Labor remained committed to its election policy of bringing forward the start date of the emissions trading scheme by 12 months to July and would not vote to repeal the carbon tax.
"That remains our position and we're still solid on it," he said.