While Malcolm Turnbull still has a substantial lead over Bill Shorten as better prime minister, the gap has markedly narrowed. Reuters/David Gray

The federal government has fallen behind Labor in Newspoll for the first time under Malcolm Turnbull, with Labor now leading 51-49% on a two-party basis.

The poll, which also shows another slide in Turnbull’s ratings, will further unsettle already jittery Coalition members as they confront an expected July 2 double dissolution, which will be called in the likely event the Senate defeats the government’s industrial relations legislation. The government would face the prospect of a loss if the Newspoll’s 4.5% swing were repeated on election day and was uniform.

The poll, in Tuesday’s Australian, also found strong opposition to Turnbull’s proposal – rejected by premiers last week – to allow the states to raise income tax. Only 19% were in favour; 58% were against.

That outcome throws into question Turnbull’s current tactic of trying to turn the argument back on the states by saying that if they won’t accept the power to raise income tax, it is no good their crying poor to the federal government. Treasurer Scott Morrison said on Monday that Turnbull had called the states’ bluff.

A fortnight ago the Coalition had a narrow 51-49% two-party lead in Newspoll.

The Coalition’s primary vote has fallen two points to 41%; it is down five points since the start of the year. Labor’s primary vote is up two points to a six-month high of 36%. The Greens have dropped one point to 11%.

Turnbull’s satisfaction rating was one point down to 38%; his dissatisfaction level was up four points to 48%. His net satisfaction has dropped to minus ten points. Last November it was plus 38 points.

Opposition Leader Bill Shorten’s satisfaction rating rose four points to 32% – just six points behind Turnbull’s – while his dissatisfaction level was up one point to 53%. His net satisfaction rating is minus 21.

While Turnbull still has a substantial lead over Shorten as better prime minister, the gap has narrowed markedly, from 31 to 21 points. Turnbull is preferred by 48%, a fall of four points in a fortnight and 16 points below his November rating. Shorten is up six points in a fortnight to 27% on the measure of better prime minister.

On Monday the government continued to reject negative interpretations of Friday’s rebuff by the premiers of Turnbull’s state income tax plan. Morrison said: “It was a serious proposal which called their bluff, because they weren’t interested in having to somehow fund the higher levels of expenditure that they believed were promised to them by Julia Gillard.”

He dismissed the suggestion that the states had not been given enough information, saying the answer would have been “no” even if they had been sent an encyclopedia.

The states had been demanding more and more money and “we said, well, if you’re not prepared to raise it we’re certainly not going to increase taxes. And I think we’ve been able to deal with that issue once and for all and get on with it,” Morrison said.

He and other ministers are now invoking the slogan that all governments have to “live within their means”.

Former Victorian Liberal premier Jeff Kennett criticised the way the tax proposal had been put to the states so soon before Friday’s Council of Australian Governments meeting and said there was no point blaming the states. But Kennett said that the need to live within our means was the right message – debt had to be addressed and he looked forward to a budget that dramatically reduced federal government spending.

Meanwhile, side matters are making for distracting background noise as the government tries to regroup.

Former minister Kevin Andrews, dumped by Turnbull, told the Manningham Leader, a local paper in his area, that in certain circumstances he would be prepared to challenge for the leadership.

Andrews, who last September challenged Julie Bishop for deputy and in 2009 challenged Turnbull, then-opposition leader, said: “It has never been my burning ambition to be the leader of the party, but if circumstances arose which they did in both of those instances where I thought there should be a change or a contest, I am prepared to do it.”

Andrews, who is riding in the Pollie Pedal with Tony Abbott, later told the media that Turnbull was the leader “and I support his prime ministership”.

In Western Australia, federal Liberal MP Dennis Jensen, who has lost preselection for his seat of Tangney, hit out bitterly. He has moved to sue The Australian over the publication of articles about an unpublished novel he wrote some years ago containing a steamy sex scene and about his family life.

While Jensen claims to have been victim of a smear campaign, he does not have much sympathy in his party. This was his third preselection defeat. On the early occasions the decision was overturned but it will not be this time.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.