OPPOSITION Leader Tony Abbott has been accused of ditching Liberal party values and sanctioning muckraking against Prime Minister Julia Gillard as Labor continues to seek the political upper hand after an improved poll result.
However, the attack came as former Labor MP Craig Thomson accused his old party of appealing to racists and rednecks by endorsing a Howard government policy on asylum seekers.
This week's Newspoll showed Labor and the coalition level-pegging in two-party terms and Mr Abbott's preferred prime minister rating hitting 34 per cent to Ms Gillard's 45 per cent.
On Thursday, the prime minister led a Labor attack on the Liberals' direction under Mr Abbott, citing as evidence its backflip on an emissions trading scheme, rejection of wheat market deregulation and division over whether to back the proposed Murray-Darling Basin plan.
Former Liberal MP Peter Slipper has also questioned how Mr Abbott could oppose free markets, saying the "barracudas" were circling.
"When one looks at recent opinion polls, it is by no means certain that the leader of the opposition will be leading the opposition at the time of the next election," Mr Slipper, who is now an independent, told parliament on Wednesday night.
Ms Gillard told parliament, in answer to a question from Mr Abbott on the impact on economic growth of the carbon tax, the Liberals had abandoned their free market commitment.
"It is truly to be regretted that this leader of the opposition has driven this Liberal party into climate change denial and extremes," she said.
Labor frontbencher Tony Burke said it was astonishing that the Liberals were "not willing to stand up for something as radical as what you call free enterprise".
WA Nationals MP Tony Crook crossed the floor on wheat market deregulation to support the government and WA Liberals Mal Washer and Dennis Jensen abstained from voting, allowing the bill to pass.
Climate Change Minister Greg Combet lampooned the Liberal leadership, comparing it to a horse race as the carbon pricing "scare campaign" faltered four months after it was introduced.
"Quite frankly the Liberal party stewards should intervene and look at changing the leadership," he said.
"What about the member for Wentworth (Malcolm Turnbull)?
"A classy thoroughbred if ever there's been one."
One MP mentioned as a leadership hopeful, opposition deputy leader Julie Bishop, returned fire to Ms Gillard.
She again questioned the prime minister over her role in helping to set up the Australian Workers Union Workplace Reform Association in 1992, when she was a partner at law firm Slater & Gordon.
She asked Ms Gillard how she could say she had no further involvement with the union fund when two documents, relating to a power of attorney and a defamation action, pointed to her "ongoing" role.
Ms Gillard said the Liberals had become the party of "scare and sleaze and smear" under Mr Abbott, and she stood by her answers given to a media conference on August 23.
Meanwhile, Mr Thomson told reporters Labor had abandoned its principles by removing the migration rights from any asylum seeker arriving by boat on the Australian mainland.
"This is about appealing to those racists elements in Australian society," he said.
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