THE Government’s star has begun to fade in the midst of the recession with the latest Herald/Nielsen poll showing the Coalition making significant inroads against Kevin Rudd and Labor.

The poll, the first to gauge the national mood since last week’s federal budget, also finds general satisfaction with the budget, but six out 10 were unhappy with the decision to raise the retirement age to 67.

The poll shows a 5 per cent two-party preferred swing to the Coalition since the previous poll in late March, leaving both parties with the same level of support they had at the federal election on November 24, 2007.

Labor leads the Coalition by 53 per cent to 47 per cent, down from the 58-42 gap in the previous poll.

The Coalition has made up 9 percentage points on Labor in the crucial primary vote.

Labor’s primary vote fell 3 points to 44 per cent, while support for the Coalition rose 6 points to 43 per cent.

The national poll of 1400 voters was taken from Thursday night to Saturday, accounting for the budget on Tuesday and the Opposition’s response.

Since the previous poll, the Government has admitted the country is in recession and the $900 cash hand-outs from the second stimulus package have begun flowing.

The poll suggests the cash payments and the budget have had no positive political impact for the Government or Mr Rudd, while Malcolm Turnbull has made small personal gains against his rival.

Mr Rudd’s approval rating has fallen 10 points to a still lofty 64 per cent while his disapproval rose 10 points to 32 per cent.

Mr Turnbull’s approval rating stayed steady at 43 per cent, as did his disapproval rating of 47 per cent.

Mr Rudd still leads his rival easily as preferred prime minister but by 9 points fewer than two months ago. Mr Rudd’s preferred prime minister rating fell 5 points to 64 per cent. Mr Turnbull’s rose 4 points to 28 per cent.

The results will buy Mr Turnbull some peace from the leadership speculation that is never far below the surface in the Liberal Party.

Labor was in a similar poll position in September just as the global financial crisis began to bite and Mr Turnbull took over as Opposition Leader.

The Nielsen pollster John Stirton said the latest poll was good news for the Coalition but it would take another month to see how permanent the change was.

“Overall, this poll shows a much improved result for the Coalition, but it only puts them on par with their 2007 election loss,” he said.

Though Mr Rudd’s approval rating fell to 64 per cent, it was a level of approval John Howard only attained four times in his 11½ years as prime minister.

“Mr Rudd should be concerned about the direction his approval rating is heading rather than its absolute level,” Mr Stirton said.

The Coalition has been banking on a campaign of highlighting debt and deficit to deal it back into the game.

It has vowed to block the budget measure of means testing the private health rebate and suggested the revenue be replaced with a tobacco tax increase. Government analysis released yesterday shows Mr Turnbull’s cigarette tax would fall short by $3.2 billion over the next decade.

The Coalition is reluctant to give Labor a trigger for a double dissolution election – the same bill being rejected three months apart – and will now support the alcopops tax rise it has opposed for a year.

“We’ve got to take into account the budgetary environment has changed,” Mr Turnbull said.

The Finance Minister, Lindsay Tanner, said yesterday the Coalition had yet to commit to support any of the $22 billion in savings measures in the budget and, other than a tax increase, had not proposed any alternative solutions to tackle debt.