Under-pressure NSW Premier Morris Iemma has lost the confidence of the Labor Party, and is a "broken premier", says federal Liberal frontbencher Malcolm Turnbull.
Mr Iemma suffered an embarrassing defeat at the ALP state conference in Sydney yesterday when delegates overwhelmingly rejected his plans to sell off the state's electricity industry.
A vote opposing privatisation was won 702 votes to 107, and followed more than two hours of heated debate during which a number of government ministers were heckled and booed as they spoke in support of the government's plans.
Mr Turnbull, a federal MP from NSW, said the vote was a "massive rejection" of Mr Iemma's leadership.
"You have to ask how in control the state government is to be beaten 700 to 100 wasn't it, a huge margin," he told Network Ten.
"Morris Iemma seems to have lost the confidence of much of his party room and the vast majority of the Labor Party, he is a broken premier, and the tragedy for NSW is he is in power until 2011, well at least the government is."
Mr Turnbull said the vote was also a rejection of Prime Minister Kevin Rudd, who will speak at the conference today.
"Kevin Rudd has got a real problem because he has gone out there and backed Iemma, backed him very strongly, and the rejection of Iemma is as much a rejection of Rudd," he said.
Meanwhile federal Treasurer Wayne Swan has come to Mr Iemma's aid, praising his courage as a leader.
"Could I just say about Morris Iemma, a really gutsy stance that he took, he's fighting for things that he believes in, and Morris I think ought to be admired for the courage he took to the floor of that conference."
However rebel Labor MP Paul Gibson insists he will vote against any power-privatisation if it's taken to Parliament.
Premier Morris Iemma insists the negotiations will continue, because he has to sure up the state's future energy supplies.
Mr Gibson says the Premier should listen to the delegates and not get the party to intervene at a Federal level.
"We can go to the national executive if they want to.
"But surely they must realise if a Premier of any state has to go to a national executive to get something through in his own state then he becomes a lame duck Premier.
"If you privatise, do you know what'll happen next time we get a big storm out in Blacktown?
"A hundred thousand people will ring up and you'll get some little bloke out the back of Bangladesh saying 'What, you've got a Blackout? Where's Blacktown?'"
Mr Iemma was always going to be defeated on policy but a senior Labor advisor said "he suffered a much bigger, much more embarrassing defeat than expected".
Mr Iemma did not stay around at the conference to hear the outcome of the ballot.
Mr Iemma released a statement saying "he will consider the decision of the conference."
The statement continued; "the Premier will weigh-up the views of 700 delegates against the future needs of 7 million people."
Labor strategist Bruce Hawker said on Sky TV this was possibly the lowest day for Mr Iemma in his premiership.
"Mr Iemma knew he was going to lose but not as badly as this".