A senior Labor official says the party retained the seat of Hunter because it picked the right candidate and showed it "didn't have to tack right on climate change".
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Five-time Olympic pistol shooter and former Mount Thorley truck driver Dan Repacholi beat off a challenge from the Nationals' James Thomson to win the marginal seat with a slightly increased share of the vote.
He was part of a successful campaign for Labor in the region and across the nation as leader Anthony Albanese claimed victory with a 3.5-point swing.
Sharon Claydon held Newcastle with a nearly four-point swing in her favour, Meryl Swanson won Paterson despite a 1.5-point swing to the Liberals' Brooke Vitnell, and Pat Conroy held Shortland over Liberal Nell McGill after growing his share of the two-party vote by 1.1 percentage points.
Labor's most significant win in the region was in Joel Fitzgibbon's former seat of Hunter, despite vigorous campaigning by Barnaby Joyce in the electorate.
Mr Fitzgibbon retired this year after waging a bitter and public war against his party's climate policies. He hand-picked Mr Repacholi to replace him, a move endorsed by Mr Albanese last year.
Some of the Hunter branch rank-and-file were livid at Mr Albanese's intervention, but Mr Repacholi proved a tireless and ultimately successful campaigner.
The Labor official, who asked not to be named, said on Sunday that the Hunter victory vindicated Mr Albanese's captain's pick and the party's climate policy.
"The candidate selection decision was very controversial, but we won it because of him," he said.
"I'd also take a broader lesson that the idea that Joel had been running around with that we'd abandoned this kind of heartland and deserted these communities and turned our back on them was f---ing bulls--t."
Labor has pledged to cut carbon emissions 43 per cent by 2030, in part by incrementally lowering the cap on how much the heaviest polluters, including coalmines, can emit before they have to buy carbon offsets.
The Coalition labelled the policy a "sneaky carbon tax" and campaigned aggressively in the Hunter on a warning that a Labor government would put 10,000 jobs at risk in the Hunter.
But the Labor vote held up in Hunter, and across the nation voters awarded Labor more seats in Parliament and elected a host of climate-minded independents in formerly safe Liberal seats.
The Greens also increased their primary vote across Australia and have two more MPs in Parliament.
We didn't have to tack right on climate change, which is what Joel always wanted.
- Labor official
As counting continued, it remained unclear on Sunday whether Labor would govern in its own right or with support from the crossbench.
Mr Albanese said in his victory speech on Saturday night that "together we can end the climate wars" and "together we can take advantage of the opportunity for Australia to be a renewable energy superpower".
The Labor official told the Newcastle Herald that treading the line between an "ambitious" climate policy and retaining the Hunter vote was "an incredible feat".
"We didn't have to tack right on climate change, which is what Joel always wanted."
Mr Fitzgibbon said the Hunter victory was due to Mr Repacholi and a "more sensible" Labor climate stance.
"Our win in Hunter can be attributed to both the quality, background and hard work of Dan Repacholi and a more moderate and sensible climate change policy which allowed us to successfully defend ourselves against the inevitable coal jobs scare campaign," he said.
"Going forward, our more sensible climate change policy will also help us further rebuild trust in our coal communities."
Ms Claydon, Ms Swanson and Mr Conroy have spent their entire Canberra careers on the Opposition benches during the Coalition's nine-year reign.
"I hope it will be a very different Parliament to the one I've been in for the past nine years," Ms Claydon said.
Mr Conroy said on Sunday that Labor would be happy to be judged by its performance in the Hunter over the next three years.
"Absolutely. We've maintained that the LNP's disgraceful and deceitful scare campaign was without any credibility, and our actions over the next three years will demonstrate that," he said.
Mr Conroy, who will put his name forward to caucus for a ministry, said the election results showed Australians wanted a government which would "govern from the middle".
"That includes things like sensible action on climate change, a corruption commission and attacking the entrenched discrimination against women.
"They're things that Labor and teal independents ran hard on, and I think the Liberal-National party is paying the price for an extreme right-wing agenda where they tried to divide the Australian people."
The Labor win means University of Newcastle will get a $16 million hydrogen and clean energy testing centre and the Hunter will have its GP Access After Hours service funding restored.
Cessnock Hospital will get a new urgent-care medical clinic, and Muswellbrook town square will receive a $10.5 million upgrade.
Labor also promised to fund upgrades to Mandalong Road at Morisset and honour the Coalition's commitment of $182 million for a hydrogen manufacturing hub at Newcastle port.
It also vowed to provide Snowy Hydro Limited with an extra $700 million in equity to make the under-construction Kurri Kurri gas power plant operate on green hydrogen by 2030.
A permanent dredge for Swansea Channel and extending the Newcastle Mines Grouting Fund to Lake Macquarie were also among Labor's election pledges.
Perhaps most importantly, Labor promised $500 million during the campaign to start work on high-speed rail between Newcastle and Sydney.
One Nation's vote in Hunter was cut in half on Saturday as Dale McNamara attracted 9.8 per cent of first preferences. It was a similar story in Paterson, where Neil Turner's vote was down from 14 per cent in 2019 to 8 per cent.
Independent Stuart Bonds won 6.1 per cent of the vote in Hunter, well down on the 21.6 per cent of the primary he claimed in 2019 as a One Nation candidate.
The Greens' Charlotte McCabe claimed 20 per cent of the primary vote in Newcastle, up five points on 2019, while the Liberal vote fell five points to 24 per cent.
"We're now the opposition in Newcastle," Ms McCabe said. "The Libs abandoned this seat while we engaged and listened."
The Nationals' vote in Hunter rose from 23 to 26 per cent, but it was not enough to challenge Mr Repacholi, who grew the Labor primary slightly to 39 per cent.
The Liberal Party was left licking its wounds after losing seats to the teal independents, including Treasurer Josh Frydenberg's electorate of Kooyong.
Defence Minister Peter Dutton just hung on to his seat and remains a possible candidate to succeed Scott Morrison, who leaves the Liberals with plenty of soul-searching to do.