Kevin Rudd has been accused of chasing Queensland votes as he angered the NSW premier with plans to shift Australia's main east coast navy base from Sydney to Brisbane.
"A phone call would've been nice," Premier Barry O'Farrell told Mr Rudd when the pair crossed paths near Garden Island on Sydney Harbour on Tuesday after seeing the prime minister's plans splashed on the front of a Sydney newspaper.
"We stand to lose 4000 direct jobs all because we have a federal political leader so spooked by the polls he will do anything, even use defence infrastructure, as a tactic to try and win votes north of the NSW border," Mr O"Farrell said.
Mr Rudd fired back, saying the premier should spend more time looking after the transport infrastructure needs of western Sydney.
"The Royal Australian Navy is not Premier O'Farrell's property," he said.
Under Mr Rudd's plan, a re-elected federal Labor government would appoint a top-level defence committee to look at moving the navy's Fleet Base East at Sydney's Garden Island to Brisbane by 2030.
"This would include a major strategic decision to deploy the navy's most important ships where they will be best placed to protect Australia's interests and quickly respond to challenges," Mr Rudd said.
Garden Island could be redeveloped to cater for the burgeoning cruise ship industry and defence-related jobs could be created in Brisbane and potentially Darwin, Perth, Townsville and Cairns.
But Mr O'Farrell was unhappy about the prospect of losing the base, which injects about $470 million a year into the state economy and employs 6700 people.
Opposition Leader Tony Abbott, who was campaigning in Newcastle, wasn't against shifting military operations.
"What I am against is policy on the run by a desperate government against the advice of their White Paper which came out just a few months ago," he said.
Jobs were also on Mr Abbott's agenda as he visited the NSW Central Coast.
If the coalition wins government, the long-term unemployed would receive a $6500 bonus if they can find and keep a job for two years.
Jobseekers who moved to a regional area for work would receive an additional bonus of up to $6000, or $3000 if they moved from a regional area to a capital city.
"These sensible, targeted measures will help get people off welfare and into new jobs," he said.
Meanwhile, Labor also attacked Mr Abbott's promise to scrap means testing of the 30 per cent private health insurance rebate, saying it would put a hole in the budget.
The rebate saving was set aside by Labor to cover $8.8 billion of the cost of the national disability insurance scheme.
Shadow treasurer Joe Hockey is expected to lay out some of the coalition's policy costings during a debate with Treasurer Chris Bowen in Canberra on Wednesday.
Later in the day, Mr Rudd and Mr Abbott will face off in the third debate of the election campaign at a people's forum at Sydney's Rooty Hill RSL Club.
