Greens leader Richard Di Natale has accused the major parties of doing a “nasty little deal” after the Liberal Party announced it would preference Labor ahead of his own party in all electorates on July 2.

Prime Minister Malcolm Turnbull made the announcement on Sunday after consultation with the party’s federal director Tony Nutt.

“This is a call that I have made in the national interest,” the PM said. “Let us be quite clear about this. The big risk at this election is that we would end up with an unstable, chaotic, minority Labor-Greens-independent government as we had before.”

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The decision overrules Victorian Liberal powerbroker Michael Kroger’s announced intention to preference the Greens in vulnerable Labor seats.

“I am the party’s leader and this decision has been taken by me, with the federal director, Mr Nutt,” Mr Turnbull said.

“The decision has been under consideration for some time, there have been many discussions about it, a lot of consultation with the state divisions and with colleagues.”

Richard Di Natale is angry over the preference deal between the major parties. Photo: AAP

It immediately is seen to benefit gaffe-prone Victorian Labor MP David Feeney in Batman, Anthony Albanese in Grayndler (NSW) and Tanya Plibersek in Sydney and other inner-city Labor-held seats where MPs may not win an outright majority.

Senator Di Natale said the decision “had nothing to do with principle, and everything to do with a dirty deal between the Labor and the Liberal Party, the Coles and Woolies of politics”.

“We don’t know whether the Australian Labor Party and the Liberal Party are joining together to lock out other independents,” he said.

“People are saying they are fed up with business as usual politics. This deal does everything it can to protect the duopoly the two major parties enjoy.”

Mr Nutt is reported to have personal knowledge of the devastating effectiveness of the strategy in the 2010 Victorian state election where the Ted Ballieu government got across the line.

I’ll scratch yours …

The expected quid pro quo is for Labor to preference the Liberals ahead of the Nick Xenophon Team’s strong challenge in South Australian lower house seats Mayo (Jamie Briggs) and even Sturt (Christopher Pyne).

Where the primary vote of major party candidates comes in under 50 per cent, the winner will be decided after preferences are distributed by returning officers.

Malcolm Turnbull says placing Greens last in voting preferences in ‘national interest’. Photo: AAP

The Prime Minister’s announcement was immediately welcomed by the Labor Party, with frontbencher Brendan O’Connor telling Sky News “obviously we’re not going to be upset by that”.

Opposition Leader Bill Shorten told reporters in Townsville: “He can worry about second and third preference votes. I am chasing every first preference I can.”

Greens lower house Victorian MP Adam Bandt said any reciprocal Labor Party deal to preference the Liberals ahead of Nick Xenophon Team candidates would effectively hand government back to the Liberals.

Australia’s lower house preferential voting system has entrenched the two major parties throughout the country’s electoral history. While minor parties can win a foothold through the proportional representation (quota) voting in the Senate, in the House of Representatives voters can mark a preference in the event their first preference candidate does not win outright.

Most voters who follow major party how-to-vote leaflets at polling booths tend to follow party discipline in preferencing.

Mr Turnbull’s announcement was timed to coincide with the Australian Electoral Commission’s pre-poll postal or absentee voting which starts this week.

Hawke in Medicare privatisation scare

Meanwhile, former prime minister Bob Hawke has appeared in a Labor Party attack ad warning of a secret agenda to privatise Medicare.

Mr Hawke said the government had appointed a task force to examine the privatisation of Medicare, a claim rejected by the Coalition.

“The Liberals were totally against it, and now the Liberals have set up a Medicare privatisation task force,” he says in the 30-second ad.

“Everybody knows you don’t set up a Medicare privatisation task force unless you aim to privatise Medicare.”

When challenged about the accuracy of Mr Hawke’s message, Labor leader Bill Shorten stood by the ad.

He said the government had allocated $5 million to a task force within the Health Department to investigate the privatisation of the Medicare payment system in which millions of dollars were paid to claimants each month.

“If you privatise our payment system as Mr Turnbull clearly wants to do, what happens is all of a sudden we’ve got to start finding money to pay a private company and their shareholders to make profits even before we then find the money to pay our doctors, to pay the costs of our system,” Mr Shorten said on Sunday.

Quentin Dempster is a Walkley Award-winning journalist, author and broadcaster with decades of experience. He is a veteran of the ABC newsroom and has worked with a number of print titles including theSydney Morning Herald. He was awarded an Order of Australia in 1992 for services to journalism.