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Labor becomes the hunted after fruitless Upper Hunter campaign

NSW opposition leader Jodi McKay is set to face further questions over the viability of her leadership, after Labor's loss in the Upper Hunter by-election.

Labor conceded defeat on Sunday, with Ms McKay and ALP candidate Jeff Drayton calling their Nationals counterparts to congratulate them.

A devastated Ms McKay said:

"We thought that people would hear our message.
"We didn't expect that our vote would go to independents; we didn't expect our vote to be torn away as it was."

Ms McKay admitted Labor needed to do some "really genuine soul-searching”:

“We have to make sure we do better.
“We have to make this region know it is a Labor region in the future.
“We have two years to prove to the Upper Hunter that we are a party that deserves their support.”
"There's no challenge against me.
“I am the leader and we will work through what we need to do.”

Nationals candidate David Layzell had claimed around 30 per cent of the first preferences from more than 41,000 votes counted by Sunday afternoon.

Mr Drayton was next on 21 per cent, with the One Nation and Shooters, Fishers and Farmers Party candidates following on 12 per cent.

It represents a significant swing against the opposition, which got 28.6 per cent of first preferences in the 2019 state election.

NSW Nationals leader John Barilaro said the result was an indictment of Labor, although argued the problem did not lie with Ms McKay's leadership.

"She's just a jockey, the horse is broken.

NSW Premier, Gladys Berejiklian, early in the campaign said the coalition would need a miracle to win the seat and avoid being plunged further into minority government.

Though the Nationals have held it for the last 90 years, Upper Hunter has become marginal and governments traditionally do not do well in by-elections.

It was reported that The Shooters, Fishers and Farmers, One Nation and Liberal Democrats preference voted for each other.

The Upper Hunter race was sparked when Nationals MP Michael Johnsen stepped down over allegations he had solicited sex in parliament and revelations he is under police investigation for sexual assault.

The final vote count will not be known for some days, with postal votes returning as late as Wednesday.