Yesterday might have been the first time federal Labor figures were dragged directly into the Eddie Obeid-Ian Macdonald saga currently playing before the corruption commission in Sydney, but for many months Obeid and the NSW Labor culture he represents has had federal Labor’s fate in his clutches. Together with Macdonald he’ll almost certainly carry it to its doom in September.

Labor’s current polling is, in anyone’s language, dire; its momentum in the second-half of 2012 has faded and while it’s no longer at the absolute nadir it reached in 2011 and early 2012, it’s still well short of being competitive on its primary vote.

But even if Labor could lift its national share of the primary vote — to say 38% or a little higher, the sort of territory where it starts to become competitive with Greens preferences — NSW will kill it. It is facing the loss of a number of seats in that state. The toxicity of the NSW Labor brand is the key reason — although the Liberal Party’s under-performance in 2010, which cost Tony Abbott the prime ministership, also means there’ll be a rebound there against Labor.

The core of Labor’s problem is that, without a Liberal Party meltdown, there just aren’t enough seats elsewhere in Australia to make good the losses Labor will suffer in NSW. It may pick up seats in Queensland, where the LNP overperformed in 2010 and where Campbell Newman is alienating voters in droves. It might pick up a seat or two in net terms in Victoria. It may come out even or lose one in Tasmania and will probably stay on level terms in South Australia and Western Australia. But even if Julia Gillard manages to pull Labor back to level pegging, NSW looks like it will kill her government.

That can be sheeted home directly to the NSW branch and its antics in government, from the rotating premiership to the power privatisation debacle to the long series of scandals and now, the biggest one of all, allegations of truly staggering malfeasance. And the Obeid family’s performance under the Independent Commission Against Corruption’s scrutiny will only make voter impressions worse.

Tony Burke and Stephen Conroy’s enjoyment of Obeid hospitality was undoubtedly innocuous from their point of view and may indeed have been below the threshold of what’s reportable under the respective disclosure requirements of the House of Representatives and Senate. Indeed, Burke may not have even been in federal Parliament when he took advantage of one of the Obeid family’s apparently limitless collection of properties.

Instead, it’s a potent symbol of how hard federal Labor will find it to escape the toxic legacy of its years in government in NSW. Having handed Barry O’Farrell victory in 2011, NSW Labor appears set to ensure, no matter how well federal Labor performs, that Tony Abbott secures victory later this year. The only risk for the Liberals is if someone on their side has had dealings with the Obeids and becomes an Ian Campbell-style casualty in the rush to judgment.

If only Labor had an alternative leader who was fixed in the public mind as someone profoundly at odds with Labor powerbrokers …