High-profile former Gold Coast City councillor Cameron Caldwell convincingly won the seat of Fadden for the Liberal National Party on Saturday against 12 other candidates including Labor's Letitia Del Fabbro.
"We are on the right path as a party," said Mr Caldwell, whose campaign focused on the cost of living.
"We have a great leader and we will return to government."
The swing to the LNP on a two-party preferred basis was 2.5 per cent, making it an even safer coalition seat, according to Australian Electoral Commission data.
Deputy Prime Minister Richard Marles was first out of the blocks on Sunday, branding the win as "pretty lethargic" and not good news for coalition leader Peter Dutton.
"We really have been focused on the cost of living since the moment that we came to government," he told Sky News.
"The idea that Peter Dutton as a Queenslander, who is leading the Liberal Party, would take any comfort out of this result at all, frankly, is ridiculous."
Mr Marles denied Labor had a problem with Queensland voters, describing the state as a place of "significant opportunity".
Treasurer Jim Chalmers also weighed in, saying the coalition had missed the "historical average" swing of four per cent against a sitting government in a by-election, given the northern Gold Coast seat was heartland LNP territory.
"The LNP underperformed against the historical average," Dr Chalmers said, adding that the LNP had spent ten times what Labor spent on the seat.
Deputy Leader Sussan Ley poo-pooed this, saying it was a strong result for Mr Caldwell and the Queensland LNP.
"We'll see what the swing is finally, and we'll see what the postal (votes) and pre-polls bring - and I expect that they will break our way," she added.
"What we have seen is a strong endorsement of the candidate Cameron Caldwell and of the Liberal National Party in Queensland."
Ms Ley said cost of living issues certainly counted in the run-up to the by-election.
"It was a strong message to Anthony Albanese that the policies he's bringing forward are actually leaving ordinary Australians behind," she said.
"I was on the ground at many polling booths and you get that sense of cost of living crunch anxiety about the future."
Mr Caldwell will replace former Turnbull and Morrison government minister Stuart Robert, who resigned from federal parliament in April this year.
The incoming MP fought off a tough campaign by Labor, which had highlighted Mr Robert's involvement in the robodebt scandal that engulfed the previous coalition federal government.
Robodebt is the unlawful debt recovery program that saddled almost 500,000 welfare recipients with hundreds of millions of dollars in false Centrelink debts between 2015 and 2019.
In her concession speech, Ms Del Fabbro said it was still a "bloody good result" for Labor.
"As you know, we knew this would be an uphill battle, so I guess it has always been an important message to the LNP to not take the Gold Coast for granted," she said.
Labor has won Fadden only once, in 1983 at the election of the Hawke government.
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