My impression is that the Australian Labor Party does win some rural seats. Possibly this was more common in earlier times.
For example the Labor Party is very competitive in Tasmania, the state which has its population least concentrated in its capital city. There is a state poll which suggests Labor may well win all five seats in Tasmania.
The Labor Party has held the most rural electorate of all, the Northern Territory seat (in the days before the Territory was divided into two electorates, one in the Darwin area and the other covering 98% of the area of the Territory).
Queensland, the only state where the Nationals are stronger than the Liberals, was a very strong Labor state in the first half of the twentieth century (indeed even as a colony in the nineteenth century it produced the world's first Labour government - it only lasted a week but still). Of course a lot of that support was probably contingent on Laboutr support for the White Australia policy and evaporated when the Whitlam government modernised the immigration laws and started paying attention to the problems of the Aborigines. The infamous Sir Joh Bjelke-Petersen led an entrenched Country/National government in the 'Deep North' state, which with the aid of a pro-rural gerrymander was in power for decades. In the end it required a Labour-Liberal coalition (a concept almost unthinkable in other states) to break the National hold on the state.
However the main support of both the Liberal and Labor parties is in urban and suburban areas, with the Nationals probably in a very slow, long term decline as the percentage of very rural electorates declines. In 1922 the Country Party won 14 House seats out of 75. In 1949 when the House was expanded to 121 members the CP won 19 seats. In 1984 they won 21 out of 148 seats (by which time they were the National Party of Australia, which was a re-branding attempt to appeal beyond the rural core vote). In general their percentage of the House seats has declined over time.
Now, since Queensland is growing faster than the national average, and the north coast of NSW will, on current projections, experience a massive influx of people over the next two decades, the relative rise of Queensland and regional NSW will, over time, lead to an urbanized population that is less heavily concentrated in a few large cities than is the case today, which is already less heavily concentrated than was the case two decades ago.
The success of the Liberal/National coalition over the past more than decade has been in large part due to the Libs ability to attract support in the "mortgage belt" of outer suburban areas around the big cities, and Sydney in particular.
The last election, John Howard not only took great credit for relatively low interest rates, but was perceived as essentially promising that they would stay low under the Libs and would rise under Labor. This is especially critical in the "mortgage belt", since mortgages are almost always set with variable rates. So, listening in to the ABC podcasts from overseas, the increase of interest rates in the middle of the month and a half election campaign seems to have helped solidify Labor's lead by attracting enough attention to the question of whether "the interest rate promise was broken" that the Coalition can't get a lot of traction on other issues.
The main problem that the Coalition has is that Australia has had very strong economic growth, largely on the back of the resource boom, and the public mood seems to have shifted from, "good on them", to, "what are they going to do with it?"
After two tough elections, the first breaking to the Coalition right at the beginning with the phony Children Overboard scandal, and the second breaking to the Coalition based substantially on an increasing view of the ALP leader, Mark Latham, as a loose cannon, it seems an like a substantial margin of the electorate may be thinking that, on the one hand, Rudd is not going to do anything rash and, on the other hand, under Rudd the ALP will try to get something done. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
It's shifting in those two regions, too, as states like Virginia become increasingly dominated by their liberal urban areas. (In Virginia's case, that's the DC suburbs, roughly from Woodbridge to Arlington, but watch Richmond and the more urbanized areas near the Bay.) What's happening, overall, is that conservatives are generally being pushed into the Great Plains and the southernmost parts of the Old Confederacy.
Even the Old Confederacy will eventually fall. Atlanta will top ten million people in the next couple of decades, if it doesn't die of dehydration first. (In the end, it's simply going to be too large for the conservatives to hold Georgia.) Charlotte, Greenville and Raleigh are growing at breakneck speeds, too, I believe, although the first may suffer quite a bit with the credit crunch in the short term. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin