As the scene was set for an optimistic start to Clive Palmer’s latest push into Victoria — a 25th-floor conference room on Melbourne’s Southbank, a big yellow backdrop flanked by TV screens showing the Palmer United emblem looking suspiciously like it belonged on a tinny — his gang was threatening revolt.

This morning Jacqui Lambie, PUP senator, 10-year veteran of the armed forces, has come out swinging, saying she will block legislation in the Senate in protest over the Abbott government’s lower than inflation pay rise for the military.

“I’m just standing my ground and if they don’t like it well then, they don’t like it. That’s tough. But I’m not moving,” she told the ABC. “Clive’s going to have to suck it up.”

“It’s going to come to whether Clive Palmer is going to stand beside me on this call or not, and if he doesn’t then it’s Clive Palmer that’s up for election in 18 months time and not Jacqui Lambie,” she said.

In response, Palmer’s spokesman said he expected Lambie to vote with the party.

Back in Melbourne, Palmer emerged from behind black screens to take the podium, he was trying to head off Lambie and take the initiative on defence.

Decrying the career path of politicians from university politics to backroom advisors to MPs, he invoked Australia’s heroes: “If you compare that, with the brave ANZACs that went overseas, not as members of the Labor Party, or the Liberal Party, but as Australians to serve their country.”

But like the dawn raid on Gallipoli, Palmer’s sneak attack on the cosy political status quo is turning into a massacre.

“Our party has been crumbling from when we had no support at all, every single poll has said our support is crumbling. Well the polls that are held on election day say that’s not true,” Palmer said.

So he is looking for another front. He talks boldly about what he can do with the balance of power in Victoria, but his stock has fallen in his home state of Queensland, and never really got off the ground in Victoria.

An Essential Research poll showed PUP’s primary vote was down to 5% in a poll of 693 Queenslanders taken over four weeks in October, down from 12% in May. And The Age’s Ipsos poll of 1401 Victorian voters showed PUP support at 2% at the end of last month.

Palmer says he can win it.

“I think we will be able to get the balance of power in Victoria,” he said.

At the federal election, 123,889 votes were cast towards the Palmer United Party statewide for his three upper house candidates: former boxer Barry Michael, footballer Dougie Hawkins and gym instructor Penny Maree Palman, who after the election turned her hand to competing as a contestant on The Bachelor.

You could say Clive has a thing for celebrities: he said he wouldn’t reveal his candidates until the weekend but revealed that “some of them are well known people, but most importantly they are Victorians”. There will be 16 or more candidates spread over Victoria’s eight upper house districts, but at the launch Palmer’s comments zeroed in on two areas of Western Metropolitan Melbourne, and Eastern Victoria.

He could be boosting industries where he has an interest, such as coal and nickel. Another reading is that he is targeting the vulnerable positions on the upper house ballot in eastern Victoria, where two seats are in play, and another plausible seat in the western Melbourne with a pitch for jobs.

Clive watchers would know that his focus in Queensland is to fulfill his vendetta against Premier Campbell Newman. If there was any hint of that motive in Palmer’s mind yesterday, he wasn’t showing it.

He started imagining a Victoria as a manufacturing state again, and queried why steel and nickel are processed overseas rather than in the Latrobe Valley.

“Why can’t we have real downstream processing here in Australia?” he said. “That’s what we think we can offer.”