8.55PM UPDATELabor candidate Anna Watson has declared victory in Shellharbour.She said she was overwhelmed and very happy with the result.‘‘I feel quite excited,’’ Ms Watson said.‘‘I am very thankful to the people of Shellharbour, who have placed so much trust in me. I’m keen to hit the ground running and do the very best I can. ''You go through every emotion. ''Today we took nothing for granted. I visited every booth, spoke to every volunteer and every voter I could - and it paid off.’’7.55PM UPDATEUnionist Anna Watson is the new state MP for Shellharbour.The Mercury is calling it for Ms Watson, with 25 per cent of the vote counted. Ms Watson replaces the retiring Lylea McMahon.Shellharbour had an ALP margin of 27 per cent and was never expected to be winnable for anyone else.PRIMARY VOTE UPDATEAnna Watson (ALP) 50.6%Larissa Mallinson (LIB) 27.4%TWO-PARTY PREFERRED UPDATEAnna Watson (ALP) 66.7%Larissa Mallinson (LIB) 33.3%7.46PM UPDATEAnna Watson (ALP): 50.6%Larissa Mallinson (LIB): 27.4%Peter Moran (GRN) 15.4%(About 25% of vote counted)7.25PM UPDATEAnna Watson (ALP): 47.4%Larissa Mallinson (LIB): 30.6%Peter Moran (GRN) 15.7%(About 12% of vote counted)7PMAs counting gets underway in Shellharbour, Labor candidate Anna Watson says the party knows who was behind a letterbox smear campaign against her.Anonymous leaflets were distributed to a number of homes around Warilla, Oak Flats, Shellharbour and Dapto early this month. The leaflet featured a photograph of Ms Watson and a number of accusations which attempt to cast aspersions on her character and fitness for office.Handing out how-to-vote cards at the community centre opposite Warilla North Public School, Ms Watson addressed the issue. She said the smear campaign was not ‘‘an internal Labor thing’’ but neither did it come from the Liberal Party.‘‘The party knows who it is and it will be dealt with after the election,’’ she said.‘‘People aren’t interested in that sort of thing, but it does hurt and it does affect my family.’’Ms Watson, who registered her vote at a pre-polling station in Albion Park Rail a couple of days ago, was upbeat. Mercury-IRIS polling earlier this month suggested Liberal candidate Larissa Mallinson would struggle to beat Ms Watson.Ms Watson started election day at Kanahooka and worked her way through the electorate, before joining the party faithful at Warilla Bowling Club to watch the count tonight.Ms Watson said her first priority, if elected, would be to fight for the maternity ward at Shellharbour hospital and she would have a strong focus on public health and public education.She said the electorate was Labor heartland and there was still a lot of goodwill towards the ALP in Shellharbour.She said voters were more concerned about local issues rather than big-picture issues, and on the local front Labor had delivered for them.However, she admitted the campaign had been a lot more intense than she expected.‘‘At the end of the day, the thing I’ve learnt is that one-on-one conversations matter the most - people can look you in the eye and tell if you’re lying or not.’’