A mayor rejected in a Labor pre-selection stoush will run as an independent for the seat of Rockhampton, in a move ABC election analyst Antony Green says will create an unwelcome distraction for the party.

Rockhampton Mayor Margaret Strelow announced her candidacy today saying it was a matter of conscience and her time with the Labor Party was over.

"I've watched the last week as various candidates on the ground have put forward issues that I'm not sure they were overly relevant," she said.

"I appreciate that this is going to mean I'm expelled from the Labor Party … but my priority has always been my community."

Ms Strelow had Premier Annastacia Palaszczuk's backing to replace retiring minister Bill Byrne in the central Queensland stronghold.

But she was beaten for pre-selection last month by senior public servant Barry O'Rourke.

Former MP and long-serving minister Robert Schwarten backed Mr O'Rourke, accusing Ms Palaszczuk of trying to intervene in a local decision.

Ms Strelow said the pre-selection loss was not why she decided to run.

"This has got nothing to do with the factional deal," she said.

Distraction for Labor

Green, the ABC's election analyst, said Ms Strelow's candidacy would add to uncertainty for Labor in a seat that was historically one of its safest.

He said Ms Strelow's candidacy would split the vote between her and Labor, however the full ramifications would all come down to preferences.

Ms Strelow said her decision to run was a matter of conscience. ( ABC News )

"With full preferential voting returning, it could be quite a complex contest and it really will depend on who finishes second, third and fourth," he said.

"I'd expect Labor would direct preferences towards her."

However, Green said the seat could become a headache for Labor if Ms Strelow did not preference the party back or if LNP or One Nation candidates decided to preference Ms Strelow.

"I suspect it's mainly a problem if the split helps deliver victory to the LNP or One Nation," he said.

"It's a certainly a distraction in a seat [the Labor Party] wouldn't normally [have] felt they had to do much work in."

Palaszczuk surprised

Ms Palaszczuk was asked about the issue, before Ms Strelow held her press conference, but would not comment until it was confirmed.

"I haven't heard that, I'd find that surprising," she said.

She later released a statement saying local members had made their choice in the pre-selection process.

"I understand Margaret Strelow was disappointed in the result," Ms Palaszczuk said.

Opposition Leader Tim Nicholls said it showed Labor was a disunited rabble.

"We're seeing a disgruntled former Labor member of the party, a mayor, thumb her nose and run as an independent," Mr Nicholls said.

"The real question for Annastacia Palaszczuk is, does she prefer the pre-selected ALP candidate or does she prefer her good friend, the Mayor of Rockhampton?".

Ms Strelow has stood aside as the town's mayor, and an acting mayor will be selected to take over until the result of the November 25 election is known.

Bruce Highway funding

The announcement distracted from the Premier's pledge to set up a new body to manage major upgrades of the Bruce Highway.

Under the plan, the State Government would commit $175 million as an initial injection, plus $200 million a year to the "Bruce Highway Trust".

The trust would also take hundreds of millions of dollars from the Federal Government and prioritise the most important upgrades looking forward across the next 15 years.

Some of the projects to be carried out as a priority include an upgrade of the Townsville ring road between Douglas and Bohle Plains and the completion of the Gympie Bypass.

Ms Palaszczuk said it would streamline enhancements.

"Future-proofing the Bruce is not just about making it quicker and safer to get from A to B, it's about boosting our economic growth and our exports ... through more efficient transport of goods from our regional producers," she said.