By the time of the 1906 election, Dawson had a poor relationship with the Queensland state executive of the Labor Party, and was initially demoted to the unwinnable fourth position on the Labor Senate ticket. As a result of concerns about the electoral fallout of his dumping, he was reinstated to the winnable third position on the ticket, but resigned as a candidate two months later, citing ill health. He subsequently changed his mind, but the executive refused to reinstate him, so he ran as an independent. That move split the Labor vote, and amidst a generally bad election for Labor in Queensland, the entire ticket lost.