Rudd Resigns as Australia Leader, Gillard Takes Post

Julia Gillard will become Australia’s first female prime minister after ousting Kevin Rudd following a slump in his approval ratings and a clash with the resources industry over a plan to increase taxes.

Gillard, 48, will be sworn in at 12:30 p.m. after challenging Rudd for the leadership late last night. Welsh-born Gillard was elected unopposed by Labor party members this morning in Canberra after Rudd, who won office in 2007, withdrew from the ballot.

The change in leadership spurred gains in BHP Billiton Ltd. and Rio Tinto Group in Sydney trading on optimism the government will compromise on its mining profit tax. Rudd’s support started to crumble in April after he shelved his emissions trading plan. His approval rating fell further as the fight over the resources tax intensified, with the spat coming to a head over the past 24 hours as colleagues switched their support to Gillard.

“This is the most dramatic leadership change in Australian political history,” Nick Economou, a lecturer in politics at Monash University in Melbourne, said in a phone interview.

Rudd, who served the shortest term as leader since 1971, said in a news conference today in Canberra that he was proud of his management of the nation’s economy and other achievements such as the introduction of school computers, construction of new libraries and proposed changes to healthcare.

“I will serve the government in any manner of assistance,” Rudd said, adding that he will contest the next election. Gillard must call a poll by April next year.

Swan Remains Treasurer

Wayne Swan, who with Rudd helped steer Australia’s economy through a global financial crisis that plunged most of the world’s developed economies into their deepest recessions since World War II, will remain treasurer, Sky News reported.

Rudd and Swan oversaw the response to the crisis, boosting spending on schools and roads, bolstering the banking system, and distributing more than A$20 billion ($18 billion) in cash to households. The measures saw gross domestic product expand every quarter except one during his tenure, keeping the unemployment rate at almost half the level of the U.S. and Europe.

Swan was elected Gillard’s deputy after abandoning Rudd. Swan will attend this weekend’s G-20 summit in Toronto on Australia’s behalf, a spokesman said.

The Australian dollar rose to 87.51 U.S. cents at 11.50 a.m. in Sydney from 87.39 cents in New York yesterday. Australia’s benchmark S&P/ASX 200 Index rose 21.3 points to 4507.40.

Rudd’s support began to slide in polls after the flip-flop on carbon trading, the centerpiece of his plan to tackle climate change, which he called the “greatest moral challenge” of our time. Then he proposed a 40 percent tax on the “super profits” of resource projects in Australia, the world’s biggest shipper of coal and iron ore, and refused to back down even after members of his own party objected.

Slump in Polls

Dissatisfaction with Rudd, 52, hit a record 55 percent, according to a telephone survey of 1,147 people between June 18 and June 20 published in the Australian newspaper this week. The margin of error was 3 percentage points. Rudd was previously the nation’s second most-popular leader, after Bob Hawke in the 1980s, according to a Nielsen poll published in March 2009.

Gillard has been Rudd’s deputy since December 2006 and helped Labor win power from John Howard’s coalition after almost 12 years in opposition. She served as minister for education, employment and social inclusion and has supported the mining tax.

Awarded the so-called “super portfolio” of education and employment in 2008, Gillard was responsible for dismantling former Howard’s labor laws that decreased the power of unions. Voter opposition to the laws was seen as the pivotal issue in the 2007 election victory.

Industrial Law

Gillard studied at the University of Adelaide and Melbourne University, where she graduated in 1986 with degrees in arts and law and joined law firm Slater & Gordon in Werribee, Victoria in 1990, practicing industrial law. The firm now has a meeting room named after her in its Melbourne office.

Gillard will face an opposition coalition led by Tony Abbott, a former amateur boxer who studied for the priesthood. Abbott has promised not to adopt the resource profits tax and has offered a more generous plan for parents to take leave from the workforce after they have a baby.

Rudd won in 2007 with promises to withdraw Australian troops from Iraq and ratify the Kyoto treaty on climate change. While the troops were out by July 2009, his efforts to pass a carbon trading plan similar to systems used in Europe were scuttled by the opposition coalition in the Senate.

“I am looking forward to working with the new prime minister in designing an appropriate carbon policy for Australia,” Warwick McKibbin, a Reserve Bank of Australia board member and international economics professor at the Australian national University, said in a phone interview.

To contact the reporters on this story: Gemma Daley in Canberra at gdaley@bloomberg.net; Marion Rae in Canberra at mrae3@bloomberg.net.

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