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Rudd Beats Gillard in Ballot for Australia Labor Leadership

Photographer: Mark Graham/Bloomberg

Kevin Rudd, Australia's prime minister, signs official documents during his swearing-in ceremony at Government House in Canberra, Australia, on Thursday, June 27, 2013. Close

Kevin Rudd, Australia's prime minister, signs official documents during his swearing-in... Read More

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Photographer: Mark Graham/Bloomberg

Kevin Rudd, Australia's prime minister, signs official documents during his swearing-in ceremony at Government House in Canberra, Australia, on Thursday, June 27, 2013.

Kevin Rudd was sworn in as Australian prime minister for his second stint in the post, tasked with reviving the ruling Labor party’s prospects in the next election as it trails the opposition in opinion polls.

Rudd was sworn in by Governor-General Quentin Bryce in Canberra today, along with his new deputy Anthony Albanese and Chris Bowen as treasurer. Defense Minister Stephen Smith announced he was retiring, the seventh minister to quit in the washout from the ousting of Julia Gillard.

The defeat of the nation’s first female prime minister in yesterday’s Labor leadership ballot was just the start of Rudd’s struggle to rally the party as the opposition prepares to exploit its divisions. Rudd prevailed over Gillard in a 57-45 vote among lawmakers that underscored the party’s split between the man who swept Labor to power in 2007 and the woman who ousted him in 2010 after his colleagues grew fed up with a leadership style that eschewed consultation.

“Rudd faces a litany of challenges, including holding the ministry together and working with colleagues, looking credible, selling the message that he’s changed his ways, and distinguishing some policy differentials from Gillard,” said John Wanna, a professor of public administration at the Australian National University in Canberra.

Photographer: Mark Graham/Bloomberg

Australian Prime Minister Kevin Rudd enters the House of Representatives, Canberra, on Thursday, June 27, 2013. Close

Australian Prime Minister Kevin Rudd enters the House of Representatives, Canberra, on... Read More

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Photographer: Mark Graham/Bloomberg

Australian Prime Minister Kevin Rudd enters the House of Representatives, Canberra, on Thursday, June 27, 2013.

Opposition leader Tony Abbott declined to call a no-confidence motion in Rudd’s government in parliament today, while urging Labor to commit to Gillard’s pledge to hold an election on Sept. 14, or earlier.

Rudd declined to name the date when pressed by Abbott, saying there wouldn’t be a “huge variation” and any announcement would be consistent with the constitution. Australian law requires the election to be held by Nov. 30.

Hypothetical Popularity

Rudd, 55, a former diplomat who last year said he’d learned lessons during his first tenure as prime minister, faces an election with a weakening economic outlook that’s prompted the central bank to cut interest rates to a record low. While Labor turned to him after polls showed it would do better under him than Gillard, the risk is its gap to Abbott’s Liberal-National coalition remains in the absence of party unity.

“The somewhat more positive view of Labor under Rudd that the public has expressed is set to be tested because it’s always been a hypothetical,” said Peter Chen, who teaches politics and public policy at the University of Sydney. “Whether that will last under a relentless and well-funded campaign by the opposition, just using everything that everyone has said about Rudd’s personality and things like that,” remains to be seen, he said.

Cabinet Posts

Rudd, a fluent Chinese speaker who was previously scheduled to head to Beijing today to attend a conference, needs to fill Cabinet positions vacated by supporters of Gillard, 51.

He’s been criticized by colleagues including Wayne Swan -- who resigned as treasurer and deputy leader -- for an autocratic style, raising questions over whether Labor can rally behind him before the election. Swan last year described him as a man of “great weakness” who had demeaned his party colleagues during his tenure as prime minister from 2007-2010.

“Political life is a very hard life, a very hard life indeed,” Rudd said today in his first parliamentary speech since winning back the leadership. “Occasionally it can be kind, more often it is not. So let us try, just try to be a little kinder and gentler with each other in the further deliberations of this parliament.”

Ministry Departures

Climate Change Minister Greg Combet announced his departure from the ministry, with Swan replaced as deputy Labor leader by Albanese and as treasurer by Bowen. Agriculture Minister Joe Ludwig also stepped aside, as did Trade Minister Craig Emerson and Education Minister Peter Garrett. Communications Minister Stephen Conroy quit and was replaced as Senate leader by Penny Wong. Smith today announced he will retire at the election.

“Our chances have improved” under Rudd, Employment Minister Bill Shorten told 2UE radio today. “He’s reflected upon what’s happened, he’s learned lessons about consultation, about listening.”

The Labor leader will need to craft an election platform, deciding whether to keep the initiatives pioneered by Gillard, who won greater legislative landmarks during her tenure in charge of a minority government than Rudd did with a majority.

Legislative Landmarks

Gillard, who yesterday said she’d retire from politics at the election, had been running on strengthening education, expanding access to broadband Internet connections and boosting funding for disability services.

Labor faces a 14 percentage point deficit in opinion polls. The coalition led Labor 57 percent to 43 percent on a two-party preferred basis, designed to gauge which party is most likely to form a government, according to a Newspoll published in The Australian newspaper on June 24.

Rudd’s return would lift Labor by 11 percentage points in the primary vote to 40 percent, compared with the coalition’s 42 percent, according to a Nielsen survey published in Fairfax newspapers June 17.

Even so, with signs of a slowdown in the world’s 12th-largest economy, including worsening employment prospects and a waning of the mining boom, momentum remains with Abbott.

The re-election of Rudd as Labor leader is “high on the Richter scale of desperation -- it’s without precedent,” said Haydon Manning, a politics professor at Flinders University in Adelaide.

Supporting Gillard

Rudd will face questions about his own trustworthiness, having said on March 22 “there are no circumstances” in which he would return to the Labor leadership and pledging “100 percent support” for Gillard. A year earlier, she won a ballot against him by 71 votes to 31 in the caucus.

“I want to say directly to the people of Australia, you deserve better than this,” Abbott, 55, told reporters last night. “In 2007, you voted for Kevin and got Julia. In 2010, you voted for Julia and got Kevin. If you vote for the Labor party in 2013, who knows who you’ll end up with.”

Gillard’s defeat came hours after she won parliamentary backing for A$9.8 billion ($9.1 billion) in extra federal funding for schools over six years from 2014-15, adding to legislative accomplishments that failed to translate into public support for Labor. She had also advocated a new levy that will collect A$20.4 billion for the disabled by mid-2019.

Gillard Legacy

In an interview in April, Gillard said her legacy is secure after introducing a carbon price and improving education, which is “closest to my heart.”

“I believe this will be remembered as a time in which we got all the elements right to seize the opportunities of this century of change in the region,” Gillard said at the time. “When I’m an older person and sitting back in the retirement home watching our nation, I will be seeing a stronger nation because we have done those things.”

It is unclear if Rudd will support some of Gillard’s big-ticket policy items that she struggled to sell to voters, including the nation’s first levy on greenhouse-gas emissions and a tax on mining company profits that will reap A$1.8 billion less in revenue for the year to June 30 than previously forecast, according to budget documents released May 14.

Mining Boom

Rudd will have to rebut opposition attacks on Labor’s economic stewardship after the government failed to meet its pledge of a budget surplus in the current fiscal year.

Even as the economy expanded in 2012 at its fastest pace in five years, unemployment has risen in some areas. While Chinese demand for iron ore and coal has driven a mining boom in the country’s north and west, manufacturing areas in the east have struggled, with the Aussie dollar in the past three years averaging 30 cents above the level of the prior two decades.

Much of the manufacturing downturn has hit electorates with a track record of voting Labor. One casualty was Ford Motor Co., which announced on May 23 it would end production in the country after nine decades, with the loss of 1,200 jobs.

Gillard’s record in pushing through groundbreaking legislation, including the world’s first compulsory plain packaging for cigarettes, was overshadowed by scandals involving Labor lawmakers. Craig Thomson, a former national secretary of the Health Services Union, faces charges he misused a union credit card to pay for prostitutes between 2002 and 2007, before he entered parliament. Thomson, who resigned from Labor and sits in parliament as an independent, denies the allegations.

Rudd may be better at selling Labor’s policy messages than Gillard, said Nick Economou, a political analyst at Monash University in Melbourne.

Even so, “he is a double-edged sword,” Economou said. “He ran a really poor government, he was a poor leader in government and a poor leader of his troops.”

To contact the reporters on this story: Jason Scott in Canberra at jscott14@bloomberg.net; Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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