Gillard Grit Overcomes Rivals as Labor Struggles for Traction

Australian Prime Minister Julia Gillard’s second win over rivals for her job in a year gave her minority government space to assemble a budget as it struggles to revive public support ahead of a national election.

Gillard, 51, called a leadership contest yesterday after former leader Simon Crean urged a rematch between her and Kevin Rudd, whom she ousted in 2010 and beat again in a February 2012 party vote. After Rudd refused to run and Gillard won uncontested, Treasurer Wayne Swan said “it’s back to work,” with a budget due in May. Gillard fired Crean yesterday, two other cabinet members quit, another minister resigned, and Rudd ruled out today seeking the Labor leadership in the future.

The next set of public polls will show whether the episode cleared the clouds overhanging Gillard, or deepened voter disaffection ahead of the Sept. 14 election. Any further loss in support would increase the odds of opposition Liberal-National leader Tony Abbott pressing for a parliamentary no-confidence motion in the government, after he lost a bid to hold one yesterday by three votes.

“Maybe Gillard can use this as a circuit-breaker” to restart the campaign, said Haydon Manning, a politics professor at Flinders University in Adelaide. At the same time, “it’s hard to imagine a scenario where she can lead the government to victory from here. All she’s got on her side is time, and that’s only six months and counting.”

‘No Circumstances’

Rudd’s office today issued a statement saying the former prime minister “wishes to make 100 percent clear to all members of the parliamentary Labor Party, including his own supporters, that there are no circumstances under which he will return to the Labor Party leadership in the future.” Rudd reiterated that he intends to contest the next election as a local member of parliament, according to the statement on his website.

The political developments had little impact on stocks, with the benchmark S&P/ASX 200 Index closing down 0.2 percent at 4,959.41 yesterday, little changed from where it was when former Labor leader Simon Crean brought things to a head earlier in the day, urging Gillard to call a leadership ballot. The Aussie dollar traded at $1.0429 at 3:50 p.m. today and was little changed in Sydney trading yesterday.

Gillard did lose a vote yesterday, when Abbott sought to propose a no-confidence motion in the government in the lower house of Parliament. A successful bid could have brought down the administration, forcing an early election. Abbott garnered 73 to Gillard’s 71, while falling short of a majority of 76.

Key Outcome

While Abbott’s attempt failed, Tony Windsor and Rob Oakeshott -- two independents on whom Gillard relies to pass legislation -- sided with the Liberal-National coalition’s call to debate the no-confidence motion, underscoring Labor’s tenuous hold on power.

A key outcome “was the confidence vote and the way in which she lost a number of her independents,” said Peter Chen, who teaches media politics, public policy and Australian politics at the University of Sydney. “She’s now got a bit of a legitimacy crisis, which is only partially assuaged by the uncontested spill.”

Australia’s first female leader, who was yesterday attempting to focus attention on her government’s apology to the victims of forced adoptions last century, threw open her leadership to challengers after Crean’s call. Crean, who led Labor in the early 2000s, urged Rudd to stand against her and said he would nominate himself to take Swan’s deputy position.

Party Coup

Gillard ousted Rudd 33 months earlier in a late-night party-room coup, leading to public discontent about how she came to power that’s been reflected in opinion polls in which Labor has lagged behind the opposition for almost two years.

A Newspoll survey published in the Australian newspaper March 12 forecast a 52-48 percent split in favor of the opposition on a two-party preferred basis. The poll of 1,143 people had a margin of error of plus or minus three percentage points. The two-party preferred measure is designed to gauge which party is likely to win enough seats to form a government.

While surveys show Rudd, 55, enjoys greater support than Gillard among the general public, he faces antipathy from Labor’s senior ranks over his leadership style. The former diplomat, who last year said he’d learned lessons during his 2007-2010 tenure as prime minister and would try to consult more widely, yesterday stuck to his pledge of not mounting another challenge to Gillard.

‘Overwhelming Majority’

“The only circumstances under which I would consider a return to the leadership would be if there was an overwhelming majority of the parliamentary party requesting such a return,” Rudd told reporters on his way to the ballot room. “Those circumstances do not exist.”

The leadership question has hampered Gillard’s efforts to focus voter attention on her legislative achievements, which include levies on resource profits and carbon, and forcing tobacco companies to brand their products in plain packaging with graphic health warnings.

Fallout from the contest extended today when Resources Minister Martin Ferguson and Tertiary Education Minister Chris Bowen, both cabinet members, resigned from their posts. Human Services Minister Kim Carr also quit. Crean lost his ministry yesterday after calling for the ballot and Richard Marles, parliamentary secretary for foreign affairs, resigned late yesterday, along with two government whips.

“This is all definitely over,” Gillard told Australian Broadcasting Corp. radio today. “People can be reassured that all of this is done and dusted now so they don’t have to worry about that anymore and we’ll just be getting on with the big things that really matter for governing and for the future of the country.”

Intensifying Speculation

The contest occurred after days of intensifying speculation Rudd would seek a contest. Rudd backers raised the idea of a leadership move with Labor colleagues, the Nine television network reported earlier this week.

Abbott, who has promised to eliminate the carbon tax and mining profit levy if elected, said the day’s events showed the minority government “experiment” had failed and called on Gillard to hold an election immediately.

“Nothing is resolved,” Abbott told reporters. “The civil war will continue as long as Kevin Rudd and Julia Gillard are in parliament.”

Parliament now enters a seven-week hiatus, leaving the government to prepare its May 14 budget. Gillard and Swan will seek to reconcile a policy agenda for a third-term focused on strengthening the education system with spending constraints imposed by lower revenue.

Budget Deficit

Swan late last year abandoned a pledge to return the budget to surplus this fiscal year, damaging the government’s economic credibility. The budget fell a further A$4.6 billion ($4.8 billion) into deficit in the first four weeks of 2013, taking the total shortfall to A$26.8 billion for the first seven months of the financial year, according to Treasury figures released by the government March 15.

Gillard’s government maintains that a willingness to go into debt and not cut spending severely helped protect jobs: Australia’s unemployment rate is 5.4 percent -- less than half the level in the European Union -- and the economy added 71,500 workers last month, the biggest increase in almost 13 years.

“The only way that she can get a bump is through campaigning, actually moving into election mode where there is a bit more of a focus on the two parties and their policy positions,” said Chen. “She’s good at that sort of language. Much better than this sort of soft campaigning she’s been in for a while.”

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