Australia Mulls Wrong Change at Wrong Time: The Ticker

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By William Pesek

Australian Prime Minister Julia Gillard is coming under increasing pressure to step down. Her possible replacement? Kevin Rudd, who she unseated in June 2010 in a party coup. Talk about a political boomerang. Talk about a potentially dumb move, too, by Gillard's party.

Few of Australia's 22.7 million people would give their first female leader high marks. Her government has racked up a string of setbacks. It's failed to sell its carbon tax, a A$36 billion ($38.6 billion) national high-speed wireless network and a mining tax to spread the benefits of growth.

Claims from opponents that Gillard's fellow Labor Party lawmaker Craig Thomson misused his union credit card to pay prostitutes are making for some very distracting headlines. So is a high court ruling overturning a planned refugee agreement with Malaysia. Also, Australians are turning increasingly gloomy on the economic outlook.

Yet now isn't the time to change leaders. It would consign Labor to losing government, either immediately, by losing support of independents, or at the next election. Labor should stick it out, pass carbon and mining legislation and disprove the scaremongering by opposition leader Tony Abbott that the economy will implode.

For all its challenges, Australia is still a star among developed economies. It's growing 1 percent with a 5.1 percent jobless rate and a minuscule budget deficit that's expected to return to surplus by 2013. Unlike the U.S. and Japan, Reserve Bank Governor Glenn Stevens has plenty of monetary ammunition to fire at additional signs of weakening.

Economically, Australia is holding its own. Politically, it's looking a little chaotic. At a time when lawmakers should be working for the greater good and future prosperity, they're preoccupied by small-minded squabbling and clinging to their own seats and the privileges of party power. Canberra's answer to what ails the nation? Change leaders.

A change means Australia will have had three leaders since 2007. Japan-like musical chairs isn't in Australia's best interest. Working with Gillard to solve Australia's problems is what's needed to stabilize the economy.

(William Pesek is a Bloomberg View columnist.)

-0- Sep/02/2011 14:47 GMT