Bloomberg News

Gillard ‘Not Going Anywhere’ Amid Resignation Call Reports

September 02, 2011

(Updates with Gillard’s comment in second paragraph.)

Sept. 3 (Bloomberg) -- Australian Prime Minister Julia Gillard said she wouldn’t resign after reports that leaders of her Labor party urged her to do so. Even if she did, it wouldn’t revive the party’s record-low poll ratings, analysts said.

“I will be leading the Labor Party till the next election,” Gillard, the country’s first female prime minister, told reporters in Canberra today after News Ltd. newspapers yesterday said that senior government figures it didn’t identify urged her to quit. Her remarks were broadcast on Sky News.

Dumping Gillard would leave Labor with its prospective third prime minister since 2007, when it ended 11 years of rule by former Prime Minister John Howard. Gillard’s public standing has eroded as Labor enacted unpopular steps to address climate change and as the nation’s mining boom spurs currency gains that hollow out other areas of the economy.

“The party would not get any points if it just keeps changing leaders,” said Rick Kuhn, a political analyst at the Australian National University in Canberra. “And even if they did, it wouldn’t reverse their fortunes.”

Lawmakers are considering a plan in which Foreign Minister Kevin Rudd, whom Gillard replaced in a late-night party coup in June 2010, would become leader and Defense Minister Stephen Smith would become treasurer, the News Ltd. newspapers said. Rudd is currently recovering from heart surgery.

Lose Faith

“If the Labor party starts chopping and changing leaders, both markets and the voting public will lose their final faith in Labor,” said Angus Gluskie, a fund manager at White Funds Management in Sydney. “With the party’s hold on power looking less certain, investors may start to speculate that a change of government could be generally favorable.”

Australia’s benchmark S&P/ASX 200 Index had its biggest drop in two weeks, falling 1.5 percent.

Gillard, 49, won the leadership after the party dumped Rudd because of poor poll ratings amid a battle with miners like BHP Billiton Ltd. over his plans for a 40 percent tax on resource profits and after he reneged on establishing a carbon plan.

A High Court of Australia decision this week that overturned a planned refugee agreement with Malaysia was the latest setback for Gillard, whose popularity in Newspoll surveys has fallen 19 percentage points since she started her job. She has also had to defend Labor lawmaker Craig Thomson, who faces allegations he used a union credit card before he entered parliament to pay for prostitutes and whose departure would threaten the government.

Labor Support Down

Labor, criticized over its suspension in June of live cattle exports to Indonesia, is struggling to garner support for a planned carbon tax, a A$36 billion ($39 billion) national high-speed wireless network and mining levy.

Labor’s support fell one point to 43 percent and the opposition Liberal-National coalition’s rose the same amount to 57 percent, according to a Newspoll survey of 1,147 people between Aug. 19 and 21 published in the Australian newspaper. The poll had a margin of error of plus or minus 3 percentage points.

“She is safe as there is no obvious alternative, despite reports about Kevin Rudd,” said Rodney Smith, a political analyst at Sydney University.

The former labor lawyer Gillard scaled back the mining tax and, less than a month after winning the leadership, called a general election. The August 2010 poll was the closest in 70 years, leading to Gillard negotiating a power-sharing arrangement with four non-party lawmakers to form a government.

‘Misleading’ Headlines

“I’m not going anywhere, I’ve got a lot of things to do,” Gillard told Australian Broadcasting Corp. radio in Brisbane yesterday. “I’m the best person to do this job and I’ll continue to do it.

Lawmakers dismissed the newspaper reports.

‘‘Those headlines are misleading -- there is a suggestion that Julia Gillard doesn’t have authority,” Labor lawmaker Joel Fitzgibbon told ABC radio. “I would suggest to you that if she lacked authority, people who were quoted in that article would be putting their names to those quotes.”

Assistant Treasurer Bill Shorten, named in the Sydney Morning Herald newspaper as a leadership contender, told reporters in Victoria state that Gillard had his support and was “the right person at the right time” for the job.

‘Governing Well’

Environment Minister Tony Burke said he had confidence in Gillard and that the next election was two years away. Burke, speaking to Seven Network television, said Labor was “governing and governing well.”

Gillard’s administration has also seen rising concern that parts of Australia’s economy are buckling under the pressure of currency appreciation and the developed world’s highest borrowing costs. Australia’s central bank raised the benchmark interest rate seven times to November 2010, to 4.75 percent.

Manufacturing has slumped to its weakest in more than two years, according to an Australian Industry Group and PricewaterhouseCoopers index. BlueScope Steel Ltd. last month announced plans to cut about 1,000 jobs and shut a furnace because of a second-half loss due to high raw-material costs and the local dollar’s surge of about 30 percent against its U.S. counterpart in the past two years.

The exchange rate has appreciated as the nation’s biggest mining expansion in a century transforms the economy, a consequence of China’s demand for iron ore and coal to propel its development. While manufacturers have been hurt, the resources boom helped Australia avoid a recession during the global slump of 2008.

“A big issue in our country today is our patchwork economy -- people see the mining sector, mining leaping ahead whilst manufacturing is bearing the burden of a strong Australian dollar,” Gillard said yesterday.

--With assistance from Michael Heath and Shani Raja in Sydney, and Tracy Withers in Wellington. Editors: Peter Hirschberg, Paul Tighe

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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