Bloomberg News

Australia’s Labor Lawmakers Set to Weigh Gillard Record, Rudd Popularity

February 24, 2012

Julia Gillard, Australia's prime minister. Photographer: Carla Gottgens/Bloomberg

Julia Gillard, Australia's prime minister. Photographer: Carla Gottgens/Bloomberg

Australia’s ruling party will decide whether it wants a leader with a stronger record of legislative success or a chief with greater appeal to voters as it struggles to overcome near record-low public approval ratings.

Julia Gillard, who won passage of carbon-emissions and mining-tax bills that confounded Kevin Rudd’s administration, vies against Rudd Feb. 27 to retain the Labor party leadership and stay prime minister. While Rudd has a 23 percentage-point advantage over Gillard in an opinion poll today, he’s behind by a 2-to-1 margin in tallies of lawmakers’ voting intentions compiled by the Australian and Age newspapers.

“There’s a clear disjunction between an incumbent leader in Gillard who’s clearly got the support in caucus but is being damaged by low opinion polls and a challenger in Rudd who’s trying to use the weapon of his alleged popularity to gain leverage with undecided members of parliament,” said Paul Strangio, a senior lecturer in politics at Monash University in Melbourne. “If the loser goes to the backbench and doesn’t cause trouble, they may have a chance to get their message through with voters.”

Party Division

The victor will need to hold together a government that relies on support of independent and Green party lawmakers after a 2010 election that left neither Labor nor the conservative Liberal-National alliance with a majority. Any collapse risks ushering in an election that polls indicate the conservatives, who have vowed to scrap the mining and carbon levies, would win.

Australia’s dollar traded at $1.0726 as of 6 p.m. in Sydney yesterday, little changed from the previous week’s close amid the political developments. The benchmark S&P/ASX 200 Index (AS51) of stocks advanced 2.6 percent for the week, part of a global rally in equities on signs the U.S. economy is gaining strength and after Europeans agreed on a second bailout for Greece.

“There’s far more important things of course driving the Australian economy” than the political situation, Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney, said in a Bloomberg Television interview. “The strength of global commodity prices, interest rates, the Australian dollar.”

Rudd’s Popularity

Rudd has 53 percent support as Labor leader to Gillard’s 30 percent, and he leads opposition leader Tony Abbott 48 percent to 40 percent as the preferred prime minister, a Newspoll survey conducted Feb. 23-24 of 346 people with a margin of error of 5.3 percentage points in the Australian newspaper today showed.

Labor’s 103 members of the two houses of parliament are scheduled to vote at 10 a.m. in Canberra Feb. 27. The Age newspaper late yesterday counted 67 favoring Gillard, 29 for Rudd and seven undecided. The Australian had 67 for the prime minister and 30 for her predecessor, who led the government from 2007 until his ouster in June 2010.

Among those who were undeclared before today was House leader Anthony Albanese, the minister for transport and infrastructure. He announced in Sydney that he’ll back Rudd, even though he conceded that all indicators point to a Gillard win.

“I don’t have a great record of backing winning candidates,” Albanese said.

In a press conference today, Gillard said she declined Albanese’s offer to resign as leader of the lower chamber and said she expected to see him “fighting Tories” as usual after the ballot.

‘Fortitude’

Gillard, a former labor attorney and the nation’s first female prime minister, said at a news conference in Melbourne yesterday that “I am the person who gets things done” and that “I’ve got the determination and personal fortitude to see things through.”

Rudd said in his news conference that “Julia has lost the trust of the Australian people,” and that “I want to finish the job the Australian people elected me to do.” He also pledged to go to the backbench and not seek to challenge Gillard again if he loses the Feb. 27 vote.

Abbott, 54, a former amateur boxer who once studied for the priesthood, told reporters two days ago his Liberal-National coalition is ready for an election, and presents a “stable and united team.” He hasn’t ruled out calling a vote of confidence on the government after the Labor vote.

Mining Tax

The conservatives have pledged to scrap the mining and carbon levies. A measure of stocks of companies subject to the taxes, was little changed yesterday. The S&P/ASX 100 Resources Index (AS41) dipped 0.1 percent to 6,626.62.

“Potentially the resource sector would be a big winner” should Abbott find a way into office, said Craig James, a senior economist at Commonwealth Bank of Australia, the nation’s biggest lender, in Sydney.

Supporters of Gillard, including Treasurer and Deputy Prime Minister Wayne Swan and Defense Minister Stephen Smith, said this week that Rudd as prime minister was ineffective at pulling his administration together behind decisions.

Rudd won status as the nation’s second most-popular leader, after Labor’s Bob Hawke in the 1980s, according to a March 2009 Nielsen poll. Support for his leadership among voters surged to a record 73 percent after he garnered plaudits for offering the nation’s first apology to Aborigines for past injustices.

Recession Avoided

His government steered Australia’s economy through the global financial crisis, boosting spending on schools and roads and distributing more than A$20 billion ($21 billion) in cash to households. The country avoided a recession, helped by what the central bank has termed a “once-in-a-century investment boom,” led by Chinese demand for the nation’s coal and iron.

The support eroded after Rudd shelved his plan for a carbon-trading system and proposed a 40 percent tax on “super profits” of resource projects in Australia. In the run-up to his ouster, dissatisfaction with the Chinese-speaking former diplomat had climbed to 55 percent, an Australian newspaper poll showed in June 2010.

Gillard brought BHP Billiton Ltd. (BHP), Rio Tinto Group (RIO) and other iron-ore and coal producers into negotiations on a revamped mining levy with the government, and won passage for legislation in the lower house in November. The Senate, where the Green party holds the balance of power, still has to vote on the measure, which is designed to take effect July 1.

Pollution Levy

The administration also in November won final passage of legislation making polluters pay for their carbon emissions starting in July. The legislation will see about 500 companies charged A$23 a ton, before a so-called cap-and-trade system is introduced three years later. This month, the lower house passed legislation to introduce means-testing of rebates for private- health insurance.

Attorney-General Nicola Roxon, who was health minister under Rudd, told Sky News yesterday that she “absolutely wouldn’t accept” an offer to work for him again if he won.

“I did witness quite a lot of very bad behavior to staff and to officials,” Roxon said in the interview. “I don’t think that’s a good way to run a government.” By contrast, she has never seen Gillard “lose her cool,” Roxon said.

Rudd, in a television interview broadcast Feb. 19, portrayed himself as a changed man who now recognizes the need to delegate authority.

“I’ve certainly reflected a lot on the last several years and you’d be a mug if you didn’t learn something from the past,” he said in the interview with Sky television. He told reporters yesterday in declaring his challenge for the leadership that he isn’t “captain perfect.”

Gillard today said the party needs to come together after deciding its next leader.

“The federal Labor party doesn’t face just one big decision, it faces two,” she said in a speech in Cessnock, New South Wales. “First, we must choose a leader in the ballot I’ve called. Second, we must choose unity after the ballot is declared.”

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: Peter Hirschberg at phirschberg@bloomberg.net


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