Leadership coup tears up Labor rule book

Julia Gillard at her first press conference as Prime Minister in Canberra.

THE pure terror of possible defeat has driven the ALP to empower Julia Gillard as the new PM to refurbish the party's image and save its neck.

Gillard's plan is to return the Labor Party to the people and its leadership to the party. She accepts responsibility for Kevin Rudd's execution, says she had an obligation to act and admits that Labor was "losing its way".

This leadership change shatters the rule book of Australian politics. Labor sentimentality died yesterday, but Labor's interests - in a party, factional and union sense - have rarely been defended so desperately. As a straight-talking woman who becomes Australia's first female prime minister, Gillard will maximise Tony Abbott's trouble with female voters. Her elevation is sure to strengthen Labor's position, yet the Gillard coup runs its own risks as a factional execution NSW-style of a first-term Labor prime minister.

The coming election is a Gillard-Abbott contest, utterly improbable just 12 months ago. Having mugged Rudd so successfully, Abbott will find Gillard a more formidable opponent. At her press conference yesterday, she displayed toughness, clarity and an affinity with ordinary people who "set their alarms early, get their kids off to school, stand by their neighbours and love their country".

Yet Gillard has no easy answers to the issues that ruined Rudd: climate change, the resources tax and boatpeople. She talks of consensus, fresh negotiation with the miners, the need to price carbon, concedes public worries about boat arrivals while rejecting any "race to the Right" on them. Labor is wedged on these issues and Gillard will struggle for liberation.

In the end, Rudd was his own worst enemy. He failed the tests of judgment and character. There is no greater fall in Labor history - within a year Rudd went from master of his domain to party reject. After Gillard confronted Rudd, his caucus support melted away. Ultimately, Rudd's mistake was to think personal popularity substituted for building an internal power base and respecting his colleagues. Yet Rudd is staying in politics - he wants a place in the Gillard era, an issue of high delicacy.

Gillard has signalled her campaign against Abbott - slamming the Coalition for threatened cuts to health and education, for disbelief on climate change and, significantly, over Work Choices. Declaring her values to be rewarding hard work and creating decency at work, Gillard will hang Work Choices around Abbott's neck.

With Rudd's demise and Finance Minister Lindsay Tanner's resignation, this Labor government is transformed. Only two of the "Gang of Four" still stand, Gillard and new deputy Wayne Swan, the symbol of continuity.

There is no parallel to these events - Labor has a fresh, dynamic leader concealing deep divisions over personality, policy and ideology.

Gillard's challenge is to win an election and re-design a government.