It's not just the leaders, it's the party

Nicholson cartoon

JULIA Gillard will not be resigning any day soon and it would be folly for the Labor Party to conduct a political assassination that merely reveals its blind panic at the historic dilemma it confronts.

Endless media speculation about the leadership is about to break over a dispirited Labor caucus. It will be demoralising, but if caucus thinks for more than a moment, it will be alert to two realities - changing the leader is not enough and changing the leader in unconsidered haste can generate its own disasters. Gillard has never recovered from the way she deposed Kevin Rudd. The public was never prepared for her elevation and Gillard got the job before she was ready. She felt doubts about her legitimacy (refusing to move into the Lodge), had no plan to deal with a deposed Rudd and post-election entered a series of deals that are the origin of her current malaise.

The political story since 2007 is that both Rudd and Gillard as prime ministers, despite their achievements, can only be deemed on balance to have misread the nation's mood and failed to offer effective governance. The problem, in short, is the Labor Party. This is a far more frightening conclusion than thinking an overnight switch can do the trick.

The central issue facing Labor needs to be confronted: whether the once great Australian Labor Party is doomed to decline such that its ability to govern in its own right is over. A debate about alternative leaders is plain dumb unless coupled with brutal honesty about how Labor fundamentally changes course.

Labor has been psychologically incapable of managing the threat from Tony Abbott. It has repeatedly misjudged Abbott. It took refuge in the Left's delusions that Abbott was a misogynist thug and a one-gag performer about to be booed off stage and failed, for too long, to grasp that Abbott actually threatens at the next election to destroy Labor for many years.

For Labor, making a judgment on Gillard is the easy part. With Labor's primary vote in Newspoll at 27-29 per cent for the past three months, Gillard must be replaced unless she recovers. As a realist Gillard would know this. The hard part is deciding on any successor, working out how the switch is done, sorting out what happens to Gillard and, above all, having a few rudimentary ideas on repositioning the government. Anybody in caucus who thinks it is - "hey presto" - a new leader and then "business-as-usual" doesn't get it.

It is beyond time for home truths: Labor is in a systemic crisis, a point obvious but denied by the ALP and most of the political media for the past 21 months. Indeed, much analysis is still to the effect that Gillard runs a really good government with really good policies (meaning the Australian people are the mugs).

In truth, Labor has not thought seriously about major structural and strategic changes since its 1996 loss to John Howard. It has been comforted by the half-truths of politics -that leadership image does the job, that worthwhile policy brings its own reward and that tactics substitute for strategy.

Labor has had four leaders at the past four elections - Kim Beazley in 2001, Mark Latham in 2004, Rudd in 2007, Gillard last year - and confronts another possible replacement for the next election. Some of these changes were justified but they testify to a party refusing to ask the hard questions.

Gillard's immediate task is to legislate the carbon price, the mining tax and devise a new asylum-seeker policy. Pitching a new leader into this melting pot would be absurd. Gillard, a born fighter, believes she can recover down the track. That looks improbable but not impossible. The only justification for changing leaders now is to recant on some of these policies, notably to abandon carbon pricing. There is no sign the cabinet wants any such retreat, though it would love to start again. Frankly, a reversal of such magnitude would probably trigger the government's collapse and an election.

Polls indicate the only viable leadership alternative is Rudd. But how could Labor explain such a change? Rudd would need to persuade Labor he was "a new Kevin". He would need to persuade the public it was "a wiser and more humble Kevin". How would he do that? Rudd, no doubt, is reflecting on this question. Moreover, changing leaders in a minority government is tricky. Presumably the four non-Labor MPs who sustain Labor in office would not be parties to the execution. That means the new leader could not be commissioned as PM until he won the confidence of the parliament. Would the new leader seek to affirm the same agreements with the independents and Greens or would he want to change them?

Given these agreements are with Gillard and they promised to deliver "stable and effective government", what justification would the independents offer for renewing this pledge under a new leader when it had been breached under the old leader?

Abbott would call for an election. His argument would be powerful. Abbott would say the new Labor leader had no mandate and no legitimacy. He would say that Gillard's minority government had failed and the correct moral and political option was an election. While this argument would have no standing in representative government practice, it would win much support. A wise ALP would only change leaders aware that this manoeuvre might, somehow, finish at the polls.

How could the new leader reposition the government? The first task would be to break the alliance with the Greens. Rudd, surely, would not persevere with this proven disaster. The alliance entrenches Labor's weakness. It repudiates Labor's history as a great party. Putting formal distance between Labor and the Greens would be a major plus. It would terminate the humiliations Gillard endures from this alliance typified by her desire to change the Migration Act after the High Court decision while the Greens just mock her. With the carbon and mining policies legislated by Gillard, a new leader (or maybe even Gillard) would have the flexibility to move.

The second repositioning concerns the trade unions. Labor these days is strong on its union ties and weak on working-class votes. It needs a dose of Whitlamist bravery to reduce union links and union influence on policy. Yes, this should have been done years ago. But the longer it delays the more Labor will sink. The longer Labor refuses to address industrial relations reform, the more it will lose big, medium and small business followed by the entire aspirational class. Over summer Labor under either Gillard or a new leader must reframe the economic debate. The ingredients exist in terms of what Gillard and Wayne Swan have already said.

The framework Paul Keating suggests is "the economy in transition" - that means enshrining the idea of transition, being part of the Asia story and locating carbon policy within this economic adjustment. It is probably too late to save Labor. But the party will now be judged by the quality of its decisions in duress.