Rumour that Gillard’s gone…

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Just heard from a mate on the hill that Steven Smith will be our new PM next week. This is just a single source rumor at this point, however I suppose news has to start somewhere.

My source got the Rudd / Gillard switch right, so I have to pay him respect … But this seems like such a stupid thing to do that I can’t have 100% confidence that it is going to happen.

The people of NSW have seen this show, and they don’t like the ending – I forecast a landslide of seats to fall in western Sydney if this occurs.


    1. Surely not, they maximize their power under the current arrangement. A coalition government would call an election, and they are unlikely to remain the marginal voter if there is a ballot.

      Sent from my iPad

      1. It might give them a chance to salvage their election prospects if they cause the Gillard gov to fall.

  1. Who is Mr Smith?

    Buckleys I reckon. They’ll tough it out with Gillard, the carbon tax will come in, be a complete non-event, and Abbott will look a bit like Beazley in 2001 with his GST rollback nonsense.

    1. Seriously, Stephen Smith? He’s way too bland.

      While I’m no fan of Gillard, they can’t afford to chop and change again. If nothing else she’s tough, and she’s obviously a pretty good negotiator, which will help her shore up support in the party room.

  2. BTW, Bill Evans is now forecasting 100bps cut by the end of 2012, starting in December.

    Are you still tipping an August hike?

    1. Yeah, i saw that, a big call. To me, this feels a bit like 2003…

      Nope. Financial crisis is an able substitute for monetary policy in slowing the economy.

      Sent from my iPad

      1. What financial crisis?

        This is all about the two-speed economy. Rates have set too high for the domestic economy in anticipation of a mining investment boom that simply hasn’t flowed through to the wider economy. Meanwhile, the non-mining trade exposed sectors and retail have been absolutely smashed by the exchange rate.

        If Bill Evans is right the RBA’s obsession with the mining investment boom will be remembered as the great policy mistake of 2010-11 and Battellino should resign.

        1. Well, my judgement is that the crisis in Europe has already tightened financial conditions. Primary has nearly stopped globally. Even in AUD, things are getting tight. WBC did a 4yr floater in an odd lot at 101bps over swap recently. That suggests to me that things have already spilled over in a meaningful way. The rising currency and the tightening of financial conditions mean the RBA has longer before they need tighten to slow demand.

          As for the mining boom, it really begins in 2012. The RBA’s strategy has been to tighten to keep some slack for the boom. They have been successful – probably more successful than they expected.

      2. It will be a crisis when there’s a sovereign default, and one or more countries exit the Euro. What’s happened so far is just a bout of anxiety.

        The bullhawks have been wrong all year about the strength of domestic economy, and imminent, real-soon-now, once-in-a-hundred years mining boom. If and when it eventuates I don’t see how its going to reverse the factors that are depressing consumer confidence, the housing market, retail and manufacturing. If the boom means even more tightening, all those sectors will become even more depressed.

        We’ve been lectured all year by the likes of Battellino about how rich we are, but outside of mining, construction and engineering, no-one is seeing much benefit, and I don’t think we will.

        If there wasn’t the carbon tax to blame for, well, everything, I reckon the RBA’s interest rate settings would already be a huge political issue. Fortunately for Tony Abbott and the RBA, Gillard is copping the blame for everything because of a modest, over-compensated tax that’s almost 12 months into the future!

        1. call it what you will, the sovereign stress has tightened financial conditions (including pushing up the AUD) and this is exactly what the RBA would have done. the market has done its work, so the RBA not need to act just now.

          it is possible to get inflation without rapid credit growth – just as the early 00s gave us fast credit growth and low inflation.

          the question of what is neutral is an interesting one. i think lower capital gains have lowered neutral — after all the relevant interest rate is the user cost of capital, so (expected) capital gains are crucially important in determining financial conditions.


    The Australian August 2011

    Julia Gillard is finished as Australian prime minister, according to senior Labor Party figures who’ve turned their attention to identifying her successor.

    That person is likely to be Bill Shorten, the former trade union leader who is Assistant Treasurer in Gillard’s government. The only evident impediment to toppling Gillard is the threat from the independents who keep her in government to pull the rug from under Labor if it removes her. But Labor power brokers are rapidly coming to the view that they should call the independents’ bluff, in the sure knowledge that they too would be destroyed in any election held now. They’re increasingly prepared to punt that self interest will keep the independents on side and give a new leader two years to rebuild Labor’s popular support from its current record lows.

    Of course, Gillard and her ministers will deny all this publicly. But a senior Labor Party figure has told Grubsheet that the tide has turned irrevocably for Gillard in the past 48 hours and her days are numbered. The ground has shifted because of rising voter anger over the government’s plan to introduce a carbon tax next July and, in particular, a deep-rooted perception that Gillard lied to the electorate when she promised not to introduce such a tax on election eve last year.

    Labor figures are now prepared to concede that Gillard would have been soundly beaten by opposition leader Tony Abbott had she endorsed a carbon tax before polling day. They were waiting to see how the electorate greeted last week’s announcement of the details of the tax on big polluters and the accompanying sweeteners to compensate ordinary householders. That verdict is now in and it’s a disaster for the government. Its support has fallen even further – down to 26 per cent according to the first opinion poll taken since the announcement – and that collapse is also showing up in Labor’s internal polling. Key party figures have now concluded that Gillard is doomed, and Labor needs to jettison her as soon as possible to have any chance of rebuilding its fortunes.

    Senior members of the government, along with a panicked back bench, have now firmly turned their attention towards solving the Gillard problem.

    Yes – says Grubsheet’s source – there’s a risk that yet another leadership change will hurt the party by reinforcing the notion that the Labor leadership is a revolving door, totally hostage to the opinion polls. Within Labor, this is called “the New South Wales disease”, after a succession of leadership changes there saw a tired and corrupt government reduced to a rump in the parliament in the last state election. Yet such is the disillusionment with Gillard that MPs are coming to realise that switching jockeys is their only hope, and the sooner the better.

    This school of thought has it that felling Gillard now will give her successor a clear run of two years to establish himself and have at least some hope of reversing the tsunami of community support for the Liberal-National Party Coalition. Labor foolishly believed that Coalition leader Tony Abbott was unelectable. But Abbott – a fiercely effective opponent of the carbon tax – has streaked eleven points ahead of Gillard as preferred prime minister in the latest poll.

    Labor now faces a nightmare scenario – that Abbott will not just win the next election, whenever it’s held, but Labor will be so badly beaten that it will be out of office for a generation and may, indeed, cease to be any significant force in Australian politics at all. What to do? Well, here’s the startling scenario outlined to Grubsheet by our source – a Labor “grandee” with close links to all of the main players.

    Gillard is a dead woman walking and according to this source, most credible figures in the party are now openly conceding the fact. This includes traditional power brokers and number crunchers like former national secretary, Karl Bitar, and former Keating minister, Graham Richardson, who is openly telling people that “the government is f***ed”. Labor is now privately canvassing alternatives. And while there’s some support for former ACTU secretary Greg Combet – Gillard’s Minister for Climate Change – the smart money is on the other former senior union boss in Gillard’s cabinet – Bill Shorten, the Assistant Treasurer.

    Shorten shot to national fame and popularity five years ago when he became the spokesman for the families of Tasmanian miners trapped in the Beaconsfield mine disaster. He’s credible, articulate and has some powerful connections beyond Labor and the union movement. Shorten is married to Chloe Bryce, the daughter of Governor-General Quentin Bryce. And it’s not lost on Labor that the couple and their 18-month old daughter, Clementine, would present a sharply more voter-friendly image as the nation’s first family compared to Julia Gillard and “First Bloke” Tim Mathieson – her live-in lover at The Lodge.

    But being Labor, of course, it’s the politics that really count. And what’s decisively in Shorten’s favour is his membership – and leadership, as former national secretary – of the Australian Worker’s Union, the dominant faction in modern Labor. The AWU makes and breaks ministerial careers at will – its Queensland boss Bill Ludwig arguably Labor’s most powerful figure, to whom senior figures like Treasurer Wayne Swan owe their entire careers.

    So Bill Shorten is both “connected” – in Mafia parlance – and user friendly. The bookies in Queensland already have him as odds-on favourite to replace Gillard and Labor’s elder statesmen like Bob Hawke and Kim Beazley long ago identified him as a potential future prime minister. And he has the all important killer instinct to both succeed in politics and survive in Labor ranks, a key figure in the political assassination of former prime minister, Kevin Rudd, and the installation of Gillard as his successor.

    Will Shorten actively move against Gillard? Only the coming days and weeks will tell. But one thing is certain. The draft is well and truly on, with senior Labor figures – including some of Gillard’s own ministers – convinced that the electorate has stopped listening to her and her chances of a political resurrection are now zero.

    The one wild card is Kevin Rudd, who makes no secret of wanting to make a comeback. The chances of that are also said to be zero, such is the personal animosity towards him in Labor’s ranks. But if the party calls the bluff of the independents and removes Gillard and installs Shorten, what then? Would Rudd seek to bring the whole house of cards down by resigning his Queensland seat and prompting a bye-election that the polls show Labor would surely lose? Here again, the growing mood is to call Rudd’s bluff, to dare him to enter history as a Labor “Rat”, who brought down a government and made Tony Abbott prime minister in an act of petulant personal revenge.

    Some Labor figures now perceive the entire future of the party to be at risk, as its traditional “aspirational working class” constituency turns to Abbott and “left leaning progressives” in the cities turn to the “save-the-planet-at-all costs” Greens. Certainly, there’s a growing sense that the Greens – with whom Labor entered into an uneasy coalition to govern – are the real enemy, more dangerous even than Abbott as they steadily erode Labor’s primary vote.

    So here’s another scenario. That if the independents make good on their promise of “Julia or dust” and sacrifice themselves by returning the country to the polls, Labor will turn on the Greens. They’ll do a preference deal with the Liberal-National Coalition to put the Greens last on ballot papers across the country and try to destroy them as a mainstream party altogether. Sound extreme? Well, some senior Labor figures now see this as the party’s only hope of keeping it alive in any form at all to continue its proud record of governing Australia stretching back more than a century. “May you live in interesting times”, goes Chinese saying.


    This will happen and the sooner the better, for Labor likes nothing more than a good knifing of a failed leader at five minutes to midnight. Gillard is just waiting for a tap on the shoulder. Those currently plotting to knife her are the same conspirators that installed her after stabbing Rudd in the back last year, sooner or later they might get it right. If they do go with Shorten, it would be something of a fleeting surge for him, not unlike the act Hawke pulled on Hayden, of which I was reminded as to just how repulsive he was then (and still is) in a film on Foxtel on Sunday night. To think that Australia had that egocentric bodgie as our PM for nine years, it doesn’t say much for the quality of the electorate, does it?

    Admittedly, Shorten has a bit more style than Hawke, but he’s still only a lacklustre pick from a party devoid of any real talent. The reason I think this change will happen, is because Labor knows that the loathsome rural independents only have one self-serving objective in mind, and that is to qualify for huge retirement payments that are triggered around the end of 2011 and early in 2012. They couldn’t care less what happens to Gillard, so long as they get their ‘super qualification dates’ attained. Charming – isn’t it? Mind you, if any ‘one’ of them had a grain of decency and a genuine concern for Australia, they would pull the pin on Labor and force an election – but pigs can’t fly as far as I’m aware. I don’t believe Rudd would cause a problem, but then wouldn’t it be lovely if he did, since we know he’s nether forgiven nor forgotten their act of treachery.

    The political landscape would alter slightly with Shorten as the ALP leader, for the reasons mentioned above – he being a far more acceptable type than the hapless one who currently, unfittingly, occupies The Lodge. But Shorten is someone that can only be called extemporaneous prime minister material – as he’s only been in parliament for 5 minutes. However, this Labor government, as Graham Richardson so eloquently put it – “….is f***ed”. The electorate are definitely not buying this ridiculous carbon tax sham for starters, plus they’re fed up with the never-ending wholesale mismanagement of everything this bunch of morons try to implement, so – irrespective of whatever leadership stunt they try-on, nobody is listening and they want them out – urgently.

    The sooner Labor acknowledges that they’ve totally stuffed up the whole shooting match and call an election, the better. I tend to think the point above about the Greens being their biggest worry for the future, is spot on, as let’s face it – these feckless ex-union types are all about self preservation, what the hell else are they going to do – go back to the union?

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