In the Australian Labor Party (ALP) leadership crisis Prime Minister Julia Gillard was able to fend off a challenge from Kevin Rudd, her former minister for Foreign Affairs and predecessor as Prime Minister. The underlying issues that led to the tensions remain.

Many commentators in the capitalist press have tried to portray the Gillard/Rudd battle as one of competing personalities. While inevitably there were aspects of personality involved, the real underlying issues are political.

On the one hand the polls are showing that Gillard is extremely unpopular. If an election was held tomorrow the Coalition would be swept into power. The ALP clearly still needs a leader who can give them more credibility amongst voters.

On the other hand the ALP, just like the Coalition, is a party that is at the mercy of big business interests. The rich and powerful are looking for a leadership that will be best placed to deliver for them – especially in a period of deepening economic crisis.

All of this manoeuvring in the ALP shows once again that despite the apparent economic stability around the mining boom, the underlying atmosphere in Australia is one of uncertainty. This is especially the case with slowing growth in China, falling commodity prices and the deepening sovereign debt crisis which is centred on Europe.

As we have explained previously the Australian economy is extremely vulnerable on a number of fronts. The political crisis and divisions in the ALP are really a reflection of the problems Australian capitalism faces and differences about how to deal with the fall out.

While it is true that both Gillard and Rudd are pro-capitalist to the core, they do differ on a number of secondary questions which are important consideration for the ruling class. For example Rudd was originally removed as PM after attempting to bring in a mining tax. At base this tax was about taking from the super rich to give to the rich. The idea was to use mining super profits to stimulate less profitable sections of the economy.

Gillard opposed this plan and was seen as a more reliable representative of big mining interests. She was also seen as someone who was better placed to make the shift away from stimulus to austerity more generally. This has been a trend the rich have pushed internationally in order to make ordinary people pay for the crisis.

With a worldwide double dip recession looming it is certain that the debate around austerity verses stimulus will come back to the fore in Australia. The ruling class are looking for an ALP leader who will best represent their interests. At the moment Gillard is their best bet.

Further to this Rudd and Gillard have diverging views about how to deal with increased tensions between the US and China. This is a major dilemma facing the ruling class as Australia has always been tied politically to the US but the economy is now almost totally reliant on exports to China.

Gillard is seen by the US as more reliable ally. The US is clearly uneasy with Rudd’s ideas about creating an ‘Asia Pacific community’ that would include China. They think that could undermine their influence in the region.

These are just some of the things being considered by the ruling elite who play a key role in choosing the leaders of the major parties and in many cases governments themselves.

At this stage many sections of big business are not convinced that the Coalition under Abbott, leader of the opposition (conservative "Liberal Party of Australia") could hold together a stable government against the backdrop of an economic downturn. He is seen by some as a populist and has yet to outline an economic vision that satisfies their needs. That said they would manage with Abbott should he be thrown into power.

A consideration for more far sighted sections of the ruling class however is which party and which leader can lead a government that can both protect their profits but also maintain political and social stability.

The ALP is a very reliable servant of big business but at the same time they also have connections to the working class through the trade union movement. This means they can be used to act as a brake on struggle and social unrest. This makes them a much better option for the rich in times of crisis.

The main point is that neither Gillard, nor Rudd, nor any other ALP politician offers any solution to the problems faced by ordinary people. In a sign of where the priorities of the ALP lie Rudd said recently that the reason for his resignation as Foreign Minister was because the “ongoing tension over the federal Labor leadership had been damaging for the business community” (!).

Not a word about the issues faced by working people just a pitch to big business that he would better represent them!

If nothing else, what the ALP leadership crisis has shown is that while big business has two parties to choose from, workers, the unemployed and young people are currently without any genuine representation. What ordinary people need is a new party that unashamedly represents their views. The challenge of building a new party will only become more pressing as the economic situation worsens.

Committee for a workers' International publications

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