RUDD HEADS FOR THE US AFTER A GOOD WEEK

UNCLAS SECTION 01 OF 02 CANBERRA 000285

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SUBJECT: RUDD HEADS FOR THE US AFTER A GOOD WEEK


1. (SBU) SUMMARY: After a week that began badly with the
Senate's defeat of a Government tax designed to curb binge
drinking, Prime Minister Kevin Rudd leaves for the United
States with two significant political victories. His labor
relations bill received parliamentary approval last Friday,
and the next day, his Australian Labor Party (ALP) colleague
and political ally Anna Bligh won a state election in
Queensland. The Senate had frustrated the Government during
the two-week legislative session that just ended, but the
labor relations bill, a key campaign promise, passed an
independent Senate virtually unscathed - thanks in large
measure to the skill and determination of Deputy Prime
Minister Julia Gillard. END SUMMARY.

SENATE FRUSTRATES RUDD


2. (SBU) On March 18, Rudd's "alcopops tax" - an increase in
the excise on pre-mixed alcoholic drinks aimed at tackling
teenage binge drinking - was rejected by the Senate due to
the combined opposition of the Coalition and one independent
senator, Family First Senator Steven Fielding. The key
legislative hurdle for the Government is the Senate, where it
needs the support of the Green Party and two independent
senators to pass legislation. With the defeat of the
alcopops tax, the risk for the Government was that the
independent senators would continue to hold it hostage,
particularly on key legislation such as its workplace
relations bill (known as "Fair Work Australia").

BUT ALP WINS THE MAIN GAME


3. (SBU) Passage of Fair Work Australia was the highest
legislative priority for the Government for this sitting of
Parliament. Rudd had campaigned heavily on abolishing John
Howard's unpopular, pro-business industrial relations laws,
known as "WorkChoices." Rolling back "WorkChoices" was one
of the ALP's key commitments - particularly for the unions
who had backed the Labor Party so strongly during the
election. With unemployment rising, however, and the
Opposition refusing to back the changes - and hand Rudd a
major victory - the Government had to rely on the Green Party
and the two independent senators to pass the legislation.
Deputy Prime Minister and Workplace Relations Minister Julia
Gillard, who had worked long and hard to craft a bill that
both the unions and business could live with, played hard
ball with the independents, refusing to accept their
amendments and in the end, during an extra sitting day
required to decide the bill, the independents capitulated.
Gillard's staff told us later that the Government "played the
politics pretty hard."

ALP WIN IN RUDD'S HOME STATE


4. (SBU) On March 21, the long-serving ALP government in
Rudd's home state of Queensland won a surprisingly
comfortable victory, defying polls which had suggested a
tight race. Premier Anna Bligh, a close ally of Rudd's who
had assumed power after the previous premier had resigned,
became the first elected female premier in Australian
history. The election was fought overwhelmingly on state
issues, but it was still good news for Rudd. It is the ALP's
best state election result since he took office, and shows
that governments can retain office in an economic downturn.
Bligh did what Rudd is doing - she portrayed the Opposition
as cost-cutting economic rationalists who will destroy jobs.

RUDD'S HONEYMOON CONTINUES


5. (SBU) COMMENT: Rudd's political honeymoon, which started
when he became ALP leader in December 2006, continues. He
remains highly popular, and the ALP is on track to increase
Qremains highly popular, and the ALP is on track to increase
its parliamentary majority. The global financial crisis has
been politically advantageous for Rudd. In late 2008, there
was a growing view the former bureaucrat was more interested
in process - i.e. establishing reviews and inquiries - than
making decisions. However, the economic downturn forced Rudd
to act quickly. He has "splashed the cash" at his working
families, while painting the Coalition as tied to the
bogeyman of WorkChoices and shifting blame for rising
unemployment onto international events. Some remain baffled
at Rudd's popularity. He is widely viewed as uncharismatic
and boring, but his confident, erudite and bureaucratic style
appears to have convinced the public he is doing all he can
to save their jobs. Up until now, Rudd has not been
compelled to make an unpopular decision. His sky high
approval ratings could begin to change once his second budget
is handed down in May, and the employment impact of his labor
relations bill becomes clear - and when he has to implement
his second major campaign commitment, his emissions trading

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scheme.

RICHE