GILLARD: ON TRACK TO BECOME AUSTRALIA'S NEXT PRIME

C O N F I D E N T I A L SECTION 01 OF 03 CANBERRA 000545

NOFORN
SIPDIS

E.O. 12958: DECL: 05/31/2019
TAGS: PGOV ELAB AS
SUBJECT: GILLARD: ON TRACK TO BECOME AUSTRALIA'S NEXT PRIME
MINISTER

REF: A) 08 CANBERRA 609 B) CANBERRA 167 C) CANBERRA 305

Classified By: CDA Daniel A. Clune for reasons 1.4 (b) and (d).


1. (C/NF) SUMMARY: Described by her many supporters as
"smart, tough, loyal, and the best parliamentary performer in
the Australian Labor Party (ALP)," Deputy Prime Minister
Julia Gillard - who visits Washington later this month - has
positioned herself as the heir apparent to Prime Minister
Kevin Rudd as ALP leader (ref A). Part of Rudd's inner
circle, she has handled a combined workplace relations and
education portfolio with confidence and ability. Gillard has
had a good year. She successfully shepherded through
Parliament the Government's key workplace relations reform
bill in March and she is overseeing the Government's
investment in every school in Australia. Gillard, a product
of the ALP Left in the state of Victoria, has shifted towards
the political center since Rudd became ALP leader and is now
a strong supporter of the Australia-US Alliance and Israel.
Although she is still seen as a leftist by key right-wing
union powerbrokers, that is not likely to stop her from
succeeding Rudd as the next leader of the ALP. END SUMMARY

THE GANG OF FOUR


2. (C/NF) With Treasurer Wayne Swan and Finance Minister
Lindsay Tanner, Gillard is part of Rudd's inner circle, a
group collectively known as "the gang of four." She is a
member of the National Security Committee of Cabinet and when
Rudd is out of the country, or on leave, Gillard is Acting
Prime Minister. Labor insiders speak admiringly of her
ability to understand issues quickly and of her negotiating
toughness. Unlike Rudd, however, whose brittle temperament
and micromanagement have come under fire, Gillard is seen by
most we've spoken with as a good manager. She oversees one
of the better-managed offices in the Government and her staff
seem very loyal. Conservative columnist Janet Albrechtson -
no friend of the ALP - says of Gillard: "most people I've
spoken to are of a firm view that Gillard is far more
engaging and impressive than the dour Prime Minister."

A GOOD LISTENER WITH AN EVEN DISPOSITION


3. (C/NF) Gillard listens carefully to advice. Kim Beazley,
the former Defence Minister and Leader of the Labor Party,
told Charge that Gillard listened intently when she met with
him to learn his views on national security policy and the
alliance with the U.S. The next day, Beazley recounted, he
was startled to hear her in a radio interview repeating many
of the things he had told her the day before. Unlike the
Prime Minister and many other members of the Government, who
have been criticized for occasional emotional outbursts,
Gillard's demeanor is always controlled. A member of her
protective detail told Charge that he was with her constantly
for several months and never saw her mistreat staff or even
raise her voice, rare behavior for ministers, he commented.

A STAR AT QUESTION TIME


4. (C/NF) Gillard is almost unanimously viewed as the
Government's best parliamentary performer. She is a superior
debater to Rudd, who gets bogged down in bureaucratic jargon
and tends to speak for too long. In Parliamentary Question
Time, it is evident that ALP MPs enjoy hearing Gillard more
than Rudd. She enjoys taunting the Opposition but, as one
Qthan Rudd. She enjoys taunting the Opposition but, as one
journalist noted, "the only problem is getting her off the
corpse." Late last year, in a widely publicized exchange,
Gillard pummeled Deputy Opposition Leader Julie Bishop (who
was under pressure in a Treasury portfolio she has since
relinquished). Opposition Leader Malcolm Turnbull later
described Gillard as "very nasty" and "vicious." A visiting
U.S. political scientist noted after watching Question Time
that the Opposition normally heckled Government speakers but
in stark contrast, they were completely silent when Gillard
was on her feet.

A LEFT-WINGER NOW A PRAGMATIST


5. (C/NF) Many believe that Rudd, after he became ALP leader
in December 2006, did not give Gillard the Treasury portfolio
(the normal portfolio for a deputy leader) because she was
from the Victorian Socialist Left faction - traditionally the
most radical faction in the ALP. Gillard recognizes that to
become Prime Minister, she must move to the Center, and show

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her support for the Alliance with the United States.
Albrechtson, who attended the June 2008 Australian-American
Leadership Dialogue in Washington with Gillard, wrote that
Gillard's speech "could have been given by the Howard
Government." Last week, in a speech to the Australian
Council of Trade Unions (ACTU) national conference, Gillard
defended the Government's workplace relations reforms and
splashed cold water on union demands for further changes.
Although she was heckled by some of the attendees and
publicly chided by union leaders, two former leaders of the
ACTU defended Gillard's in the press and her public stance
against "union radicalism" is likely to be popular with the
Australian public.


6. (C/NF) The ALP Right in Gillard's home state of Victoria
are not convinced that she is a transformed moderate. Some
Victorian right faction members tell us they are looking for
a Gillard alternative - although they admit there is no one
at present. Beyond Victoria, Gillard has earned the high
regard of the powerful right faction within the New South
Wales ALP. ALP state secretary Matt Thistlethwaite, a key
right faction powerbroker, told us June 3 that Gillard's
remarkable message discipline and shrewd management of key
portfolios has earned her the respect of virtually all NSW
ALP members. We heard a similar message from NSW labor union
contacts, who told ConGen Sydney over lunch May 20 that
Gillard appears to be Rudd's heir apparent. Thistlethwaite
said the NSW right faction would probably challenge Gillard
if they had someone of her "caliber," but he admitted they
did not. Ambitious young MPs and former Union leaders Bill
Shorten and Greg Combet are routinely mentioned as possible
future prime ministers, but Thistlethwaite said that neither
one is in any real position to challenge Gillard. More
focused on the next election, party powerbrokers have not had
any serious conversations about a Rudd successor, according
to Thistlethwaite.


PRO-ISRAEL


7. (C/NF) Gillard has thrown off the baggage of being from
what one analyst called the "notoriously anti-Israel faction"
of the ALP. As Acting Prime Minister in late December 2008,
Gillard was responsible for negotiating the Government's
position on Israel's incursion into Gaza. Left-wing ALP MPs,
a group to which Gillard used to belong, wanted her to take a
harder line against Israel. Instead, she said Hamas had
broken the ceasefire first by attacking Israel - a stance
welcomed by Israel's supporters in Australia. MP Michael
Danby, one of two Jewish members of Parliament and a strong
supporter of Israel, told us that after the Gaza statement he
had a new appreciation of Gillard's leadership within the ALP
(ref B). Israeli Ambassador Yuval Rotem told us that Gillard
has gone out of her way to build a relationship with Israel
and that she asked him to arrange an early opportunity to
visit. He will accompany Gillard and a delegation of
Australian officials (including newly-appointed Minister Mark
Arbib and Liberal Party heavyweights former Treasurer Peter
Costello and Chris Pyne, Manager of Opposition Business in
the House) to a meeting of the Australia-Israel Leadership
Forum later this month.

LABOR REFORM PASSES


8. (C/NF) On March 20, the ALP's reform of Australia's
Q8. (C/NF) On March 20, the ALP's reform of Australia's
workplace relations laws passed (ref C). Gillard consulted
broadly with business and the unions in drafting the
legislation so that when the new law was finally introduced
in Parliament, there was little left for either side to
criticize. When independent senators in Parliament tried to
soften a pro-labor provision in the legislation, Gillard
stood her ground, and forced them to back down. Her tenacity
in defense of workers' rights did not go unnoticed.
Right-wing ALP MP Richard Marles, a former official with the
ACTU, told us recently that Gillard "hasn't put a foot wrong"
since becoming Deputy Prime Minister.


9. (C/NF) Gillard also managed to win the admiration of big
business in the workplace relations consultation process.
Katie Lahey, CEO of the Business Council of Australia (an
umbrella organization representing Australia's 100 largest
firms) told Charge in March that Gillard was well respected
by executives thanks to remarkable outreach and a "genuine"
willingness to listen. While making her rounds with

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executives in the lead-up to the workplace relations law,
Lahey said Gillard made you feel "as if there were nobody
else in the room." Executives unsurprisingly found items in
the law with which they disagreed, but broadly say that they
were adequately consulted.

THE EDUCATION REVOLUTION


10. (SBU) In his election campaign, Rudd promised an
"education revolution," to improve education and boost
productivity and international competitiveness. Despite the
opposition of the teachers' unions and elements within the
ALP Left, Gillard has supported a voucher system for
vocational education and performance pay for teachers. She
has also invited New York Education Chancellor Joel Klein to
Australia. The Rudd Government's second big economic
stimulus package, passed in February, provided money for
infrastructure upgrades for every school, public and private,
in Australia. While this funding may improve educational
outcomes, the political benefit for ALP politicians will be
immediate: in the next twelve months, each school will have a
ceremony celebrating the investment, presided over by the
local ALP politician.

THE FRONT RUNNER


11. (C/NF) COMMENT: All the ALP MPs we have spoken to have
enormous respect for Gillard. However, as one ALP Right MP
told us, choosing a leader from the Left would be a massive
cultural change for the ALP. Don Farrell, the right-wing
union powerbroker from South Australia told us Gillard is
"campaigning for the leadership" and at this point is the
front-runner to succeed Rudd, conceding that the Right did
not yet have an alternative. Agriculture Minister Tony
Burke, one of the early NSW Right backers of the Rudd-Gillard
team, confided that Gillard is the clear front runner to
succeed Rudd and in the end, the ALP caucus will follow the
opinion polls if she is the one the public wants. Two keenly
anticipated books on Gillard are expected to be released
within the next 12 months (one of them authored by the wife
of Beazley's former Chief of Staff). At present, the
question of a successor to Rudd is probably two elections
away. Several Rudd confidantes have told us that Rudd
appreciates Gillard and sees her as a possible PM, but that
he wants to avoid anointing her to head off a possible
leadership challenge when his poll numbers inevitably sag.
The PM's brother Greg told us in April that Rudd wants to
ensure that there are viable alternatives to Gillard within
the Labor Party to forestall a challenge. Mark Arbib once
told us a similar story, though he stressed that Rudd
appreciates Gillard's strengths. However, another Rudd
advisor told us that while the PM respects Gillard, his
reluctance to share power will eventually lead to a falling
out, while Gillard will not want to acquiesce in creating
potential rivals. In the meantime, Gillard has proven her
value to the Prime Minister and we expect her to remain the
most important member of the Rudd Government, after the Prime
Minister himself.

CLUNE