Gillard knocks out rival, but not discontent

CANBERRA, Australia - Australian Prime Minister Julia Gillard may have survived a challenge from within her own party, but the dissent that forced Monday's vote isn't going away.

Gillard defeated Kevin Rudd, her former foreign minister, 71 votes to 31 in a ballot of Labor Party lawmakers, ending Rudd's attempt to recapture the job Gillard took from him in an internal party coup in 2010. But she remains unpopular with voters, and unless that changes she could lead Labor to huge losses in elections slated for next year.

Though Rudd said he will not challenge Gillard again, his supporters predicted that party power brokers will simply nominate someone else to do so within months.

"If Julia Gillard wins today and we end up in the same position as we are now, in terms of the polls, in several months' time, then my view is the same people who installed Julia Gillard will be looking for a candidate to replace Julia Gillard," Senator Doug Cameron, a Rudd supporter, told Australian Broadcasting Corp before Monday's vote.

Gillard described her win as "overwhelming" after months of "ugly" infighting within the ranks of the center-left party. She said that if the infighting ends and the party is united, Labor could "absolutely win the next election" against the conservative opposition.

Rudd, who warned during his brief leadership campaign that Gillard would lead Labor to certain defeat next year, called on Labor to unite behind her.

"I bear no one any malice and if I've done wrong to anyone with what I've said and what I've done, I apologize," he told reporters.

Rudd said it was time the "wounds were healed" within the party.

Gillard's failure

Gillard has largely failed despite a string of policy successes to convince voters that their position and prospects compare favorably to much of the rest of the world.

The discontent puzzles policymakers who have tried to ensure businesses and consumers don't turn their glumness into a reality.

"Perhaps we as a society tend to not give sufficient weight to the fact that we are in a long upswing," Reserve Bank of Australia Governor Glenn Stevens told lawmakers last week, highlighting the country's low unemployment rate, subdued inflation, strength in government finances and attractiveness to foreign investment.

"We've got issues, but it's actually a pretty reasonable performance compared both with our historical experience and with the vast bulk of other countries you might choose with which to draw a comparison."

The resource-rich country of just 22.8 million people has grown almost without pause for over two decades. Indeed, it was the only developed nation to dodge recession during the global financial crisis.

Its jobless rate of 5.1 percent is half that of the European Union and comfortably below the United States' 8.3 percent.

The country's banks are sound, government debt is small and the budget is well on the way to surplus. Sydney, Melbourne, Adelaide and Perth recently made the Economist magazine's top 10 list of the world's most liveable cities.

Yet you can't turn on a TV or pick up a newspaper without being bombarded by negative headlines, focusing on the political crisis, job losses and the rising cost of living.

AP-Reuters