Deputy Pm Julia Gillard Star In Rudd Government

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

¶1. (C/NF) SUMMARY: Two stars have emerged in the government
of Prime Minister Kevin Rudd: Rudd himself and Deputy Prime
Minister Julia Gillard (who will be Washington for the June
23-25 American Australian Leadership Dialogue). Gillard
became Deputy Leader of the Australian Labor Party (ALP)
after she and Rudd deposed Kim Beazley in December 2006. In
the run-up to the November 24 election, and during the
campaign itself, Gillard was a loyal and competent deputy, so
much so that Rudd went out of his way in his election victory
speech to thank her. While she was not given the traditional
number two job of Treasurer in the new government, Gillard
was handed two important portfolios: industrial relations and
education. Gillard, unlike Treasurer Wayne Swan or any other
minister (except Finance Minister Lindsay Tanner), has
increased her prominence and power since she became deputy
prime minister and is now the clear number two (with a big
gap before number three) in the Rudd Government. At this
point, Gillard would have to be considered the front-runner
to succeed Kevin Rudd as Prime Minister, which would make her
Australia’s first female Prime Minister. Several contacts
caution, however, that Rudd is ambivalent about Gillard, who
is not from Labor’s Right Wing like he is, and he will avoid
creating a potential rival. By the time Labor is thinking
beyond Rudd, Gillard may well face more serious competition.


¶2. (C/NF) Through the first seven months of the Rudd
Government, Gillard is the only ALP politician who has
approached PM Rudd in national prominence. She is the second
most important person in the Government, with the rest of the
ministers trailing far behind, and Australia’s highest
ranking woman. Gillard, who stumbled a bit when she
announced Labor’s industrial relations policy at the ALP
national conference in April 2007, has since performed well,
supporting Rudd during the election, running her ministry
competently, and demonstrating a flair for showmanship and
public speaking during Parliament’s Question Time.
Traditionally, the Treasurer, the second most important
cabinet position, comes from the Right Faction of the Party
in an ALP government. This practice partly explains why
Wayne Swan received the position. To compensate, Gillard
received two portfolios, education and industrial relations.
Since the election, however, it is Gillard who has made the
most of her position while Swan, uncomfortable on his feet
and with economics, has struggled at times. After Rudd, she
is now the most prominent minister in the government.


¶3. (C/NF) Many key ALP insiders have told poloffs that
Gillard, who joined the ALP as a member of the Victorian
branch’s Socialist Left faction, is at heart a pragmatist.
New South Wales Right powerbroker Mark Arbib (protect)
described her as one of the most pragmatic politicians in the
ALP. Michael Cooney (protect), from the ALP Right and a
former senior adviser to ALP leaders Mark Latham and Kim
Beazley, said she has been very impressive as a minister:
knowledgeable on the issues, listens to advice from
subordinates and civil servants and is not afraid to delegate
responsibility. When we reminded Paul Howes (protect), head
of the right-wing Australian Workers Union, that ALP
Qof the right-wing Australian Workers Union, that ALP
politicians from the Left, no matter how capable, do not
become party leader, he said immediately: “but she votes with
the Right.” In 2002, when she was Shadow Immigration
Minister, Gillard presented to the ALP National Conference a
draft policy supporting the continuation of the Howard
Government’s policy of mandatory detention of unauthorized
arrivals (of refugees like those on the “Tampa”). This upset
the Left, but reflected the views of mainstream Australia.


¶4. (C/NF) Although long appearing ambivalent about the
Australia-US Alliance, Gillard’s actions since she became the
Labor Party number two indicate an understanding of its
importance. Poloffs had little contact with her when she was
in opposition but since the election, Gillard has gone out of
her way to assist the Embassy. She attended a breakfast
hosted by the Ambassador for U/S Nick Burns who visited
Canberra just days after the election. At our request, she
agreed to meet a visiting member of the National Labor
Relations Board, after prior entreaties by the board member’s
Australian hosts had been rebuffed. Gillard is now a regular
attendee at the American Australian Leadership Dialogues
(AALD), and will be the principal government representative
to the AALD meeting in Washington at the end of June.
(COMMENT: Although warm and engaging in her dealings with
American diplomats, it’s unclear whether this change in
attitude reflects a mellowing of her views or an
understanding of what she needs to do to become leader of the
ALP. It is likely a combination of the two. Labor Party
officials have told us that one lesson Gillard took from the
2004 elections was that Australians will not elect a PM who
is perceived to be anti-American. END COMMENT)


¶5. (SBU) In the late 1970s, Gillard joined the Socialist Left
faction of the Victorian ALP. In the mid 1980s, she helped
form “Socialist Forum” which contained disaffected members of
the Socialist Left and former Communists. This group
proposed ending the Australia-US Alliance, and introducing
radical tax policies. In a Socialist Forum Pamphlet from the
mid-1980s, Gillard describes herself as a “socialist and
feminist.” By the late 1980s, however, her involvement in
Socialist Forum had significantly declined, although she
remained a member until it dissolved in 2002. Gillard now
downplays her involvement in Socialist Forum and describes
the group as a “sort of a debating society.” Indeed she
good-humoredly waves away press attempts to raise the subject
of her early political leanings.


¶6. (SBU) In the early 1990s, Gillard and her supporters
formed a group within the Socialist Left called the “Pledge
Group.” To the consternation of the Socialist Left
leadership, it formed an alliance with the Right, and Gillard
became Chief of Staff to then Victorian Opposition Leader
(now Premier) John Brumby, who is from the Victorian Right of
the ALP. In 1998, with the Right’s support, she gained
preselection for the federal parliamentary seat of Lalor, in
Melbourne’s western suburbs. Subsequently, the Socialist
Left split and the Gillard group, part of the “Soft Left”
faction, has remained outside the Socialist Left since. In
March 2006, Gillard described factions as “a cancer eating
away at the very fabric of the Labor Party.” She called on
ALP leadership figures to quit factions and for the ALP
leader to have the power to directly appoint his/her front
bench Indeed, Gillard has not attended faction meetings
since she became Deputy ALP leader. After the election, Rudd
broke ALP tradition and appointed his Ministry (apparently)
without the approval of the factions. Since 2003, Gillard
has been on good terms with a large number of Right Faction
MPs – such as Simon Crean and Joel Fitzgibbon – whom she
worked with to oppose Kim Beazley in leadership ballots.


¶7. (C/NF) The ALP traditionally does not produce leaders from
the Left of the party, but Gillard is a pragmatist who has
appeal across factional lines. Conventional wisdom is that
Rudd will be Prime Minister for eight or nine years and then
hand over the leadership 12-18 months out from an election.
Gillard twice seriously considered running for the ALP
leadership. In January 2005, following Mark Latham’s
resignation, she pulled out when she realized Kim Beazley had
the numbers. And in late 2006, she threw her support behind
Rudd because she knew Beazley would have won a three-way
QRudd because she knew Beazley would have won a three-way
contest (notwithstanding the fact that Gillard would have
received more votes than Rudd) and he would have defeated
Gillard one-on-one. Gillard the pragmatist knew only Rudd
was capable of receiving the necessary support to defeat

¶8. (C/NF) Some Coalition MPs believed before the last
election that Gillard was a weakness for Rudd. They thought
she was too left-wing for mainstream voters, and her
childlessness and unmarried status would hurt her with
“working families.” The Coalition targeted her during the
election campaign but the down to earth Gillard is popular
with ordinary Australians. An obstacle to Gillard assuming
the leadership may be some key right-wing ALP MPs and union
officials. Powerful, socially conservative union leaders
such as Joe De Bruyn (head of the shopworkers union, the
largest in the Australian Council of Trade Unions), Bill
Ludwig (head of the Australian Workers Union), and Don
Farrell (powerbroker and shopworkers union leader in South
Australia and incoming senator) may attempt to thwart her.
So could the head of the Victorian Right, Senator Stephen
Conroy (who was a strong supporter of Kim Beazley and cannot
stand Gillard), and the ambitious MP and former unionist Bill
Shorten (also a strong supporter of Beazley who has Prime
Ministerial ambitions). Much internal hostility towards
Gillard can be traced back to her support of Mark Latham and
her undermining of Kim Beazley’s leadership. Last year, some
ALP MPs were critical of the industrial relations policy she
drafted for the ALP conference – a policy which alienated
business and had to be re-drafted by Rudd.

¶9. (C/NF) Perhaps the biggest determinant in whether she
becomes leader will be her performance as a Minister. Gillard
has a huge workload as Minister for Education and Workplace
Relations. She is responsible for implementing two of Rudd’s
key election promises – the “Education Revolution,” and
industrial relations changes, including the creation of a
national industrial relations system. This will require her
to deal with recalcitrant ALP state governments and unions
that would like the ALP to stop their declining memberships
by going further than Rudd promised. One contact who used to
work for Rudd suggested that he gave Gillard the education
reform portfolio to weaken her within the ALP, as any serious
reform will antagonize the education unions and the state
governments. A less credible education reform package will
cement the notion that Gillard is captive of the traditional
Labor Left, which would torpedo her viabilitiy as PM. John
Howard’s former chief of staff told us that with two
portfolios, Gillard would be “too busy” to worry about
anything other than her job. But Gillard is tough and highly
intelligent. If she comes through this relatively unscathed,
it will go a long way to ensuring she succeeds Rudd. In the
public’s eyes at present, Gillard, as the number two figure
in the ALP, is Rudd’s heir apparent. If this is the case
when Rudd goes, it will be extremely hard for ALP MPs to deny
her the leadership. It is unlikely the ALP would miss the
opportunity to produce Australia’s first female Prime