SYDNEY, AUSTRALIA – Australia is the rare major economic power that, under Prime Minister Kevin Rudd, avoided a recession in 2009. The unemployment rate here is 5.1 percent. Yet the reigning Labor government is as fearful as Washington Democrats – with a national unemployment rate of 9.5 percent – of losing big in the next election.

Last month, Labor biggies, desperate over polls that showed their party losing in the next election, sacked Rudd and replaced him with Deputy PM Julia Gillard. Saturday, Gillard called an election for August 21. Polls show Labor with an edge, but it’s not clear that the leadership switcheroo can save the left.

Why were Australian voters so dissatisfied that Labor ousted its leader? People question the low unemployment statistics. They say it hides endemic underemployment as Aussies have been forced to live on part-time work. And they blame the Rudd government for overreacting to global economic woes by overspending, and turning the federal surplus that he inherited from Prime Minister John Howard when he won office in 2007 into anxiety-inducing debt.

In 2008, the Rudd government passed a $10 billion stimulus package to stave off a recession. But later stimulus add-ons, which pushed the total over $70 billion, turned out to be flops. A $16 billion school construction program – run by Gillard – was infamous for incompetence and cost overruns – or as Aussies put it, no “value for money.” A disastrous home insulation scheme bankrolled the installation of bad roofing that will have to be replaced and was linked t0 more than 100 fires and four deaths of installers working for fly-by-night-and-cash-the government-checks operations.

Added up, the Labor stimulus package belied Rudd’s campaign pledge to not repeat what he had referred to as Howard’s “irresponsible spending spree.”

Maybe Rudd could have survived those woes if he had not stumbled on climate change. You see, Rudd had framed the issue as “the greatest moral issue of our age.” Then in the face of fierce domestic opposition and the collapse of the farcical Copenhagen climate talks – which produced nothing more than copious greenhouse gases – Rudd announced he would put off dealing with “the greatest moral issue of our age” until 2013, possibly. He looked like a complete fraud.

Then came Rudd’s proposed mining tax, which outraged vital industries, as well as officeholders of affected districts who felt they should have been consulted first. On taking over, Gillard quickly neutered that scheme.

In her weeks in office, Gillard also moved Labor’s border-security plank from left – her old home – to center-right, where she now wants to appear to live.

Gillard’s path to power is now under fire. Last week, allegations leaked about the June 23 meeting between Gillard, Rudd and Labor solon John Faulkner that led to Rudd’s ouster. According to an unnamed source – whom Rudd denies is he – Rudd had told Gillard that he would step aside if he was flagging in the polls before a then-planned October election. He thought they had a deal. Then Gillard reneged.

La Gillard will not confirm or deny. Many voters may well regard Gillard’s gambit as the stuff of hardball politics. Others, especially voters from Rudd’s Queensland, aren’t happy that she deposed the bloke who won the vote.

The surfing/boxing/biking conservative opposition leader Tony Abbott paints the episode as a stain on Gillard’s character. Abbott, a newbie to party leadership himself after a more open leadership fight, asked Saturday, how can we “trust Julia Gillard when even Kevin Rudd couldn’t?”

Abbott also is hitting Gillard on the school construction boondoggle and Labor’s big spending ways. “Failure to keep everyday spending under control is causing harm to everyday Australian families,” he told The Australian.

Her slogan, delivered in her very measured way, is “moving forward.” With his usual bluster, Abbott says, “The best way for Australia to move forward is for Labor to move out.”

Whatever happens, this race will be quick and dirty.

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