Kevin Rudd
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Kevin Rudd was sworn in as Australian prime minister for the second time. Photo: Reuters

Kevin Rudd sworn in as Australian prime minister after overthrowing Gillard

Kevin Rudd

Kevin Rudd was sworn in as Australian prime minister for the second time on Thursday, a day after toppling Julia Gillard and three months out from scheduled elections with polls suggesting the ruling Labor Party is staring at a devastating defeat.

Rudd’s resurrection as prime minister comes after three years of bitter infighting within the Labor leadership and as the world’s 12th largest economy faces challenges from a slowdown in top trade partner China.

Late on Wednesday, Rudd, a Putonghua-speaking former diplomat, highlighted the difficulties associated with “the end of China’s resource boom” and said he would work to rebuild the government’s strained relations with the business community.

He made no mention of whether he would change policy or bring forward elections due on September 14.

Australian business was scathing of the political instability and called on Rudd to abandon laws which strengthen trade union access to the workplace and which tighten rules for temporary skilled immigration.

“Our tolerance factor with instability in the leadership of Australia’s government is at breaking point, matched only by a swathe of anti-business policies which have brought business frustration to boiling point,” said Australian Chamber of Commerce and Industry chief executive Peter Anderson.

“The economic challenges facing Australia, especially our declining competitiveness, high cost structure and low confidence, are serious.”

Rudd’s first task will be a major cabinet reshuffle after a string of senior ministers loyal to Gillard resigned from the cabinet, including former deputy prime minister and treasurer Wayne Swan, Trade Minister Craig Emerson and Climate Change Minister Greg Combet.

Immigration Minister Chris Bowen was sworn in as Treasurer and Transport Minister Anthony Albanese was sworn in as deputy leader on Thursday, after Rudd won an internal party ballot to oust Australia’s first female prime minister.

Financial markets see few implications for the US$1.5 trillion economy, which is struggling to cope with the end of a historic mining boom as commodity prices fall and a record pipeline in resource investment starts to falter.

Manufacturing has been hurt by a strong Australian dollar and other sectors of the economy are struggling to pick up the slack as the mining bonanza fades.

“While some bounce in the polls and possibly confidence is expected, the political games will be largely a sideshow to deeper issues in the Australian economy,” Nomura interest rate strategist Martin Whetton said of Rudd’s re-appointment.

Rudd’s return is the latest chapter in a three-year battle with Gillard, his former deputy who rolled him in 2010 and led a minority government. Gillard announced she was quitting politics at the next election after losing the party ballot.

Rudd is likely to test his support in Australia’s hung parliament, but he has commitments of support from the Greens and three independents, making it likely he will be able to control a majority.

The shift back to Rudd came after a series of polls found Labor is facing electoral annihilation in September, losing up to 35 seats and handing a massive majority to the conservative opposition.

Rudd, always among the most popular of politicians with the electorate, was welcomed back by voters.

“I am glad that we’ve now been given the opportunity to have the prime minister we voted in several years ago,” said Peter Mayson, a building industry employee in Sydney.

Analysts said the dramatic leadership change should help lift Labor’s standing in opinion polls, although the initial boost might not last until the elections and Labor was still likely to lose power.

“I think Kevin Rudd will probably do better than Gillard would have done,” Nielsen pollster John Stirton told Australian radio on Thursday. “Where it could come unstuck is that the initial burst of support simply may not last.”

Opposition Leader Tony Abbott has called on Rudd to call an election for early August to end the instability and to let voters decide who should be prime minister.