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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 
 
CANBERRA 00000545  002 OF 003 
 
 
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 
 
CANBERRA 00000545  003 OF 003 
 
 
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