How it all went so horribly wrong for Labor

When an ashen-faced Julia Gillard stepped up to the dispatch box on Thursday afternoon to a hushed chamber, she calmly and resolutely informed the House that in 2½ hours the Labor leadership, her prime ministership, would again be put to a vote.

Facing a fight on all fronts, she addressed the one at hand, then leant in and addressed her opponent Tony Abbott: "Give it your best shot."

Once again, it was game on. Months of poor polls and misguided policy steps had brought the spectre of a fresh challenge by Kevin Rudd to life. The announcement was dynamite.

Question time passed in a blur of no confidence motions and heckling of the Prime Minister. But less than two hours later, it was all over. There would be no challenge. Rudd squibbed it when he didn't have the numbers.

The fallout was swift and widespread. Rudd supporters fell on their swords. Already damaged, the government was now divided and in disarray. A party room despondent at its electoral hopes was now faced with almost certain electoral oblivion.

How did a government find itself in such a position? And how did it leave Opposition Leader Tony Abbott in the seemingly unassailable position to waltz into the Lodge in September with his opponents in a heap almost entirely of their own making?

Unknown to almost everyone, Julia Gillard had been granted the luxury of time to know that she was to face a showdown with Rudd, and used it to weaken his chances.

Cabinet minister Simon Crean, an old ally, had come to her suite in Parliament House on Wednesday night to tell her he was planning to stand for deputy prime minister. He believed the party's problems were so deep that the months of simmering tensions had to be brought to a head.

The message was clear. If Crean went ahead, Gillard would be pressured to open the leadership to a caucus ballot. It could mean only one thing: Kevin Rudd would be able to challenge her for the leadership.

Crean promised to let Gillard know when he'd made up his mind to make a public declaration.

The following morning, Thursday, he spoke to another of Gillard's ministers, Chris Bowen - a key Rudd supporter - and asked whether Bowen's pro-Rudd "tactical group" was united behind a challenge.

"Bring it on," Crean says Bowen told him. Were the numbers organised for Rudd, Crean says he asked? Bowen's response, according to Crean, was that a declaration in favour of Rudd by a figure with the authority of Crean would cause "a stampede" of support for Rudd.

Reassured, Crean contacted Gillard late on Thursday morning and told her he was about to declare himself in pursuit of the deputy prime ministership, and that he would urge caucus members to sign a petition demanding a ballot. Furthermore, he would be supporting Rudd to challenge her for the prime ministership.

Crean, however, hadn't been dealing directly with Rudd. Indeed, Rudd wasn't impressed with Crean's wish to be deputy. Rudd wanted Anthony Albanese, the manager of government business and a seasoned political street fighter from Sydney's inner west who would bring votes from his own Left faction.

Rudd's number crunchers say they thought they had a straightforward deal with Crean, which involved him delivering enough votes to ensure Rudd would win any ballot. They were waiting for such a guarantee, they say.

But it didn't come and Rudd's number counters were taken by surprise. When the Prime Minister announced at the start of question time, 2pm, that there would be a ballot at 4.30pm, the Rudd camp didn't have time to ensure beyond doubt that they would have enough caucus votes to get their man over the line.

Rudd had told his closest allies that he had a minimum criteria if he was to put up his hand: he had to be guaranteed of sufficient numbers to win a ballot. He needed a minimum of 50 votes, but his team couldn't find more than 48 or 49, and they thought it could be as low as 46.

When question time was over, Crean got an alarming call from Chris Bowen. There was a problem with the numbers. Shortly afterwards, with the minutes ticking towards the ballot, Rudd phoned Crean to say he wasn't running.

"I said to Kevin, 'You must run'," Crean says.

By then, Gillard had sacked Crean from the ministry, and was busily contacting her supporters to ensure they were solid.

Crean's whole plan and his career was about to unravel. Kevin Rudd wouldn't contest the ballot. One of the more bizarre days in Australia's political history was all but done, leaving Julia Gillard in charge of a government riven by bitterness and unresolved hatreds.

Thursday was the last day of the short fortnight of Parliament before the long pre-budget recess.

The recess (or should that be refuge) was close enough to touch. Seven glorious Parliament-free weeks when the Labor leadership would be safe from the danger of sudden attack. The break looked all the better against the horror of the past fortnight.

It was widely acknowledged this fortnight of sittings represented a clear and present danger for Gillard.

Newspoll had at the outset confirmed what everyone already knew. Labor's primary vote remained stuck in the mid- to low 30s. Its two-party-preferred vote was 52 per cent to 48 per cent - woeful yes, but they'd seen worse. As bad as that news normally would be, it had actually come as something of a relief that it wasn't worse.

It followed a Fairfax Nielsen poll in February showing a Labor primary vote of just 30 and Julia Gillard trailing Tony Abbott as preferred prime minister for the first time in seven months.

The Newspoll showed Labor's vote recovered slightly and Gillard's approval and preferred prime minister ratings also showed a slight blip in the right direction. Perhaps she was safe after all? Perhaps Rudd had left it too late. Perhaps his overweening sense of entitlement to the job he had so comprehensively bungled in 2010, mixed with his particular strain of toxic revenge, would not find an outlet?

The extra spring in the government step that the Newspoll provided, at best a mere glimpse of light, was somehow alchemised into something much brighter. The voters, it seemed, had heard the new "Aussie-jobs-first" Rooty Hill message.

Focus groups had responded favourably to the get-tough-on-foreigners line and the hugely criticised Western Sydney "sleep-over" (as it was derided by the mainstream media) had registered in voter land.

Call it observable fact or a case of heroic dot-joining, but whatever it was, an emboldened Gillard suddenly felt like seizing the initiative. It was at this point, it seems, that she bought into one of the government's more hare-brained plans. It involved stitching up the long dithered about and inherently controversial media law recommendations from the Finkelstein and convergence reviews into a single take-it-or-leave-it package.

This would then be rammed through cabinet (convened on another premise, with no advance warning of the media policy submission or debate), and then foisted on the minority Parliament with the same take-it-or-leave-it ultimatum. What could go wrong? Independent and minor party MPs are known to just love being effectively told, forget about scrutiny, don't worry about considering alternatives - just vote for this.

Yet it was a telling sign of the disconnection from reality that senior players, from the Treasurer Wayne Swan to the Communications Minister Stephen Conroy and beyond, could not foresee problems with the sudden departure from the government's previous handling of its minority, nor how the almost certain failure of this approach would inflame the unresolved leadership issue.

In short, if the bills went down, it would look very bad for Gillard, given that she had controlled the process and the timing. Ministers bristled at the suggestion the manoeuvre was flawed or risky, yet few could explain where the gain was for Labor.

By the second week of the two-week session, those nightmares were well and truly playing out. Crossbench MPs were revolting. Conroy declared the package would not be bartered.

By last Sunday, this was already breaking down, and by Monday it was clear the only hope the government had of salvaging any small victory would come from allowing the six bills to go forward separately.

Monday also saw the publication of the March Fairfax Nielsen poll. Labor's primary vote was at a landslide-losing 31 points, up a statistically insignificant 1 point from February.

Just as bad for morale, Gillard's popularity was down, while Abbott's was up. His net approval rating - the percentage of those who approve of his performance, minus those who disapprove - had shrunk to negative 10 per cent. In other words, it was now just half that of Gillard's, which had crept out to 20 points negative.

The news, coupled with the embarrassing shambles that the media changes had become with every major news organisation campaigning vociferously against them, had propelled the government "right back into the shit" as one Liberal put it with some delight.

And most of it had been self-inflicted.

The fate of the media law reforms, which Gillard eventually took over the minor party negotiations for, and the escalating pressure its hamfisted handling had come to represent, played perfectly into the hands of those Labor figures who backed Kevin Rudd.

Here it was: the carefully formed, discreetly delivered, exquisitely timed stuff-up that so economically seemed to justify a leadership change.

As the government bled support and the PM spent valuable credibility defending not just the indefensible but the unwinnable, two things became clear: the reforms were for the high jump, and because of the sheer predictability of that fact from the get-go, the question of the Prime Minister's judgment, and therefore her leadership, was back in play.

When Simon Crean stepped up to "clear the air" nobody could imagine he was, in fact, a suicide bomber and would take Rudd and almost certainly the government with him.

By the end of one of federal Labor's darkest days, the careers of several Labor figures lay in tatters.

Senior cabinet ministers Simon Crean and Chris Bowen were no more. Up and coming Parliamentary Secretary Richard Marles had resigned. Chief Whip Joel Fitzgibbon, and deputies Ed Husic and Janelle Saffin had also fallen on their swords. Martin Ferguson quit on Friday.

Gillard's guiding principle after the storm is likely to follow the common sense of dumping those who were against her, on the basis that they already hate her anyway, while ensuring she makes no new enemies.

That will ensure Conroy's safety despite the woeful strategic stuff-up of the media bill, and the fact that this particular piece of political genius nearly cost Gillard her leadership.

It is remarkable that in the end, Gillard's leadership was not formally tested at all.

Just as remarkable is the fact that despite Rudd's overwhelming superiority in standing with voters - 62 per cent to 31, according to the last Fairfax Nielsen poll - Labor MPs would not brook his return.

Clearly they were not prepared to reward the man they regard as the single most destructive force on the government and the Prime Minister - and that includes Tony Abbott.