The Carr ruse frees Gillard to govern

For such a sharp-minded man, Bob Carr seems to have very hazy recollections of his conversations with various Labor figures in the past week.

Standing beside Prime Minister Julia Gillard as she announced her cabinet reshuffle on Friday, Carr was asked several times about the specific details of being offered the post of foreign minister, refusing it, and then finally heeding the "call to public service" from Julia Gillard herself.

We will not know for some years how he was shuffled in, then out, then back into the Labor frontbench, but there are two possibilities.

The first is that Carr was part of a clever ruse to draw out an opposition attack on Gillard's 'weak' leadership, that would make her look all the stronger when she finally got her man. If this was the strategy it worked, with Tony Abbott lambasting Gillard in parliament on Wednesday: "The prime minister was rolled by the defence minister. It is like being beaten up by Clark Kent! ...As for constructing the cabinet, yet again she is being dictated to by the faceless men."

The second possibility is that she was indeed being dictated to by Sussex Street heavies, but suddenly realised her real power and took inspiration from the sentiment Winston Churchill reputedly muttered each night as he went to bed: "Bugger everyone."

With Carr admitting he is an "unbounded admirer of this prime minister", Gillard knows that she now controls the frequency and nature of numerous Carr-Gillard media conferences between now and a 2013 election.

With the booming voice and towering presence of Carr beside her, she has secured what, in an ideal world, Kevin Rudd could have offered her – the combination of world class oratorical skills, formidable erudition and an instinctive feel for media performance. Nobody has yet accused Gillard of having any of these.

So was it a tactical ruse, or did Gillard shaft her own party's power brokers? Take your pick. Either way, the effect of the Carr-Gillard media performance between now and a 2013 election cannot be understated, and its most important effect will be to kill off any possibility of a Rudd challenge. As noted on Thursday, to the psephologically-minded a new Rudd challenge was, despite the protestations of the former foreign minister, a near certainty (Seductive rumours of Abbott's demise, March 1). The opposite is now true.

This is all great theatre, but it's important to remember what this means for Australian business and the economy more widely. For better or worse, we now have a robust Labor leadership team that simply will not be toppled before a late-2013 election, meaning the fundamental economic policy settings – give or take some fiscal gymnastics at budget time – will not change until early 2014.

The Fair Work Act review will tread a cautious line between, on the one hand, the ever-growing clamour of employers for 'flexibility', a lighter unfair dismissal burden for employers and less union power in EBA negotiations, and, on the other, the populist notion that wage growth over and above productivity gains is somehow good for 'working Australians'.

The Clean Energy Futures carbon pricing package will not be tinkered with by this government, nor will the accompanying tax and pension reforms. The NBN rollout will continue according to plan.

And the MRRT will swing into play, harvesting something like bugger-all to redistribute amongst "all Australians".

The Gillard government is facing an almighty task to deliver a budget surplus this year and it will continue to step on toes to achieve this iron-clad promise – the latest toes being those in the solar hot water industry which saw federal subsidies withdrawn overnight for installing rooftop hot water systems.

Bob Carr can't help much with that process. However, the signs are good that he will build on Kevin Rudd's impressive list of foreign policy achievements. And, most importantly, ensure that it is Bob Carr's media performances that fill the airwaves for the next 18 months, not those of a backbencher named Kevin Rudd.

That is something of a coup for a prime minister who supposedly had no control of cabinet.

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