THE DISTILLERY: Labouring through

With Labor's promise to bring the budget back into surplus now carved in stone, the government's policy is unlikely to change significantly, whether Prime Minister Julia Gillard keeps her place or predecessor Kevin Rudd pinches it back. Be that as it may, the leadership ructions nonetheless have a massive influence on the way business is done in Canberra. This morning three columnists take us through how Reserve Bank Governor Glenn Stevens, Telstra chief executive David Thodey and Qantas chief executive Alan Joyce will be drawn into this truly absurd episode.

The Australian's Glenda Korporaal cleverly reminds readers that Australia's leading central banker has a date with Canberra today.

"Reserve Bank governor Glenn Stevens finds himself in the political hot seat this morning, when he appears before the House of Representatives Standing Committee on Economics in Sydney's Tattersalls Club. His appearance, in the middle of a bitter leadership fight within Labor and with Tony Abbott almost in campaign mode, makes him the perfect target for some political point-scoring. His every word will be studied for political advantage to either side's case. The committee is chaired by the Labor backbencher from Parramatta, Julie Owens, a Gillard supporter who will no doubt be trying to put the best face on the national economic outlook."

The Australian's John Durie also picked up on the consequences the leadership battle might have in the real world, citing Telstra's acceptance yesterday of the Australian Competition and Consumer Commission's terms governing the NBN.

"Suffice it to say, as much as the NBN is seen by some as a welcome sign of progress, the business community is disgusted by the present scenes in Canberra as politicians look after their own egos while the country is struggling. The timing of Rudd's attempted return is perhaps apt, given the naysayers figure the NBN is a giant waste of money. It was also poignant that just as Telstra's board concluded its discussions and chief David Thodey handed its agreement to the ACCC, Telstra's internet service broke down, stranding millions."

The Sydney Morning Herald's Elizabeth Knight says size does appear to matter in Australian's airline battle, but in the opposite direction to usual. The smaller, nimble Virgin Australia has flown rings around the cumbersome former government agency Qantas.

"As its trump card, Virgin took the lead over Qantas yesterday with the announcement of a corporate restructure that will house its international operations in a separate company and free the listed head company from its 49 per cent foreign ownership limit, allowing overseas funds to buy into the stock. For years Qantas has been lobbying Australian governments to amend the Qantas Sale Act to achieve this outcome. Armed with its new competitive disadvantage, it might be able to restate its case in Canberra – once it knows who the prime minister will be."

And while we're talking politics, one of the side-stories to the Gillard/Rudd showdown is the popularity of the opposition leader – Rudd might be able to pinch some small ‘l' liberals who would prefer Malcolm Turnbull to Tony Abbott. Well, The Australian's economics correspondent Adam Creighton lampoons one of Malcolm Turnbull's favoured economic policies, that of a sovereign wealth fund – and it should be pointed out that Bob Brown and Colin Barnett are big fans as well.

"We should already know this. The Future Fund, worth about $70 billion today, was set up in 2006 to offset the Commonwealth's future pension liabilities. Since then it has eked out not much more than 2 per cent a year in real terms, less than an investment in bank bills. Meanwhile the government has more than $200 billion of government debt outstanding, mostly borrowed at rates between 4 and 6 per cent. Australians might think of the Future Fund as their giant national hedge fund, albeit a poorly performing one. These assets would be better off in the hands of taxpayers and businesses, who are in a far better position to spend them. Even if fund returns were good, SWFs would still be a bad idea. The sovereign debt crisis in Europe is a salient reminder of democratic governments' proclivity to overspend. A large pool of government assets on the side only encourages politicians to borrow more than they otherwise would, as they are then able to parade "net debt” figures before a confused public. And they are not able to shift the exchange rate, whose value is set in foreign exchange markets that churn more than $1 trillion a day.”

Getting back to the soap opera that has everybody talking for the remaining of this morning's Distillery, The Sydney Morning Herald's Malcolm Maiden concludes that the only reassuring results for investors from the Labor Party leadership spill is a resounding victory for Julia Gillard that nullifies Kevin Rudd's ability to launch a second challenge down the track, in the style of Paul Keating on Bob Hawke. The other two possibilities, a possibly close victory for Gillard or an unlikely victory for Rudd, would bring uncertainty to the markets. The Sydney Morning Herald's Jessica Irvine writes somewhat parallel to the current events in Canberra to conclude that economic management, such a crucial attribute for both parties, is now largely a function of the Reserve Bank of Australia and the Treasury.

Meanwhile, The Australian's Bryan Frith gives a consummate summation of Virgin Australia's ascent under former Qantas executive John Borghetti, and how desperate his former employer is to follow his lead of splitting its international business into a separate, unlisted company. The same newspaper's Damon Kitney chimes in with some kind words for Borghetti.

In other company news, The Australian's Richard Gluyas says Fairfax Media's plan to slash $170 million in costs over three years obscures some "worrying trends,” while The Sydney Morning Herald's Malcolm Maiden also takes a look at the results of his employer.

The Age's Adele Ferguson says Insurance Australia Group chief executive Mike Wilkins has presided over seven profit downgrades in his almost four years in the jobs, which speaks more of the complexity of the insurance game than anything else. But these latest results imply higher premiums from its customers, gains in motor insurance and positive signs out of the UK. The Australian's Tim Boreham says some of David Jones' fortunes rest on the tense purse strings of 'bridezillas', with the upmarket retailer opening up an in-house bridal boutique at its flagship Sydney site, while The Australian Financial Review's Chanticleer columnist Tony Boyd examines Origin chief executive Grant King's ever-improving reputation.

Fairfax's Insider columnist Ian McIlwraith says Breville's 41 per cent increase in interim profit has largely come courtesy of its operations in the US and New Zealand; its Australian customers are just like everybody else's – cautious.

Elsewhere, The Age's Michael West perhaps oversteps himself with a reference to the Argentine junta of the 1980s, but his outrage is well founded with his report detailing how the government has simply removed a press release from the prime minister's website about taxpayer assistance for banks.

The Australian's Chris Merritt brings word that former West Australian attorney general Cheryl Edwardes has quit her job as key adviser to Gina Rinehart's company to return to legal practice.

And finally, Giles Parkinson ponders in The Australian where clean-tech energy stocks are headed, given that stock selection is difficult due to contrasting technologies and uncertainty about which method and business model will work.