To Abbott, the spoils of the spill

We are headed for another dangerous period in Australian history. But out of that chaos is likely to come a government headed by Tony Abbott with a huge majority and the ability to make much-needed changes.

So while I am not going to forecast who will win the battle between Gillard and Rudd, the real winner is Tony Abbott and the Coalition parties.

Australians do not want to be governed by a set of politicians who are in chaos. And whether the election is held in 2012 or 2013 they will not forget the Gillard-Rudd battle and the political hatreds it brought to the surface.

So it is very likely that Tony Abbott will get one of the highest majorities ever seen in parliament. Even if that doesn't translate into a majority in the Senate he will move to a double dissolution on a series of major issues and a country, which is desperately looking for leadership, will back him.

The simple truth is that Tony Abbott actually won the last election but didn't get to power because Julia Gillard made a series of deals with minorities that were not really sustainable.

The first big danger for Australia is that either Gillard will retain power or Rudd will gain power by the same side deal mechanism and we will see another raft of left wing inspired policies. The best outcome would be a big win from either Gillard or Rudd because it would settle the matter. The second danger is that, in his anxiousness to become prime minister, Abbott will make popular promises that make reform much more difficult.

In my view, whoever wins the Gillard-Rudd struggle will take my suggestion and lower interest rates via the bank guarantee mechanism that I have been advocating (Gillard's secret rates weapon February 21).

But Stephen Bartholomeusz, while admitting that there is no barrier to a government taking that course, sets out the hazards. Bartholomeusz does not believe it should be done (Avoiding an unnecessary funding fix February 22).

While we disagree on this point, if the Gottliebsen plan is attempted in political turmoil it might not be as effective and extreme positions might be undertaken.

But the good news for Australia is that unless there is a very decisive outcome in the Gillard-Rudd tussle the chances of an early election are now much greater – and remember that behind an Abbott victory will come a much higher sharemarket.

We need reform of the industrial relations act because just as John Howard went too far to the right, the Gillard reforms went too far the other way. Industrial relations will be a difficult area but Tony Abbott can overcome many of the problems by promoting independent contracting and if he does that on a much bigger scale he will lift Australian productivity dramatically.

Abbott in many areas has not yet set out policies but in independent contracting he and his people have done a lot of good work. Meanwhile the independents in parliament need to think about the national interest if neither Rudd nor Gillard gets a big majority.