By Michael Pascoe
You might have read Julia for PM first here on May 14 - and I have the t-shirt to prove it - but now that Ms Gillard has the job, what does it mean for Australian business and economics?
Unfortunately only half the required change was achieved. Wayne Swan as Treasurer and now deputy prime minister will be sold as something about continuity and stability, but it was Swan who trashed the Henry tax review, keeping only a couple of footnotes from that document and hatching a cunning plan to wedge Tony Abbott with an early exit from deficit via an ill-considered and too-complex version of a resources rent tax.
As has been on public display since the election, Lindsay Tanner is the better communicator and sharper economic mind. It would be Gillard's first mistake if alleged personal animosity between herself and Tanner prevented the cleaner change that would make reform of the rent tax easier to achieve. If it was merely the will of the factions, one of the deals to get up the numbers, it remains a mistake.
That aside, what Gillard hopefully brings to the leadership is the ability to be a good chairman of the board, a builder of consensus, a reasoned weigher of arguments who can harness the talent available in Cabinet. Heavens knows there are some duds, so all the efforts of those with ability are required. These were the traits that arguably made Bob Hawke Australia's most successful reformist prime minister.
RS profits tax
The easy example remains the RS profits tax. One might have thought seeking real input from the relevant minister, Martin Ferguson, would have resulted in a more acceptable tax with fewer obvious flaws. An attempt at negotiation with the industry first, without that initial burst of xenophobic public denigration of our biggest investors, might have avoided the entrenched confrontation that has ensued.
There's a wall plaque hanging in Cobar's Busy Bee's café that states: ``I'm not bossy, I just have better ideas.'' Wise leadership has the ability to let others think they have had those better ideas. It leaves more room for compromise for a start.
The Australian economy right now doesn't need confrontation, but it does need more confidence. Economies always need confidence. The good macro-economic management of the Rudd government played a key role in Australia being positioned very sweetly in an uncertain world, yet the local animal spirits remain nervous.
Tuesday's re-rating by the Australian Bureau of Agricultural and Resource Economics of our commodity exports outlook underlines a key reason for confidence with a serious upgrade of the expectations in federal budget just six weeks ago. It confirms the RBA and Treasury optimism about our terms of trade surging, providing our economy with an opportunity to grow and invest wisely in our future. There is a window of opportunity that is likely to last for some years, but not indefinitely.
The challenge for Gillard's leadership is to make the best of that opportunity, primarily by investing in the development of Australia's most important natural resource: its people.
Educating Julia
Coming from the education ministry, it might be hoped she has that insight. The Rudd government provided an initial surge in education spending, but there's been a lack of follow through.
With the exception of the Viva Cubana School Sheds program (big mistake to trust the NSW to spend a pile of money quickly), Gillard's portfolio performance has been well reviewed. The people she works with speak well of her ability, grasp and manner. Now she should have the power to take good management further into leadership.
I think it might be a Peter Drucker quote that good management is doing things right, while leadership is doing the right things. The task ahead of the new prime minister is to demonstrate vision for what the right things are, rather than a series of programs that polling says voters like.
Julia Gillard inherits an economy that is in remarkably good shape. Politics has given us a wildly exaggerated concern about the federal government deficit - it's actually not much of a problem. Calming the horses and disarming Labor's doctrinaire media enemies would do much to let the strengths of the economy blossom.
Aside from the terms of trade surge, we are also underpinned by a shortage of housing, a shortage of skilled labor and its corollary, a healthy immigration program. Our major challenges are those of success, not the crisis and genuine oceans of debt continuing to bedevil the rest of the developed world.
RBA balance
A major potential ally in making the most of this opportunity is the Reserve Bank. With Swan remaining in charge of Treasury, developing a trusting relationship with the RBA could prove a most useful balance for the PM - a steadying hand from the worrying trend towards certitude at Treasury.
Credibly communicating the opportunities here is half the job ahead. The government's ability to do that had become tarnished by failed gimmicks and backflips. If Julia Gillard can restore that confidence and see off the economic ratbaggery being offered by the federal opposition, the economy and the businesses who sail upon her should do well.
But some business opportunities have been lost. I proposed last month that there was a quick buck to be made selling Julia for PM t-shirts, mainly to Labor Party members. Well, it's too late now. I made the arguments for the t-shirts as part of a presentation to a Travelscene American Express conference in Hong Kong - a couple of hours later, the organisers had had the Langham Hotel's concierge produce one. It's not quite the design I would myself chose, but I suspect it's still the first and thus a collector's item. Now, if I can just get the PM to sign it...
Michael Pascoe is a BusinessDay contributing editor.