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Australia PM Gillard called to step aside, hold leadership vote

MYT 12:00:02 PM

CANBERRA (Reuters) - Australia's Prime Minister Julia Gillard faces a leadership challenge after rivals called for a ballot to resolve months of slipping polls and internal tensions that put her minority Labour government on course to be swept away at September elections.

Australian Prime Minister Julia Gillard speaks at the National Press Club in Canberra January 30, 2013. REUTERS/Stringer
Australian Prime Minister Julia Gillard speaks at the National Press Club in Canberra January 30, 2013. REUTERS/Stringer

"This is not personal. It's about the party, the future of the country," said senior Labour minister Simon Crean, calling the challenge to break a deadlock between Gillard and chief rival Kevin Rudd, who she deposed in 2010.

Crean, who a former strong Gillard supporter, said Gillard had told him she would not call a leadership vote and he urged Labour Party members now to bring on a ballot under party rules.

If the ruling Labour Party replaces Gillard, that could prompt an early election as a new leader would not have guaranteed support of key independents in Australia's hung parliament. Gillard has set September 14 as the election date.

Gillard, who replaced Rudd in a partyroom coup in June 2010, has seen her leadership under threat for most of the past two years and her minority government has been unable to turn around a long-running slump in opinion polls, fuelled in part by internal instability, as well as flagging economic conditions.

The conservative opposition led by Tony Abbott is well ahead in opinion polls and has promised to scrap a 30 percent tax on coal and iron ore mine profits, and to scrap an unpopular tax on carbon, if it wins power.

Financial markets had little reaction to the news. The Australian dollar was a shade firmer on the day thanks mainly to a surprisingly strong reading of manufacturing from China, Australia's biggest export market.

The currency was at $1.0380 and holding in a very tight range. Government bonds hardly budged, with investors assuming future borrowing needs would be much the same whichever leader or party was in power.

A switch to Rudd would also mean a likely shakeout of senior ministers including Treasurer and Deputy Prime Minister Wayne Swan, who openly criticised Rudd during Rudd's previous failed leadership challenge in February 2012.

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