Will SMEs back Gillard?

While Julia Gillard’s decision to challenge for the leadership of the Australian Labor Party has shocked no one, the speed at which support for Kevin Rudd evaporated was staggering.

Just a few days ago, Gillard was emphatically ruling out a try at the top job. This morning, after a lightening move from the ALP’s Right faction, she is now Australia’s first female Prime Minister.

While questions will be asked about whether factional heavyweights should have as much power over the ALP – and for now at least, the Government – as they clearly do, it is equally obvious that the ALP had to move.

Rudd simply had lost traction with the electorate. The negative momentum probably started with his decision not to proceed with the emissions trading scheme – an issue he famously described as “the greatest moral challenge of our time” – and gathered pace with the botched insulation scheme, the school buildings program and the Government’s stance on asylum seekers.

A $15 billion health reform didn’t give Labor a boost in the opinion polls and the poorly-handled introduction of the Resources Super Profits Tax apparently sealed Rudd’s fate.

Of course, Rudd is now yesterday’s man.

The big question now is: can Julia Gillard lead Labor to a win in the Federal Election?

Gillard obviously has a better chance than Rudd, and is likely to enjoy something of a honeymoon period with voters in the coming months. This will probably give Labor a good deal of momentum leading into the poll – this may also make it difficult for the Coalition to get its message through to voters.

But Gillard may still find it very difficult to win over the SME community due to one key reasons – industrial relations.

As the architect of the Fair Work IR regime, Gillard is perhaps the minister who has had the biggest direct impact on SMEs since the Rudd Government’s election in 2007.

Under this regime, we have seen the removal of unfair dismissal protections for thousands of businesses, new enterprise bargaining rules, new workplace flexibility rules for employees, and mass confusion over Gillard’s Modern Awards system.

The change from the Howard Government’s Work Choices regime to the Fair Work regime has been complex, confusing and costly for many entrepreneurs and the worst may still be to come – many of the new Modern Awards start on July 1, as Gillard’s prime ministership is just getting underway.

Gillard and the Government rightly argued that Work Choices pushed the IR balance of power too far towards employers, but many entrepreneurs and employer groups believe Fair Work has pushed the pendulum back too far the other way.

Gillard’s stint as Prime Minister may we be very short if SMEs decide they simply cannot vote for the architect of the Fair Work regime.