The people, not caucus, must decide

Leadership conflict has broad implications for the nation

Kevin Rudd's unprecedented act in resigning as Australia's Foreign Minister while on official duties overseas has brought an already divided and dysfunctional government to the edge of collapse.

The ongoing leadership conflict within the Labor Party has serious implications for Australia, far beyond the immediate concern of who will eventually occupy the Prime Minister's office in Parliament House.

For weeks many in the Labor Party have been in denial, insisting that any talk of a leadership battle was a figment of the imagination of the media or the Opposition.

There was even an argument being advanced by some within Labor that, as legislation continued to be passed, any leadership tensions between Julia Gillard and Kevin Rudd were largely irrelevant outside the "beltway" of Canberra politics and the press gallery.

This was a spurious argument.

Undoubtedly, conflict at the highest levels of the federal government, with the consequential uncertainty and instability, has an impact on the nation.

It undermines business confidence which flows through to consumers and the broader economy, as people become more cautious in their spending and investment decisions.

Confidence has already been rattled by concerns about the implications of the ongoing European sovereign debt crisis, sluggish growth in the United States and conflict in the Middle East.

One of the primary roles of the Government is to reassure consumers and business investors that Australia's economy remains strong and robust and able to withstand the future shocks that will inevitably come our way.

While the Westpac/Melbourne Institute Consumer Sentiment Index saw an increase in February over January, confidence remains well below levels of two years ago.

Political parties, by their very nature, often have internal tensions and there can be intense competition between Members and Senators, however it is relatively rare for disputes to spew so publicly into view.

Public confidence will hardly be reinforced by Kevin Rudd's attack on the Labor Party and the competence of the Prime Minister, nor from Treasurer Wayne Swan's vitriolic counter attack.

This comes on top of the recent spectacle of a senior Cabinet Minister and former Labor Leader in Simon Crean conducting multiple interviews to verbally savage another then senior Cabinet Minister and former Prime Minister in Kevin Rudd.

To make matters worse, Simon Crean, a Victorian colleague of Prime Minister Gillard, was reportedly putting himself forward as a compromise candidate while other Victorian colleagues were walking away from the Prime Minister, with backbencher Darren Cheeseman publicly calling for her to resign and Minister Kim Carr ostentatiously refusing to back her leadership.

With a leadership spill likely next week, there will be no end of plots under way from the rival camps, all involving attempts to fatally undermine each other.

Beyond the turmoil and uncertainty this increasingly chaotic situation is creating, there are already serious problems arising from the fact that the Prime Minister and the Foreign Minister have not been talking to each other.

Kevin Rudd made it clear that he was not consulted before the Government took the unilateral decision to ban the live cattle trade to Indonesia, after footage collected by animal rights activists was broadcast on ABC's Four Corners.

This panicked decision damaged our live cattle industry and has had the residual effect of halving this important trade for northern Australia, valued at almost $320 million in 2010.

It has undermined Indonesian confidence in Australia as a reliable supplier of food and has had wider ramifications as Indonesia has reviewed the trade relationship with Australia across a range of agricultural products.

There are reports of obstacles and barriers being placed in the way of trade in horticultural produce, for example.

There is little doubt that had he been consulted, the former Foreign Minister would have counselled against arbitrarily imposing such a ban without proper consultation and further official investigations.

Similarly, the former Foreign Minister has made it clear that he was not consulted before the Prime Minister announced her "Malaysian solution" for asylum seekers.

Again there is little doubt that the former Foreign Minister would have counselled against that policy on the grounds that it undermined Australia's obligations under the United Nations Refugee Convention, but also that proper consultation with other countries including Indonesia had not been undertaken.

Too often the Prime Minister and Kevin Rudd have not been on the same page on foreign policy.

During the debate about whether there should be a no-fly zone imposed over Libya, the former Foreign Minster was actively campaigning, while in Europe and Northern Africa, for a no-fly zone, while the Prime Minister was in Washington refusing to support that initiative.

One can only guess what our international allies and partners presumed to be our formal position.

Former Labor Foreign Minister Stephen Smith once said there cannot be a "crack of light" between a Prime Minister and a Foreign Minister to ensure Australia's national interest and international reputation is protected.

The relationship between the Prime Minister and Kevin Rudd has been utterly dysfunctional from the time that she betrayed him by executing a plot to remove him from office.

This situation has been untenable from the outset and has now exploded into open conflict.

The ongoing damage to Australia's interests domestically and internationally will not stop with Kevin Rudd's dramatic resignation.

Only a general election can bring certainty to the highest levels of our national government and give a much needed boost to national confidence.