IN a desperate effort to hold off a leadership challenge from Kevin Rudd, Julia Gillard has combined her ruthless disregard for the long-term future of the Labor Party with her ferocious desire for self-preservation, the now familiar hallmarks of her leadership.

The Prime Minister has demonstrated that she is prepared to break solemn promises, walk away from long-held principles and policies, do “whatever it takes” to cling to her job and thereby prevent a Rudd return.

There have been rumours for months that Rudd and his supporters have been making the case for his return some time this month or next. That included floating the policy changes he would make to win the public approval denied Gillard since her now notorious broken promise not to introduce a carbon tax.

Rudd is said to have promised changes to the carbon tax should he be returned to the leadership, including scrapping the floor price for the carbon tax that was to take effect in 2015.

Significantly, the Prime Minister suddenly dispatched Climate Change Minister Greg Combet to make an embarrassing policy backflip and announce the scrapping of the carbon floor price of $15 a tonne.

Combet’s announcement came just weeks after the introduction of the carbon tax and after months of forceful arguments as to why a floor price was critical. As the floor price was not due to come into effect for another three years, the only logical explanation for the rushed announcement is that Gillard believed Rudd was gaining support for his policy idea and that she was increasingly vulnerable to a challenge.

The government’s “power sharing” partners, the Greens, showed their true colours when leader Christine Milne embraced this policy change even though it could lead to a collapse in the carbon price.

Milne and her party have long argued for a carbon price exponentially higher than the present level to make renewable energy price competitive with coal, yet she raised no concerns about scrapping the floor price. Combet and Milne both argued that they expected the EU price to be much higher in 2015 than the floor price of $15 a tonne. That prompts the question of why scrap the floor price, if that is in fact their belief?

The obvious truth is that the government and the Greens expect the EU price to remain low but do not want to be accused of imposing a carbon tax that is so obviously out of step with the small-scale carbon price schemes operating in Europe.

The Australian business community has been quick to demand an immediate cut to the present tax of $23 a tonne to bring it closer to parity with Europe, where trading has been at less than $10 a tonne. As Europe is in the throes of a financial crisis, there are serious doubts about any significant recovery in the price of carbon.

This scenario has serious implications for the federal budget, as modelling has been predicated on a price higher than $15 a tonne. If the cost of the compensation outstrips revenue from the carbon tax a yawning budget black hole will appear.

While the Greens generally show scant regard for potential budget blowouts, there can be no policy justification for this decision as it is likely to lead to a lower price on carbon.

Perhaps the solution to that minor piece of hypocrisy was revealed the next day when Health Minister Tanya Plibersek announced a $4 billion dental health program, with Greens senator Richard Di Natale standing at her shoulder for the announcement. It seems that to head Rudd off at the pass, the government needed the Greens on side. The Greens extracted their price in the form of the dental program.

In their haste to make the announcement, the basic details were not worked out and confusion followed over whether any funding had been identified. Plibersek claimed “there is not billions of dollars in the budget for this” and “we need to find a new $4bn”.

Gillard claimed there would be “a large saving” to come from ending a current program that targeted chronic dental health problems. The Health Minister’s office then confirmed no funding had been allocated in the budget forward estimates for the axed dental health program and it was therefore not possible to count its closure as savings.

Given that this presently unfunded dental health program will not begin until 2014, well after the next federal election, the timing of the announcement adds to the air of desperation surrounding Labor. Surely it would have made more sense for the government to hold back until the election campaign.

The rash of announcements has caused some Coalition strategists to speculate that Rudd’s support is at a sufficiently high level for Gillard to be considering an early election.

The government’s response to the Gonski review into school funding has added to the speculation of an early election.

Schools Minister Peter Garrett declared last weekend that “this is a once-in-a-generation opportunity for us to support the needs of every kid in every classroom in Australia” – words eerily reminiscent of Rudd, who, as prime minister, often overreached in policy pronouncements.

Such grandiose claims came back to haunt Rudd, as they will Gillard.

The response to the Gonski review will not be fully implemented until after another three elections and seven budgets, and Gillard knows there is little likelihood of these reforms surviving beyond the next election.

It is clear Gillard’s overriding priority is her short-term survival as Prime Minister, rather than the long-term survival of the government. While any modest rise in the opinion polls may give the Gillard camp renewed hope that she can cling to the leadership, they may need to reconsider their plan.

Small improvements in the opinion polls could play into Rudd’s hands. Rudd supporters argue his return to the leadership would give the party a boost of at least 5 per cent in the primary vote.

When Labor’s primary was hovering at 26 per cent, a Rudd boost to 31 per cent was a moot point. If Rudd as leader were able to provide a lift closer to 40 per cent, that would make Labor competitive. It would be hard for backbenchers to reject such an opportunity.

Meanwhile, MPs are watching Gillard closely as these big-ticket announcements keep rolling out to shore up her leadership. Come the election, the policy cupboard may well be empty.

Emeritus professor of history and politics at Griffith University, Ross Fitzgerald is the author of 35 books.