Governments inevitably get tired and oppositions eventually get their act together.  After brave tries by Kim Beazley and a mad gamble with Mark Latham, Kevin Rudd brings solid professionalism and a focussed work ethic to his task of beating John Howard.

He has made an impressive start.  Rudd's Labor is well ahead in the opinion polls, and even the punters have finally shortened the odds on a Labor win.

John Howard keeps repeating that the Federal Election later this year will be hard to win, and this time he is sincere.

You can be sure he will pull out every stop, be very active and make many new announcements.  The power of imcumbancy is considerable, and he is a master in its use.

Howard announced a new "war cabinet", using his newly promoted water supremo, Malcolm Turnbull,  to "grab" control of the Murray-Darling Basin - concrete evidence of urgent and sensible action.

Howard starts the election year with two bits of good news.  It has rained, and many experts are saying the signs are good for further, drought breaking, rain.  Recall that Bob Hawke broke the drought after  he was elected, Howard may do it ahead  of the election.

Then there is inflation, slightly negative in the December quarter, with "underlying" inflation also below expectations and below September's worrying numbers.  If this welcome trend continues there will be no further rate hike, and this would remove a threat that might well have given Labor a real chance to win.

This result, incidentally, owes something - in my view quite a bit - to the Government's controversial IR policy reform.  Joe Hockey will sell this policy better than his predecessor, and a free kick will come when a respected economic guru gives credit where it is due.

Conversely, if Labor is too zealous about "rollback" in this area, it will lose votes.  The "swing group" in this area are Australia's independant contractors, whose numbers include many former union members and firm Labor supporters who have adjusted to life as small businessmen and women.

According to a recent Morgan Poll, 81% of Australian workers say their job is safe and 63% say they could find a new job quickly if they were to become unemployed - both virtually unchanged from a year ago.  So much for increased levels of Workchoices-born job insecurity.

In the US, John Howard's mate George Bush is in real trouble, with his strategy in the War on Terror under serious scrutiny.  So far, Howard has been immune to the massive backlash against Bush (and Tony Blair in the UK) and if the "coalition of the willing" is on the way out of Iraq by the time of the Federal election here, this will be a plus for the Government.

Howard must cut a quick deal with Washington that will see David Hicks home before long, and the signs are promising.  This would be popular.

There needs to be a tough budget.  This would minimise the chance of further interest rate hikes and be portrayed as a sign of the Government's continued economic focus and expertise.  The overall economy will continued to be supported by the commodity boom and perhaps also the breaking of the drought.  Consumer Confidence has remained robust and Australians are still world champion consumers.

Expert reader of the public mood, Hugh McKay says:  "Straws in the wind. Hints. Possibilities. Nothing more. But it's hard to escape the feeling that the Australian electorate might be emerging from its dreamy period. Sitting up. Taking notice.

"If there is, indeed, a turning of the tide, it appears not to be the result of a single, sudden crisis, but a confluence of several unrelated factors.

"The environment tops the list. Not since the late '80s has there been such widespread openness to the possibility that the planet is sending us a message. A drought that seriously threatens the water supplies of our capital cities, bushfires that rage out of control for months and have seasoned experts shaking their heads, and the scary prospect of global warming all suggest there's an issue here we can't ignore".

McKay is right about this - a November 2006 Morgan Poll found that, according to Australians aged 14 and over, the most important priority for the leaders of the world was ‘protecting the environment’. 

This is a dramatic change when compared with a similar survey conducted two years prior – in November of 2004, the most important priority for Australians was seen to be the ‘war on terrorism’, with the environment coming in third.  Now, only 9% of Australians believe the ‘war on terrorism’ to be the most important priority, and a massive 22% believe the environment to be the leading issue.

To return to Hugh McKay: "Then there's the "values" question. Ironic, really, that politicians have tried to hijack this one: the issues are real enough, but they have nothing to do with defining distinctive Aussie values or deciding whether "mateship" somehow distinguishes us from other cultures (the French, after all, claimed fraternite long before we did). But deeper values-based questions are engaging our attention: have we become too materialistic for our own good? How can we lead more balanced lives? Can we revive our communities and our sense of belonging to them? Is the Australian way of life in danger of being hijacked by American values and culture?  ...

"Our changing attitudes to David Hicks look like another symptom of a mood shift. An authoritative Newspoll survey has revealed that 71 per cent of us think Hicks should be brought home. Six months ago, I doubt if enough of us were paying attention to have an opinion, but perhaps the fifth anniversary of his incarceration without trial has jolted us. Even our involvement in Iraq seems set to attract renewed, more critical, interest.

Howard has embraced the fact of global warming and the theory that human action is a primary reason.  Now it is eccentric to be a "climate sceptic" and Nicholas Stern from a position inside the UK Treasury has placed the debate in the language of economics, making the point that strong action now will be much less costly than if remedial action is postponed.

The Age/SMH  recently reported:  "A draft UN report forecasting dramatically higher global temperatures and even less rainfall over Australia turns up the heat on the federal government to reveal a climate change policy, the federal opposition says.

"It has been widely reported that the draft report, authored by 2,500 scientists and due for release in Paris on February 2, will warn of more heatwaves, floods, droughts and rising seas linked to greenhouse gases released mainly by burning fossil fuels.

"The draft for the UN Intergovernmental Panel on Climate Change (IPCC) is expected to predict a temperature rise of two to 4.5 degrees celsius above pre-industrial levels by 2100 with a "best estimate" of a rise of three degrees celsius.

"That is a much bigger rise than previously forecast". (More here.)  This turns the heat up on the government - what will it do to reduce Australia's high relatively high contribution to global warming; the Australian people will not hoodwinked and the costs of likely actions - embracing nuclear power, limiting road and air travel and airconditioning (for example) and water use by raising the cost of fuel, electricity and water - will not be tolerated unless they are sold very well indeed.  Howard's best chance would to cut a deal with Rudd on a bipartisan approach, but this is so far outside standard political norms as to seem virtually unthinkable.

Kevin Rudd has sensibly embraced spending on education and research.  This is clever because people worry about their children's education more than most daily issues but also because education raises both economic efficiency ("productivity") as it increases fairness ("equity").  This is in contrast to many policies that involve a conflict or "trade off" between efficiency and equity - think income tax cuts, as one example, that would improve incentives and therefore economic efficiency but at the cost (arguably) of reducing fairness.

Kevin Rudd has also cleverly begun positioning himself as the moderate man as opposed to Howard the extremist.  Howard has been discombobulated by this and has come out swinging, his climate change initiative being the first of many Laborish initiatives he will embrace in 2007.  Indeed, I confidently predict that Kevin Rudd will be able to claim a lot of influence on government policy even without winning government – the cold comfort of a successful opposition.

I should finish with my prediction.  I expect John Howard to retain government.  There will be a real struggle and Kevin Rudd will bring Labor to a far stronger position, poised to win next time round.  My main reason is the importance of economic prosperity – why change a government that has presided over a decade of unprecedented prosperity?  This will be the question that resonates in many people's minds as they enter the ballot box later in 2007.

Originally published in On Line Opinion.