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.