Illustration: Andrew Dyson

Illustration: Andrew Dyson

JULIA Gillard's inner sanctum hasn't had much to smile about lately, but on Tuesday her advisers were giving each other high-fives in the Prime Minister's office. The catalyst? A very brief call from Christine Milne to Gillard that ended less than two minutes before the Greens leader delivered her televised National Press Club address, and announced the end of her party's alliance with Labor.

Gillard's response, as she recalled it the following day, indicated that the news was neither unexpected nor disturbing. ''Thanks, righto,'' she recalls telling Milne.

The sense of excitement, after the PM relayed the news to her office, was two-fold: Labor was now free to launch an all-out assault on the party that invaded its territory, safe in the knowledge that the minor party would continue to vote with the government in the event of no-confidence motions, support supply and ensure that the Parliament runs its full term.

The good news improved when Milne threatened to vote with the Coalition against the removal of $1 billion in tax concessions for the nation's biggest companies - a measure that is intended to pay for the ''game-changing'' jobs package Gillard announced last Sunday.

Here, the Labor argument went, was all the evidence you need of the Greens' hypocrisy. On the one hand, they say the miners aren't paying enough tax; on the other, they threaten to oppose something that prevents the same companies from receiving massive handouts to fund their research and development.

Another of Milne's justifications for declaring the alliance over was Environment Minister Tony Burke's decision to reject National Heritage listing for Tasmania's pristine Tarkine Wilderness, something she described as a sell-out to mining interests at the behest of union boss Paul Howes. This, too, pleased those close to Gillard. ''The Greens have decided they prefer trees to jobs,'' said one. ''That's a fight we can have anywhere.'' Alas, the argument is not so simple. What of the notion that you don't have to make a black or white choice, that you can protect jobs and the environment?

There are, of course, two sides to every marriage break-up. The Greens' emphatic assertion is that Labor is the one behaving badly - and that it was Labor that rendered the alliance meaningless, not least by failing to engage on the Greens' long-stated concerns about the design flaws of the mining tax.

For them, the end of the formal relationship that made the carbon price a reality, and saw Gillard host weekly but increasingly unproductive meetings with Milne during sitting weeks of Parliament, is also something to celebrate.

There is also the prospect that Milne's party will use its balance-of-power status in the Senate to make things difficult for Labor on other fronts, though Milne made it clear on Friday that their support of school funding reform is unconditional.

What tempered the mood in Gillard's office was the timing of Milne's declaration, which accentuated the impression of chaos and instability that has evolved over the last month. This intensified in the first sitting fortnight of Parliament and contributed to the very, very bad Age/Nielsen Poll for Labor published on Monday.

That the break-up also coincided with an ugly brawl with Victoria over hospital funding, an apparent capitulation, and the prospect of an extended blame game with the states, contributed to yet another week where Tony Abbott didn't need a small target strategy - the government fashioned one for him.

The result is more frenzied speculation about a leadership change when Parliament resumes for a two-week sitting on March 12, before rising until the May budget. Graham Richardson, who titled his memoir Whatever It Takes, set the tone on Friday, saying that much depends on next Tuesday's Newspoll. ''If Newspoll has a 30 or less as a primary vote, I think they will remove her,'' ''Richo'' told Sky News. ''I'd say

the odds of that would be 60/40.''

What tends to be overlooked is that Labor's problem is not confined to who is leader. It is also about the message, the direction and the state of mind of the 103 MPs who make up the caucus. On the leadership, what we know is that there is little confidence within the parliamentary party that Gillard can turn the ship around; and that there is no consensus whatsoever about whether Rudd should be drafted or whether he would transform the party's prospects. I would suggest Richo is overstating the likelihood of change.

Gillard addressed the question of direction in her speech to Howes' Australian Workers Union annual conference on Monday. ''I come here to this union's gathering as a Labor leader,'' she said. ''I'm not the leader of a party called the progressive party. I'm not the leader of a party called the moderate party. I'm not the leader of a party even called the socialist democratic party.''

One concern is that this kind of language confines Labor's horizon to the party's traditional trade union base and, on one assessment, ''is just circling the wagons when we should be trying to win territory''.

A traditional tactic in times like these is to seek a circuit breaker or, at least, a diversion capable of deflecting the media's attention and commanding that of the caucus. Paul Keating was a master at it. The message from Gillard, however, is that there will be no diverting from the strategy that served her well when the outlook was just as bad (and then deteriorated) this time last year.

Back then, Gillard anticipated that Labor would take a pounding until the carbon price was in place in July, and would then manage a slow, grinding comeback once the predictions of doom from Tony Abbott failed to materialise and she was able to speak about other priorities.

Sharing some common features with Barack Obama's re-election strategy, the updated approach is to frame the contest in terms of emblematic issues (in Gillard's case jobs, school reform and disability insurance); get the detail out; doggedly prosecute the case; and hope the pressure will at some point switch to Abbott.

The emphatic message on Friday, when Gillard addressed the Australian Education Union's national conference in Melbourne, was that only ''the government I lead'' would deliver the Gonski plan to improve the nation's schools. ''If this government goes, Gonski goes with it,'' she said, adding that there was no way the Liberals would support Gonski and that the Greens' ''petty politicking'' was an added threat.

By design, it's a slow-burn strategy that relies on consistency and discipline. The problem is that there isn't much time and there is even less confidence that it will deliver. Are there things she could do? Perhaps.

One might be to take Rudd on his word that he has no ambition to return to the leadership, and is utterly committed to do all he can to defeat Abbott. Invite him around for an unannounced meeting and discuss an elevated role in the campaign and a return to cabinet should Labor be returned.

Another would be to do what football clubs with proud histories do when the confidence of the playing group is shot - invite a legend back to give them an address about solidarity and the hard yards in hard times. Bob or Paul. Take your pick.

There is, of course, a long way to go to the election, but as things stand now, the only ones high-fiving come September 14 will be the team behind Abbott.

Michael Gordon is political editor of The Age.