Gillard sidesteps bombshell claim

Australian Prime Minister Julia Gillard appears unlikely to call an election this weekend after she was forced to sidestep a bombshell claim she pulled out of a deal with Kevin Rudd the night before she seized the leadership.

The surprise account of the June 23 meeting between Ms Gillard and Ms Rudd by Nine Network political veteran Laurie Oakes spiced up her otherwise bland economic speech at the National Press Club on Thursday.

It further complicates the election timetable after Labor has struggled with new asylum seeker policy.

Ms Gillard was trying to set out the economic narrative of her government, promising to be as much of an fiscal conservative as her predecessor.

Despite an updated snapshot of the economy on Wednesday showing government coffers were in better shape than predicted at the May budget, Ms Gillard promised the forthcoming election would be no spendathon.

"Those expecting an old-style, spend-up-big campaign can forget it," she said.

"Any commitments made in the upcoming campaign will not add a single cent - not a cent - to the budget bottom line."

Instead, she vowed her campaign would be "clean", "green" and "very lean".

There was, however, no mention of what she planned to do on climate change during her address.

The excitement, instead, came from Oakes, who put to Ms Gillard a detailed account of the meeting, where Mr Rudd apparently offered to hand over to his deputy ahead of an October election if polling still showed he was on the nose with voters.

Oakes suggested to Ms Gillard that she had agreed the "offer was sensible and responsible".

He went on to suggest when the meeting temporarily broke, Mr Rudd briefed some colleagues on the "deal", while Ms Gillard spoke to the factional leaders who were pushing her to bring on a leadership spill.

"(Is it true) when the meeting resumed, you said you'd changed your mind, you'd been informed that he didn't have the numbers in caucus and you were going to challenge anyway?" Oakes said.

Ms Gillard refused to confirm or deny the account.

As she has before, Ms Gillard would not elaborate on what was said on the night before she became prime minister - a confidence she intends to keep until the day she dies.

"I intend to respect that confidence for the rest of my life," Ms Gillard told the press club.

But Opposition Leader Tony Abbott said Ms Gillard should explain her role in Mr Rudd's axing.

"I think plainly, the prime minister has some explaining to do about what her exact role in the events of that night were," he said in Brisbane.

While the "deal" was over before it was even finalised, it bears similarities to the Kirribilli pact between Bob Hawke and Paul Keating or the agreement witnessed by Ian McLachlan between John Howard and Peter Costello.

The question stunned political observers, but how the matter will resonate in the electorate remains to be seen.

It has the capacity to reflect badly on both Ms Gillard and Mr Rudd, who will be undoubtedly seen as the suspected source of the leak.

His office was refusing to comment.

Mr Rudd is in the US for the Australia-American Leadership Dialogue, where he may be putting out feelers for a job in the international arena.

He met United Nations secretary general Ban Ki-moon and is understood to have sought a meeting with US Secretary of State Hillary Clinton.

The leaking of the agreement would appear to cruel his chances of a frontbench job though speculation is growing he will change his decision to remain in politics, made in the immediate aftermath of his shock dumping.

Ms Gillard, however, continued to say he would be welcome on her frontbench if Labor won the election.

For the prime minister, the issue could raise questions about character after she repeated denials in the months leading up to the change that she wanted the leadership.

- AAP