KEY POINTS:
Prime Minister Kevin Rudd, battling a raft of grim economic news and facing an increasingly critical public, has one key asset: Liberal leader Dr Brendan Nelson.
Nelson's tenuous grip on a splintered Opposition, the knives being sharpened behind his back, and his inability to latch on to the opportunities he has been given to nail the Government continue to bolster Labor.
Yesterday a Newspoll in the Australian showed that not only does Nelson continue to wallow in the distant dust of Rudd as preferred prime minister, most voters would also like to see him replaced by former Treasurer Peter Costello.
Newspoll found that Costello's support for Liberal leadership had doubled since December, now running at 41 per cent against Nelson's 18 per cent, and overtaking shadow treasurer and would-be usurper Malcolm Turnbull.
Under Nelson's leadership, the Opposition has also slipped.
On the two-party preferred basis that determines Australian elections, Coalition support has dropped from 47.3 per cent at the November election to 43 per cent. And Labor's two-party preferred vote has risen from 52.7 per cent last November to 57 per cent.
But the news is not all good for Rudd. Satisfaction with the way he is performing as prime minister has slipped from 63 per cent to 58 per cent, and support as the better prime minister is down from 70 per cent to 66 per cent.
The Government's handling of the economy, especially as it battles the twin effects of mercurial global financial markets and oil prices, is increasingly coming under fire.
High interest rates, rising petrol and food prices, and growing fears for employment have eroded confidence in a Government that was greeted almost as a saviour when it was voted into office.
And the bad news keeps coming.
Yesterday research by superannuation industry analyst SuperRatings confirmed the worst fears of millions of Australians - their nest egg is shrinking, rapidly.
SuperRatings reported that the median balanced fund had lost 6.39 per cent in the year to June, rising to almost 16 per cent for some funds and sparking warnings that millions of older workers might have to forget about retirement for the time being.
On Monday, Treasurer Wayne Swan summonsed reporters to a special media conference after the ANZ bank announced its bad debt and trading provisions had soared to A$1.6 billion ($2.07 billion), following National Australia Bank's revelation last week of an A$830 million provision for losses in the United States.
Swan urged calm in the market and among the Australian public, saying that if any country had the ability to withstand global financial shocks, it was Australia.
Rudd is also faced with tough balancing acts that threaten to please no one. He is working to modify the intervention in the Northern Territory's indigenous communities while battling a divided and frequently heated community, defending the policy of managing Aboriginal incomes against wide opposition, and promising constitutional recognition without committing to form or timetable.
The Government's environmental policies are also under fire from opposing flanks, despite a number of popular moves and a compromise that promised to compensate drivers for fuel price rises as a result of its planned greenhouse gas emissions trading scheme.
A Morgan poll last week reported that predictions of ETS-inspired price increases for electricity, gas and the wider cost of living had pulled two-party preferred support for Labor down 5 percentage points to 55 per cent, narrowing its lead over the Opposition to 10 points.
Green groups, including Queensland Conservation and Greenpeace, have also attacked Rudd's support for the coal industry, painting protest messages on coal ships and demanding federal intervention to block the construction of a new coal port.
And on yet another front, the Senate appears likely to reject legislation increasing excise on pre-mixed drinks as a means of combating binge drinking, with a survey showing drinkers were instead switching to spirits.
After only eight months in the job, Rudd is learning the truth of former Liberal Prime Minister Malcolm Fraser's infamous remark: "Life was not meant to be easy".
