Prime Minister Julia Gillard may have enjoyed a quiet birthday dinner last night, but today she woke to the renewed threat of a leadership challenge.

A Galaxy poll has revealed Kevin Rudd is very much the preferred Prime Minister.

Emilie Gramenz reports.

TRANSCRIPT

They’re facing mounting budget pressure, but Julia Gillard and Wayne Swan say they can balance the books by next year.

Government revenue has dropped 13 per cent in the last three years.

Wayne Swan says while public finances have taken a major hit, the budget deficit is better than expected.

In fact it’s $1.6 billion less than forecast.

Wayne Swan, Treasurer: “We’ll have softer revenues going forward as a consequence of the global instability, and all of that will make it more difficult to reach surplus in 2012-13. But we are absolutely determined to do that.”

Meanwhile, Gillard has been dealt another blow.

A Galaxy poll shows Kevin Rudd has a 60 per cent approval rating as Labor leader.

David Briggs, Galaxy Research Chief: “There is evidence in the poll that should Kevin Rudd become leader, he would be immediately a more popular option and restore the stocks of Labor but he would need to attend to some of those unpopular policy issues, such as the carbon tax and the Malaysian deal.”

Rudd addressed an audience at the University of Queensland this morning, but didn’t mention domestic politics.

Political commentators say the threat of a leadership challenge will keep Julia Gillard on her toes, but Kevin Rudd has so far remained silent on the issue.

But in Rudd’s hometown of Brisbane, opinion remains mixed.

Emilie Gramenz, QUT News