If the states and territories do not sign up to fundamental reform, then my message is equally simple: we will take this reform plan to the people at the next election - along with a referendum by or at that same election to give the Australian Government all the power it needs to reform the health system.

On 21 October Rudd faced incumbent Prime Minister John Howard in a television debate where he was judged by most media analysts to have performed strongly. Rudd subsequently announced a leadership election for 24 June saying that he would stand. During his first two years in office Rudd set records for popularity in Newspoll opinion polling maintaining very high approval ratings.

Labor won the 2007 federal election with a 23-seat swing and Rudd was sworn in as the 26th Prime Minister of Australia on 3 December. The Rudd Government's first acts included signing the Kyoto Protocol and delivering an apology to Indigenous Australians for the stolen generations. Eventually Rudd's deputy Julia Gillard announced on 23 June 2010 that Kevin Rudd would challenge him for the leadership the following day.