Three immovable realities are leading Labor MPs to an unpalatable decision to restore their dumped leader. 

In a Chinese classic tale, a monk is sent on a long and dangerous journey to find sacred texts. For protection, Buddha gives him a mischievous monkey god.

The monkey, equipped with a flying cloud and a magic staff, is well-meaning but wayward. Buddha controls him by putting a golden band around his head; if he's veering out of control, the monk can tighten the band and inflict pain to bring the monkey in check.

The story is familiar to many in Australia and Britain thanks to a popular TV show named Monkey, which the ABC broadcast in the 1980s. In China, under the title Journey to the West, the 16th century story is one of the four great classical novels.

One day, the monkey god, sick of the pilgrimage and Buddha's power over him, decides to rebel. He takes to his cloud and flees. He decides to fly beyond Buddha's realm, to escape to the end of the universe.

He travels for a long time, as fast as his cloud will carry him, through sky and space until, finally, he sees five mighty pillars ahead, blocking his way. Monkey feels free, relieved to be at the end of the universe.

But as he approaches the pillars he realises, with horror, that the pillars are, in fact, Buddha's fingers. For the entire time, he has been in the palm of Buddha's hand.

Like the rebellious monkey, Labor has spent the last year and a half trying to leave its former leader behind, only to turn the corner into the new year and discover, aghast, that it has failed to escape.

Australian politics pivots, once again, on Kevin Rudd. How and when Labor deals with him will decide its fate. The future of the Liberal Party will be, in large measure, a residual, a byproduct.

It's not that Rudd's done anything to bring this to a head. It's just that the delusions of the Gillard government have finally started to fade. The passage of time and the advent of a new year has revealed Rudd's pervasiveness as a verity that cannot be wished away.

For all the twisting and turning and schemes and stratagems, federal Labor confronts three immovable realities. First, it has haemorrhaged support since the 2010 election and it's not coming back. At that poll, Labor won a primary vote of 38 per cent. Since then 1.1 million voters have deserted. The opinion polls have been showing, for a year now, that Labor has a support base of only 30 per cent. There has been some oscillation in the numbers, but essentially within the margin of polling error. This is an all-time low.

One senior Labor figure said yesterday: "People said last year, 'give us time, we just need time.' Remember I kept saying that to you? Well time is up." He was a firm Gillard loyalist all last year. He, like many in caucus, would no longer be prepared to cast a vote for her in a party ballot.

As we saw, Labor couldn't win power in its own right with 38 per cent of the primary vote and was obliged to form a minority government. Electoral experts agree the party needs a minimum of 40 per cent to hope for victory. What would happen with just 30 per cent?

Labor's share of the seats in the House of Representatives would be halved. Faced with this looming threat to their seats, Labor MPs are now having to confront the second reality: Julia Gillard is unable to salvage the government's position.

Despite a growing economy, relatively low unemployment, an unpopular opposition leader, and a year and a half in the job, the Prime Minister has made no inroads.

Don't take my word for it. Apart from the evidence of the published opinion polls, consider Labor's own research with focus groups. As the Herald disclosed last June, after a year in the job, Gillard had failed to establish any sort of positive relationship with the Australian people.

The Labor Party's research showed that Gillard was seen as cold and untrustworthy. This does not seem to have improved and shows no sign of improving. As the Herald's pollster, Nielsen's John Stirton, puts it: "Dislike of Gillard, where it exists, is deep and visceral." Unfortunately for the Prime Minister, it seems to exist pretty widely - 50 to 60 per cent of voters consistently disapprove of Gillard.

Caucus was confronted with this reality in the raw when MPs and senators went on Christmas holiday. In unprotected exposure to extended family, friends and community they heard it directly, a kind of personalised focus group for each parliamentarian.

This helps account for the gathering gloom around Gillard's leadership. More gloom comes from the fact that Gillard's latest setbacks have all been self-inflicted.

There were four over the last couple of months - the dismal ALP national conference, Gillard's misjudged cabinet reshuffle to reward loyalists, the collapse of her deal with independent MP Andrew Wilkie, and her staff's attempt to foment an Aboriginal protest against Tony Abbott on Australia Day. "The level of disappointment is just so deep" inside caucus, said a senator.

So if Gillard seems fated to lead Labor to a painful defeat, what alternatives does it have? This is the third reality: There is only one alternative leader who could plausibly lift Labor into election-winning territory.

That, of course, is Kevin Rudd. In every poll asking voters their preferred Labor leader, Rudd has been in a league of his own for a year now. In the last Herald Nielsen poll to ask the question Rudd won more votes than Gillard plus the next three candidates combined. It's that stark.

But the most powerful poll result came when the Herald-Nielsen pollsters asked people how they'd vote if Gillard were replaced with Rudd. The effect was dramatic - it would have lifted Labor's primary vote by 15 percentage points, putting Labor in a commanding lead and transforming politics.

This poll, taken last September, is what the pollsters call a "hypothetical poll," as if all the other ones weren't. Still, the point is that we should treat it with some scepticism.

But hold on - if it's so clear-cut, why do we hear an endless recitation of other names as alternatives to Rudd or Gillard? In recent months anonymous Labor sources have inserted into speculative media pieces the names of Stephen Smith, Simon Crean, Greg Combet and, most persistently, Bill Shorten.

The problem with these names is that they all carry less voter support than Gillard. Much less. So to make any one of these characters leader would be a change without an improvement. The ranking looked like this the last time the Herald-Nielsen pollsters asked the question, in September: Rudd 44 per cent, Gillard 19 per cent, Smith 10, Crean 8, Shorten 5 and Combet 4. All other published polls, before and since, show broadly similar findings.

Rudd in the leadership cannot guarantee victory for Labor, of course. But he represents the party's only plausible path to it. Even as recently as two or three months ago, there was powerful caucus resistance to the idea of installing Rudd. The coup-masters who brought Rudd down, all factional operatives from the Labor Right, were determined to defend Gillard at any cost - even at the cost of losing an election. Most of them still are. The fierceness of this Praetorian Guard deterred many others in caucus from even flirting with idea of another leadership change.

But over the summer break, caucus support for Gillard has crumbled from within. Rudd has done nothing to assist. Indeed, he's been out of the country for most of the time and pledging loyalty to Gillard for the rest. So it's entirely Gillard's own work.

But one consequence is that while Gillard has lost the fealty of many supporters, most don't appear to have shifted to Rudd. Many seem to be in a state of uncommitted limbo, despairing of Gillard but not convinced of Rudd.

It's hard to gauge because no one is compiling lists of names and counting heads just yet. But it's entirely possible that neither Gillard nor Rudd today enjoys a majority. Rudd cannot openly seek to persuade his colleagues without being accused of gross disloyalty, and perhaps provoking a confrontation he doesn't seem ready to embrace.

Neither does Gillard want to destabilise a delicate status quo by being too overt in courting caucus votes. But she doesn't need to be. She's the leader. Her invitation to all 103 members of caucus to a political revivalist meeting in Canberra on Sunday, followed by a feed at The Lodge ahead of the first parliamentary week of 2012, is her way of courting solidarity.

Some of her loyalists want her to bring on a vote now, to force the confrontation with Rudd before he builds further. That would be rash, and probably counterproductive. First, it would free Rudd from the terms of his good behaviour bond. He'd be able to campaign aggressively. So far, Rudd's caucus appeal is mainly his electoral appeal. But in an open contest he could transform a mere popularity contest into a purposeful campaign.

And even if Gillard were to win a ballot now, Rudd would retire to the backbench, free to continue campaigning, and challenge later on his own terms and timing. Gillard would be unable to govern in the meantime and Rudd's eventual victory would be assured.

But if Labor's fate is in the palm of Rudd's hand, he's not making any move to grasp it. He seems content, for now, to wait for the party to reach the point where it falls into his embrace. The exact timing and circumstances are unpredictable, but it's growing near.

Every Which Way It's Rudd

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Tasmanian Labor MP Dick Adams says Prime Minister Julia Gillard has a credibility issue with some voters.

Speculation is continuing that Ms Gillard will be replaced as ALP leader with support reportedly growing for Foreign Minister Kevin Rudd returning to the top job.

Mr Adams, who represents the eastern Tasmanian seat of Lyons, says while the prime minister has support, not all voters are convinced.

"She has a bit of a credibility issue with some of the decisions that she's made," Mr Adams told ABC News 24.

"That's a message for her that she has to get out there that her credibility is sound."

He said the government had not been able to communicate its achievements to the electorate in an effective way.

"I think Cabinet has to take some responsibility for the message delivery and how their leadership is coming through for government and they need to look at themselves in a pretty hard way from that perspective," he said.

"All these things that weren't spent in the last government are being spent by this government to position Australia into the future.

"If you can't get that message out, yeah, somebody's got to take that responsibility and that's got to be done."

Mr Adams was frustrated that parts of the government's message had confused parts of the electorate.

"In general circumstances the economy is good. In those circumstances anywhere in the world the government is then pretty sound.

"I would cite the issues that I encountered when we first started to do the mining tax and people were asking me why we were putting a tax on super and we had a super tax running out there in people's minds."

He believed that the leadership issues were being "blown up" and said nobody has rung him about it.

"I've been around a long time and I've had a lot of calls over the years from people who aspire to leadership. I've had no calls.

"I've had nobody calling me to start making up lists and I don't believe there are lists being made up.

However, he said Labor heavyweights would be looking at the current polling which shows Labor a long way behind the coalition.

"Polling that is being done by the political parties, they're always the polls that you make political decisions about.

"And the machinery of the parties act on those and I'm sure my colleagues in that role will be looking at those and making decisions."

Asked if Ms Gillard had his 100 per cent support, Mr Adams replied that he supported the leader.

"If I change my mind I would tell the prime minister that she doesn't have my support.

"I will support the leader. I don't believe it's time to change the leader."

Caucus members will meet in Canberra on Sunday for a pre-parliament strategy day.

Gillard Has Credibility Issue: Labor MP