Don't expect the sky to fall in under a Rudd Government. Do expect a raft of new political thinking that will still be tempered by a Senate that Labor does not control.

In Kevin Rudd's victory speech on Saturday night he used the phrase: "It's time". But don't expect a return to overblown Whitlamesque policies. Rudd's speech actually did more to define what he really does stand for than six weeks of campaigning ever did. We will see some "Me Too-ism" but it's more likely Rudd will deliver a raft of fresh new ways to implement largely centrist policies.

Immediate decisions will be taken by the Rudd Government, just as Whitlam moved swiftly in 1972 to implement key elements of his platform. Rudd will ratify Kyoto. WorkChoices has been utterly repudiated by the electorate, and Rudd will implement a new industrial relations regime that will restore enterprise bargaining at the expense of some aspects of individual contracts. And Australia will withdraw troops from Iraq.

Investors have little to fear on initial appearances. The Rudd team is committed to centre politics not radical Left agendas. It has tied itself to fiscal conservatism and greater engagement with our key economic partners in Asia.

The bogeyman policies painted by the Coalition during the campaign, particularly industrial relations, have been vastly diluted by Rudd against the wishes of many in Labor's historic supporter base. Indeed, on IR Rudd has alienated many in the union movement and the Greens have benefitted from a more aggressive rejection of WorkChoices. Rudd's halfway house position on IR will focus on the installing the fairness in workplace negotiations that WorkChoices had denied.

However, the Government under Prime Minister Kevin Rudd and Treasurer Wayne Swan will still have to confront a Senate it does not control. The Democrats have essentially evaporated. When the new Senate takes its seats in Parliament in July next year, new Green senators from Victoria and Western Australia will join with South Australian Independent Nick Xenophon. Together, up to five Green Senators and Xenophon are likely to hold the balance of power.

But Rudd's scrapping of WorkChoices in favour of enterprise bargaining will still have a tough passage through the Senate. The Coalition's Nick Minchin, presumably if he is elected to the role of Opposition Leader in the Senate, is now in a crucial position to monitor legislation produced by the Rudd team. The Greens will be able to wield tremendous influence on Rudd and will be keen to pepper decisions with their own policies but Minchin may be in a position to negotiate changes with Rudd that bypass more "extreme" Green amendments and at least keep the Coalition in the picture.

Just what Rudd and his deputy Julia Gillard come up with as a replacement for WorkChoices will also be tempered by the fact that the ALP managed to win power thanks to massive swings in Queensland and New South Wales but failed to have their WorkChoices argument win traction in the resources boom state of Western Australia. Rudd is looking to the future and another election victory to cement his place - he needs to reassure Western Australia that his industrial relations policy will not lead to a wages blow-out and that it will rely on sensible bargaining between bosses and workers. In WA it will require exquisite handling.

In his victory speech, Rudd identified the drought the massive threat it is to rural Australia. It is also undermining economic growth. Australians are seeing food prices rising and food quality declining in their supermarkets. Our food exports will start to slide as the drought bites harder into farm incomes. The drought has to be managed - and having Labor governments across the country may help satisfactorily redraft the Howard Government's Murray-Darling water plan to overcome Victorian intransigence.

Inflation remains a threat as it threatens to rise above the 3 per cent mark. The Reserve Bank is signalling that it will aggressively tackle rising inflation and economists are tipping up to two or even three more interest rates rises over the course of 2008. Rudd will have to tackle the inflationary impact of the drought and rising fuel costs as well as the expectations of higher wages that traditionally come with the election of Labor.

Home affordability, health and education are three key areas that need immediate attention from Rudd and his team. The electorate will expect that the policies Labor announced over the campaign will be rolled out promptly.

There is a new talent pool of capable people to sit on the front bench. In terms of assigning portfolios, it is questionable whether Peter Garrett will be given Environment given how easy it is for him to be conflicted based on his previous positions at the Australian Conservation Foundation. Rob McClelland has also failed to impress as Foreign Affairs spokesman and it is questionable whether he will slot into that portfolio given the Rudd team's desire to engage with Asia - an astute Foreign Minister is required to handle our relations with Indonesia and McClelland does not seem to fully fit the role.

Wall-to-wall Labor governments may not be the bugbear the Coalition tried to paint them. State and territory leaders will find talking to Canberra easier but may not get any grand concessions given the scrutiny Kevin Rudd is under to maintain an aura of fiscal conservatism that he has cloaked himself in.

As for the Opposition, the Liberal Party has been crippled and is now out-of-the-loop politically. It will find that fundraising and opening doors to key interest groups such as the business sector will be much tougher.

A new leader is needed and perhaps Malcolm Turnbull can get better traction in rebuilding a connection with voters.

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