PM wins 71 to 31.

ABOVE: Time for a moment of quiet reflection before pulling the trigger. BELOW: Official ALP image of Ms Gillard with her new Apple iPad.

Australian Prime minister Julia Gillard has called a federal election for August 21.

If the bookies can be believed, Ms Gillard's June coup against Kevin Rudd has turned her party's fortunes around.

Mining tax helps uproot Rudd

The ousting of Kevin Rudd from his job as Australian Prime Minister this week is a welcome reminder that voters aren’t quite as gullible as politicians believe.

And it is a warning to New Zealand’s Prime Minister John Key that no amount of popularity in the opinion polls is enough to insulate against policies that wreck the economy and needlessly cost people jobs.

Australian Prime Minister Kevin Rudd has called for a Labor caucus vote on his leadership and faces a challenge from deputy leader Julia Gillard. If successful, she will be the country's first woman prime minister.

The spill, as Australians call a leadership challenge, comes after a precipitous fall in Mr Rudd’s popularity since the beginning of the year.

Air New Zealand’s major rival Qantas has taken drastic action to cut costs as it slashed its full year pre-tax outlook from $A500 million to between $A100 million and $A200 million.

To deal with reduced demand and passenger load factor, the airline is cutting flying capacity by 5%, which the airline estimates will affect the equivalent of 1250 jobs.