Kevin Rudd has brought Labor back from the brink of electoral defeat into a competitive position, and Tony Abbott will need to respond with more than just a demand that an election be held immediately, writes Barrie Cassidy.

How close will the federal election be?

Look at it this way. If the first polls after the elevation of Kevin Rudd represent the high water mark, then Tony Abbott and the Coalition will win.

But if it's not - if Rudd and Labor can improve on that first blush result, however slightly - then the Government will win.

In other words, there is an awful lot riding on that basic and unproven assumption that it will not get any better than this for Rudd.

The practical and psychological hurdle for Labor is that it must win seats - five at least - to form government in its own right.

That seemed preposterous just over a week ago. But not anymore.

The combined polls through last week suggest a turnaround in the two-party preferred vote of 7 per cent or more in the seats-rich states of NSW and Queensland.

Polling analyst Andrew Catsaras on Insiders on Sunday will demonstrate just how dramatically that can impact on the distribution of seats. Suffice to say, the change of leadership has headed off a catastrophic result for Labor and set up a real contest.

That is despite the fact that the return of Rudd has failed to impress voters in South Australia and Victoria, the two states where Julia Gillard had historical links. In those states, many voters are grumpy at the way she was treated. However, those voters are vulnerable to change as the focus comes on Tony Abbott nearer to the campaign proper.

The biggest single indication of how the political dynamics have changed is Abbott's refusal to debate Rudd unless Parliament is recalled or an election date announced. Ordinarily, an opposition leader is the one making the challenge, keen to share the platform and the leadership status with the incumbent. But not this time.

Rudd's tactic has been especially audacious by allowing Abbott to debate the issues that he has run most strongly on in the past: asylum seekers, the carbon tax, and debt and deficit.

Given Abbott's reluctance, it would not be surprising if Rudd eventually offered his opponent three debates during the formal campaign, American style, focussing separately on general issues, the economy and foreign policy.

Another important indicator to political fortunes beyond the two-party-preferred and primary votes is the preferred prime minister figure.

Rarely does government change hands when the opposition leader trails the incumbent. Bob Hawke led Malcolm Fraser in 1983. John Howard led Paul Keating in 1996.

More recently, in the run-up to the 1998 election, Howard led Kim Beazley 42 to 37. Then, in 2001, he led Beazley again, and even more convincingly, 52 to 34.

In 2004, Howard led Mark Latham 51 to 36. Then, in 2007, an opposition leader finally led the prime minister when Rudd edged out Howard 48 to 41, and of course he went on and won the election.

In 2010, Gillard led Abbott 50 to 34, and the result was a hung parliament. Interestingly, that's precisely the lead that Rudd now has over Abbott and again a hung parliament is very much in the equation.

Much will depend in coming weeks on how the electorate responds to the various policy adjustments that Rudd is working towards.

On the face of it, most of the flagged changes will be politically popular: making it harder for asylum seekers to claim refugee status; moving quickly to an emissions trading scheme; restoring funding to higher education; and reversing the welfare cuts to single mothers.

However, some of those adjustments will cost billions of dollars. The new Treasurer Chris Bowen has said that any spending or loss of revenue will be met with new spending cuts. In other words, the changes will be revenue neutral. That means there has to be some bad news with the good.

Pessimists within Labor ranks - read: former Gillard supporters - don't believe victory is in sight, or anywhere near it. They argue that the Labor brand has been irrevocably damaged, particularly in NSW.

But somehow Rudd seems to transcend that reality, positioning himself as the outsider ever since he lost the leadership. The intervention by the federal executive into the affairs of the NSW branch will further blunt that attack.

The intervention seems to be designed, at least in part, to head off a genuine root-and-branch, take-no-prisoners intervention that would have happened after the election had it not been for this largely cosmetic pre-emptive strike.

The decree that property developers are not to be eligible to stand for pre-selection is so typical of the Rudd style immediately after 2007. How can you rationally exclude one legally constituted profession from the political processes? What next? Used car salesmen, then journalists, perhaps?

It's gesture politics at best. But the landscape has undoubtedly shifted. Nothing can be taken for granted.

Rudd is running hard and Abbott has responded so far with nothing more than a demand that the country go straight to an election.

A lot more than that will be needed as Rudd drags out the debate and the contest, probably all the way through until October.

Barrie Cassidy is the presenter of ABC programs Insiders and Offsiders. View his full profile here.