Senior Labor leaders have admitted that the leadership showdown between Prime Minister Julia Gillard and former Foreign Minister Kevin Rudd this week drove down a gaping wedge between party members.

Yet the most notable effect of the damaging Labor rift was the distraction from effective governance of the country, specifically its economy, according to Federal Treasurer Wayne Swan.

Swan, however, is upbeat that since the leadership struggle was now behind Labor, the party can now train its full energy in managing the economy, foremost to ensure that the financial difficulties currently underway in Europe will not impact the Australian economy in a big way.

Economist have predicted that Europe teeters on the brink of another recession once the debt issues battering many of its economies further deteriorate, with both the International Monetary Fund (IMF) and the World Bank validating such assertions.

And now that the smoke created by the skirmishes within Labor is slowly clearing, Swan said the government is gearing to perform what it does best, uplifting the state of the domestic economy and maintaining its present robust state.

"The focus returns to a simple choice between Labor, who stands up for working people, and the Liberals, who kneel at the feet of vested interests," Swan was quoted by the Australian Associated Press (AAP) as saying on Tuesday, obviously taking a swipe on the Coalition.

He stressed that the Gillard government is forward-looking and plans to convince the Australian public that the party is the best choice in handling the national economy, a claim that Swan said is backed by the achievements registered by the Labor-led government since it assumed power in 2007.

Swan dismissed suggestions that following the caucus vote on Monday, which Ms Gillard had resoundingly won, Labor came out a damaged party, making it harder for the present Labor leadership to reverse a likely trouncing come the November 2013 elections, as shown by latest polls.

"The values, policies and beliefs that unite the Labor Party dwarf any differences we have from time to time over politics or personalities," Swan insisted.

Swan added that amidst the heavy attacks seen in the previous days, exchanged between Labor factions, some personalities came out in sterling state, with the Treasurer citing the act displayed by Senator Mark Arbib.

Swan lamented the resignation tendered by Arbib on Monday, shortly after Ms Gillard had formally thwarted efforts by Rudd and his supporters to wrestle the Labor leadership and the prime ministership away from her bloc.

Arbib's sudden exit gave rise to talks that he was a Rudd supporter and therefore an early victim of the expected purge that Ms Gillard would implement to weed out the remaining backers of her predecessor from her government.

But succeeding media reports indicated that Arbib voted for Ms Gillard during the tension-filled caucus and his early retirement from politics was largely influenced by the immediate members of his family.

It was a pity that the Labor-led government will have to lose a man like Arbib, Swan said, adding that the senator was largely responsible for drafting policies that befitted small businesses in Australia and protected thousands of workers.

Arbib's decision to quit with haste came as a surprise for the Labor leadership, Swan stressed.

"He was already doing a magnificent job and I had looked forward to working together for a longer period," Swan said.