<h1>Leadership challenge threatens party unity as immigration and economic setbacks boost rival populist movement's momentum.</h1> Leadership is under strain as failure to achieve economic growth, persistent inflation and public-service weaknesses have eroded party and voter confidence. Organizational instability from high-profile departures has heightened perceptions of disarray while a metropolitan mayor proposes wholesale policy change as a potential leadership alternative. Immigration, driven by small-boat arrivals and large anti-immigration protests, has bolstered a right-wing populist movement and become the central political flashpoint shaping the contest over national renewal and party strategy.