Gillard Contest With Abbott Pits Economic Prowess Against Trust

Australians will weigh the ruling Labor Party’s record of preserving economic growth against opposition attacks on its trustworthiness and competence in an election that polls call so close no party may win a majority.

Prime Minister Julia Gillard, who took office in a party coup that toppled her predecessor, has lost support during the five-week run up to the Aug. 21 vote as opposition leader Tony Abbott attacked what he called the government’s record of unmet promises and wasted stimulus spending.

“It’s all about trust,” said Andrew Hughes, a political analyst at the Australian National University in Canberra. “And people don’t trust a government that has had dodgy programs, broken promises and an assassinated leader,” he said, referring to the June 24 ouster of Kevin Rudd as Labor chief and prime minister by party lawmakers.

Melbourne-based mining companies BHP Billiton Ltd. and Rio Tinto Group are among those with the most at stake. Abbott, 52, says he will shelve Gillard’s proposed 30 percent tax on iron ore and coal profits.

Australia, the world’s biggest exporter of those two commodities, avoided recession during the global financial crisis as Chinese demand supported its A$1.2 trillion ($1.09 trillion) economy. Australia’s streak of 18 straight years of growth has helped fuel the best-performing major currency in the past eight years.

Gillard, 48, a former lawyer and student activist, has sought to capitalize on that economic record. She argues that the Labor Party is better able to manage an economy that skirted the global recession with the help of the government’s A$42 billion stimulus package.

Conflicting Polls

Labor led in a Newspoll opinion survey published in the Australian newspaper Aug. 16, with 52 percent backing compared with 48 percent for Abbott’s Liberal-Nation coalition. The poll of 1,694 voters, taken Aug. 13-15, had an error margin of 2.4 percentage points.

Gillard will win a four-seat majority this weekend, according to a JWS Research poll published in the Sydney Morning Herald today. The survey of 28,000 voters was conducted Aug. 14-15 and no margin of error was released.

Those predictions contrasted with a Galaxy poll in the Sunday Telegraph on Aug. 15. It showed the coalition leading Labor by 51.4 percent to 48.6 percent among 4,000 voters polled Aug. 8-13 in 20 closely fought districts. It had a margin of error of 1.5 percentage points.

One-fifth of the 150 House of Representative seats are currently held by margins so small that they could change hands with the switch of several hundred votes.

“It’s just too close to call,” said Nick Economou, a political analyst at Monash University in Melbourne.

The tightness of the race raises the possibility that neither party will win a parliamentary majority, creating a risk of policy gridlock as independent lawmakers vie for influence.

Voting is Mandatory

All seats in the House, which decides who forms the government, are at stake. Voters will also elect half of the Senate, which can block legislation. Voting is compulsory for Australia’s 14 million voters, who are fined A$20 for not casting a ballot.

Abbott had led in several polls by as much as 6 percentage points before Gillard ousted Rudd. Labor’s slide began after Rudd shelved a carbon-trading plan, which had been a mainstay of his 2007 election victory, in April.

After taking office, Gillard quickly moved into a 10-point lead in polls and called the election. Abbott closed the gap by winning support in mining states and Rudd’s home base of Queensland.

Gillard was grilled about Rudd’s ouster in a televised town-hall meeting in the Sydney suburb of Rooty Hill on Aug. 11. One participant in the audience of 200 undecided voters drew applause after suggesting she couldn’t be trusted.

Stimulus Funds

Gillard has also been hurt by accusations from Abbott and some school boards that she mismanaged A$16.2 billion in stimulus funds earmarked for school construction, claims that were supported by a government-sponsored report earlier this month. She has also been criticized for supporting a home- insulation program that was linked to the deaths of four workers.

Abbott, a former amateur boxer and Rhodes scholar who studied for the priesthood in the 1980s, is a father of three girls. He has campaigned with his family to highlight the differences with Gillard, who is unmarried and has no children.

“Abbott has nothing to lose and he has shone during the campaign,” said Hughes. “Gillard has a government to lose.”

The opposition leader has called for lifting Labor’s ban on uranium exports to India, potentially opening up a new market for Rio-controlled Energy Resources of Australia Ltd. He has also promised a stay-at-home plan for workers who have just had a baby and tax breaks for people whose children are at school.

Internet and Transport

Gillard’s government vows to build a A$43 billion high- speed Internet network, provide extra funding for transport and improve health and schools spending. She has promised to cut carbon emissions by 5 percent from 2000 levels by 2020 and generate 20 percent of the nation’s energy from renewable sources by the same year.

The Greens, whose support has doubled since the 2007 election to 14 percent according to the Newspoll survey, may hold the balance of power in the upper house. The party supports a higher mining tax and deeper emissions cuts.

“A Greens-controlled Senate may be taken nervously by the market,” said Prasad Patkar, a Sydney-based fund manager who helps oversee $1.6 billion at Platypus Asset Management Pty. “Legislative paralysis can occur, which adds to uncertainty.”

To contact the reporters on this story: Gemma Daley at gdaley@bloomberg.net; Marion Rae in Canberra at mrae3@bloomberg.net

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