Aug. 4 (Bloomberg) -- Australian Prime Minister Kevin Rudd called an election for Sept. 7, saying the five-week campaign will center on management of the $1.5 trillion economy as a China-driven resources boom wanes.
“Who do you best trust to manage a very profound economic transition,” Rudd said today at a news conference in Canberra after visiting Governor-General Quentin Bryce to seek approval to hold a ballot. “Economic management will be a core determinant of this election.”
Rudd, 55, is betting his record as leader through the 2008-2009 financial crisis, when Australia sustained growth while much of the developed world slumped into recession, will help Labor defeat Tony Abbott’s opposition. Since ousting Julia Gillard five weeks ago, he has closed the gap in opinion polls and sought to neutralize opposition attacks with plans to scrap the world’s highest carbon price, curb asylum seekers arriving by sea and reform his party’s leadership rules.
“Rudd faces a litany of challenges, including holding the ministry together and working with colleagues, looking credible, selling the message that he’s changed his ways, and distinguishing some policy differentials from Gillard,” said John Wanna, a professor of public administration at the Australian National University in Canberra.
The former diplomat, who last year said he’d learned lessons in leadership during his first tenure as prime minister, heads into an election with a weakening economic outlook that’s prompted the central bank to cut interest rates to a record low.
Australia’s growth is slowing and unemployment is rising as a spurt in mining investment to meet demand from China wanes. The government announced Aug. 2 that the budget deficit will blow out to A$30.1 billion ($26.8 billion) this fiscal year.
“With the end of the China resources boom, we can no longer afford to have all our eggs just in one basket,” said Rudd, who defeated Gillard June 26 in a leadership ballot to secure his second stint as prime minister. “For the future we must broaden the economic base, diversify the economy.”
Rudd is trying to frame the election as a battle between David Cameron-style austerity from the opposition and his own program that allows the deficit to widen as he prioritizes jobs and economic growth. Labor says Abbott’s Liberal-National coalition will have to cut A$70 billion to maintain the government’s updated budget position and fund the opposition’s own proposals.
To raise receipts, Rudd’s government plans to increase tobacco taxes by A$5.8 billion; save A$1.8 billion by tightening tax breaks for business car use; target A$827 million of unpaid tax and pension savings; and charge banks a fee for deposit insurance.
“It is plain that this government has no plan to manage our economy,” Abbott, 55, told reporters in Canberra today after Rudd set the election date. “No plan whatsoever.”
Polls indicate the switch back to Rudd has boosted Labor. A Newspoll published July 23 showed Labor trailed the opposition 48 percent to 52 percent on a two-party preferred basis, designed to gauge which party is most likely to form a government, from a 14 percentage point gap when Gillard was at the helm. The two parties are split 50-50, according to a Galaxy poll published in the Sunday Telegraph newspaper on July 28.
Rudd leads a minority government, formed by Gillard in 2010 after the closest election in seven decades, that has relied on independents and the Greens to pass laws. Labor holds 71 of the 150 seats in the lower house, where government is formed. Abbott’s coalition has 72 seats, with seven held by independents or smaller parties.
Half the 76 Senate seats will also be up for grabs. The coalition has 34 upper house seats, Labor 31 and Greens or others 11.
Rudd prevailed over Gillard, 51, in a 57-45 vote among Labor lawmakers that underscored the split between the man who swept the party to power in 2007 and the woman who ousted him in 2010 after his colleagues grew fed up with a leadership style that eschewed consultation.
The fluent Chinese speaker has revamped his cabinet as seven senior party members quit their ministry positions after the defeat of Gillard. New Deputy Prime Minister Anthony Albanese and Treasurer Chris Bowen were rewarded for supporting him in the leadership challenge, while some Gillard backers kept their posts in an apparent attempt at reconciliation.
In the past, Rudd has been criticized by colleagues including Wayne Swan -- who resigned in June as treasurer and deputy leader -- for an autocratic style, raising questions over whether Labor can rally behind him. Swan last year described him as a man of “great weakness” who had demeaned his party colleagues during his first tenure as prime minister from 2007-2010.
“You the Australian people know me pretty well, warts and all,” Rudd said today. “ The Australian people over the years have seen me at my highest highs and some of my lowest lows.”
Since returning to the job, Rudd has won a bid to give Labor’s rank and file members more of a say in electing the leadership, in an effort to reduce factionalism and the likelihood of future party coups.
In crafting an election platform, Rudd has embraced one of the legislative landmarks of Gillard’s tenure -- A$9.8 billion in extra federal funding for schools.
He’s also sought to differentiate himself from Gillard -- pledging to accelerate a move to emissions trading by scrapping her fixed price on carbon a year early. The carbon price, which was to be set at A$25.40 a ton for 2014-15, will move on July 1 next year to a floating price of about A$6 if Labor wins the poll and can get legislation passed by parliament to make the change.
Abbott is opposed to emissions trading, saying it isn’t a “true market.” The coalition is pledging as much as A$750 million to subsidize companies’ spending to achieve a 5 percent cut in greenhouse gas emissions from 2000 levels by 2020.
Rudd has promised to curb the number of asylum seekers arriving on Australia’s shores by boat, by intercepting vessels and sending them to Papua New Guinea.
Abbott has vowed to “stop the boats” and tow them out of Australian waters. He’s also said he would dismantle Labor’s taxes on mining profits and find ways to open up the nation’s remote northern regions to agriculture.
The Rhodes Scholar and former amateur boxer says Labor’s internal infighting has made it unfit to govern.
Along with claims he leads a party riven by internal divisions after three leadership challenges in as many years, Rudd will have to rebut opposition attacks on Labor’s economic stewardship.
While Chinese demand for iron ore and coal has driven a mining boom in Australia’s north and west, manufacturing areas in the east have struggled, with the Aussie dollar in the past three years averaging 30 U.S. cents above the level of the prior two decades.
Much of the manufacturing downturn has hit electorates with a track record of voting Labor. One casualty was Ford Motor Co., which announced on May 23 it would end production in the country after nine decades, with the loss of 1,200 jobs.
“Elections are about judgments of our record, just as they are about our plans for the future,” Rudd said today. “In the years we’ve been in office we have helped keep our economy strong.”