Abbott Pledges Surplus Within Decade as Australia Poll Nears

Australian opposition leader Tony Abbott officially began his party’s election campaign, pledging a budget surplus equal to 1 percent of gross domestic product within a decade as polls show he’s set to become prime minister.

“The current government has turned a A$20 billion ($18 billion) surplus into deficits stretching out as far as the eye can see,” Abbott, 55, told Liberal party supporters yesterday in a packed hall at the Queensland Performing Arts Centre in Brisbane. “We can’t afford another three years like the last six.”

Polls show the Liberal-National coalition leads Kevin Rudd’s Labor government ahead of an election on Sept. 7. Abbott committed to shrinking the government’s share of the economy each year and made few new policy commitments, constrained by falling government revenue, with Treasury predicting a budget deficit of A$30.1 billion for the 12 months through June 2014.

Rudd, 55, who returned to power for a second time in June by defeating Julia Gillard in a Labor leadership vote, is running out of time to convince voters the party should be re-elected after six years in power, marred by infighting and with signs of a slowdown in the world’s 12th-largest economy. Abbott’s coalition needs to increase the seats it holds in the 150-seat lower house by four to form government.

“The election is now the coalition’s to lose,” said Haydon Manning, a politics professor at Flinders University in Adelaide. “Rudd’s task now has to be not to win, which looks unrealistic, but to save some of the furniture in defeat and avoid a wipeout.”

Poll Margin

The coalition’s two-party preferred vote fell 1 percentage point from the week before to 53 percent, according to a Newspoll published in The Australian newspaper today. Labor rose 1 point to 47 percent. The measure is designed to gauge who is most likely to form a government under Australia’s preferential voting system.

Support for Rudd as preferred prime minister rose 1 point to 44 percent, while backing for Abbott fell 1 point to 40 percent, according to the telephone survey of 1,129 voters conducted from Aug. 23-25, which had a margin of error of 3 percentage points.

Griffith Risk

A separate Newspoll published Aug. 24 in The Australian showed Rudd is at risk of losing his own district of Griffith in Brisbane, with support for Labor at 48 percent, compared with 52 percent for the coalition on a two-party preferred basis. The poll interviewed 500 voters by telephone on Aug. 21 and 22, and had a margin of error of as much as 4.4 percentage points.

Rudd initially boosted Labor’s popularity on his return as prime minister. Both leaders have put management of the $1.5 trillion economy at the center of their campaigns, amid slowing growth as a China-led boom in mining investment wanes. Rudd is pressuring Abbott to release details of the coalition’s policy costs before the election.

A re-elected Labor government would pass a law to allow the creation of a high-speed rail network down Australia’s eastern seaboard, stretching from Melbourne to Brisbane and including Sydney and Canberra, Rudd told reporters in Sydney today. The first stage of the plan, to be completed by 2035, would allow commuters to travel from Melbourne to Sydney in three hours at speeds of 350 kilometers (217 miles) an hour, he said.

The project will support employment beyond the China-led resources boom, Rudd said. While the government didn’t provide costings for the plan, it intends to allocate A$52 million to an authority that will start to implement it.

‘Believable Surplus’

Among Abbott’s promises yesterday were a pledge to have the budget on track for a “believable surplus” by the end of the coalition’s first term and expand it to 1 percent of GDP in 10 years.

The Labor government under Gillard backtracked on its pledge to return the budget to surplus, as the Australian dollar’s longest stretch above parity with the U.S. dollar since it was freely floated in 1983 slashed company tax receipts.

The government had an underlying budget surplus of A$17.2 billion in the year ended June 30, 2007, before Labor came to power. That swung to a A$27.1 billion deficit two years later as the government introduced tax cuts and cash payments to shield the economy from the financial crisis.

Labor is on course to return the budget to surplus in the 12 months ending June 30, 2017, Treasurer Chris Bowen said on Aug. 3. Treasury has projected a surplus in that year of A$4.2 billion.

Resource Taxes

Abbott also pledged to have legislation in Parliament within his first 100 days in office to abolish Labor’s mining and carbon taxes.

The Labor government’s levy on iron ore and coal mining profits is forecast to raise A$4.4 billion in the four years to June 30, 2017, according to the Treasury outlook published Aug. 13. The carbon pricing mechanism is expected to raise A$16.1 billion, the document shows.

Queensland state Premier Campbell Newman, Deputy Opposition Leader Julie Bishop and Nationals leader Warren Truss spoke before Abbott, each criticizing Kevin Rudd.

“You see the trouble with Kevin is, he’s a fake, all these multiple personalities,” Bishop said in her speech. “He reminds me of the Incredible Hulk. You know, masquerading as the mild-mannered everyman but instead he’s actually suppressing a monster inside.”

Netball Dad

Following an introduction by two of his three daughters, who described his cringe-worthy moments as a netball dad, screaming “Run Forrest Run” from the sidelines of their games, Abbott strode onto the stage after a hug from former Liberal Prime Minister John Howard.

“I am so proud of my girls, I am proud of my family that has given me so much,” he began his speech. “This election is about making a great country even better; and that starts with changing the worst government in our history.”

Abbott reiterated a pledge to remove a A$1.8 billion tax on company cars, reduce the company tax rate by 1.5 percentage points to 28.5 percent and cut red tape by A$1 billion a year. He also promised to be an “infrastructure prime minister who puts bulldozers on the ground and cranes into our skies” and forecast a new business plan for the national broadband network that will cost A$60 billion less than Labor’s network.

Abbott on Aug. 23 pledged A$420 million over the budget’s forward estimates toward installing a regional deterrence framework in a bid to halt a surge of asylum seekers arriving in Australia by boat. He’s also proposing a paid parental leave system that’s expected to cost A$5.5 billion a year.

Savage Cuts

“It’s mathematically impossible to achieve all of those objectives unless there is a generation of deep and savage cuts,” Attorney General Mark Dreyfus, who’s also Rudd’s campaign spokesman, said yesterday in an e-mailed transcript of a media briefing following Abbott’s speech. Labor officially begins its campaign on Sept. 1.

“The coalition’s soft spot is its costings: they’re going to have to put real meat on the bones of their campaign promises,” Flinders University’s Manning said. “Labor will be using a scare campaign to try to convince voters that Abbott will cut services after coming to power.”

Before it's here, it's on the Bloomberg Terminal.