Thu, Oct 07, 2004 page9

• Australia's Labor Party faces uphill battle in election campaign

  Despite voter opposition to the Iraq war and the government's position on the Kyoto Protocol, John Howard wins support for presiding over a robust economy

  • DPA
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  Campaigning was never going to be easy for opposition Labor Party leader Mark Latham: an Australian economy into its 13th year of expansion, interest rates at their lowest in 30 years, inflation in check an close race likely to be decided in just a handful of marginal seats.

  From a shambles when Latham took over the leadership in December, Labor is back to being a credible alternative government. But it would still be a surprise if Labor managed to wrest the eight seats it needs to deny the coalition an absolute majority in the 150-seat house of representatives.

  "The federal electorate is famously conservative when it comes to throwing out governments," respected social researcher Hugh Mackay said. "We've only done it three times since 1950 and it looks as if two conditions must be met before we take the plunge: a government must appear tired, confused, incompetent, divided or seriously out of touch with the people, and the opposition leader must be a known quantity."

  The coalition is unpopular on some big issues. A majority of the 12 million voters tell pollsters they think Howard was wrong to commit 2,000 troops to the US-led invasion of Iraq.

  They also think he is shifty and that he lied when he said Middle Eastern asylum-seekers on rickety fishing boats had thrown their children in the sea to force navy personnel to pick them up. Added to that is the belief that the coalition should desert the US and join the rest of the rich world in ratifying the Kyoto Protocol on curbing the greenhouse gasses that cause climate change.

  Not even a great communicator like Latham can claim that 65-year-old Howard and the government he leads is tired, confused or incompetent.

  The latest opinion polls show voters rate Howard as the better economic manager by a margin that puts him a full 30 percentage points ahead of 43-year-old Latham.

  Howard's remarkable eight-year stewardship of the economy has forced Labor into promising that it too would never run a budget deficit, stoke inflation or let inflation run away.

  Parallel protestations of economic piety from the rival parties contrast sharply with the fiscal permissiveness other governments get away with. In Japan, the US, Germany and Britain governments are in deficits that are all bigger than 3 percent of GDP. Contrast this with Australia and a budget that is in a surplus that equates to 0.8 percent the size of the economy.

  Howard is trying to scare voters with the bogey that a Latham government would mean more union power, wage rises not backed by productivity increases, budgets in deficit and higher interest rates.

  But those whose job it is to monitor and make a call on the direction of the economy are untroubled by a change in government.

  Su Lin Ong, an analyst with RBC Capital Markets, said that "there is little real difference between the current government and the opposition on the key issues that matter to financial markets." She predicts the economy will continue to bubble along.

  "I don't see wholesale change, but some business leaders have indicated some concern over industrial relations," said Richard Sheppard, the deputy managing director of Macquarie Bank, Australia's biggest investment bank and its only home-grown financial services multinational.

  It's on foreign policy that the coalition and Labor diverge. Howard has put the heat back into relations with the US by sending troops for campaigns in Afghanistan and Iraq. On the back of those commitments, he has negotiated a free trade agreement (FTA) with Washington that many other countries are envious of.

  To his buddy President George W. Bush, Howard declared that the US had "no greater friend in the world than Australia." Latham, on the other hand, is committed to an independent foreign policy that would see relations with Washington downgraded.

  He has pledged to withdraw Australia's Iraq contingent "by Christmas" and keep the troops at home to protect the mainland.

  Australia's posture would become isolationist like New Zealand's, with Latham a stay-at-home premiere unlikely to commit troops to foreign adventures.

  A fourth term for Howard would see the conservatives plugging away at old themes. There would be more attacks on trade union power, another attempt to fully privatize giant telecommunications company Telstra and more work on deregulating the economy and stimulating commerce.

  According to columnist Paul Kelly of The Australian, a fourth term for the coalition "means an ongoing change in Australia's political culture toward a more aspirational, entrepreneurial and achievement-oriented society as represented by Howard's values."
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