Australia’s Howard lures voters with tax promise

By Rob Taylor, Reuters

CANBERRA — Australian Prime Minister John Howard, facing crushing defeat at a November election, promised A$34 billion (US$30 billion) in tax cuts on Monday if returned by voters as he fired the first shots in a tough six-week campaign.

The tax cuts would be delivered on the back of stronger than expected economic growth, which will bring the government a budget windfall of some A$12.5 billion over the next four years.

With polls pointing to an opposition Labor landslide, Howard’s deputy, Treasurer Peter Costello, said the conservative government would deliver tax cuts worth A$20 a week to ordinary wage earners from July 2008, rising to A$35 a week in 2010.

“This plan is all about further building and growing the Australian economy, it’s about creating more not less jobs,” Howard said in his first big campaign promise, warning the boom times would be at risk if Labor took office.

Costello predicted Australia’s economy would grow by 4.25 percent in 2007/08, up from a previous estimate of 3.75 percent, but inflation would remain within the central bank’s 2-3 percent target band, he said.

Opinion polls on Monday showed Opposition Leader Kevin Rudd’s Labor party ahead of the conservative government by 56 percent to 44 percent.

Howard, 68, is fighting to overturn a mood among voters for change despite the country enjoying a 16-year expansion, unemployment at 33-year lows and previous tax cuts worth A$110 billion (US$100 billion).

But Howard’s pitch of continued prosperity and more jobs has been blunted by a string of interest rate hikes to 6.5 percent, hurting bedrock conservative support in mortgage-saddled outer city suburbs, which both sides call “aspirational” belts.

The Newspoll survey showed support for Rudd, 50, a Mandarin-speaking former diplomat who may bolster ties with China, was strengthening as preferred prime minister, with 48 percent believing he would do better than Howard.

The centerpiece of Rudd’s campaign is a call for “New Leadership”, stressing generational change over Howard and pledging sweeping reforms to health, education and controversial labor laws, while maintaining economic conservatism.

The election will determine the future of Australia’s military contribution in Iraq and climate change stance, with Labor promising to bring home combat troops and sign the Kyoto Protocol. But the poll will be fought and won on domestic issues.

Rudd, who needs an imposing 16 more seats to take power in the 150-seat lower house, said he would release his tax policy later in the campaign for the Nov. 24 election.