Australian PM's poll gamble x2

AUSTRALIANS WILL vote in a general election on 3 October, after John Howard, the Prime Minister, decided yesterday to gamble his government's comfortable majority and seek a fresh mandate only two-and-a-half years after he came to power.

The election, which Mr Howard has called six months before its due date, will decide which leader takes Australia into the next millennium and who presides over a referendum next year on becoming a republic.

The choice will be between Mr Howard, 59, leader of the conservative Liberal Party, and Kim Beazley, 49, of the opposition Labour Party.

It will be a hard-fought campaign, in which both leaders will be trying to convince voters that their parties are better placed to manage the country in increasingly uncertain economic times. Mr Howard's leadership will also be an issue, as will the emergence of One Nation, the right- wing group led by Pauline Hanson, which has become notorious for attacks on Asian immigration and welfare funding for Aborigines.

Mr Howard's Liberals, in coalition with the National Party, won by a landslide in March 1996, ending Labour's record 13-year reign.

Labour faces a huge task. Only one incumbent Australian government has ever lost power after just one term. Mr Beazley holds his own constituency, in Western Australia, by the slimmest of margins.

But Mr Howard has whittled away the goodwill that he earned in his 1996 victory. Recent opinion polls suggest the coalition may lose the election, which appeared unthinkable six months ago. Mr Beazley has overtaken Mr Howard in polls for preferred prime minister.

The coalition's standing in the polls rose slightly earlier this month when Mr Howard announced sweeping reforms to the tax system. The centrepiece is a consumption tax, similar to VAT, of 10 per cent on almost everything, including food and drink. Income tax rates will be lowered to offset the new tax.

Mr Beazley countered with a tax reform plan that promises relief to low- and middle-income earners, but does not include a VAT. Although Labour itself once tried to introduce a VAT, it will now try to exploit the fact that the unpopular tax proposal could be Mr Howard's political Achilles' heel.

Labour could well be right. The Liberals under John Hewson, a former leader, lost the 1993 general election over a VAT plan when the then Labour government waged a scare campaign against it.

Mr Howard hopes the timing of the election will run his way. Australia's economy is buoyant, but the country is starting to feel the shockwaves from Asia's financial turmoil, where most Australian exports go. Another shock has come from the economic turmoil in Russia. As a big commodity- exporting country, Australia is badly placed to withstand a flood on to the world market of cheap commodities from Russia.

But Mr Howard is not a popular leader. The press have attacked him for failing to counter Ms Hanson's racial diatribes. Business leaders are disappointed he has not been more decisive in attacking unions.

Ms Hanson will loomover the entire campaign The party stunned the establishment when it won 11 seats in a Queensland state election in June, and captured almost a quarter of the state's vote. The Hanson Queensland victory was seen mainly as a protest vote but it could cause havoc if it is repeated in the forthcoming federal poll. Some pollsters have predicted the Hanson party, with about 10 per cent of the vote, may end up holding the balance of power in Canberra.