KEY POINTS:
CANBERRA - Australian Prime Minister John Howard fired a cannon blast through the election campaign last night, promising A$34 billion ($39.67 billion) in tax cuts if returned by voters.
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 on November 24, Howard's deputy, Treasurer Peter Costello, said the conservative Government would deliver tax cuts worth A$20 ($23) 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 per cent in 2007-08, up from a previous estimate of 3.75 per cent, but inflation would remain within the central bank's 2-3 per cent target band.
Opinion polls yesterday showed Opposition Leader Kevin Rudd's Labor party ahead of the Government by 56 per cent to 44 per cent.
But a Galaxy poll shows that Queensland could derail Rudd's plans, with Labor on track to pick up just two of four key seats in his home state.
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.
Howard's pitch of continued prosperity and more jobs has been blunted by a string of interest rate rises to 6.5 per cent, 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 per cent believing he would do better than Howard.
The centrepiece of Rudd's campaign is a call for "New Leadership", stressing generational change over Howard and pledging sweeping reforms to health, education and controversial labour laws, while maintaining economic conservatism.
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.
HSBC chief economist John Edwards said the tax cuts were far larger than he expected.
"It's a direct challenge to the Reserve Bank and I do think it puts Australia's inflation experience and the durability of the expansion at risk," Edwards said.
However, Deutsche Bank economist Tony Meer said tax cuts were affordable as tax receipts had been far larger than expected.
A debate over debates dominated the first morning of the campaign.
Howard has offered to take on Rudd this Sunday night in the only televised debate of the campaign, to be shown on pay TV.
But Rudd says it's too early to have the debate one week into the campaign, before most policies have been announced, and wants a series of three debates, including one on free-to-air TV and one over the internet.
"It is silly and just wrong for the Government of the day ... to set the rules, the timing and the contents of the debate as well. It's just wrong," Rudd told the Nine Network.
Howard said he was happy to debate Rudd in the Great Hall of Parliament next Sunday night.
"I suggested a format for the debate and I think the national director of my party and the federal director of the Labor Party ought to work out the details," he told ABC Radio.
Both leaders hit the airwaves yesterday in a radio and television blitz. Howard would not be drawn on the polls.
"The real thing will be on November 24 and I will not be commenting on polls until then."
- Reuters / AAP