Australia Vote Hinges on Economy

THE road to Yarralumla had never been watched more carefully by reporters.

That's the path to the governor-general's residence that Australian prime ministers must traverse when they want to call a federal election. Under this country's parliamentary system, Prime Minister Paul Keating had until May to hold the election. But the guarded Mr. Keating surprised everyone when on Feb. 7 he called a March 13 vote.

Several events made it pointless for him to wait. The ruling Labor Party recently lost a state election in Western Australia, the long-range unemployment forecasts were getting no better, and a Labor Speaker of the House of Representatives had resigned over an ethical issue.

Keating wasted no time getting into campaign mode. At a trade conference he hammered his favorite theme, more trade with Asia.

"Everything else we do in this country depends on our success as a trading nation," he said. And he is expected to announce a new policy on women's issues.

But what was most eagerly awaited was Keating's economic package, announced Feb. 9. Highlights include:

* A tax cut on companies from 39 percent to 33 percent.

* A 10 percent general investment allowance for small businesses.

* A $30-a-week child-care cash rebate for working parents.

His opposition, the Liberal-National Coalition, scoffed at the package. "It cannot be paid for," said Peter Reith, the shadow treasurer.

The stakes in the election are high: Australia is in the midst of a fundamental shake-up in labor relations; foreign debt totals 40 percent of gross domestic product, or $160 billion (Australian; US$108 billion); its 11.3 unemployment rate is nearly as high as during the Great Depression; and the country is cautiously eyeing emerging trade blocs to see where it is going to fit in.

Keating's Labor Party has been in power for a decade and some voters, as in the United States election, seem ready for a change. The views of the two candidates, Keating and opposition leader John Hewson, could not be more different.

Keating has positioned himself as the visionary for a new Australia. He is pushing the country to realign itself with Asia and away from Britain and the US.

Keating, who was treasurer of Labor before unseating Bob Hawke in Dec. 1991, has followed Mr. Hawke's efforts at gradual restructuring of the work force and deregulation of industries.

Yet in the last eight months, Labor has been thrown out of office in 3 out of 4 state elections because of the worsening economy and its role in the collapses of state banks and building societies.

Dr. Hewson, the Liberal-National coalition candidate is staunchly pro-business. Hewson's "Fightback" economic package, launched a year ago, consisted of bullet-biting workplace restructuring, tariff reduction, business incentives, privatization, and slimmed-down social programs. It taxed consumption rather than production by replacing six taxes with one, a 15 percent goods-and-services tax (GST).

But after wide public protests over the fairness of a GST on food during a time of great unemployment, and seeking to counter an image as "inflexible," Hewson in December came out with a softer package that exempted food from the GST. While Keating derided the changes as waffling, the public did not.

Pollsters and pundits are predicting a close race. A Morgan poll shows approval ratings for Labor at 43.5 percent to the Coalition's 42 percent.

But voters say they prefer Keating as prime minister by a margin of 48 percent to Hewson's 40 percent.