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Australia's Hawke flies lower in polls. Premier's tough economic policies could cost him votes in upcoming election

Prime Minister Bob Hawke is fighting to shore up his Labor Party's dwindling lead in opinion polls and win a record third consecutive term in Australia's national elections on July 11. With two days until Australia's 10.5 million voters cast their ballots, the ruling Labor Party enjoys only a one-percentage-point advantage over the conservative opposition, the Liberal and National parties.

Labor runs the risk of losing this slim margin if, as during recent campaigns, three or four percent of voters switch allegiances the day of the vote.

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Labor's slide in the polls has dashed Mr. Hawke's hopes of an easy victory in the snap election he called in May. If reelected, Hawke, who came to office in March 1983, would be the first Labor candidate to win the premiership three times in a row.

Hawke's main task is to convince voters that his economic policies will effectively redress Australia's financial troubles. These include:

Falling living standards, as average wage increases of 5 percent fail to keep pace with a 9 percent inflation rate. Unemployment is at 8 percent.

Declining world prices for Australian primary products exports, which has fueled a $105 billion (Australian) (US$75.6 billion) gross foreign debt.

A large, though declining federal budget deficit, which totaled A$2.7 billion (US$1.9 billion), or 1 percent of the gross national product for the fiscal year ending June 30. The shortfall in the budget contributed to a prime interest rate of 19 percent earlier this year, although the rate has dropped to 17 percent over the past two months.

To combat these problems, Hawke has been carrying out some unpopular measures such as cuts in welfare and unemployment compensation and backed a tight monetary policy. These steps have begun to slowly reduce the budget deficit and interest rates.

Combined with the halt in the depreciation of the Australian dollar, which caused prices of imports to rise, the measures are expected to reduce the inflation rate from the current 9.5 percent to 6 percent by next June.

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Hawke's uncharacteristically conservative programs have pushed the Liberal Party leader John Howard even further to the right.

In a radical move that significantly boosted his popularity, Mr. Howard last month promised to slash Australia's top tax rate to 38 percent from 49 percent.

Howard has also pledged to abolish Labor's capital gains and fringe-benefit taxes, while trimming government spending by 10 percent, or A$8 billion (US$5.8 billion), in order to fund the tax cuts.

Hawke has attacked Mr. Howard's platform, charging that the Liberal's spending cuts will reduce funds for social programs and education by 16 percent on average while leaving the defense budget untouched.

Labor also has asserted that the conservative opposition will introduce a highly regressive national consumption tax, a charge the Liberal Party has denied.

The intensity of the economic debate has made for an extremely close election, according to Australian pundits.

Given the current party alignment, Labor must gain at least 47 percent of the vote to win. Yet voters backing Labor have dropped to 48 percent, compared with 45 percent who support the Liberal-National opposition, according to a last weekend's Morgan Gallup Poll of 2,000 Australians.

The remaining 8 percent of voters are divided among a number of smaller parties. Since Australian voters are obliged by law to cast a ballot, they have a tendency to switch to minor parties on voting day.

Earlier this year, Labor had trailed the opposition in the polls by a substantial margin.

But a series of public brawls and policy disputes between the Liberal Party - traditionally the party of business - and the rural-based National Party split the opposition coalition and damaged its public image. The two opposition parties, however, have agreed to cooperate in a new government if they defeat Labor.

Saturday's elections for the federal parliament will include all 148 House of Representatives seats (the Labor Party currently holds a 16-seat majority in the House), as well as for the 76 Senate.

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