Bloomberg News

Gillard Declares Sept. 14 Election as Labor Trails in Polls

January 30, 2013

Australian Prime Minister Julia Gillard

Australian Prime Minister Julia Gillard. Photographer: Patrick Hamilton/Bloomberg

Prime Minister Julia Gillard set Australia’s election for Sept. 14, the longest advance notice in at least 60 years, as her minority Labor government seeks to close the gap in opinion polls with the opposition.

Parliament will be dissolved on Aug. 12 for a monthlong campaign, Gillard told reporters in Canberra today, breaking with convention that usually sees leaders give just a few weeks notice. Setting the date “gives shape and order to the year and enables it to be one not of fevered campaigning but of cool, reasoned deliberation,” she said.

“This is unprecedented,” said Zareh Ghazarian, a political analyst at Melbourne’s Monash University. “Prime ministers traditionally keep their cards close to their chest on election dates as part of a tactic to deny the opposition leader equal standing in the contest.”

Gillard’s government has trailed in opinion polls for more than 20 months even as the nation entered its third recession- free decade that’s yielded contained inflation, low unemployment and higher growth than other developed economies. Liberal- National leader Tony Abbott, who trails Australia’s first female prime minister in personal ratings, is pledging to scrap taxes on mining profits and the government’s price on carbon emissions if his coalition wins office.

Best Gauge

Labor rose 3 percentage points to 49 percent on a two-party preferred basis, with the coalition falling 3 points to 51 percent, according to a Newspoll survey published in the Australian newspaper on Jan. 15. The measure is the best gauge of which major party is likely to win the seats required to form a government.

“The coalition is ready” for the election, Abbott, 55, told reporters in Canberra. “This election will be about trust. Who do you trust to reduce cost of living pressures, who do you trust to boost small business and job security, and who do you trust to secure our borders?”

The more than seven-month run up to the election is the most in six decades of records, according to Evan Ekin-Smyth, a Canberra-based spokesman for the Australian Electoral Commission, who was continuing to check the archives.

According to Australian law, an election must be held by Nov. 30.

Addressing the National Press Club in Canberra in her first major political address of the year, Gillard, 51, said she was setting the date “not to start the nation’s longest election campaign.”

“Quite the opposite,” she said. “It should be clear to all which are the days of governing and which are the days of campaigning. Announcing the election date now enables individuals and business, investors and consumers to plan their year.”

Investor Optimism

The benchmark S&P/ASX 200 Index (AS51) maintained gains after the announcement, its 10th day of increases. The Australian dollar traded at $1.0470 as of 5:20 p.m. in Sydney. The nation’s benchmark 10-year bond yielded 3.50 percent after earlier touching 3.53 percent, the highest since May 4.

“It certainly breaks with tradition,” said Matthew Sherwood, head of markets research at Perpetual Investment, which manages about $25 billion in Sydney. “It puts a boundary on when minority government will end, which is probably a good thing. Investors might be a bit more optimistic that such an election, regardless of who wins, will mean the end to minority government.”

Gillard has been criticized by the opposition after she reneged on a 2010 election pledge not to introduce a carbon tax and backpedaled last month on a promise to deliver a budget surplus this year as weaker growth and a strong local currency curb tax receipts.

Surging Currency

The government has contended with a local currency that surged 21 percent in the 31 months since Gillard ousted predecessor Kevin Rudd as prime minister. The currency’s longest stretch above parity with the U.S. dollar has made it more difficult for manufacturers to compete and resulted in job losses among workers who form Labor’s traditional support base.

Gillard has overseen a two-speed economy, where mining regions in the north and west boom while manufacturers, retailers and builders in the south and east struggle.

Hiring strength in mining has helped compensate for weakness in other industries. The nation’s unemployment rate, at 5.4 percent, is less than half the euro-area level and lower than the U.S.’s 7.8 percent. Australia’s consumer price index gained 0.2 percent last quarter, half the level forecast by economists, as food and health care costs declined.

Inflation, Unemployment

Contained inflation and low unemployment allowed the central bank to reduce borrowing costs by 1.75 percentage points since Nov. 1, 2011, to a half-century low of 3 percent. Policy makers are aiming to revive industries including housing construction ahead of a plateau in mining investment this year.

“Labor has taken the first move of advantage,” said Andrew Hughes, who conducts political-marketing research at the Australian National University in Canberra and is predicting a narrow win for the coalition. “It’s potentially a masterstroke, but first Gillard has to win back Labor’s market share, which won’t be easy as there’s a lot of disaffected voters who see her as untrustworthy. It’s a long campaign and voters are bound to become disengaged from the parties’ messages.”

Australia is the largest developed economy to enforce compulsory voting, according to the Australian Electoral Commission’s website and International Monetary Fund data. It became mandatory to cast a ballot in federal elections in 1924, according to the AEC, and fines of as much as A$50 may be imposed for non-compliance.

Sportsbet, which describes itself as Australia’s largest online bookmaker by revenue, is offering to return A$1.25 on every A$1 winning bet should the coalition gain power. Labor is the outsider, paying A$3.75.

To contact the reporters on this story: Jason Scott in Canberra at jscott14@bloomberg.net; Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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