* Conservatives outline spending reductions, deny cuts in
* Spending seen as key electoral weakness for PM Rudd
* Rudd predicts Labor comeback in campaign's final stages
By Rob Taylor
CANBERRA, Aug 28 Australia's conservative
opposition, heavily favoured in next month's election, outlined
A$31 billion ($27.8 billion) in savings on Wednesday and
promised to breathe new life into the economy by abolishing
environment taxes polarising voters.
But Prime Minister Kevin Rudd said the opposition planned
big cuts to key services and predicted voters would return to
his Labor Party in the final week of campaigning. Most polls
give the opposition under Tony Abbott a 53 to 47 percent lead,
enough to give them a sizeable majority in parliament.
Opposition finance spokesman Joe Hockey, who would become
treasurer of the world's 12th biggest economy if the polls prove
true, said the conservatives were determined to better Labor's
spending record, seen as one of Rudd's biggest electoral
"After six years of Labor getting every single budget number
wrong, enough is enough," Hockey told reporters. "The coalition
is absolutely committed to living within its means."
Labor, he said, had presided over a "dysfunctional" budget
after ousting the conservatives in 2007.
The opposition has long made the abolition of a "carbon" tax
on pollution and a tax on mining company profits the cornerstone
of its bid to drive Labor from office, blaming the carbon tax
for pushing up the price of electricity and other services.
VOTERS CONCERNS OVER BUDGET CUTS, JOBS
But budget cuts and their impact on jobs amid a slowdown
remain a major concern among many of the 14 million voters. An
Australian National University survey found jobs and management
of the A$1.5 trillion economy to be the most important issue.
Rudd told a campaign event that Abbott planned in secret to
"cut, cut and cut" health and education programmes, austerity
measures that could hurt confidence and propel the country into
its first recession for a generation.
"He is the master of the big cuts," the prime minister said.
He predicted Labor would make a big comeback despite the
polls, as it did in the 1993 election.
"Mr Abbott thinks he's a shoo-in," Rudd said. "I think the
Australian people don't like political leaders who arrogantly
assume that they have their vote already in the bag."
Hockey, a former financial markets lawyer, went out of his
way to say there would no cuts in social spending.
The conservatives, he said, would deliver a centrepiece
promise of a A$9.8 billion paid parental leave scheme, paid for
in part through abolition of business compensation associated
with the carbon and mining taxes to be eliminated. A further
A$5.2 billion would be saved by axing 12,000 government jobs.
As well, the opposition would keep savings adopted by Rudd
in a pre-election budget statement that lowered growth forecasts
to 2.5 pct from 2.75 pct this fiscal year, and forecast the
jobless rate rising to 6.25 percent.
The one exception would be Labor's cuts to tax breaks for
the automotive sector, still struggling to adjust to the
Australian dollar's high levels in recent years and local costs
which prompted a pullout this year by Ford, he said.
In response to the weakening economy, the Reserve Bank of
Australia has cut its benchmark interest rate to a record low of
2.5 percent, while a A$33 billion drop in tax revenue saw a
forecast budget deficit this fiscal year of $A30.1 bln,
returning to a A$4.0 billion surplus by 2016-17.
Global demand for iron ore, coal and other natural resources
supported the economy for most of the past decade, but falling
commodity prices and slowing growth in China, the country's top
export market, have rattled confidence.
Hockey said the conservatives would more quickly wind back
net government debt, now expected to peak at 13 percent of GDP
by 2014-15, or A$212 billion, up from the May forecast of
A$191.6 bln, or 11.4 percent of GDP in 2014-15.
"This is the most important election in a generation," he