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Australian PM faces poll test
06/08/2006 14:25 - (SA)
Sydney - Prime Minister John Howard has announced he will fight for a fifth term in office, but as Australia's economic feel-good factor begins to wane, some believe it's an election too far for the long-serving leader.
Howard, 67, has staked his government's reputation on sound economic management since he won power in 1996.
He has overseen one of the country's longest periods of economic growth and last month unemployment fell to a 30-year-low.
But last week's hike in interest rates to 6% - the third 25 basis point rise in 18 months - poses a political nightmare for the government which won re-election in 2004 on a pledge to keep rates low.
The rise has forced Howard onto the defensive, and on Sunday he tried to shore up his government's reputation for economic competence.
In an interview with Australia's Ten Network, he acknowledged the election, expected in late 2007, would not be easy. But he urged voters to concentrate on the bigger economic picture.
"If you want to maintain our current prosperity and build on it, and hand it down to future generations, there is only one side of politics that has the policies, the track record and the commitment to do so," he said.
As a rash of newspaper headlines reminded Howard last week, the interest rate hike is likely to hit his core supporters the hardest - middle income, suburban voters struggling to repay their home loans.
"Battlers' pain to peak on poll day," said The Australian Financial Review in a front page headline on Thursday.
The newspaper pointed out the effects of the hike would hit hardest late next year, just as the government is expected to call national elections.
Although the housing boom has brought greater wealth to many Australian households, it has also saddled new home-owners with hundreds of thousands of dollars worth of debt.
The government has no control over the Reserve Bank of Australia's monetary policy. But on the day he called the 2004 election, Howard posed the question to voters: "Who do you trust to keep interest rates low?"
Opposition Labor Party leader Kim Beazley accused Howard of misleading the electorate.
"I feel really sorry for the people of Australia who took John Howard at his word because their trust has been betrayed," Beazley told commercial radio last week following the rise.
"Many people on the strength of that borrowed to the eyeballs."
Frank Cain, a senior politics lecturer at the University of New South Wales, downplayed the significance of the rate hike.
He said the Australian economy was still in good shape, buoyed by surging Chinese demand for resources such as coal and iron.
"The economy will keep booming along. We will still be enjoying prosperous times at the next election," he said.
But John Warhurst, professor of political science at the Australian National University, said the government had good reason to feel nervous as voters felt the effects of the hike on their pockets.
"This could be a slow burn build up of pressure and if the battlers do start to desert Howard in any numbers, it is possible that he could lose," Warhurst said.
Howard remains streets ahead of Beazley in opinion polls and in a survey conducted before last week's rise he continued to enjoy a solid approval rating, with 50% of respondents saying they were satisfied with his performance, compared with 39% dissatisfied.
But Warhurst said politicians were keenly awaiting the next poll data, to analyse the impact of the hike.
Howard, a former Sydney lawyer, is only the second Australian leader to reach a decade in office.
Ending weeks of speculation, he announced last week that he would lead his Liberal Party into elections expected to be held in October or November next year.
- AFP
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