Australia's October 9 election marathon begins

Australian politicians set off on a marathon campaign yesterday for an election that will focus on the way forward for one of the world's strongest economies, the credibility of candidates and support for the Iraq war.

Australia's relationship with key ally the United States will also be a centrepiece of the closely fought October 9 poll, less than a month before the US presidential elections, after Prime Minister John Howard committed troops to the Iraq war.

Mr Howard's tough stand on national defence, including a plan to create Southeast Asia's most lethal fighter jets, has also alarmed Australia's Asian neighbours. Centre-left Labour has also promised a defence revamp.

But the issue of trust is squarely in the spotlight. Opposition Labour leader Mark Latham has attacked Mr Howard over the government's claims on the eve of its 2001 re-election that asylum seekers on a rickety fishing boat had thrown children into the sea off the Australian coast in a bid to win refuge.

A former defence adviser said this month that Mr Howard knew the claim was false but still stuck with the story over the last three days of that campaign.

"Poll choice is truth or dare" The Australian newspaper's headline read. The Sydney Morning Herald declared "It's a matter of trust", while The Daily Telegraph tabloid described the post-Olympics countdown to the election as a "Six week marathon".

Mr Latham accuses Mr Howard of a litany of deceit over the boat people row, the reasons for joining the Iraq war and Mr Howard's claims that a Labour victory would mean substantially higher interest rates, damaging the robust economy.

Mr Howard said voters could expect a return to interest rates of almost 20 per cent, such as were seen under the Labour governments of Paul Keating and Bob Hawke if Mr Latham won power.

"At a time when there is some pressure around the world for interest rates to go up, we are a much safer bet in relation to interest rates than a Labour government," Mr Howard said.

Australia enjoys one of the world's most robust economies, with its key cash rate currently at 5.25 per cent, close to 30-year lows, although some economists tip one small rate rise before the end of the year.

Macquarie Bank's chief economist Richard Gibbs said there was likely to be some moderate upward pressure on interest rates during the next year no matter who won the election.

"People obviously have a high level of sensitivity to changes in interest rates. There is no strict correlation between changes of government and the interest rate cycle," Mr Gibbs told Reuters.

Mr Latham told local radio: "Mr Howard has been caught out with a porkie (lie) there that I think just proves that on interest rates and other matters you just can't believe him. You really can't lead the nation if you are going to mislead the people".

Opinion polls have shown the government running neck-and-neck with Labour on primary votes, but Labour leads substantially on a two-party preferred basis, where minority party votes are distributed to major parties and ultimately decide elections.

Australian bookmaker Centrebet has named Labour the clear underdogs in the election race, while it has the Liberal/National coalition government odds-on to be returned to power.

Mr Howard's coalition government holds 82 seats in the 150-member parliament and would be out of office if it loses seven seats and the support of independents. Labour needs to win 12 seats to take office in its own right.