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Rudd lays out election battleground

Australian prime minister Kevin Rudd is to fight next month's general election on who can be trusted to manage the Australian economy as it moves from a decade-old mining boom that is fading.

In starting the five-week election campaign, Mr Rudd said the economy can no longer rely on Chinese demand for iron ore and coal that made the country one of the few wealthy nations to avoid a recession during the global economic downturn.

"Who do the Australian people trust to best lead them through the new economic challenges that lie ahead?" he asked.

Rudd conceded that his centre-left Labor Party was the underdog, but opinion polls also show that more voters prefer the 55-year-old former diplomat to China as prime minister over opposition leader Tony Abbott, a former Roman Catholic seminarian and journalist who is also 55.

The latest economic figures show a sharp decline in Australia's finances. The government also announced a shortfall in the revenue forecast over the next four years.

The conservative Liberal Party-led opposition coalition has accused the government of wasting money on stimulus spending. After Mr Rudd announced the election date of September 7, Mr Abbott promised to "get the budget back under control."

Polls suggest the opposition faces an easier task picking up seats than Labor does. Labor holds 71 seats in the 150-seat House of Representatives where parties form governments. The opposition holds 72 seats, with the rest held by independents or sole legislators from minor parties.

Mr Rudd became prime minister in 2007 but was ousted in 2010 by his then-deputy in an internal party showdown. He reclaimed the leadership on June 26 and changed several key policy positions, and Labor started gaining ground in opinion polls.

In a major policy difference, Mr Abbott wants to scrap both the carbon and mining taxes Labor introduced. He says the carbon tax on Australia's biggest polluters is too high and making the country uncompetitive.

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