Gillard set to call August election

Australia's first woman prime minister is expected to call an 28 August poll, Australian television said, giving voters stark choices over a new mining tax and climate policy.

"I'm not engaging in election speculation," she said yesterday. "But whenever the election is called, there will be a very clear choice about whether Australia moves forward or back."

Ms Gillard has pledged to introduce a new resource rent tax if elected, raising A$10.5 billion (6.02bn) from 2012, but the conservative opposition has vowed to dump the tax, even though it has been agreed by global miners BHP Billiton, Rio Tinto and Xstrata.

Australia's robust economy, which dodged recession in 2009 and emerged strong from the global financial crisis, will be key to the election. And Ms Gillard has said she will seek re-election on a platform of creating jobs.

"The election is largely going to be fought on whether or not you believe it's important for the government to support jobs," Ms Gillard said.

Possibly to that end, she has promised to bring Kevin Rudd, whom she deposed as PM in a party coup three weeks ago, back into the Cabinet.

"I have said Kevin Rudd will serve as a senior minister in a re-elected Gillard government," the prime minister told reporters on the island state of Tasmania. "I will honour that commitment."

The bookish and distant Mr Rudd was removed by his fellow MPs after polls showed he was in danger of leading the party to defeat after only one term.

Australian National University political scientist Norman Abjorensen said Mr Rudd could become a destabilising influence on her government and Cabinet.

"He's practised in the dark arts of political undermining," Mr Abjorensen said.

"If Gillard has read history, you don't have an ex-prime minister close to the levers of power."

Since her ascendency, Labour has regained a narrow opinion poll lead over the opposition and Ms Gillard has been expected to call an early election to capitalise on this.

But she has at times struggled to sell policies on the economy, resources, climate and asylum seekers.

Conservative leader Tony Abbott needs to win only nine seats from the government to take office.

"Labour probably starts a slight favourite … but there is genuine concern amongst the party's strategists.One told me today: 'I think it's possible you'll see an Abbott victory by a whisker,'" said Australian political journalist Laurie Oakes.

"The campaign itself could be crucial, because Gillard is untested as a campaigner, while Abbott made some really silly campaign mistakes in the last election," Mr Oakes said on Australian television.

Many voters have deserted the major parties for the small Greens party, which is set to be the kingmaker in the upper house Senate and influence policy of the next government.

The Greens' major demand on the next government is for the introduction of an interim carbon price ahead of a market-based emissions trading scheme.

The Labour government lost voter support in the past year over its failure to introduce a carbon trading scheme and business has warned that a lack of a clear climate policy is now hindering investment in the power sector.

On the issue of asylum seekers and border protection, which is resonating in marginal seats, Ms Gillard has proposed a regional asylum processing centre, possibly in East Timor, as a way to stop boat people arrivals.

But the scheme has received little support in Asia and at home.