P 090624Z NOV 07
FM AMEMBASSY CANBERRA
TO SECSTATE WASHDC PRIORITY 8535
INFO AMCONSUL MELBOURNE 
AMCONSUL PERTH 
AMCONSUL SYDNEY

C O N F I D E N T I A L CANBERRA 001624 
 
SIPDIS 
 
 
NOFORN 
SIPDIS 
 
E.O. 12958: DECL: 11/09/2017 
TAGS: PGOV AS
SUBJECT: HOWARD STILL WELL BEHIND AS INTEREST RATES 
DOMINATE WEEK FOUR 
 
REF: (A) CANBERRA 1612 (B) CANBERRA 1595 (C) CANBERRA 
 
     1596 
 
Classified By: POLITICAL COUNSELOR JAMES F. COLE.  REASON: 1.4 (D) 
 
 ¶1. (C/NF) SUMMARY: The interest rate rise announced by the 
Reserve Bank this week (ref. a), has paradoxically, turned 
the political debate to the Coalition's strength - economic 
management - but given the ALP ammunition to undermine the 
Coalition's credibility on this important issue.  The 
Coalition has decided to use interest rates as a "cut through 
issue" by launching attack advertisements on the ALP - 
virtually identical to those used in 2004. Although this 
strategy could backfire, the Coalition has no choice as its 
other tactics are not working, and it is still a long way 
behind with only two weeks to go. The Liberal Party will hold 
its official campaign launch in Brisbane on Monday November 
12 while ALP will hold its official campaign launch in the 
same city two days later.  At this stage, Howard would need 
an unprecedented comeback to win this election.  END SUMMARY. 
 
THE POLLS 
 
¶2. (C/NF) The poll conducted the weekend of the Garrett gaffe 
did not indicate a significant shift in voter sentiment (Ref 
b).  On November 8, "The Australian" published state-by-state 
(excluding Tasmania and the Northern Territory) re-analysis 
of the last two Newspolls.  This indicated a 5.2 percent 
swing against the Coalition in NSW, 6 percent in Victoria, 
11.1 percent in Queensland, 12.4 percent in South Australia 
and 5.4 percent in Western Australia. On a uniform basis, 
these swings would mean the ALP would gain 6 seats in NSW, 4 
seats in Victoria, 14 in Queensland, 5 in South Australia and 
2 in Western Australia.  Added to likely gains in the 
Northern Territory (1) and Tasmania (2), this suggests a 
landslide 34 seat gain by the ALP - though most ALP contacts 
and observers still remain cautious at this point. 
 
SEATS STATUS IN VICTORIA 
 
¶3. (C/NF)  A Victoria Liberal MP told poloff recently that 
though Deakin (5 percent), La Trobe (5.9 percent) and 
Corangamite (5.3 percent) were worrisome for the party, the 
general view from each side is that none of these seats will 
change hands as there are local issues and candidates that 
make it tough for the ALP.  However, with the polls strong 
for the ALP and the two Victorian seats - Deakin and McMillan 
(5 percent) - the 17th and 18th most marginal Coalition 
seats, it is not surprising that the ALP is giving extra 
attention to these seats.  That the Prime Minister and his 
Ministers have spent more time in these seats than expected 
indicates the Liberals have concerns. 
 
ALP LIKELY TO PICK UP TWO SEATS IN TASMANIA 
 
¶4. (C/NF)  Embassy Canberra and Consulate Melbourne Pol 
Officers visited Tasmania this week where the Coalition holds 
two marginal seats.  Bass, in the north-east of the state, 
appears an almost certain gain for the ALP despite the work 
of the Liberal MP who the ALP concede is an "excellent 
campaigner".  Polling shows the Green vote in this seat has 
risen significantly on the back of voters' concerns about a 
controversial proposed pulp mill which has divided the 
community.  Because both the ALP and the Liberals support the 
pulp mill project, the Greens have retaliated by announcing 
its "how to vote" tickets would not preference the ALP in any 
seats in Tasmania.  However, analysis from the last election 
shows The Greens preference flow to the ALP is only slightly 
lower in the absence of favorable "how to vote" tickets. 
With polls indicating the ALP and Coalition almost level on 
QWith polls indicating the ALP and Coalition almost level on 
the primary vote, Greens preferences are likely to deliver 
the ALP the seat.  A much tighter result is expected in 
Braddon where the takeover of a state-government public 
hospital by the Federal Government has put the Liberals back 
in the race. 
 
CAMPAIGN HEADQUARTERS - ALP 
 
¶5. (C/NF) According to a contact inside ALP campaign 
headquarters, the opposition's campaign is running smoothly 
in contrast to 1996 and 2004 when Keating and Latham did not 
follow campaign headquarters' advice.  Source gives 
significant credit to Rudd's Chief of Staff, David Epstein, a 
former Chief of Staff to former ALP leader Kim Beazley, who 
is on the road with Rudd and acts as a liaison with campaign 
headquarters for Rudd. Morale in ALP headquarters is 
optimistic, but not over-confident as the "business end" of 
the campaign - the last two weeks - has yet to begin. The 
source believes the last two weeks will determine whether it 
is a close election or a landslide to Rudd akin to the Howard 
victory in 1996. He says "it is always dangerous ground" for 
the ALP when political debate shifts to interest rates.  He 
said ALP focus groups showed its latest advertisement - 
featuring a woman complaining about Howard being out of touch 
on cost of living pressures ) was a winner. 
 
CAMPAIGN HEADQUARTERS - COALITION 
 
¶6. (C/NF)  A contact inside Coalition campaign headquarters 
reports that staff have been ordered to not comment on the 
campaign following an article in "The Bulletin" magazine 
which quoted one campaign insider complaining that "Abbott 
cost us two days" (ref. C).  Another Liberal source was 
quoted as saying that &it was clear that by the end of the 
second week, we weren't traveling well at all.  We just 
weren't moving.8  The article also reported that Liberal 
research showed the party in danger of losing four seats in 
Victoria.  The contact, however, said the article was 
"rubbish", that the Coalition has the right issues to attack 
the ALP and that "two weeks is a long time in politics". 
However, he did not appear optimistic. 
 
RUDD REMAINS ON TRACK FOR VICTORY 
 
¶7. (C/NF) COMMENT:  At this stage, Howard would need an 
unprecedented comeback to win this election.  The polls have 
remained rock-solid for Rudd since he became leader, as was 
the case in the lead up to the Howard landslide in 1996. 
There will be a big advertising blitz by both parties in the 
final two weeks of the campaign, a period in which a large 
proportion of voters "lock in" their votes.  But nothing 
appears to have altered the apparent "mood for change" that 
is propelling Rudd's poll numbers.  Although there is 
relatively little daylight between the parties on  most 
policy issues, the Rudd "brand" is still attracting the 
numbers over Howard.  END COMMENT.