By Michael Perry
CANBERRA (Reuters) - Australian Prime Minister Julia Gillard is expected to call an election on Saturday, taking advantage of a rebound in support for her Labor party, narrowly ahead in opinion polls, and a robust economy.
Australia's first woman prime minister is expected to call an August 28 poll, the Australian Broadcasting Corporation said, giving voters stark choices over a new mine tax and climate policy, but little difference in economic management.
"I'm not engaging in election speculation," she told reporters earlier on Friday, but media speculation grew that she would call an August 21 or 28 poll on Saturday or next weekend.
"But whenever the election is called, there will be a very clear choice about whether Australia moves forward or back."
Her office declined comment on the ABC report, which cited Labor party sources.
But news outlets said Labor staffers had been told to man campaign headquarters this weekend and that media companies were fielding calls from advertising sources linked with Labor, fanning rumours of an imminent poll.
Financial markets showed no reaction to the report with the Australian dollar steady at $0.87/85.
Economists said the impact on markets would be minimal during the election campaign as both the Labor government and Liberal-National opposition are economically conservative. The main focus is the government's new 30 percent mining tax.
Gillard has pledged to introduce a new resource rent tax if elected, raising A$10.5 billion (6 billion pounds) 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.
"The coalition is less interventionist," said Shane Oliver, head of investment strategy at AMP Capital Investors.
"They will can the mining tax. While that benefits the material sector, it has implications on superannuation and other spending the tax would have bank-rolled," said Oliver.
Australia's robust economy, which dodged recession in 2009 and emerged strong from the global financial crisis, will be key to the election. And 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," Gillard said.
The government claims much of the credit for this performance, citing a fiscal stimulus and quick action on guaranteeing bank wholesale funding. But analysts give just as much credit to a sound banking system, steep cuts in interest rates by the Reserve Bank of Australia and population growth.
The government has said it will return a budget surplus by 2013, but opinion polls show voters view the opposition as better economic managers, despite Labor steering the economy through the global financial crisis and avoiding recession.
The opposition has also promised a return to surplus and tight controls on spending.
WHISKER-CLOSE ELECTION POSSIBLE
Gillard was appointed prime minister in a Labor party coup on June 24 to avoid electoral defeat after just one term in office under then-leader Kevin Rudd.
Since her ascendency, Labor has regained a narrow opinion poll lead over the opposition and Gillard has been expected to call an early election to capitalise on her honeymoon period.
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.
"Labor 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,'" Australia's most respected political journalist Laurie Oakes said.
"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," Oakes said on Nine Network 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 Labor government lost voter support in the past year over its failure to introduce a carbon trading scheme to fight climate change 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, Gillard has proposed a regional asylum processing centre, possibly in East Timor, as a way to stop boatpeople arrivals.
But the scheme has received little support in Asia and at home, while the opposition has said it would turn the boats back and reopen Pacific island detention centres.
(Editing by Ed Davies and Jonathan Thatcher)
