By James Grubel
CANBERRA (Reuters) - Australian Prime Minister Julia Gillard's Labour government will narrowly win Saturday's election, a Reuters Poll Trend showed on Wednesday, paving the way for a controversial mining tax and a possible carbon trading scheme.
Australia's small Greens party, on course to gain the balance of power in the Senate upper house, said on Wednesday it would seek to toughen the mining tax if Labour wins.
The proposed 30 percent tax on iron ore and coal, forecast to raise A$10.5 billion (7 billion pounds) over two years starting 2012, has been signed off on by mining giants BHP Billiton, Rio Tinto and Xstrata, but is opposed by the rest of Australia's key mining sector.
The big three miners had earlier warned that a higher mining tax, initially proposed by Labour, would damage investment in the resource sector, reducing Australia's competitiveness as it seeks to supply minerals to China.
A Labour victory would also see a possible carbon trading scheme to combat climate change from 2012 and ensure construction of a $38 billion (24 billion pounds) fibre-optic national broadband network.
The Liberal-National opposition opposes all three policies.
CLOSE ELECTION
With three days of campaigning left in the tightest election in decades, Labour's floundering support with voters seems to have improved slightly while the conservative opposition is slipping in key eastern states which will decide the election.
The latest Reuters Poll Trend shows Labour has a 3 point lead over the opposition, which could see Gillard win a four-seat majority in the 150-seat parliament. Labour had a 16-seat majority at the last election.
"I think this will be the closest election since 1961, which was a cliff-hanger. I do think this will go down to the wire," Chris Bowen, Labour's campaign spokesman, said on Wednesday.
However, the possibility remains that the August 21 election may result in a hung parliament, where neither Labour nor the opposition wins enough seats to form government.
In that case the support of three independents will decide which party forms the next government.
The election outcome is now certain to be decided in key marginal seats in the resource state of Queensland and Australia's most populous state, New South Wales.
The Reuters Poll Trend found Gillard could lose up to 11 seats with voters angry over the mining tax, a failure by Labour to implement a carbon trading scheme and a perception of weak border protection with the arrival of illegal immigrants.
However, voters are also dissatisfied with conservative leader Tony Abbott, with Gillard commanding a 13 point lead as preferred prime minister. Many Australians do not want to vote for Labour, but shun the pugnacious Abbott as leader.
Underpinning Labour's last-minute support in key rural seats has possibly been the national broadband network which promises high speed Internet and a plan for medical clinics in rural towns struggling to attract doctors.
The opposition has charged Labour with using both policies to win over, or "pork-barrel," marginal seats.
Gillard has placed financial competence at the centre of her campaign and cast Abbott as a jobs and investment risk, prompting the opposition to outline its economic plan and reassure the central bank of support for its inflation target of 2-3 percent.
Online bookmakers sportsbet.com.au said the odds on a Gillard victory, as well as the possibility of a hung parliament, had shortened. "We're still taking far more bets on the (opposition) coalition, and have done for some time, but the serious money all seems to be on Labour," sportsbet's Haydn Lane said.
(Additional reporting by Rob Taylor and Michael Perry; Editing by Miral Fahmy and Ron Popeski)
