Australia's Howard struggles in his last election

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CANBERRA, Nov 22 (Reuters) Australians vote in national elections on Saturday with polls showing conservative Prime Minister John Howard facing defeat after a series of campaign blunders, including a new row over anti-Muslim leaflets.

Opposition Labor party leader Kevin Rudd, 50, has built a strong lead in the polls with his campaign for a new generation of leadership, promising to sign the Kyoto Protocol on climate change and pull Australian frontline troops out of Iraq.

A Rudd victory will end 11-{ years of conservative rule and would further isolate Howard's friend and close ally, U S President George W. Bush, on climate change and the ongoing conflict in Iraq.

Whatever happens on Saturday, this election will be Howard's last. If he wins a fifth straight term, Howard, 68, has promised to retire and hand power to his deputy, Treasurer Peter Costello, in about two years.

Making his last major campaign speech on Thursday, Howard said he had not felt any voter anger towards the government and was confident he would be re-elected, saying his government had strengthened Australia since he first won office in 1996. ''I don't find as I go around the country that people want a change in the fundamental direction of Australia. I've been in a lot of election campaigns. This is not an angry election campaign,'' Howard told the National Press Club.

Labor needs to win 16 more seats to win office and both Rudd and Howard say the election will be tight, although polls show Labor leads by between 8 and 10 points and enough to deliver Rudd a solid victory if carried through to election day.

Howard has campaigned on his economic management, continued economic growth and record low unemployment, and waged a negative campaign warning a future Labor government would be dominated by former trade unionists and would wreck the economy.

CAMPAIGN BLUNDERS Today, Howard's campaign was entangled in a new row after fake leaflets, which linked Labor to Muslim extremists, were distributed in a key eastern Sydney seat.

''I condemn it completely. It wasn't authorised by the Liberal Party, by me. It's not part of my campaign,'' Howard said.

But the leaflets may damage his re-election hopes in key seats, including his own, where migrant voters fear the government harbours xenophobic beliefs which underpin its tough anti-boatpeople stance.

Australia's border security policy see boatpeople detained in centres in the Indian and Pacific oceans.

Howard's campaign was also hurt when the central bank increased interest rates on November 7 by 0.25 points to 6.75 percent, the sixth rise since Howard won a fourth term in 2004 with a promise to keep rates low.

Monash University analyst Nick Economou said the government's campaign has been mired by blunders from the start, when Howard could not nominate the correct level of interest rates.

''The government has run a shocking campaign. They have been in a mess from the start,'' Economou told Reuters yesterday.

Howard's tenure has been marked by a focus on security and the economy. Since the September 11, 2001 attacks in the United States, Australia has been on medium security alert.

Under Howard, Australia's military in 2006 was at its highest operational level since the Vietnam War, with troops in Iraq and Afghanistan and several other nations.

While troop deployments have reduced, there are currently 3,500 troops deployed in 10 operations and the government is spending A billion to raise its army to the level of the Vietnam War so it can respond to instability in the Asia-Pacific.

Rudd, who has led every opinion poll since January, has promised a new Australia under his leadership. ''Australia is a great country but we are not as great as we can be,'' Rudd said on Wednesday in his final big pitch to win voters.

Rudd says a priority of his new government will be to overturn Howard's labour laws, arguing many workers have not benefited from 17 years of economy growth. He has also promised conservative economic management, with ongoing budget surpluses.

But there will be little change in security policy under Labor, except for a few hundred troops withdrawn from Iraq.

Reuters SZ DB1304

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