HOWARD STILL WELL BEHIND AS INTEREST RATES

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.