JIM LEHRER: Now: Australia, where the economy is booming, but it remains the central issue in Saturday's elections for a parliament that will chose a prime minister.
We have a report from special correspondent Stuart Cohen.
DAVID BRADBURY, Australian labor party candidate: Well, I'm up for reelection on the 21st of August. I'm going to be asking for your support.
STUART COHEN: Labor Party candidate David Bradbury is on the hustings, as Australians say. He's campaigning for reelection to his parliamentary seat in Sydney's sprawling suburbs. Like most Americans, his constituents are
worried about the economy, but not because Australia is suffering through the global financial crisis.
DAVID BRADBURY: The challenge for us is to demonstrate to people that the reasons why we were able to steer the economy through the global financial crisis were because of the economic activity that we stimulated through government policy.
STUART COHEN: Bradbury's conservative party challenger is Fiona Scott. In a sign of just how tight the race for this seat is, they work this shopping mall in shifts. When one heads off, the other takes over.
FIONA SCOTT, Australia parliament candidate: I believe people out here, and they're showing out here, are very passionate about the things that they're dealing with every day, the things that are hurting their own back pockets, things like the cost of living, seeing our infrastructure out here starting to
STUART COHEN: With an unemployment rate just over 5 percent, Australia's economy is still booming, thanks to continued mineral exports to places like China.
It was also government spending that helped keep Australia out of recession. But it put the budget into a relatively small deficit for the first time in more than a decade. That's pushed the economy out front as the major issue in this campaign, even though the deficit, as a percentage of the economy, is barely a third of that in the U.S.
Peter Hartcher is political editor at The Sydney Morning Herald.
PETER HARTCHER, political editor, The Sydney Morning Herald: The big and searing experience out of this was that, when there was a global financial crisis, and suddenly countries everywhere were in trouble, the Australian government had enough money in the kitty that it was easily able to enact a massive stimulus massive at least in proportion to our economy.
The consequence is one of the only countries in the world that didn't have a recession. And this experience has now been burnt into the national consciousness, and it's put a real premium on getting back to surpluses as quickly as possible.
STUART COHEN: All 150 members of Australia's lower house, the House of Representatives, and half of its 76 senators are up for election. Because of the peculiarities of Australia's electoral system, third parties abound in the Senate, and neither major party holds a governing majority. So, the big fight is over the lower house, where the leader of the majority party becomes prime minister.
It's places like this where Australia's election will be decided. The seat of Lindsay, here in Sydney's far western suburbs, is considered a bellwether. It belonged to the country's conservatives under former Prime Minister John Howard, but swung to the Labor Party when Kevin Rudd swept to power three years ago.
The conservatives need just 17 of these so-called marginal seats in order to take control of Parliament. People in this key district know their votes could ultimately decide who becomes prime minister. But many still haven't made up their mind yet.
MAN: I vote for the person, not for the not for the party. We will leave it at that, on that one.
WOMAN: I'm still sitting on the fence, believe it or not. I have got one particular local candidate here that I'm sort of a bit more partial to than the other, but yes.
MAN: I think, for many people, they're looking which one is going to be the least worst prime minister. It's not much to choose from, really.
STUART COHEN: The Labor Party leader is Julia Gillard. She made history just a few weeks ago by becoming Australia's first female leader, after the unprecedented move of ousting her party's sitting first-term prime minister, Kevin Rudd.
The party's poll numbers had plummeted, as Rudd made a series of unpopular decisions on taxes and climate change. Labor's rank-and-file feared an election drubbing. When the newly installed Gillard called the election five weeks ago, Labor's numbers had bounced back, and she was looking like a shoo-in. But her honeymoon was short-lived.
PETER HARTCHER: And the reason is because Julia Gillard wasn't the honey that the voters thought she was. The voters who had some sort of sense of hallelujah and rushed to her were progressive voters. And they made the Labor Party's look terrific for a few days. But, day by day, decision by decision, those voters realized that they had made it was a case of mistaken identity. They discovered that Julia Gillard was actually very conservative within the Labor spectrum.
STUART COHEN: Gillard's challenger is Tony Abbott, leader of Australia's conservative party, which, confusingly, is actually called the Liberal Party.
While Gillard is also the country's first declared atheist prime minister and in a so-called de facto relationship with her live-in boyfriend of three years, Abbott is a practicing Catholic who almost went into the priesthood. He has three daughters and, early on, portrayed himself as the traditional family candidate.
He's also a climate change skeptic who toppled his own party leader just a few months ago over a disagreement on climate change legislation.
Dr. Geoff Gallop is head of the graduate school of government at the University of Sydney.
DR. GEOFF GALLOP, University of Sydney: Both Tony Abbott and Julia Gillard haven't been leaders for a long time. So, there's a lot of debate about whether or not they can be believed in what they're saying, whether or not they're expressing their true beliefs, or whether they're just compromising in interests of the short-term election process.
So, I think there's quite a lot of debate about that.
MAN: Please make welcome Prime Minister Julia Gillard and opposition leader Tony Abbott.
STUART COHEN: At their one and only debate, both leaders set a contentious tone for the campaign to come, but on issues that have since faded.
TONY ABBOTT, Australian opposition leader: Julia Gillard can't talk about her record, because things have gone from bad to worse since she took over. There's the boat people fix that got lost somewhere in the Timor Sea. And there's the climate fix which is just another talk-fest.
JULIA GILLARD, Australian prime minister: I'm an optimist, and I believe we can work our way to a community consensus about putting a cap on carbon pollution and designing the market-based mechanism that will support that.
Now, we had a consensus in Parliament House, and, obviously, Tony became opposition leader and ended that consensus. And the rest, as we all know, is history.
STUART COHEN: But it was the ousting of Kevin Rudd, just three weeks before the start of the campaign, that has remained as raw for many voters as it was for Rudd the day he stepped down.
KEVIN RUDD, former Australian prime minister: What I'm less proud of is the fact that I have now blubbered.
PETER HARTCHER: No political party has ever politically assassinated a prime minister in his first term before, so we didn't really know how it would play out. The effect has been, though, that Kevin Rudd's ghost has haunted this
campaign. And 69 percent of voters said that they disapproved of the way he was treated. You can't get 69 percent of voters to agree on anything normally. So, that's been a strong factor.
STUART COHEN: In the last days, the polls have swung back in favor of the Labor Party. Some say this is now Julia Gillard's election to lose. But she's not taking anything for granted.
JULIA GILLARD: I think it's going to be a nail-biter of a Saturday night. I think this is going to be one of the closest races the nation has ever seen.
STUART COHEN: No matter who wins, one thing seems certain: the future of the American relationship.
PETER HARTCHER: One of the tenets of Australian foreign policy is that both parties are deeply committed to the U.S. alliance. And, as a part of that, as an expression of that, both are also deeply committed to the deployment in Afghanistan.
STUART COHEN: Voting is compulsory in Australia. Around 95 percent of registered voters are expected to turn out when polls open across the nation Saturday morning.