By: Karim Raslan
First published: 4th October 04, TODAY

United States President George W Bush and his challenger, Senator John Kerry, spent most of their first election debate arguing about Iraq and homeland security.

Their focus was not surprising, given that national security has now become a key concern of many American voters, worried as they are about the Middle East quagmire and the possibility of further terrorist attacks.

However, things couldn't be more different in Australia, the US' prominent ally in the "War on Terror". One would have expected incumbent Prime Minister John Howard and his conservative Liberal/ National alliance government to be fighting for re-election on similar issues - especially after the bomb blast outside the country's embassy in Jakarta on Sept 9.

Instead, Mr Howard, who goes to the polls on Saturday on the back of a booming Australian economy, is focusing his campaign on bread-and-butter issues.

This is in line with opinion polls in Australia, which suggest that while many first-time voters and women are uncomfortable with Mr Howard's slavish adherence to American strategic goals, the population's antipathy to Mr Bush barely registers alongside more pressing domestic and predominantly economic issues.

Times have changed for the 65-year-old Australian leader. Only three years ago, the opposite was very much the case. Much of the Nov 2001 general elections (fought only two months after the 911 attacks) revolved around the premier's hardline stance on national security.

At that time, he had tapped a vein of nasty, redneck sentiment and anti-Muslim scare-mongering, when he denied hundreds of refugees - mostly Afghan-Muslims - from landing in Australia. The ill-fated Norwegian vessel, the MV Tampa, that had picked up the refugees from their sinking ship, was to become an ugly symbol of his administration.

However, this time around, Mr Howard - sensing the importance of domestic policy issues - has taken pains to present himself as a pragmatic and even-handed steward of the Australian economy.

During campaign rallies and functions, he has stressed repeatedly the country's eight-year economic boom and highlighted Australia's historically low levels of unemployment - currently only 5.7 per cent.

Of course, it's arguable that Australia's current prosperity is due to a combination of factors outside Mr Howard's control - ranging from an independent and experienced Reserve Bank; China's dramatic growth spurt and its attendant demand for Australian natural resources such as iron, coal, wool and cotton; as well as spiralling oil and natural gas prices.

Still, a combination of low-interest rates and a long, drawn-out period of prosperity has encouraged Australian consumers to borrow, leading to an unprecedented level of household indebtedness.

Mr Kean Wong, a Malaysian journalist currently with the Australian Financial Review, explained: "Many families are burdened with debt. The national household debt-to-income ratio has more than doubled in the past decade."

As Sydney's and Melbourne's suburbs expand exponentially with gated communities and "McMansion" villas replete with gleaming sports-utility vehicles and plasma televisions, it is clear that voters are almost more worried about the possibility of an interest-rate hike than terrorism.

Mr Bob Carr, the Labor premier of New South Wales, argued: "There is deep-rooted scepticism of Howard's arguments on security issues. Instead, he has been running a scare campaign on economic matters. He recognises that property values have boomed, especially in Sydney. He makes much of the fact that interest rates had once reached 17 per cent under Paul Keating's Labor government."

Mr Howard's opponent, the 43-year-old Labor leader Mark Latham, while well-liked and widely admired, has, perhaps, failed to convince voters of his ability to manage and sustain Australia's prosperity.

Indeed, his relative youth and impetuousness have worked against him more than his stated aim of bringing Australian troops back from Iraq before Christmas.

Still, the incumbent is by no means confident of victory. While the Liberals have dominated Federal politics for 39 of the past 59 years, left-of-centre Labor currently controls all eight provincial legislatures, though this is as much the result of different electorate cycles, as it is the desire to limit the control of both parties.

An indication of Mr Howard's unease and the closeness of the contest may well be his willingness to spend the government's hard-earned budget surpluses in a series of major initiatives announced during the campaign period. But, many economists are unhappy with the profligacy of the A$6-billion ($7.34-billion) package that includes education, health care and small business incentives.

Mr Greg Hunt, a Liberal MP, disputed the criticism: "We've done all the hard work. We've reduced the public debt from A$96 billion to A$23 billion, achieving the lowest public debt-to-GDP (gross domestic product) ratio in the OECD (Organisation for Economic Co-operation and Development). Because of all this, we're able to use some of the savings to invest in government services."

Nonetheless, given Mr Howard's attempt to portray himself as a responsible and prudent financial manager, the spending spree has attracted enormous criticism. It also seems to undercut his carefully-honed reputation for prudent economic management and has revealed indirectly that this Bush ally in the Southern Hemisphere is hostage to mortgage rates, not kidnappings.