FOREIGN POLICY AND IRAQ

Howard's government has centered its foreign policy on an intimate alliance with the United States and a more aggressive approach to security issues in the Asia-Pacific.

One of US President George W Bush's staunchest allies, Howard committed 2,000 troops to last year's invasion of Iraq, despite strong domestic opposition, and still has some 900 soldiers still in and around Iraq.

The government has signed counter-terrorism agreements with several regional governments and sent troops to help restore law and order in the Solomon Islands and neighboring Papua New Guinea.

It has also played an active role in a US-led initiative to halt international smuggling of banned weapons, notably by North Korea.

But Howard angered some regional neighbors during the campaign by insisting his government reserved the right to carry out preemptive strikes overseas if needed to avert a terrorist attack.

The saber-rattling was for domestic consumption as Howard sought to shore up his tough image on national security, but it still rankled in a region uneasy with the idea of an Australia acting as Washington's "deputy sheriff".

Labor has vowed to withdraw the troops from Iraq by Christmas if it wins the election. Latham says involvement in the Iraq war has drawn precious resources from the fight against terrorism in Australia's home region.

Labor's foreign policy plan would maintain the close alliance with Washington, but place more emphasis on relations with southeast Asian and Pacific states.

"We don't believe our permanent interests lie on the other side of the world, they lie on our side of the world - and that's one of the reasons why we didn't support the Iraq conflict in the first place," Latham said recently.

While the Iraq war has dominated international news coverage of the election, it barely registered among voters as a key election issue.

ECONOMY AND TAXES

Howard's government has overseen nearly nine years of solid economic growth and prosperity, with low unemployment and interest rates.

He campaigned largely by attacking the economic records of past Labor governments, when interest rates were in double digits, and claiming the 43-year-old Latham was too inexperienced to run an 800 billion dollar economy.

Howard trumpeted his government's success in passing industrial reforms which limited the power of trade unions he says will come back to stunt the economy if Labor wins.

He also announced a series of tax cuts before the campaign began, primarily to benefit small businesses, and has suggested he might lower the top tax rate if reelected.

One of Latham's first campaign promises involved nearly 8.0 billion dollars in tax cuts over four years focussed on middle-income and poorer families he says were left out of the government's tax plan. His proposal notably encourages mothers to go back to work.

To counter Howard's scare campaign on interest rates -- a key issue in the so-called mortgage-belt constituencies likely to decide the election outcome -- Latham has repeatedly pledged a Labor government would spend prudently.

He also promised to offset many of his campaign spending promises with cuts in other areas to ensure the budget remains in surplus.

SOCIAL ISSUES

Education, health and care of the elderly emerged as key election issues, largely due to proposals put forward by Labor.

One of Latham's boldest vows was to strip million of dollars in public funding from wealthy private schools and redistribute the money to government schools and poorer private establishments.

Latham promised free hospital care for over 75s, aid to grandparents who take on child care duties and a free day of care each week for three and four-year-olds in families eligible for government benefits. He also pledged to cut the costs of subsidised medicines.

Howard countered with his own plans to upgrade schools, create a network of technical colleges under federal control, provide yearly grants to pensioners and reimburse parents 30 percent of certain child care costs.

In all, each side's spending promises for the next four years totalled some 14 billion dollars -- a record for an Australian election campaign -- to be paid for out of 25 billion dollars in budget surpluses predicted for the same period.

ENVIRONMENT

Opinion polls indicate the Greens party could become Australia's third political force in this election, highlighting the growing importance of environmental issues.

The main environmental proposals put forward by Howard and Latham were billion dollar plans to conserve water and save river systems -- a crucial issue in the most arid of all continents.

Both sides also pledged efforts to save ancient forests on the island state of Tasmania, though Labor went further with an 800-million-dollar plan to reduce logging while Howard offered a more limited proposal that placed a higher priority on preserving timber industry jobs.

The biggest difference on environmental issues was Labor's promise to sign the Kyoto Protocol on curbing the greenhouse gases which cause global warming. Howard has refused to sign the treaty, saying it would harm Australia's economy.

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