By James Grubel
CANBERRA (Reuters) - Australian Prime Minister Kevin Rudd called a September 7 general election on Sunday, barely six weeks after he toppled former leader Julia Gillard in a party-room vote, ending a turbulent three years in power for the minority Labor government.
Rudd, who was dumped by his center-left party in June 2010, has generated a spike in public support since he returned but conservative opposition leader Tony Abbott is still favorite to win power.
Rudd's Labor government could fall with the loss of just one of the 150 seats in parliament. His government currently holds 71 seats, the opposition 72, with one Green and six independent cross-benchers.
Abbott's opposition has promised to scrap an unpopular 30 percent tax on coal and iron ore mine profits, as well as a A$24.15/metric tons (1.1023 tons) carbon tax if he wins power.
Rudd returned as prime minister on June 26 after he toppled Gillard, with a third of Gillard's cabinet also stepping down.
His party has been in power since late 2007 and helped Australia's A$1.4 trillion economy avoid recession following the 2008 global financial crisis, aided by a prolonged mining boom fuelled by resources demand from China and India.
However, a budget update on Friday showed Australia's economic growth is slowing as the mining investment boom ends, with unemployment rising and the manufacturing sector in particular shedding jobs.
AMP Capital Investors chief economist Shane Oliver said the election campaign could usher in a quieter period in the economy because Australians usually restrain spending during elections.
"It would be good for confidence to see an end to minority government and to get the election out of the way," Oliver said, adding a victory for the pro-business opposition parties could also boost business confidence.
"HELL OF A FIGHT"
Rudd announced the election date in an email to his supporters, telling them "it's on", after visiting Governor-General Quentin Bryce, who is Australia' head of state, to dissolve the current parliament.
"We've got one hell of a fight on our hands," Rudd said, later acknowledging to reporters he would lose power if current internal Labor polling was borne out at the election.
The latest polls show Rudd has lifted Labor's support to give the government a chance of victory, although the respected Newspoll in late July still had Rudd's Labor Party trailing the opposition 48 percent to 52 percent.
Abbott called Rudd's government "dysfunctional" and said infighting would continue if he was returned. The opposition would control government spending and stop the controversial flow of boats from Indonesia carrying asylum seekers, he said.
"It's really about who is more fair dinkum," Abbott told reporters, using an Australian phrase for honesty or fairness.
Analyst Nick Economou said polls have not swung back to Rudd enough to put Labor in a winning position, particularly in marginal seats in the outer suburbs of Australia's major cities.
"Rudd has undertaken a risky strategy ... I'm not sure that Labor's message is resonating in key marginal seats," Monash University's Economou told Reuters.
"I can't see that he can win."
Online bookmaker Sportsbet.com, which takes bets in each of the 150 electorates, said current projections had Rudd winning 65 seats and Abbott's conservatives 82.
Abbott has built a strong lead in opinion polls with his campaign to abolish the carbon tax, which he has blamed for pushing up electricity prices and for job losses.
He has also won support for his strong stance against asylum seekers who arrive in Australia by boat, with refugee policy set to play a leading role in the election.
Since returning to office, Rudd has announced Australia's toughest measures to deter asylum seekers, saying anyone who arrived by boat would be sent to either Papua New Guinea or Nauru in the Pacific for processing and resettlement.
The election date means Rudd will miss the G20 summit in St Petersburg on September 5-6, even though Australia will take over as chair of the G20 for the coming year.
(Editing by Paul Tait)