Australia election campaign kicks off

Mr Rudd has overhauled several key policies since taking office in June

Australia's political parties have swung into campaign mode, a day after Prime Minister Kevin Rudd called an election for 7 September.

On Monday Mr Rudd's Labor party announced an A$200m ($177m; £116m) package to assist the car industry.

Conservative opposition leader Tony Abbott, meanwhile, pledged to repeal Australia's carbon tax at his first campaign event in Brisbane.

Polls currently put the opposition Coalition ahead of Labor by 52-48.

The economy is expected to be a key issue in the election, along with asylum and climate change.

"I'm a believer in manufacturing's future," Mr Rudd told Australian broadcaster ABC, after the funding package for the car industry was announced.

"On a case-by-case basis, industry-sector-by-industry-sector, the government will provide support where necessary," he said.

Mr Rudd's cabinet is meeting in Canberra for what is expected to be its last meeting before the government enters into caretaker mode.

'Political chaos'

Mr Abbott kicked off his campaign in Brisbane

Mr Abbott began his campaign in Brisbane with a press conference followed by a tour of a meat-processing factory.

He reiterated the opposition's pledge to scrap Australia's carbon tax. "If the Coalition is elected our first legislative priority will be to scrap the carbon tax," he said.

He also promised a vigorous election campaign.

"I want a people's campaign," he said. "It is the people's choice and what I'll be doing over the next five weeks is travelling the length and breadth of Australia listening to people and explaining to them our strong positive plan."

The opposition remains the favourite to win the election, although opinion polls show that the Labor Party has significantly narrowed its lead since Mr Rudd ousted his predecessor, Julia Gillard, in June.

In one of the first opinion polls since the election was announced, a Newspoll published in The Australian newspaper suggested that the Coalition led Labor 52-48 on a two-party preferred basis, although more voters believed that Mr Rudd would make a better prime minister.

Meanwhile, Australia's Daily Telegraph newspaper sparked controversy after its front page headline told voters to Kick This Mob Out, criticising the Labor party for causing "political chaos and economic decline".

The paper, which is owned by Rupert Murdoch's News Corporation, had supported Mr Rudd in the 2007 election.