Sydney: Australia`s ruling Labor party is heading for a narrow election victory on Saturday, with a lead of just 2-4 percent over the conservative opposition, according to exit polls by two broadcasters.
The vote, which has ended in eastern Australia but is still underway in some states, is shaping up as the closest election in decades with Australians divided on whether to give Labor a second term or opt for conservative rule, raising a real risk of a minority government unpopular with investors.
An early exit poll by Sky News showed Labor on 51 percent to the opposition`s 49 percent, on a two-party preferred basis, while another by Nine Network indicated a 52-48 result.
"The poll says a narrow Labor win...," said John Armitage of Auspoll which conducted the exit poll. He said he could not rule out an opposition victory, given the tight margin.
At stake was not only the political future of Prime Minister Julia Gillard and the opposition`s Tony Abbott, both new and untested leaders, but also Labor`s plans for a 30 percent resource tax and a USD 38 billion broadband network.
From surf club polling booths along Australia`s coast to dusty outback voting stations, where political banners swayed in the hot breeze, Australians stood in line to vote.
But even after five weeks of campaigning, many Australians remained undecided as to whom they wanted to run their country.
"I will get fined if I don`t vote. I don`t think it makes any difference who is in power...," said one disgruntled voter. Voting is compulsory in Australia.
Financial markets were unsettled on Friday by the prospect that no major party would win enough votes to form government --- a scenario which would see the Australian dollar sold off and possibly result in policy gridlock and investment paralysis.
Investors are also worried about the likelihood the Greens party will win the balance of power in the upper house Senate and stifle policy and force the next government to increase spending.
The poll may be determined in marginal seats in mortgage-belt areas of Sydney and Melbourne, where there are worries over immigration, as well as in resource states of Queensland and Western Australia, where there is bitterness over the mining tax.
"It will be tough. Let`s just get through the day and see how the vote goes tonight," said Gillard after casting her ballot at a polling booth in a Melbourne school.
Conservative leader Abbott, who cooked sausages at his local surf club in Sydney before voting, said: "This is a big day for our country, a day when we can vote out a bad government."
The first polls have closed in the big, populous states of New South Wales, Queensland and Victoria, which are expected to decide the election.
Voting in other states continues with Western Australia the last to close at 1000 GMT.
About 40 percent of the local share market is owned by foreign investors and one analyst has tipped a fall of 2-5 percent in the Australian dollar if a minority government is elected. Without a clear winner, the next government would have to rely on a handful of independent or Green MPs to rule.
Afghanistan deaths overshadow voting
Abbott`s Liberal-National coalition, which ruled for 12 years before Labor won the last election in 2007, has pledged to scrap Labor`s three key policies: a new mine tax, fibre-optic broadband network and a future carbon price to tackle climate change.
But with no dominant election theme, the election is expected to be decided on various issues in important marginal seats, mainly in the resource states of Queensland and Western Australia and the mortgage belts of Sydney and Melbourne.
A uniform swing of only 1.7 percent would unseat Labor.
The deaths of two Australian soldiers in Afghanistan cast a shadow over polling, with both leaders stopping to reiterate a bipartisan commitment to Afghanistan.
Abbott was regarded as unelectable nine months ago when he became opposition leader and with the poll so close, the result may come down to whether voters like Gillard or Abbott better.