June 15 (Reuters) – Australian Prime Minister Kevin Rudd is struggling to regain voter support ahead of elections expected in October, with polls showing he may be ousted after only one term, due to a series of policy backflips and a controversial mining tax.[nSGE65E006]

Following is a summary of key Australian risks to watch:

* RUDD’S LEADERSHIP

Despite speculation of a leadership challenge due to his falling popularity and a planned mining “super profits” tax, Rudd is unlikely to be toppled before the election.

His popular deputy Julia Gillard, whom some Labor politicians believe would offer a more conciliatory face and lure back jaded voters, has shrugged off suggestions she will mount a leadership challenge.

Rudd can expect a boost come the poll, due to a robust economy, with unemployment half that of Europe and the United States.

Rudd’s popularity has plummeted in recent months after he shelved a series of policies, including a landmark carbon trade plan. Opposition policies are similar in most aspects, although the opposition will abandon the mining super profits tax.

A further dive in Rudd’s re-election prospects, or a leadership change, is unlikely to have a major impact on markets. For a factbox on key policy differences, click on [ID:nSGE64R07F]

But over the longer-term, Rudd’s leadership may be drawing to a close, with Gillard possibly poised to replace him if Labor loses the election, or early in a new term if Rudd wins with a reduced majority in parliament.

What to watch:

– Opinion polls. The Reuters Poll Trend shows Rudd could lose, or face a hung parliament, although he is still favoured to win the coming election. The government held a narrow 0.4 point lead, down from 10.4 points a month earlier. [ID:nSYU010055]

* ECONOMIC AND TAX POLICY

Economic management is always a key election battleground. Traditionally, conservative parties have claimed this mantle, but the ability of Rudd’s centre-left government to steer the country through the global crisis and avoid recession has given it economic kudos among many voters.

Homeowners, particularly in crucial marginal mortgage belt electorates around Sydney, Melbourne and Brisbane, are concerned about rising interest rates. The central bank has lifted its key cash rate by 150 basis points since October to 4.50 percent, with mortgage rates now around 7 percent. [ID:nSYC002333]

The booming resources sector is also angry at plans for a 40 percent tax on mining profits, to start in mid 2012, which underpins Rudd’s plan to restore the budget to surplus in 2012-13.

What to watch:

– Mining tax: The government is locked in negotiations with more than 80 mining companies on details of the new super profits tax. The 40 percent headline rate appears set in stone, but the government appears more flexible on the definition of a super profit, and may compromise by increasing the threshold for the new tax rate, currently set at around 6 percent. For full coverage of the mining tax, click on [ID:nAUTAX]

– Mining firms say the move puts new investment at risk, and expansion plans have been put on hold. Mining shares have tumbled and the government faces heavy opposition from the resource sector, which has financed an advertising campaign against the changes. The conservative opposition has also promised to abandon the tax if it wins power, putting the issue at the centre of the coming election campaign. The government has countered with its own taxpayer-funded advertising campaign.

– The government could reach a deal with miners, but the fate of any compromise will hang on changes in the composition of the upper house. The post-election Senate is expected to have fewer conservatives but more crossbench Greens. Rudd also faces an outside chance of needing key independents to hold a majority in the lower house. [ID:nSGE64T02H]

– Monetary policy. The Reserve Bank of Australia (RBA) left interest rates unchanged at its policy meeting on June 1, with expectations rates will remain on hold in the near term. [ID:nnSYC002333]

* POLICY SWITCHES

Ahead of the election, Rudd is postponing policies that risk being vote-losers, delaying them to next year and a future parliament in which he hopes to have a stronger hand. The government withdrew its twice-defeated carbon emissions trading scheme from parliament, where it faced a third defeat in the obstructive Senate where it is seven votes short of majority. The government also postponed its planned mandatory Internet filter, which had angered the U.S. government and web heavyweight Google (GOOG.O). Rudd also dumped a troubled scheme to give free home insulation to all houses after the programme was blamed for house fires and linked to four deaths.

What to watch:

– Broadband. The government is bogged down in talks with the country’s biggest phone company, Telstra (TLS.AX), and other telcos on a A$43 billion super-fast broadband spanning the country. Communications Minister Stephen Conroy says difficult negotiations on folding Telstra’s telecoms infrastructure into the network are reaching a conclusion, with parties either reaching a deal soon or breaking off negotiations. The government also has laws before the Senate designed to force Telstra to join the broadband plan by forcing the company to split its retail arm from its wholesale business. The laws face an uncertain future, and the row has weighed on Telstra’s share price.

– Health. Rudd has struck a deal with all states except conservative-ruled Western Australia to take control of health and hospital funding, using consumption tax revenues reserved for states. The deal, popular with voters, could still unravel if Rudd is unable to reach agreement with Western Australia to include it in the scheme. If he fails, it will be a major blow to his authority and could fuel criticism he has not delivered most of his big reform visions. [ID:nSGE63I051]

– Climate policy. Plans for a sweeping carbon trade plan have been put on the backburner until 2012 at the earliest. Rudd has said he will wait until the Senate is more receptive and the direction of world climate talks is more certain. Once the likely outline of long-term climate change policy becomes clearer, the expected impact on corporate profits will be reflected in Australian stocks .AXJO.

(Editing by Sanjeev Miglani)