Australia's politicians have begun their general election campaigns, after PM John Howard set a 24 November date.
Mr Howard (R) is trailing Mr Rudd in opinion polls
Veteran leader Mr Howard, 68, pledged billions of dollars in tax cuts and launched a web video on climate change.
The opposition Labor Party has criticised Mr Howard's refusal to sign the emissions-limiting Kyoto agreement.
Mr Howard is seeking a fifth term in office for his ruling Liberal-National coalition, but polls suggest a huge victory for Labor's Kevin Rudd.
The 50-year-old opposition leader has been ahead of Mr Howard in polls for most of the year.
Analysts say Mr Howard has opted for a long election fight to give himself a chance of overhauling Labor's lead.
In the opening salvos of the campaign, the ruling coalition announced a five-year plan for tax cuts worth A$34bn (£15bn).
Mr Howard said this was part of his "go-for-growth strategy" and would encourage more people to join the workforce.
More than 13.5m of Australia's roughly 21m people are registered to vote
Electors will choose candidates for all 150 seats in the lower House of Representatives and 40 of the 76 seats in the upper house, the Senate
PM John Howard has led the conservative Liberal-National party coalition to four election wins since 1996 and is seeking a final term
Kevin Rudd is taking the centre-left Labor Party to the polls for the first time as leader
Election issues to be the economy, environment and war in Iraq
Correspondents say Mr Howard has alienated many voters by opposing the Kyoto protocol, and introducing labour laws making it easier for employers to hire and fire workers.
Seeking to tackle the climate change issue, the prime minister launched a campaign on video-sharing website YouTube.
On the video, he promises a climate change policy that "balances our obligation to reduce gas emissions with the need to keep our economy growing".
Mr Rudd is committed to signing up to the Kyoto agreement and devising an exit strategy for Australian troops from Iraq.
He has also pledged sweeping reforms to health, education and the controversial labour laws.
The centrepiece of his campaign is a call for "new leadership".
He said the "greatest risk" to the country was that Mr Howard's coalition would be returned to power, and nothing would change.
Mr Rudd's party needs an unprecedented swing to gain the extra 17 seats he needs for an overall majority in the country's 150-member House of Representatives.