Australia setting up for July election

Australia's rightist government unveiled a budget on Tuesday, even as the premier announced he'll use a political deadlock over industrial relations to dissolve parliament and call fresh elections.

"You can expect there to be an election on the second of July," Turnbull said in an interview on Australia Broadcasting Corp radio, adding that he would call the poll "between now and the 11th of May."

Labor catching up?

The Liberal-National coalition, which returned to power in 2013, has lost much of its lead against the opposition Labor party in the latest polls, with the two sides now running neck-and-neck.

But Turnbull , who seized his party's top spot eight months ago, said he expected to win. That's despite a pair of scandal-driven resignations within his cabinet.

"I am quietly confident that the Australian people will give us another term in government," he told Channel 9 TV.

The government handed down its budget the same day that the Reserve Bank of Australia cut interest rates to a record low of 1.75 percent, seeking to restrain a rising currency and stem deflation.

Stalemate over construction industry watchdog

The dissolution will be triggered by a rarely invoked parliamentary procedure. The Senate blocked the government's bill aimed at re-establishing the Australian Building and Construction Commission (ABCC) that was scrapped by the former Labor government.

The government claims there has been a spike in "unlawful industrial action” since the ABCC was repealed. But critics say the ABCC is used for union-busting.

Now that the bill has been rejected twice, Turnbull is empowered to dissolve parliament and call new elections. The last time Australia's elections were invoked by double dissolution was in 1987.

jar/rc