AUSTRALIAN Prime Minister Kevin Rudd is to fight next month's general election on who can be trusted to manage the nation's economy, as a decade-old mining boom is fading.

In starting the five-week campaign, Mr Rudd said the economy can no longer rely on Chinese demand for iron ore and coal that made the country one of the few wealthy nations to avoid a recession during the global economic downturn.

He asked: "Who do the Australian people trust to best lead them through the new economic challenges that lie ahead?"

Mr Rudd conceded his centre-left Labour Party was the underdog, but opinion polls also show more voters prefer the former diplomat as prime minister over opposition leader Tony Abbott, a former Roman Catholic seminarian and journalist

The latest economic figures show a sharp decline in Australia's finances. The government also announced a shortfall in the revenue forecast over the next four years.

The conservative Liberal Party-led opposition coalition has accused the government of wasting money on stimulus spending.

After Mr Rudd announced the election date of September 7, Mr Abbott promised to "get the budget back under control".

Mr Rudd became prime minister in 2007 but was ousted in 2010 by his then-deputy, Julia Gillard, in an internal party showdown. He reclaimed the leadership on June 26 this year.