TONY Abbott has defied low expectations and put his August 21 election campaign back on track.

The Opposition Leader put on a disciplined performance in last night's leaders' debate, overcoming underdog status to come close to victory, The Australian reports.

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But as Mr Abbott savaged Labor over its record of waste and broken promises, Julia Gillard hit back by questioning Mr Abbott's intentions on industrial relations, urging voters to look to the future, not the past.

A week into the election campaign, the debate did not yield any new detail on policy, with both leaders sticking to their rote lines on key issues including industrial relations, border security, climate change and population.

Mr Abbott, thrashed in a health debate earlier this year by dumped prime minister Kevin Rudd, maintained his focus, leaving no openings for Ms Gillard, who had been widely expected to cruise to victory.

Audiences who scored the debate for the Seven and Nine networks declared Ms Gillard the winner, with the Prime Minister earning consistently higher votes from female participants.

Focusing his attack on the government's competence, Mr Abbott highlighted Labor's failure to properly administer programs including its home insulation scheme and school buildings program.

"It's very difficult to trust the Prime Minister with $350 billion of government spending when we couldn't trust her to deliver $16bn of government spending without enormous waste," said Mr Abbott, in reference to the Building the Education Revolution program.

"This government is so desperate that just a month ago, in panic they sacked their own prime minister. I can deliver for Australia because I have been a senior minister in an effective government."

Ms Gillard promised sound management to drive a strong economy, which she said would allow her to deliver improved health and education services.

She contrasted this with the Coalition, which she said would slash spending.

"This is not a time for us to turn back," she said. "If you want to lead this nation you've got to have your eyes on the road ahead, not on the rear view mirror. As Prime Minister I would never, I would never cut back the investments in our schools that are enabling us to have better quality teaching."

Mr Abbott said Ms Gillard had been given an opportunity in their debate to explain why Labor should be re-elected but had failed.

"My pledge to the Australian people is to end the waste, to pay back the debt, to stop the new taxes and to stop the boats," the Opposition Leader said.

"Under the Coalition there will be no big new taxes, decisions will be made by cabinet not powerbrokers and government will live within its means like you do, like businesses do."

On border security, Mr Abbott attacked Ms Gillard's plan to establish an asylum-seeker processing centre in East Timor as fanciful. "The Indonesians don't like it and the East Timorese don't want it," he said. "We have a centre in Nauru. It was built by Australian taxpayers. It could be made operational again."

Ms Gillard defended her policies and ridiculed Mr Abbott's pledge to turn back asylum-seeker vessels as they approached Australian waters. She said the policy was naive and would put Customs and naval personnel at risk because people-smugglers would scupper their own vessels.

It was therefore more prudent to craft policies that prevented boats from leaving for Australia.

Mr Abbott criticised Ms Gillard's promise last week to create a citizens assembly to search for a consensus on climate change as "just another talkfest", insisting Australia already had a citizens assembly: parliament.

"We have a clear and definite policy, not a talkfest, and a clear and definite policy which can deliver our target of reducing emissions by 5 per cent by 2020."

Ms Gillard defended her citizens assembly, arguing it showed she was displaying leadership. "I don't make any apology for setting up processes for bringing people with me."

Mr Abbott refused to make a promise to keep grocery prices lower than they had been under Labor.

"Sure you can try to ensure that there's competition in the markets," Mr Abbott said. "But government can't, with the stroke of a pen, reduce grocery prices and it was very foolish, verging on the fraudulent, for the Labor Party to make that promise before the (2007) election."

Ms Gillard said Mr Abbott's paid parental leave scheme would push grocery prices up.

"If you put an extra tax on big companies like Coles and Woolworths, as Tony is proposing, guess what? Prices go up because they will be looking to recoup that tax from consumers and that's Tony's policy setting," Ms Gillard said.

She defended her ousting of Kevin Rudd, saying she had done everything she could as a loyal deputy to address problems in his administration.

Ultimately though, she said, she had to choose between serving Mr Rudd and a government that had become "stuck and bogged down" and doing a service to the broader Australian people.

The Prime Minister focused her attack on industrial relations, vowing she would not make any changes to Labor's Fair Work Act and urged Mr Abbott to "come clean" about his plans to reintroduce the Howard government's Work Choices laws.

Read more on The Australian.