Norway set for close polls result

Norway's Prime Minister Jens Stoltenberg casts his vote

OSLO, Norway -- Oil-rich Norwegians are set to send the ruling Labour government to its worst election tally in nearly 80 years on the back of accusations of high taxes and worsening welfare facilities.

Norway has the world's best living standard thanks to its offshore oil reserves, a United Nations' report has said.

But Norway's three million voters, unhappy with a lack of nursery schools and retirement homes, as well as a declining standard of public education, are set to kick out Labour and trigger a period of uncertainty and instability.

The party, which claims to have established the country's welfare system, is predicted to pick up about 25 per cent of the vote, down from 35 in the last general election in 1997 -- it last polled below 30 per cent in 1924.

The Conservatives, pledging tax cuts and more cash for schools alongside an overhaul of welfare spending, is likely to witness a surge in its vote from 14 per cent to 23 per cent.

The Oslo newspaper Aftenposten said: "The first parliamentary election of the 21st century is the most exciting in recent memory."

While another daily, Dagbladet, said: "We are heading for a political earthquake when the votes are counted tonight, if we believe opinion polls."

Labour Party leader and foreign minister Thorbjoern Jagland is quoted by The Associated Press as saying: "It is unstable and unpredictable."

Whale hunter Steinar Bastesen is likely to hold the balance in parliament if, as predicted, his Coast Party ends up winning two parliamentary seats.

Prime Minister Jens Stoltenberg would not say whether his government would resign if public support plummeted.

Norway's Conservative Party leader Jan Petersen and his wife

Polls opened at 9 a.m. (0700 GMT) on Monday and were due to close 12 hours later, with early indications likely later in the evening, though the official result is not expected until Wednesday.

Advance voting began on Sunday in remote villages, while 500,000 postal ballots have already been cast.

Weeks of haggling by a minority government is set to follow. The Conservatives are reluctant to include the far right Party of Progress in any coalition, and have no other declared government partners.

Underspending on the welfare system is compounded by the fact that Norway is the world's second-largest oil exporter, and currently saves most of its oil-generated surplus cash.

The government said it was reluctant to spend the estimated $60 billion for fear of triggering inflation.

Norway has twice voted "No" to joining the European Union, in 1972 and 1994.