Opposition Leader Tony Abbott told 200 undecided voters at a people's forum in Brisbane that he was in the race of his life, while Julia Gillard said she would emphasise the positive.
Appearing second, Prime Minister Julia Gillard told the people's forum in Brisbane that it was time to be positive.
She said that there had been a lot of negativity in the election campaign and she thought people actually wanted to hear positive plans for the future.
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As expected, the ghost of Ms Gillard's predecessor Kevin Rudd reared its head, when a woman asked how her policies were going to be different to his.
The prime minister said she stood for a sustainable Australia, for jobs and quality education for young people.
Ms Gillard once again defended her decision to oust Mr Rudd from the top job.
"I stepped up when I, and overwhelmingly my colleagues, came to the conclusion that the best way of the government being in the best shape to deal with the issues that the nation faces was for me to step up into this position," she said.
Mr Rudd again cropped up when a female questioner asked why he had been dumped for "supposedly" losing his way, while Ms Gillard "must have been party to all the bad decisions".
She said she took her fair share of the government losing its way, "warts and all".
Ms Gillard said she also supported desalination, but it was not the only way to secure the nation's water supply.
"We've got to better manage our river systems," she said.
Earlier, Mr Abbott had said a Coalition government would be better than Labor, although not perfect because "nothing is ever perfect in this vale of tears".
A young woman asked Mr Abbott about legalising gay marriage, comparing the current ban on gay marriage to a previous ban on inter-racial marriages.
Mr Abbott said there was no parallel, but said he hoped to reduce discrimination against gay people.
"I can fully understand why gay people feel that they've been ripped off over the years I am as strong as anyone to want to see everyone given the rights and the dignity that every single human being should be accorded," he said.
But Mr Abbott said marriage should be between a man and a woman.
"That's not to say that men and women who are married love each other more than other people in other sorts of relationships."
Mr Abbott, who was watched by his wife and eldest daughter sitting in the crowd, then talked of his plans to "slim down" the public service.
He also warned that Greens leader Bob Brown would be an "unofficial cabinet minister" if Labor won the election, in reference to a preferences deal which is likely to help the Greens into the balance of the power in the Senate.
Ms Gillard had invited the Opposition leader to a separate debate on the economy this evening but Mr Abbott has said he would not be taking part.
