What you need to know about Australia's upcoming election

SYDNEY (Reuters) - Australia will hold a general election on May 3, Prime Minister Anthony Albanese announced on Friday.

Opinion polls indicate it will be a neck-and-neck race between Albanese's ruling centre-left Labor party and the conservative Liberal-National coalition led by Peter Dutton, as cost of living pressures hit households.

A large number of independent and minor parties are also seeking reelection and could become king-makers if Labor and the Liberal-Nationals fall short of majority government.

Labor returned to power in 2022 after nine years of Liberal-National coalition rule.

Here are some facts on how elections work in Australia:

HOW DOES IT WORK?

Australia is one of the few countries in the world with compulsory voting for all citizens aged 18 years and older.

Australia does not have a set date for national elections, but the maximum term for the House of Representatives is three years. The election is called by the prime minister. The previous election was on May 21, 2022.

There are two houses of parliament, with the government formed by the party or coalition holding a majority in the lower chamber, the House of Representatives. The prime minister is chosen by the governing party from the House.

WHAT'S THE STATE OF PLAY NOW?

Labor holds 77 House of Representatives seats, the Liberal-National coalition holds 53 seats, the Greens hold 4, and 15 are held by micro parties and independents.

Boundaries have been redrawn in New South Wales, Victoria and Western Australia states since the last election. There will be 150 House of Representatives seats up for election, reduced from 151.

If neither Labor nor the Liberal-National coalition has a majority of seats in the House of Representatives after polling day, a minority government can be formed with an agreement of support from independent members or minor parties.

HOW DO AUSTRALIANS VOTE?

Australia has a preferential voting system for the House of Representatives. Voters rank local candidates in order of preference on their ballot papers.

A candidate who gets more than 50% of the first-preference votes wins the seat. If no candidate reaches that threshold, the one with the fewest votes is excluded and their votes are distributed to the person each of those voters nominated as their second preference. This continues until one candidate passes the 50% threshold.

The upper house, the Senate, has 76 members - 12 from each of the six states and two from each of Australia's two less-populous territories. Half of the Senate seats will be contested at this election.

(Reporting by Kirsty Needham and Christine Chen in Sydney; Editing by Alasdair Pal and Stephen Coates)