"Kingmakers" make new demands in Australia deadlock

Australia`s political gridlock was no closer to a resolution.

Canberra: Australia`s political gridlock was no closer to a resolution that would provide market certainty on Monday after "kingmaker" independent MPs unveiled new demands as the price for their support to form a minority government.

Tasmanian Andrew Wilkie presented Labor Prime Minister Julia Gillard and conservative opposition Leader Tony Abbott with a list of 20 priorities ranging from a price on carbon to limits on slot machines and pension increases.

"It`s a long list because it`s been a long time since southern Tasmania ... had a fair go from Canberra," Wilkie told reporters.

Another independent, Bob Katter, said he was also drawing up demands for his outback seat, which sprawls across an area twice the size of the United Kingdom.

Prime Minister Julia Gillard`s Labor is fighting to hold on to power after neither of the main parties won a majority in August 21 elections. Abbott wants to scrap a mining profits tax and emissions trade plans, as well as a USD 38 billion telecoms project.

The uncertainty over which party will gather the support to form government has unsettled markets and JP Morgan said on Monday it could unsettle investors for weeks.

"A layer of persistent political risk ... against a backdrop of heightened uncertainty over the state of the global economy, will weigh on investor sentiment and AUD (Australian dollar), in particular," the bank said in a research note.

Financial markets have so far been patient, but investors are concerned Gillard could make major concessions to the sole Green MP, Adam Bandt, and former Greens party member Wilkie in order to build a working majority.

Bandt backs the proposed mining tax, which affects miners like Rio Tinto and BHP Billiton, while Wilkie wants a crackdown on gambling, which would affect stocks like Tabcorp Holdings, Tatts, Crown and Aristocrat Leisure.

Adding to the confusion, independent Rob Oakeshott said on Monday he had received a threatening phone call from a conservative MP and accused Abbott`s coalition of trying to discredit him, making the conservative leader`s job harder.

"Is this a strategic move to try and destabilize this whole process, destabilise government, spend up to AUD 50 million of (USD 45 million) Australian taxpayers` money in going back to the ballot box?" Oakeshott told ABC radio.

"If that is the game, it needs to be flushed out early."

Bookmakers have Abbott as favourite to win the support of enough independent MPs to form a government, a result that would also please financial markets hoping for Labor`s 30 percent tax on iron ore and coal mines to be axed.

Those hopes rest on the conservatives looking likely to hold one more seat than Labor in the new parliament -- 73 versus 72 -- giving them a head-start in negotiations with the four independents and the Green MP promising to back Labor.

To form a government, at least 76 seats are needed. Abbott claims the coalition should win because it received 500,000 more first votes than Labor, while Gillard says her party got a majority after transfer of second-preference votes.

Even though three of the independents were once members of the National Party, part of Abbott`s conservative coalition, they have all had bitter splits with their former party colleagues.

The animosity has broken into the open, raising the prospect of Labor signing them up instead, or the whole negotiation process breaking down and leading to another election.

Independent Tony Windsor, another ex-conservative, put the chances of another election as high as 10 percent, but said he hoped the situation could resolve itself this week, after an intense round of negotiations with the major parties.

Bureau Report

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