Australia close to forming govt but new poll still a risk

Labor PM is strongly tipped to form a new minority govt within 48 hours.

Canberra: Australia`s Labor Prime Minister Julia Gillard is strongly tipped to form a new minority government within 48 hours, ending a fortnight-long political limbo with the backing of three kingmaker independents.

Independent Tony Windsor said he expected a decision by Tuesday, but warned there was a risk the three independent MPs could still split, delivering a deadlock of 75 votes apiece in the 150-seat lower house and the prospect of another election.

"That is what we will be talking about today. If that is the circumstance, what do we do about it? Do we go back to the polls or do we nominate one side and have a government," Windsor told reporters on Monday as he arrived at Canberra`s Parliament house.
Gillard and conservative opposition leader Tony Abbott have been desperately wooing the independents for their support for a minority government since August 21 elections delivered the country`s first hung Parliament since World War Two.

Several newspapers on Monday said unnamed conservatives were expecting Gillard to win over at least two independents to form a minority government holding 76 seats. Bookmakers are also tipping a Gillard Labor government.

Gillard currently has 74 seats to Abbott`s 73 after a fourth independent last week sided with Labor, but Abbott could still form government if the three uncommitted independents back him.

Gillard`s Labor has promised a controversial mining profits tax and a USD 38 billion broadband project if it wins, as well a carbon price to curb one of the world`s highest per-capita levels of emissions. The conservatives oppose all three policies.

"They are pretty significant issues with significant amounts of money wrapped up in all three of those policies, so I think a lot more certainty on the government side and those policy fronts will be welcomed by business leaders," said Stephen Halmarick, Head of Investment Markets Research with Colonial First State.

Australians want fresh election

A poll in the Daily Telegraph newspaper on Monday showed 56 percent of Australians now wanted another election, regardless of which party the independents decided to back, underscoring expectations that any new government will struggle to overcome ongoing instability with such a thin majority.

Independent Rob Oakeshott said he could change his mind about which of the two major parties to back in a minority government if the outcome was tied at 75 seats apiece. He also said he was disappointed at conservative opposition to some parliamentary reforms sought by the kingmakers.

"There is a national interest issue in question about how we have a stable government over the next three years," he said.

Betting agencies were tipping one of the three, stetson-wearing outback MP Bob Katter, to side with Abbott.

Katter last week gave Gillard and Abbott a "wish list" of 20 priorities that could cement his support, ruling out emissions trade and the 30 percent tax on coal and iron ore miners.

But Katter also hinted that the mining tax, brokered by Gillard with Rio Tinto, BHP Billiton and Xstrata, was not a deal breaker.

Bureau Report