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Australian Labor Prime Minister Julia Gillard will know on Tuesday if she can form a new minority government with the support of three independents, ending more than two weeks of uncertainty after the August 21 elections.
Independent Tony Windsor said the impasse should end on Tuesday morning, but 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.
"There are still some meetings to go on this, both with the opposition and the government (and) depending on how long they take, and any sticking points, it should be tomorrow," Windsor told reporters in Canberra.
But in a further setback for conservative opposition leader Tony Abbott, the independents said they will not make a final choice until he confirms support from a rebel National Party MP who wants to sit on the cross benches in the new parliament. "Until there is a resolution to that issue we don't really have a decision to make. We cannot form a government even if we wanted to with Mr Abbott," said fellow independent Rob Oakeshott.
Gillard and 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. They have demanded political stability from Labor and the conservative as a cornerstone for their support.
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 $38 bln 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.
FRESH ELECTIONS
An Essential Media poll on Monday showed 52% 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.
Seventy percent of respondents believed there would be fresh elections within a year, the survey found.
Australia's economy recorded strong growth in the last quarter and financial markets have largely been unruffled by the political gridlock. Standard & Poor's on Monday reaffirmed its 'AAA/A-1+' foreign and local currency sovereign credit ratings for Australia, with a stable outlook.
"The ratings on Australia reflect the country's ample fiscal and monetary policy flexibility, economic resilience, public policy stability, and its sound financial sector," Standard & Poor's credit analyst Kyran Curry said.
Despite providing a large stimulus of almost 5% of GDP over 2009 and 2010, the government's fiscal position was stronger than most other 'AAA' countries, with the deficit likely to peak at a modest 3.2% of GDP in 2010.
