Australia election: Talks start after hung vote

Julia Gillard: "Stable and effective government is continuing"

Three independent MPs who may hold the balance of power following Saturday's inconclusive election in Australia say they will negotiate as a bloc.

With some votes still to be counted, both the ruling Labor party and the opposition conservative coalition appear to have fallen short of the 76 seats needed for a majority.

Both are now lobbying for support from the independents.

Trading was down as financial markets opened, amid the political limbo.

The Australian dollar and government bonds both fell in value. The Australian dollar lost almost 1% against the US dollar in early trading, before recovering somewhat.

Australia has not elected a hung parliament since 1940.

But the latest figures from Australian public broadcaster ABC give Labor 72 seats and the coalition 69 seats. The Greens secured one seat and independents won three. Five seats have not yet been called.

'Shoulder to shoulder'

On Monday, both Prime Minister Julia Gillard and opposition leader Tony Abbott flew into Canberra to start working to try to secure a majority. Both have opened talks with the independents.

"It's my intention to negotiate in good faith an effective agreement to form government," Ms Gillard told journalists on Sunday.

Attention is focusing on three independent MPs - Bob Katter, Tony Windsor and Rob Oakeshott - who represent rural and regional constituencies.

Analysis

Camera crews were at Canberra airport to record the arrival of the three independent MPs who will determine this race: the once-obscure kingmakers who are now in the national spotlight.

I wonder how many times they have slipped in and out of the nation's capital without anyone paying them a blind bit of notice or even knowing who they are. Now Bob Katter, Tony Windsor and Rob Oakeshott are the talk of Australia.

There is a rich irony, of course. For the past five weeks the myopic focus has been on 20 marginal constituencies, many of which are to be found in the suburban fringes. Now voices from the bush, the outback and regional Australia have come to the fore.

Mr Oakeshott said the trio would stand "shoulder to shoulder" during the negotiating process, so they did not "get picked off by political interests and vested interests".

Another independent, Andrew Wilkie, looks on course to win the Tasmanian seat of Denison, while Adam Bandt secured one seat for the Greens.

Mr Abbott claimed the current government had lost its legitimacy.

"It's almost inconceivable that any Labor government emerging from this election could deliver competent and stable government," he said.

The election came two months after Ms Gillard ousted Kevin Rudd in a controversial leadership challenge.

Correspondents say Mr Abbott has tried to exploit the Labor party's divisions after the departure of Mr Rudd, trying to portray the opposition coalition as a stable answer to a government beset by in-fighting.

What happens next

  • Counting of postal votes could continue for up to two weeks, with four seats too close to call
  • Rivals to negotiate with up to four independents and one Green MP expected to hold the balance
  • Deadlock could lead to new elections - though analysts believe this is unlikely to happen quickly

In his campaign he has pledged to tighten immigration and has hit out at government spending. He has also toned down his well-known climate change scepticism.

Ms Gillard, a former lawyer who called a snap election shortly after coming to office, was hoping to be rewarded for the government's handling of the economy, which weathered the global recession remarkably well.

But support for Australia's first female prime minister has fallen in the two months she has been in office.

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