Election Deadlock Puts Australia At Risk

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Australia confronts the palpable fear of weak government as the 2010 battle between Julia Gillard and Tony Abbott has intensified.

The result being the first minority government since 1940.

Victory will fall to the leader with the most seats and neither was calling an outcome last night, with a million votes outstanding.

But the political momentum is with the Opposition Leader, and Labor's governing legitimacy has been cast into serious doubt. The Prime Minister has the advantage of incumbency yet Abbott has the psychological edge, offering a new team to break the deadlock.

Gillard made clear yesterday Labor would fight to salvage office. She plans to negotiate to achieve an effective and stable government - a bid devoid of political legitimacy unless Labor finishes with more seats than the Coalition. Seats, not votes, are the measure that counts.

Abbott has won the primary vote 43.5 per cent to 38.5 per cent and Gillard the two-party-preferred vote 50.7 per cent to 49.3 per cent but the bottom line is obvious: the re-elected independents cannot justify a deal with the party having fewer seats.

Australia is at risk, politically and financially, in a globalised world. The political system has not faced such a test since World War II. Any Gillard government will be dependent upon the Greens, the goodwill of Kevin Rudd and Labor's ability to contain its smouldering tensions.

Labor has lost its majority in this debacle. It is the worst result for a first-term government since Scullin Labor in the Great Depression and will haunt the party for many years. Over nine months Abbott has staged one of the most stunning recoveries in Australian history to return the Coalition from the political graveyard.

The numbers defy prediction, with both Labor and Coalition short of a majority in the 150-strong chamber. There is only one path to a fragile stability at this point: a written agreement between the prime minister and the three re-elected independents that guarantees supply and confidence to a minority government, getting it a 76-seat consolidation. Nothing less will suffice.

The signs are that these three - Bob Katter, Tony Windsor and Rob Oakeshott - will strike a joint deal.

They represent conservative seats that would otherwise be held by the Coalition. This trio would be able to explain to their electorates their decision to support a minority Gillard government with all its problems only by invoking the justification that Labor deserved to govern because it had more seats.

The Greens emerge big winners from this election. They have nine senators, the Senate's balance of power and one pivotal new member, Adam Bandt, in the prized seat of Melbourne, pledged to back a Gillard government. The likely fifth independent candidate is Andrew Wilkie, in Tasmania, previously a Green who challenged John Howard over the Iraq war. It is assumed that Wilkie would also back Labor. One option, probably remote, is that Labor might be able to form a government relying upon Bandt and Wilkie.

Abbott has been denied a majority because of incompetence from the NSW Liberal division. The Liberals in western Sydney and on the NSW central coast failed to maximise their potential gains.

There are three policy certainties from this result: regional Australia will win significantly more funds; the prospect of market-based economic reform will diminish; and the Greens will exert more leverage over legislation.

Hopes that Australia can organise stable government from this hung parliament are heroic. A short-term parliament leading to a more decisive second election cannot be dismissed.

An Abbott government would constitute a historic failure for Labor: the demise of two Labor prime ministers, Rudd and Gillard, within the same eight-week period.

But if Labor forms a minority government, the risks would be immense. Could Gillard rehabilitate Labor or would it sink further in its much diminished position?

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