Gillard snatches victory to head Ist minority govt since 1943

Australian Prime Minister Julia Gillard is set to head the country's first minority government in nearly 70 years after two kingmaker independent MPs today extended support to her Labor party, giving it a wafer-thin one-seat majority after the August 21 cliffhanger polls.

"Labor is prepared to govern," Gillard told reporters in Canberra after Tony Windsor and Rob Oakeshott, the two rural independent lawmakers, said they will support her party, ending weeks of political instability following a hung parliament, the first since 1943.

"I believe the Australian people, given the closeness of this vote, want us to find more common ground in the national interest," 48-year-old Gillard said in her first remarks after snatching victory.

Labor now controls 76 seats in Parliament's 150-member lower house, with the opposition Coalition of Liberal party leader Tony Abbott on 74. Gillard, the first woman Prime Minister of Australia who assumed power 10 weeks ago in a party revolt, said it is likely she would be in a position to administer oath to her new ministry early next week.

She said her minority government will be held to higher standards of accountability as a result of the deal struck with the independents. Gillard thanked all independent MPs, including Bob Katter who went against Labor, for the "tone and tenor" of their negotiations.

She said she had no idea about the decision taken by Windsor and Oakeshott to back her and learnt about it while watching their live press conference. "So let's draw back the curtains and let the sun shine in, let our Parliament be more open than it was before," she said.

Gillard also thanked Abbott for the "common courtesy" of phoning her after Windsor and Oakeshott made it clear that they would back Labor. Abbott, however, expressed his disappointment with the decision of the independents to support a minority Labor government.

"It's a disappointing day, it's a disappointing result," he said. "Nevertheless I could not have asked for more support from my colleagues, from my staff and from the party at large."

Gillard, who managed the narrowest victory in the 150-member House of Representatives with the support of independents, said "ours will be a government with just one purpose, and that's to serve the Australian people."

"We will be held to higher standards of transparency and reform and it's in that spirit I approach the task of forming a government." The Prime Minister said it was likely she would be in a position early next week to swear in a new ministry and added that Labor would govern in the best interests of the Australian people.

"I know that if we fail in this solemn responsibility, we will be judged harshly when we next face the Australian people at the next election," she said. Under the deal with the independents, Gillard had offered Oakeshott a frontbench role to serve regional Australia in a Labor government, according to 'The Australian'.

The Prime Minister, however, said the package was a "fair share." She declared that her 9.9 billion-dollar deal with the independents will deliver a net impact on the budget of just 43 million dollars. Labor will save 700 million dollars by deferring an election commitment to offer a tax discount on interest income to 2012-13.

The regions' deal includes 763 million dollars in new spending to accelerate the Pacific Highway and Tamworth Hospital redevelopment, a 600 million-dollar Priority Regional Infrastructure Fund and amended transitional arrangements of fuel ethanol taxation. Savings will include 106 million dollars after election commitments.

Gillard said Labor was prepared to deliver a stable and effective government for the next three years after winning the support of the two key rural independents. She said Abbott had called to wish her well and she promised to strive for "common ground" with the Liberals and Nationals.

A disappointed Abbott said he would continue to stand as leader, possibly at a party room meeting to be held on Thursday, despite the Coalition being denied a chance to rule by the independents.

He said he hoped "for the country's sake" that Labor would be better in its second term than it had been during the past three years - and rediscovered its soul. Abbott, however, said Parliament would be vastly improved by reforms agreed to by both parties with the independents. He said he would not let his disappointment at the result blind him to the "great strengths" of Australia's parliamentary system which he would always respect.

The Coalition would hold the government "ferociously to account," he said. "We will be an even more effective Opposition in the coming Parliament than we were in the last one."


Commenting on the latest political development, National Senate leader Barnaby Joyce claimed that minority Labor government will work against interests of regional Australia.

"They have thrown their lot in with a Green-Labor organisation which will work completely at odds with the interests of regional Australia," he was quoted as saying. Joyce rejected a suggestion that the Nationals should leave the Coalition with the Liberals, arguing they had already provided product differentiation through their support for a single desk on wheat marketing.

Meanwhile, ex-prime minister Kevin Rudd is expected to be offered a senior portfolio in the government, 'The Age' said. However, Gillard declined to say if he would get foreign affairs. "I gave Kevin Rudd a commitment that he would be a senior member of my ministerial team, a Cabinet minister, as he will be," she said.

As part of the agreement with the independents, Gillard has promised to give regional Australia "its fair share." "The next round of health and hospitals funding will be focused and dedicated to regional Australia," she said. "So will the next round of funding from the education investment fund."

The government will ensure its national broadband network will have uniform wholesale prices across the country, while regional Australia would also be given priority as the network rolls out, she said.

Labor will dedicate 800 million dollars to a priority regional infrastructure programme, while 573 million dollars of the regional infrastructure fund will be spent with the guidance of regional development officers. Gillard said those commitments came on top of Labor's general commitment to the 6 billion-dollar regional infrastructure fund and the tele-health and building better cities programmes outlined during the election campaign.

"In total this means, for regional Australia, they can look forward to benefits in the order of 9.9 billion dollars," she said. "But that's a fair share, it's been worked through with Mr Oakeshott and Mr Windsor and I thank them for working through that with me and (Treasurer) Wayne Swan."

Gillard said 2 billion dollars of the 6 billion dollars in revenue coming from Labor's proposed minerals resource rent tax would flow to Western Australia. About half a billion dollars would be specifically allocated with the advice and assistance of regional development authorities.

Amid concerns over reported multi-billion-dollar shortfall in revenue from the mining tax, Swan said the regional infrastructure fund was in place earlier this year before any of the political events unfolded.

He said it was part of the response to mining boom "mark two" and the regional infrastructure fund "is a very, very important part of all of that."

Separately, Abott, reacting to the two independents' support to Gillard, said: "In the end I wasn't surprised or shocked, I was disappointed, I was nevertheless grateful for the opportunity over the last fortnight to put my case to the three country independents.

"I think that the Coalition offered regional Australia a historic new deal, I'm pleased Bob Katter accepted that but I'm disappointed the other two didn't." Abbott rejected a suggestion from Windsor that if the Coalition had got the numbers it would nevertheless have "rushed off to the polls as soon as (it) could."

"I made it absolutely crystal clear that as far as I'm concerned, and as far as the senior leadership of the Coalition was concerned, we wanted the parliament to run full term," he said, insisting that he would be standing for re-election as Liberal leader on Thursday.

Deputy Liberal leader Julie Bishop said she would be recontesting her position as well and heaped praise on her leader. "Tony transformed the political landscape in this country. He has secured a place in political history," she said.

She said Abbott had brought the party together in a way that no one would have imagined and made the Coalition even stronger. "He has proved to be one of the most effective leaders of the opposition in history, and I believe he would have made a magnificent prime minister," she said. "On that basis I would be honoured to serve as his deputy again."

Abbott said although his predecessor, Malcolm Turnbull, was likely to return to a senior position on the Coalition frontbench, he did not expect a major reshuffle. "I have great confidence in my team and while inevitably there will be changes, should that be up to me, I don't think anyone should expect big changes," he said.

"Malcolm is an extremely able person, I've always believed that he was an adornment to the Parliament. I'll have to have a talk with him but I think he can expect to be a senior member of the Coalition going forward."