Julia Gillard inches closer to forming new govt in Australia

Australia's first woman Prime Minister Julia Gillard today moved a step closer to a return to power after one of the independent MPs extended his support to her Labour party for forming a minority government following a cliffhanger general election on August 21.

Andrew Wilkie, an independent lawmaker from Tasmania, has decided to support 48-year-old Gillard's party, taking its tally to 74 against opposition leader Tony Abbott's Liberal-led Coalition's 73 in the 150-member House of Representatives.

A party needs 76 seats to form a government and the four independent MPs, including Wilkie, are holding the balance of power.

Wilkie said he decided to back Labour after Gillard agreed to several requests, including $340 million for the Royal Hobart Hospital and restrictions on poker machines, ABC reported.

He said he turned down the offer from Abbott, 52, to join his group. "The ALP best meets my criteria that the government must be stable, competent and ethical," he was quoted as saying.

In the new government, Wilkie said, regional and rural hospitals should be considered as priorities in the applications for funding.

Apart from the $340 million for Hobart hospital, Gillard has promised to open up a funding round of $1.8 billion for other hospitals.

A Labour government would also force the states to implement "smart cards" on poker machines to restrict gambling if they do not agree to do it voluntarily. "This is a fabulous commitment of the Prime Minister and will go a long way to reducing problem gambling in Australia," Wilkie was quoted as saying.

However, he also warned that his decision to back Labour only extends to issues of supply and no-confidence motions. "I've made it quite clear to the prime minister that she shouldn't necessarily count on my support when it comes to any particular initiative or pieces of legislation," he said.

Welcoming Wilkie's decision to support her attempt to form a government, Gillard thanked him "for bearing in mind at all stages the national interest."

Wilkie's decision came at a time when other three independent MPs were locked in talks to decide which party to support in a minority government.

Rob Oakeshott, Tony Windsor and Bob Katter were in back-to-back meetings in Canberra with Labour and Coalition leaders and also had lunch with mining magnate Andrew "Twiggy" Forrest, who is strenuously opposed to Labour's mining tax, ABC said.

"I've been quite open about more than likely pulling something together over the weekend," Oakeshott said. "I think we're all looking to hopefully at the latest be home by Monday or Tuesday...."

Oakeshott wants a document on parliamentary reform to be finalised by tomorrow before he makes a final decision. 

The independents also released Treasury analysis that showed a $7 billion to $11 billion shortfall in the Coalition's election policy costings. 

The fate of both Labour and Coalition depends on the final decision of the three rural independents. If the independents go as a bloc they will ensure one side or the other is able to form government.

But it is still possible the three MPs could split and leave Australia in limbo, 'The Australian' reported.