Gillard inches closer to reins of power

CANBERRA - Julia Gillard is now just two seats short of the 76 she needs to form a Government as Australia's first elected female Prime Minister.

Tasmanian independent Andrew Wilkie yesterday gave his support to Labor in the wake of Wednesday's deal that confirmed the backing of the Greens' first federal MP, Adam Bandt, in the House of Representatives.

Wilkie said he would back Labor on budget bills and votes of confidence, but that he would consider each of the party's policies on its merits.

"Labor best meets my criteria that the Government must be stable, competent and ethical," he said.

Wilkie's decision, which followed intensive discussions with both Gillard and Opposition Leader Tony Abbott, effectively gives Labor 74 seats, and the Opposition 73, if the vote of new West Australian Nationals Tony Crook is included in the Coalition's total.

Crook has said he will sit on the crossbenches as an independent, but is unlikely to support a Labor Government.

The formation of the new Government now lies in the hands of three rural-based independents, at least two of whom must side with Labor if Gillard is to win power.

Queenslander Bob Katter and New South Wales MPs Tony Windsor and Rob Oakeshott were previously members of the Nationals, the Coalition's junior partner, but moved to the crossbenches after separate, acrimonious, splits with the party.

They have agreed to form a common approach without indicating which side is most likely to win their support, and have indicated that their key concerns are stable, effective government and sound economic management.

Labor's deal with the Greens has given Gillard an important card in the Upper House, where Greens senators will hold the balance of power from next July - although the agreement could work against her among the conservative voters of the independents' electorates.

Gillard has also been handed another bonus with Treasury costings of the major parties' election promises, which disclosed a "black hole" of between A$7 billion ($8.9 billion) and A$11 billion in the Coalition's figures.

In contrast, analysis of the Government's costings showed its budget bottom line would be better than predicted, increasing from an estimated A$44 million to A$106 million.

The Treasury analysis of the rival costings was provided to Windsor and Oakeshott, after Abbott's refusal to submit his figures to official scrutiny during the campaign for the August 21 vote, and later reluctance to allow analysis for the independents.

Although Windsor said the disparity between Treasury and Coalition calculations was not necessarily a "game-breaker", he and Oakeshott have expressed concern.

"We probably understand now why [Abbott] wasn't interested in releasing the numbers and so I think we all await an explanation of where these significant differences are in terms of interpretation," Windsor told ABC radio.

He said the discrepancy raised issues of trust.

Oakeshott said he was also worried by the Treasury analysis, which would influence his decision.

"In the end we've all got to trust someone and [Treasury heads] are the apolitical advisers in all of this, so, look, I'm listening to them very closely and now I'll listen to the responses," he said.

The Treasury analysis said the Opposition had underestimated some costs, double-counted some estimated savings, and miscalculated savings from its proposed axing of Labor's national broadband network.

Shadow Treasurer Joe Hockey stood by his figures yesterday, saying that the discrepancies were the result of "differences of opinion" on about 10 of 300 policies submitted to the Treasury.

Abbott said the disputed figures did not compromise his ability to continue to negotiate in good faith with the independents, and that the bottom line remained Labor's record of "waste and mismanagement" against the Opposition's record of responsible economic management.

But caretaker Treasurer Wayne Swan said the Coalition had set out to deceive the Australian people.