What happens next in the fight to form government? A SmartCompany Q&A

Australian entrepreneurs have started the business week with a cloud of uncertainty hanging over the economy – after five weeks of campaigning, we still do not know whether Labor or the Coalition will be able to form a new government.

While the electorate delivered a resounding vote of disapproval to Labor, the Coalition could not capitalise, with much of the swing going to the Greens.

Julia Gillard and Tony Abbott now face the prospect of negotiating with the three independent members of Parliament – Bob Katter from Queensland and Tony Windsor and Rob Oakeshott of New South Wales – in a bid to form a minority government.

But how will that process work? And who is likely to end up living in The Lodge?

Time to unpack all the drama with a special SmartCompany Q&A.

Right, so what is the current state of the election scoreboard?

The official tally has Labor on 70 seats, the Coalition on 71 seats, the Greens holding one seat, Independents holdings three seats and five seats still undecided. That means both major parties remain well short of the 76 seats needed to take a majority.

The seats in question are Brisbane (in Queensland), Corangamite (Victoria), Lindsay (Victoria), Denison (Tasmania) and Hasluck (in Western Australia).

At present, voting trends suggest the Liberals will win Brisbane while Labour will grab Corangamite and Lindsay – that would take both major parties to 72 seats.

An independent, Andrew Wilkie, is expected to take Denison, so everything hinges on the West Australian seat of Hasluck, where the Liberals lead by a paltry 363 vote on current numbers.

If the Liberals win Hasluck, they would move to 73 seats and could then negotiate with the three independents to try and form a minority government.

If Labor wins Hasluck, they would move to 73 seats and would also start negotiations. However, their position is strengthened by the fact that Greens MP Adam Bandt has indicated he will support Labor.

So does Labor look more likely to form government?

They do appear to have a slight edge at this stage, although as counting continues the race for those undecided seats could change quickly.

And Labor will still have to win over those Independents.

I am hearing a lot about these guys. What are their stories?

Bob Katter split from the National Party in 2001 over agriculture issues – essentially he was against the removal of sugar tariffs, which hurt the industry in his electorate. His campaign has been very focussed on the idea of better representation for rural areas and particularly agricultural industries. He has a reputation as being very outspoken and is generally seen as taking a conservative view of many issues.

Tony Windsor is a former NSW state MP who was also formerly a member of the National Party, but has always campaigned for Parliament as an independent. He joined the Federal Parliament after the 2001 election, and has been a strong advocate for improved support for regional areas, including a population plan to encourage more people to move to regional areas, and improved health and telecommunications services for the bush.

Rob Oakeshott entered Federal Parliament in 1997 as a National, but quit the party in 2002 and stood as an Independent. Despite is conservative background, Oakeshott describes himself as “socially progressive”. As well as advocating on local issues, Oakeshott is a strong proponent of the parliamentary process.

So won’t these former Nationals members naturally lean to the Right?

No. All three had very bitter splits from the National Party and have been quite scathing of leader Barnaby Joyce. That could actually hurt the Coalition’s chances of convincing this gang of three to help them form government.

What are they likely to want to get before they give their support minority government?

Essentially, what they want is more support for rural and regional areas – particularly their own.

In an enlightening interview with the three independents last night on ABC Television’s 7:30 Report, the trio put climate change (they appear to be against an emissions trading scheme but in favour of renewable energy and direct action), water, tax reform (Windsor and Oakeshott have backed the mining tax), broadband (all three want better telecommunications for the bush, and Windsor and Oakeshott support the NBN) and population.

Katter will probably also want the new government to provide more support for agribusiness, and may even argue to more tariffs to protect local farmers.

The party that wants to form government is also likely to appoint one of the independents as speaker (Oakeshott looks most likely and keen) and may also have to give the independents senior roles in government.

There are a lot of different issues in there. Will the independents be in total agreement on everything?

Great question. While the three have said they will work together, whether they can line up on everything remains to be seen.

What a deal can’t be done to form a minority government?

There are few different outcomes here.

The worse case would be that another election is called, and we hope the next vote provides a clear winner.

If a fully-fledged minority government deal can’t be done, the independents could do a provisional deal whereby they agree to guarantee the passage of what is called supply (essentially it’s the supply of money to keep the government running) and agree to support a government when it faces a non-confidence vote from the opposition. With this provisional agreement in place, the government could then thrash out each individual issue as it arises with the independents.

Sounds potentially torturous.

It would certainly slow down the passage of bills, although it could be argued we’ll get better outcomes when issues are thrashed out very thoroughly.

However, it should be pointed out that any deal between the parties and the independents – whether it is a full-blown minority government deal or a provisional supply deal – could be fragile. If relations break down, we will be back to the polls.

Right. What about the Senate? The Greens have that all wrapped up, don’t they?

The Greens will clearly hold the balance of power, with nine senators. However, this isn’t such a big deal – having a different party in charge of the Senate is pretty common, so governments are used to having to do deals with the Upper House.

So a minority government that wants to get anything through Parliament will need to do a deal with the rural-focused independents in the lower house, and the Greens in the Upper House?

Exactly. That’s why we could see some big delays in getting key legislation through the Parliament. It can work – and does in lots of other countries around the world – but it won’t be easy for however wins government.

Right. So where to from hear? And how long will we need to wait for a result?

The counting in those close seats will go on for up to 10 days, which will make it hard for everyone – including the independents being courted by Labor and the Coalition – to get a clear picture of exactly what is going on.

Gillard and Abbott will both meet with the independents today, although it is expected to take at least a week and likely longer to thrash out a deal.

The great wait has only just started.