Australia in limbo as vote counting in tight election to take days

By Jane Wardell and Wayne Cole

SYDNEY (Reuters) – Vote counting resumed on Monday in a dramatic Australian federal election but a winner is not expected to be announced for several days, raising the prospect of prolonged political and economic instability.

The exceptionally close vote leaves Prime Minister Malcolm Turnbull chasing support from key independent and minor parties – the very groups he called a risky double dissolution election to circumvent – to retain power.

The opposition Labor Party is also schmoozing with a quartet of new power brokers who are yet to declare support for either side, as rumbling grows about Turnbull’s future as leader of the centre-right Liberal Party-led coalition.

The election on Saturday was meant to put a line under a period of political turmoil which has seen four prime ministers in three years. Instead it has left a power vacuum in Canberra and fueled talk of a challenge to Turnbull’s leadership of the Liberal Party, less than a year after he ousted then prime minister Tony Abbott in a party-room coup.

The Australian dollar dipped in early trade on Monday after no clear winner emerged, pointing to policy paralysis ahead and perhaps threatening the country’s triple A credit rating. The local dollar started around half a U.S. cent lower around $0.7435 but soon edged back up to $0.7469 in light volumes.

Australian shares could also be hindered by the inconclusive result. The local share price index futures was still up 0.6 percent at 5,235, an 11-point discount to the underlying S&P/ASX 200 index close. The benchmark had risen for a third straight session on Friday to end the week 2.6 percent firmer.

Turnbull said on Sunday he remained “quietly confident” of returning his coalition, which retains government in a caretaker mode until a winner is declared, to power for another three-year term.

But Andrew Wilkie, one of the four key independents, said the vote showed that Turnbull has no mandate to impose his election agenda, which included cuts to healthcare and a A$50 billion corporate tax break over 10 years.

“Neither the Labor Party or the Liberal Party have a God-given right to rule,” Wilkie told ABC radio, adding he was adamant he would “do no deals.”

A second independent, Cathy McGowan, also said she did not intend to decide which side to support until the votes were counted and parliament resumed.

“There is enormous disappointment with the way the government has been working,” McGowan said.

Vote counting for the Senate resumed on Monday but counting for the House of Representatives does not restart until Tuesday, leaving the precarious position of the lower house in limbo.

The delayed counting is a result of new security measures imposed by the Australian Electoral Commission.

Before counting was paused on the weekend, the Labor Party had won 67 seats to the coalition’s 65 with the Greens Party picking up one seat and independents claiming four.

With the result of 13 seats still in doubt and either side needing 76 seats in the House of Representatives to form a majority government, political pundits are predicting one of two main scenarios: the coalition scrapes across the line by picking nine or more of the undecided seats, or it doesn’t reach the 76 mark and has a hung parliament where neither side holds power.

Small parties are also likely to do well in the Senate, with Pauline Hanson’s One Nation on track to win between two and four seats, marking the return of the right-wing anti-immigration activist to parliament after an almost 20-year absence.

(Editing by Phil Berlowitz)