Australian PM facing political jigsaw to govern

By Jane Wardell

SYDNEY (Reuters) – As Australian Prime Minister Malcolm Turnbull inched closer on Friday to retaining power, attention turned to the political jigsaw he will need to navigate to pursue flagship policies including a A$50 billion ($37.6 billion) corporate tax break.

The country’s cliffhanger election is likely to give its leader a minority, or slim majority, Liberal-National coalition government, a hostile senate and sniping from within his own center-right Liberal Party.

Turnbull flew south on Friday to woo a second independent candidate in a bid to cobble a government together as counting from Saturday’s poll headed into a sixth day.

The opposition Labor Party, meanwhile, was moving quickly to make plans for the return of parliament, holding a caucus meeting to reaffirm leader Bill Shorten.

“We need to be prepared to go back to the polls sooner rather than later,” Labor’s deputy leader Tanya Plibersek told ABC Radio, citing the likely divided parliament.

Turnbull’s gamble in calling an election, ostensibly to clear the upper house Senate of what he saw as obstructive minor parties, backfired badly with a much bigger swing to the center-left Labor opposition than expected.

It also saw minor parties and independents become even more powerful, making it less likely Turnbull will be able to push his reformist economic agenda through an intransigent upper house.

Standard and Poor’s on Thursday cut Australia’s credit rating outlook to negative from stable, threatening a downgrade of its coveted triple A status, as Turnbull flew to northern Queensland state to win support from a maverick former member of the ruling conservative coalition.

Independent Bob Katter’s support gives Turnbull’s coalition a total of 74 seats, according to the latest Australian Broadcasting Corp projections, two shy of the 76 it needs to form government outright.

Labor is projected to win 66 seats, meaning they would need to win the six seats still being counted and do deals with all the four remaining independents to form government – a scenario considered extremely unlikely by pollsters.

“I remain confident that we will form a government, and we will unite the parliament as far as we are able to,” Turnbull told reporters after meeting Katter.

On a national two-party count, just 485 votes separate the Liberal-National coalition and Labor with a 3.5 percent swing to Labor.

($1 = 1.3317 Australian dollars)

(Editing by Lincoln Feast)