Minority Australian government hits first hurdle

Australian Prime Minister Julia Gillard has vowed to serve a full term after scraping back into power, but her fragile coalition has been hit by discord over a new tax. After cobbling together a one-seat majority helped by three independents and a Greens MP, Gillard promised the nation's first minority government since World War II will be "stable and effective".

Reuters

"The government's aim is to go for its full term and deliver stable and effective government for three years," she told public broadcaster ABC.

Gillard, who seized power of the Labor Party in a June party coup, was handed a flimsy mandate on Tuesday when she won the backing of two "kingmaker" independent MPs, finally breaking a 17-day impasse after deadlocked elections.

But less than 24 hours later, independent Tony Windsor was disappointed that a controversial new levy on the mining sector, which brought down Gillard's predecessor Kevin Rudd, would not be discussed at an upcoming tax summit.

"I thought it was going to be included in any discussions in relation to taxation," he told ABC radio.

Treasurer Wayne Swan said the issue of the 30 percent tax would not be raised at the summit because legislation was already being prepared, and said he had smoothed over the issue with Windsor.

However, Liberal Party shadow treasurer Joe Hockey said the incident raised questions about the unity of the coalition, which will also face difficult negotiations over taking action against climate change.

"We're not going to have stability for the next three years if this is what happens on day one," Hockey said.

"The happy couple haven't even left the chapel and they're arguing about the mining tax already."

Gillard, an industrial lawyer called an elections three weeks after ousting Rudd, banking on a wave of support and goodwill over the strong, resource-led economy.

But the anticipated honeymoon period failed to materialise as many voters turned away from the two main parties and handed the environment-focused Greens a record ballot share.

Meanwhile newspapers accused Gillard of bribing her way back into power by promising the independents 9.0 billion US dollars for rural healthcare.

"The Big Steal", said Sydney's Daily Telegraph, while the business-friendly Australian Financial Review's headline simply read: "Gillard buys power for 10 billion dollars".

"Australians should be concerned at the outcome of the election," the Review's editorial said.

"It is no recipe for the unpopular reforms that are needed to revive productivity and keep Australia competitive in an increasingly challenging world."