Australian Prime Minister Julia Gillard came within grasp of a return to power on Thursday after one of four kingmaker MPs backed her Labor Party's bid to form a minority government following last month's dead-heat elections.
Labor has promised to introduce a new tax on mining profits and a $38 billion broadband project if it wins a second term over the opposition conservatives, as well as a price on carbon to curb one of the world's highest per-capita levels of emissions.
Independent Andrew Wilkie's decision to back Gillard means Labor can now claim 74 seats in the 150-member lower house of parliament, still two short of the number needed to rule.
The conservatives now have 73 seats, but could still win the race to form a government if the three remaining rural-based independents line up behind its leader, Tony Abbott. Their decisions may not come until early next week.
I have judged that it is in fact (Labor) that best meets my criteria that the next government must be stable, must be competent and must be ethical, Wilkie told reporters at parliament in Canberra.
Labor, he said, would have his support only on legislative votes affecting budget supply and defeating no-confidence motions launched by the conservatives in the fractured parliament.
Bookmakers immediately reversed their odds on Gillard forming a government, with the conservatives sliding behind for the first time since the inconclusive August 21 vote delivered the country's first hung parliament since World War Two.
Wilkie had demanded gambling curbs to limit the amount people could lose on gaming machines. A crackdown on betting would affect stocks like Tabcorp Holdings, Tatts, Crown and Aristocrat Leisure.
To guarantee his support, Gillard agreed to look at putting smart-card technologies to monitor slot machines use in pubs and casinos in a nation where $9.3 billion (6.03 billion pounds) was gambled away in the year to June 2009, he said.
These are ways of individual gamblers being recognised by the machines and by the network of the machines, which is a very effective way ... to rein in problem gambling, Wilkie said.
The government also agreed to release extra money for public health and hospitals.
Wilkie said he also wanted Australia's richest companies to pay more tax on their profits, although Gillard's planned 30 percent profits-based tax on coal and iron ore companies needed tweaking before it would get his support.
The concept I'm not at odds with. But I think the current version has many faults, and I'm not comfortable with the way it was negotiated with only three miners, he said.
Labor's proposed tax would hit miners Rio Tinto, BHP Billiton and Xstrata.
Adding to pressure on Abbott, the conservatives came under pressure to explain a $9.6 billion hole in their election manifesto costings, putting at risk talks with the undecided independents.
One of the kingmakers, Tony Windsor, said that while the error was not a deal breaker, Abbott's pre-election refusal to have the costings verified by Treasury department officials had fostered suspicion his coalition had something to hide.
What we're after -- well, I'm after -- is a judgement on two different teams that want to be the government. So one of those things that we have to establish is trust in what they're actually saying, Windsor told Australian television.
So far financial markets have not been ruffled by the political uncertainty. Investors are more focussed on the risk that economic weakness in the United States and Japan could spill into Australia, undermining its relatively robust growth.
Nevertheless, the Australian economy remains in rude health. Data released on Wednesday showed that the country's gross domestic product (GDP) rose by 3.3 percent in the second quarter from the same period in 2009.
(Editing by John Chalmers)