Australian election cliff-hanger leaves nation in limbo

SYDNEY - Australia's political parties began horsetrading on Sunday to break an anticipated parliamentary deadlock after a dramatic election failed to produce a clear winner, raising the prospect of prolonged political and economic instability. The exceptionally close vote leaves Prime Minister Malcolm Turnbull's centre-right Liberal Party-led government in a precarious position, potentially needing the support of independent and minor parties. It has also opened the door to the possibility, albeit less likely, that the main opposition Labour Party could win enough backing from the smaller parties to form government itself, although Turnbull said on Sunday he remained "quietly confident" of returning his coalition to power for another three-year term. "I can promise all Australians that we will dedicate our efforts to ensuring that the state of new parliament is resolved without division or rancour," Turnbull, who accused Labour of waging a dirty tricks campaign, told reporters in Sydney. Police said they were considering whether to investigate thousands of text messages sent to voters on Saturday by the Labour Party purporting to be from the state healthcare service Medicare, warning the service would be privatised by a coalition government. Labour leader Bill Shorten said Australians had rejected Turnbull's mandate for reform like cuts to healthcare and a A$50 billion ($37 billion) corporate tax break over 10 years. "What I'm very sure of is that while we don't know who the winner was, there is clearly one loser: Malcolm Turnbull's agenda for Australia and his efforts to cut Medicare," Shorten told reporters in Melbourne. The election was meant to end a period of political turmoil in which Australia which has had four prime ministers in three years. Instead it has left a power vacuum in Canberra and fuelled 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. If the coalition fails to form a government, it would be the first time in 85 years an Australian ruling party has lost power after its first term in office. The uncertainty is likely to spook markets when they reopen on Monday, with analysts warning Australia's triple A credit rating could be at risk and predicting a fall in the Australian dollar and the share market. Vote counting could take a week or more, and the coalition will rule under caretaker provisions in the interim. Official electoral data for the House of Representatives showed a 3.4 percent swing away from the government, with about two-thirds of votes counted. Electoral Commission projections give the coalition 67 seats in the 150-seat lower house, against Labour's 71 and five to independents and the Greens Party. A further seven seats were in the balance. -Reuters