Stocks in Australia's biggest mining companies rose Monday as the government's plans for a new tax on their profits were thrown into doubt after the nation's closest election in almost 50 years delivered no clear mandate.
Trading in the rest of the market was flat, however, and Australia's chamber of commerce urged companies to continue investing despite what will likely be two or three weeks of uncertainty about who will govern the country for the coming three years.
The center-left Labor Party— which has ruled for the past three years and remains in control of the caretaker government — and the conservative Liberal Party are negotiating with independent and minor party lawmakers to decide which side can command 76 seats in the 150-seat House of Representatives.
"The continuation of the caretaker period of the Australian government, together with the prospect of a minority Australian government is not the ideal scenario for the Australian economy or business community," the chamber's chief executive Peter Anderson told reporters.
"The business community ... needs to ensure that the Australian economy is well respected nationally and internationally and we can do that by getting on with the doing of business, not putting investment decisions on hold and not adding to any uncertainty," he added.
On the first trading day since the election Saturday, Julia Gillard, the caretaker prime minister, said on Monday that the flat market showed "the market understands that stable government is continuing."
"Obviously there is uncertainty over the election result, but there is no uncertainty over the fact that stable and effective government is continuing in this period of time," she added, without indicating when the next government would be sworn in.Talks with independents
Gillard and Liberal leader Tony Abbott arrived in Canberra on Monday where confidential negotiations will take place with three key independents: Rob Oakeshott, Tony Windsor and Bob Katter.
The three independents planned to hold kingmaker strategy meetings in Canberra starting Tuesday at the earliest, Oakeshott's spokesman Garth Norris said.
Mining stocks were buoyed by the voter backlash against Labor which had promised to impose a 30 per cent tax on iron ore and coal miners profit to raise an additional 9.79 billion in government revenue in two years.
But if Labor can form a government in the lower chamber, the environmentally oriented Greens party promised that the tax will be carried through the senate, where the Greens' nine senators will ensure a majority in the 76-seat upper chamber.
Committed to mining tax
Gillard said Monday she remained committed to introducing the tax if she can form a minority government, despite the tax being blamed for Labor losses in the mining states of Queensland and Western Australia.
Stocks in Anglo-Australian mining giant BHP Billiton rose 21 cents Australian to $35.53, while rival Rio Tinto climbed 57 cents to $67.30 by the end of Monday after both lost some morning gains.
Adrian Leppinus, a client advisor for brokerage Cameron Securities, said that BHP and Rio "have been very strong" in morning trade.
"There is commentary this morning that because Labor doesn't have a stranglehold, it is probably a positive for the iron ore and coal stocks," he added.
By close, the benchmark S&P/ASX200 index edged down 0.04 per cent to 4,429 points, while the broader All Ordinaries index had dropped 0.04 per cent to 4,460.4 points.
While minority governments rule in many countries, an Australian election has never failed to deliver a majority government since 1940. Two independents then helped form a conservative government, but brought it down within a year by switching their allegiances to Labor.
Legal experts from the Australian National University said election rules allowed Gillard to carry on in her caretaker role for up to three months while she struggled to enlist a majority.
With more than 78 per cent of the vote counted, revised figures on the Australian Electoral Commission website said that Labor appeared to have won 72 seats and the Liberal-led coalition 70. The commission had earlier predicted the coalition held 72. Most analysts agree the coalition was likely to finish with 73, one seat ahead of Labor, or tie at 73.
By convention, Gillard as prime minister should have the first chance to form government. She bases her claim to rule on the election outcome showing that more voters supported Labor than the coalition, despite that support failing to translate to a majority of seats.
Abbott argues that the unprecedented swing of votes away from Labor after only a single three-year term showed that voters wanted a change of government.