By Rob Taylor
CANBERRA (Reuters) - Three independent MPs who will determine Australia's next government after inconclusive weekend elections said on Wednesday that economic policy will guide their decision on which of the major parties to support.
They also warned that the country may have to go back to the polls if no consensus is reached.
"We do think this is about the economy and we do think the next three years needs some consideration of things such as election promises and election commitments, and both the costings and the impact on the budget and the economic cycle for the next three years," said independent Rob Oakeshott.
The group said they had delivered seven broad demands to Prime Minister Julia Gillard and her conservative opponent Tony Abbott, including a briefing by top Treasury officials on budget finances.
Another independent, former farmer Tony Windsor, said if talks broke down, he and the others were not afraid to withhold support from either side and force fresh elections in the hope of breaking an impasse that has unsettled financial markets.
"If there's not goodwill displayed by both leaders and their party members, and if we can't see a future in terms of some longevity in terms of the parliament itself...then I won't support either," Windsor said. "There is a third option, and that is another poll."
The chances of a conservative government appeared to have risen after the ruling Labour party looked to have lost another seat to a fourth independent in Tasmania.
At stake is the fate of Labor's planned 30 percent mining profits tax, a $38 billion (24.6 billion pound) fibre-optic broadband network and a future carbon price which the power sector says is needed to ensure continued investment. Abbott's conservative coalition oppose these policies.
One analyst said he was encouraged by the initial comments from independents.
"There's a genuine recognition here on their part that there are limits to the kind of programmes you can put in place when they know that the electorate generally supports the view that the government should be trying to return to surplus in the next few years," said Michael Workman, senior economist at Commonwealth Bank of Australia, .
"In the interests of transparency, that's extremely positive."
The independents said they had called for information on how each party was willing to improve government, including timetables for action and implementation strategies.
Bookmakers now put the opposition under Abbott as slight favourites to form a minority government ahead of Gillard.
One of the independent MPs hinted at the scope for corruption in the current uncertain environment and called for an end to betting on the result of the election.
An Australian timber magnate was jailed for attempting to bribe a Labour politician to cross the floor of parliament after a 1989 election in Tasmania state delivered a minority Labour-Green government in 1989.
Latest projections give Labour 72 seats and the opposition conservatives 73 seats, with 76 seats needed to command a majority. That would leave four independents and a sole Green MP holding the balance of power.
The three independent MPs are due to meet both Gillard and Abbott on Wednesday. They have said they would not leap to any decisions on who to back and see talks stretching into late next week after the completion of vote counting for the 150-seat lower house.
The three could also become four, with former government intelligence analyst and Iraq war whistle-blower Andrew Wilkie expected now to win a tight contest with ruling Labour in the seat of Denison, in the island state of Tasmania.
Financial markets are hoping for a conservative government to counter the Greens, who will wield the balance of power in the upper house Senate. The Greens are seeking higher taxes, more generous welfare and a price on carbon pollution by business.
Markets now seem comfortable that the ultimate minority government will be fiscally prudent and both Labour and the Liberal-National coalition have pledged to return the budget to surplus by 2012-13, but uncertainty has dampened trading
"Volumes are dead. At the moment, it's all hands off because of the current political environment," said Lucinda Chan, of Macquarie Equities, said political uncertainty was keeping foreign investors firmly on the sidelines.
(Additional reporting by James Grubel; Editing by Ed Davies and Jonathan Thatcher)
