Julia Gillard will remain Prime Minister after securing the support of two of the three rural Independent MPs to form government.
Julia Gillard will remain Prime Minister after securing the support of two of the three rural Independent MPs to form government.
Independent MPs Tony Windsor and Rob Oakeshott decided to support Labor to form government while Bob Katter announced he would support the Coalition.
"I intend with my vote, for what it's worth, to support the Labor party," Mr Windsor said.
Mr Oakeshott followed suit.
"Today I'll do what I have always done and give confidence and supply to government and in effect that means confidence and supply in Julia Gillard," he said.
The decision means Labor has 76 seats and the Coalition 74 seats.
Ms Gillard says Labor is prepared to deliver stable and effective government for the next three years.
"Labor is prepared to govern," she said.
"Labor is prepared to deliver stable, effective and secure government for the next three years."
Ms Gillard said the Australian people had told the government it would be held more accountable than ever before and more than any government in modern memory.
"Ours will be a government with just one purpose, and that's to serve the Australian people," she said.
"We will be held to higher standards of transparency and reform and it's in that spirit I approach the task of forming a government."
Ms Gillard said the political deadlock had resulted in more openness, transparency and reform in how the parliament was conducted than any other time in modern Australian politics.
The political players had been open with the Australian people throughout the process.
"To quote Rob Oakeshott, sunshine is the best disinfectant," Ms Gillard said.
"We've agreed to far-reaching reforms that make me as prime minister and our government and how it functions more accountable to the Australian people.
"So let's draw back the curtains and let the sun shine in, let our parliament be more open than it was before."
Labor would govern in the best interests of the Australian people, Ms Gillard said.
"I know that if we fail in this solemn responsibility, we will be judged harshly when we next face the Australian people at the next election," she said.
"Being held to that test is just the way I want it."
The government would be true to its beliefs and pragmatic on policy, Ms Gillard said.
She also reached out to Opposition Leader Tony Abbott and Nationals leader Warren Truss, saying that the closeness of the election result showed voters wanted them to find more common ground in the national interest.
"I pledge my best efforts as prime minister to work constructively with you and your colleagues to find common ground where we can," she said.
Ms Gillard said she would meet Governor-General Quentin Bryce later on Tuesday and present her with the documents to prove she had the 76 seats required to form government.
"I will then move through to create the new government."
Mr Windsor thanked both Julia Gillard and Tony Abbott for the way they treated each of the Independent MPs as individuals.
Mr Oakeshott said both Ms Gillard and Mr Abbott would make good Prime Ministers.
Mr Windsor said the biggest issues for him were the stability of government and the national broadband.
He said the broadband presented an enormous opportunity for regional Australia.
"My advisors in relation to the broadband technology suggest you do it once, you do it right and you do it with fibre," Mr Windsor said.
Mr Oakeshott said it was a line ball decision describing it as a "wicked dilemma for Australia."
"It's not a mandate for anyone ... nor is it an endorsement for anyone," he said.
Mr Oakeshott said he thought long and hard about who dealt better with broadband, climate change and education when coming to his final decision.
He said there was a "crisis" in regional education.
"We now have national indicators in education, around poorness, around indigenous and around regional.
"It is a disgrace that regional education has been left behind in this country, when it is the meal ticket for all those three combined."
Mr Oakeshott wasn't happy with the coalition's decision to axe Labor's computers in schools program, and praised many of the reforms Ms Gillard implemented when she handled the education portfolio.
Mr Windsor said the final decision was made early on Tuesday morning.
"We talked through a range of issues and I think it was probably 1.30am (AEST) that we actually reached a decision," he said.
"In the end I think for both of us ... we've both lived our political lives being able to sleep at night.
"In the end it came to me that I thought, I'm comfortable with this, I can live with this."
Mr Windsor said he would not be speaker or a minister in the Gillard government.
"No and no," he said in answer to a reporter's question.
Mr Oakeshott said an offer had been made but he declined to give details.
"It is separate to any consideration in this whatsoever," he said.
"I don't want to be someone who gives up the confidence of discussions."
Mr Oakeshott reserved the right to support a vote of no confidence in the Labor minority government in exceptional circumstances, such as "the obvious ones, maladministration, corruption".
He might also "exert some muscle", if, in consultation with other MPs, it was determined the government was reneging on its deals.
"If people aren't fair dinkum about the documents they've signed, the regional Australia package for example, we will get increasingly agitated about getting done over in a deal and start to exert some muscle as quite rightly we should," he said.
