Australian prime minister Julia Gillard's Labor Party and Tony Abbott's Liberal-National coalition were deadlocked with more than half the vote counted in the tightest national election in almost five decades.
Labor won 60 seats while the coalition took 59 with 74 per cent of the total vote tallied, according to the Australian Electoral Commission.
The closeness of the race raises the possibility that no party will win a majority of the vote, an outcome not seen in Australia for 70 years. A hung parliament would make it harder for either party to push through legislation such as Labor's proposed 30 per cent tax on iron ore and coal profits.
The vote is "extremely volatile, more so than I have ever seen in my political life," treasurer Wayne Swan told the Australian Broadcasting Corporation. "It's very close." Without a majority in the 150-seat house of representatives, Ms Gillard (48) and Mr Abbott (52) would have to build alliances with independent and Green politicians to enact laws.
Both leaders contacted independent politician Rob Oakeshott as ballot counting continued late into the night, his spokesman said by phone.
"We are looking at a hung parliament and that means voters have rejected the major parties who offered few policies," independent politician Tony Windsor told the ABC. "The independents will get together to come up with a solution on which side we support."
Today's election will be won or lost in about 40 seats, mainly in New South Wales and Queensland states, that will change hands with the switch of just hundreds of votes. Australians last ejected a single-term government in 1931. A key issue for Ms Gillard, a former lawyer and student activist, was how voters responded to her role in ousting Kevin Rudd as prime minister on June 24th after a slump in opinion polls.
Her support dwindled during the five-week campaign over her disposal of Mr Rudd after a late night party coup, a move she justified by saying the government had "lost its way."
Labor's Maxine McKew, who lost the Sydney seat of Bennelong three years after taking it from then prime minister John Howard, criticised the party's national campaign and suggested Rudd's removal had "significant ramifications" for the result.
Ms Gillard has promised a 30 per cent tax on iron ore and coal profits at companies such as BHP Billiton and Rio Tinto Group, which Mr Abbott has pledged to scrap. Her watered down form of Rudd's proposed 40 per cent tax on all resources still faces a backlash from miners in Australia, the world's biggest exporter of coal and iron ore.
The Australian Greens won their first lower house seat in a general election, taking the district of Melbourne from Labor after Ms Gillard delayed plans to set up a market mechanism to put a price on carbon until after 2012.
"The government has been punished for its denial on climate change," Adam Bandt told supporters as he claimed the district previously held by retiring Finance Minister Lindsay Tanner.
"We have seen the need to respond to the climate emergency being pushed into the too hard basket." Labor has vowed to cut carbon emissions by 5 per cent from 2000 levels by 2020 and generate 20 per cent of the nation's energy from renewable sources by the same year. The coalition wants to set up a A$1 billion fund to encourage companies to reduce emissions and establish a 15,000-strong "green army" to repair environmental damage.
Ms Gillard and Mr Abbott say their parties are better able to manage the country's A$1.2 trillion ($1.08 trillion) economy, which the Reserve Bank of Australia says has expanded for almost the past two decades. Mr Abbott, a former amateur boxer and Rhodes scholar who studied for the priesthood in the 1980s, is a father of three girls.
He has campaigned with his family to highlight the differences with Ms Gillard, who is unmarried and has no children. The coalition leader is promising a A$6.2 billion budget surplus in 2012-13, compared with the government's forecast of A$3.5 billion. He also pledged to cut business taxes to 28.5 per cent from the current 30 per cent, deeper than the government's goal of 29 per cent.
A total of 1,198 candidates from 25 parties are competing for all 150 seats in the house of representatives and 40 of the 76 senate seats. While final results may not be declared for weeks because of the delay in counting postal votes, either Ms Gillard or Mr Abbott may concede defeat tonight based on early returns.
Bloomberg