The Australian Electoral Commission reported a 3% swing to the Labor Party with around 20% votes counted
Early counting in Australia's national election showed a sizeable swing to the opposition Labor Party, bolstering fears a close vote will deny current Prime Minister Malcolm Turnbull the outright majority he needs to enact major economic reforms.
The leader of Australia's conservative Liberal Party-led coalition dissolved both houses of parliament in May in a bid to oust intransigent independents in the upper house Senate who had blocked his agenda, including company tax cuts.
But Turnbull's gamble is at risk of backfiring as the coalition faces a strong challenge not only from the main opposition Labor Party but from independents who could win enough seats to hold the balance of power in the Senate or force a minority government in the lower house.
With polling closed across the country, the Australian Electoral Commission reported a three per cent swing to the Labor Party on a two party count with the coalition with around 20 per cent of the vote counted. It projected 63 seats to the coalition and 62 to Labor.
Labor requires a uniform swing of about four per cent to win government, but a significant smaller shift will likely leave the coalition with a minority government.
At the Labor Party's federal election headquarters at the Moonee Valley Racecourse in Melbourne, the mood was initially subdued but cheers began to ring out as Labor pulled ahead in key seats - the parties had 16 seats each in Victoria state in early voting.
Kim Jago, a party volunteer during the election campaign, said concerns about the coalition cutting funding to education and a perceived soft touch on banking reforms had swayed her support.
"People are getting cranky," she told Reuters as she watched the count at the racecourse. Opposition leader Bill Shorten has spearheaded an opposition campaign focusing on coalition cuts to health and education policies.
With 150 seats in the House of Representatives, the coalition requires 76 seats to maintain outright power, otherwise it will need to form alliances with small parties and independents to get a majority.
Turnbull has invoked Brexit fears in his campaigning, arguing that minor parties, possibly in a coalition with centre-left Labor, could not be trusted to manage an economy hampered by the first mining downturn in a century and balance public finances after years of deficits.
At the coalition's headquarters in Sydney, the mood was nervous and quiet with Finance Minister Mathias Cormann arriving but heading straight to a back room. A Reuters reporter was prevented from taking a photo of a champagne-filled fridge.
In contrast, supporters at the Adelaide headquarters of the independent centrist Nick Xenophon Team, which is expected to emerge as a powerful force in the Senate, gave a huge cheer to candidate Rebekah Sharkie. Sharkie is on track to win the lower house seat of Mayo in South Australia, representing another potential lost seat for the Turnbull government.
Xenophon has vowed to block the Coalition's cornerstone A$50 billion ($37 billion) corporate tax cuts if his party holds the balance of power in the senate.
Far-right parties, including Pauline Hanson's One Nation, have campaigned on anti-immigration, anti-Muslim agendas. Hanson is also strong contender to win a position in the Senate.