UPDATE: THE Nationals say the Labor-Greens deal struck today will "send a shiver" down the back of rural Australia.
In what was a widely expected move, new Australian Greens MP Adam Bandt signed an agreement with Prime Minister Julia Gillard in her Parliament House office this morning in the hopes of forming a minority government.
They were joined by Deputy Prime Minister Wayne Swan, Greens leader Bob Brown and his deputy Christine Milne.
It moves Labor's tally to 73 seats.
In return for Mr Bandt's support, Ms Gillard has offered to set up a climate change committee, make investments in dental care as well as $20 million to look at high-speed rail on the east coast.
There will also be a parliamentary debate on Afghanistan and restrictions placed on political donations.
The government had also agreed to move towards holding a referendum to change the constitution to recognise indigenous people and local government, Senator Brown said.
Nationals leader Warren Truss slammed the Labor-Greens alliance, saying it would "send a shiver down the spine of regional Australia".
"If such a Labor/Green beast forms government, the regions will be threatened by Greens policies such as an even bigger mining tax,'' Mr Truss said.
An emissions trading scheme would be imposed on agriculture, fishing in marine areas would end and death duties would be put in place under the new coalition, he said.
Mr Truss claimed there would be food shortages because the Greens would push to end intensive agriculture and stop irrigation in the Murray Darling Basin.
Independent MPs Bob Katter, Tony Windsor and Rob Oakeshott, all disaffected Nationals will meet Mr Truss and Nationals senate leader Barnaby Joyce "at some stage soon'', a spokesman for Mr Truss said.
It is uncertain if the trio will meet together with the Nationals or individually.
The chance of both coalitions forming government now rests with the three independents.
Mr Truss said regional people saw what was happening under Labor and acted accordingly by increasing the Nationals vote at the polls.
"They will react with dread at a formal ALP/Greens alliance in government that will drag them even further down the path of ruin,'' Mr Truss said.
The constituents of all three independents are considered to be traditionally conservative when it comes to politics.
Speaking about the Labor-Grens alliance, Senator Brown said the climate change committee, operating at cabinet level, would move towards setting a price on carbon.
He said this all remained a work in progress.
"I spoke with Mr Abbott last night,'' Senator Brown said.
"He told me that he would attack any agreement that we signed up on.
"I said that's his right.
"I reminded him that he may well be the prime minister next week although we favour Julia Gillard leading the next government of Australia and are working to that end quite clearly.
"We have made a decision here.
"We are the first people in this balance of power in both houses to make a decision. We think that will help lead to others making a decision.''
Senator Brown said if Mr Abbott became prime minister, he would then meet him to work out processes for how the Senate would work.
"I give a commitment here to whichever is the next government - our job is to provide the best Senate accountability for that government and we will do just that.''
Senator Brown told reporters the Greens were happy with the agreement they'd negotiated.
The climate change committee, to be made up of parliamentarians, "will look at all the options available to achieving a carbon price'', he said, which was a key priority for the Greens.
"We've got this agreement, we're happy with it.''
But asked if it meant Ms Gillard will then need to scrap her citizens assembly on climate change, Senator Brown said reporters would have to ask her.
The negotiations were a good example of how parties could work together on a consensus basis, which was what the Australian people were demanding, he said.
He also defended a lack of progress on some issues, including allowing a conscious vote on same-sex marriage.
"We didn't reach an agreement on that matter.''
Senator Milne said European nations used the process of a parliamentary committee representing all interests committed to a certain idea and including subject matter experts.
She said the idea was to come up with a parliamentary consensus supported by everyone.
"The proviso for membership of the committee is that the people going onto it are committed to a carbon price,'' she said.
"They may not all agree with the mechanism of achieving a carbon price.''
Senator Brown said he had first put the idea of the climate change committee to Ms Gillard some days ago, and in a "happy conjunction'' she had put the same idea on the table.
He would not put "pre-conditions'' on the deal such as securing a carbon price within the next three years.
The Greens would also contribute to the budget process, Senator Brown said.
"We will be able to feed ideas into the budget process,'' he said.
"The budget ultimately will be shaped by the government.''
He and Mr Bandt would meet with Ms Gillard or her representative every week in sitting periods and once a fortnight in other periods to work on the legislative agenda.
The agreement does not apply to the Greens' relationship with a Labor opposition.
The Greens failed to earn a spot in cabinet because the government could not "digest'' the idea, Senator Brown said.
"If that means we have to be a bit modest about our potential contribution to cabinet, so be it,'' he said.
Senator Brown said the agreement has been sent to the independent MPs to look over, but he won't be approaching them to discuss it further.
"We leave them to make up their own mind, I don't want to be putting any pressure (on them),'' he said.
Senator Brown lauded the agreement as one of the first steps towards stable government.
"We are on the threshold of a new period of government in Australia's history that's going to be more exciting than anything we've seen in decades,'' he said.
"We're in the rough water at the moment, but there's smooth sailing to come out of it.''
