Australian budget prompts new leadership talk

CANBERRA, May 16 (Reuters) Australia's Prime Minister John Howard would fight one more election before handing over to his heir apparent, Treasurer Peter Costello, analysts today said, despite a suggestion he could stand down by Christmas.

New speculation that Howard could retire this year surfaced after the government delivered A billion (28.5 billion dollars) worth of tax cuts in a mid-term budget and with a prominent columnist saying the end of the year would ''suit an elegant departure''.

But a new poll published today found that despite the budget give-aways, government support had fallen marginally, while analysts said Howard was unlikely to retire before the next election, due in the second half of 2007.

''I think Howard has at least one more election in him,'' political analyst Nick Economou, a close observer of the Howard-Costello leadership issue, told Reuters. ''I think he'll want to go to the next election, and retire after that.'' Howard, 66, has won four straight elections and notched up 10 years in power, but has refused to commit to leading the Liberal Party to the next election. Costello, his patient deputy, has made no secret of his ambition to replace Howard.

The issue has dominated Australian politics for the past five years since Howard said he would consider retiring near his 64th birthday. But Howard changed his mind in 2003, and ever since has said he would remain leader as long as his party wants him.

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