Ruling party rift in Australia

Australia: Australia's ruling party was split yesterday by a leadership crisis after allegations that the prime minister, John…

Australia: Australia's ruling party was split yesterday by a leadership crisis after allegations that the prime minister, John Howard, reneged on a deal to hand over power to his previously loyal treasurer (finance minister).

In a drama with parallels to the rift in Britain between Tony Blair and his heir apparent Gordon Brown, Australia's conservative prime minister is said to have assured the minister, before winning office that he would hand over the top job within a few years. Like Mr Brown, Peter Costello is increasingly impatient for power.

On Sunday Mr Costello confirmed a weekend newspaper report that in 1994 Mr Howard had promised to go after one and a half terms in office if the coalition won power. Mr Howard, then opposition industrial relations spokesman, allegedly offered the deal if Mr Costello agreed not to contest a Liberal party leadership ballot so that he could be elected unopposed.

The agreement was revealed by another former opposition spokesman, Ian McLachlan, who witnessed the exchange and kept notes of the meeting. Until now Mr Howard and Mr Costello have denied a deal.

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Yesterday Mr Costello confirmed the nature of the conversation. "He told me that he wanted to do one and a half terms as prime minister and then would hand over. I did not seek that undertaking - he volunteered and I took him at his word. Obviously that didn't happen."

Mr Howard rejected Mr Costello's memory of the conversation. "There was no deal made," he said. "There were lots of discussions at that time, including one at which Mr McLachlan was present." While Mr Howard commands significant backbench and ministerial support, Mr Costello sees himself as prime minister-in-waiting and, after 10 years as treasurer, wants his patience rewarded.