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Australian PM faces backlash on budget: Opposition parties and the public line up against tax increases that betray Keating's campaign pledges

AS HE prepared for a forthcoming visit to explain his republican plans to the Queen at Balmoral, Paul Keating, the Australian Prime Minister, faced a political crisis yesterday as the threat developed of being forced into a general election over a huge public backlash against the Labor government's budget.

Mr Keating faced assault on two fronts: from a public opinion poll, which found support for Labor has plunged to its lowest point in a decade; and from opposition MPs who threatened to block the budget in the Senate, the upper house of federal parliament, possibly bringing on a dissolution of both houses.

Just five months after the Labor Party's unexpected return to an unprecedented fifth term, public support for it has dissipated to such an extent that Mr Keating would be rejected at any early election, based on yesterday's opinion poll, leaving stranded his whole campaign to turn Australia into a republic. He is due to visit London and Balmoral early next month, his first such visit since he became prime minister two and a half years ago and began his push for a republic by the turn of the century.

The catalyst for the crisis was the budget, presented to parliament last week, which deferred indefinitely some promised income tax cuts and raised taxes on wine, petrol, tobacco and many other consumer goods. The budget signalled the government's retreat from many spending pledges on which it campaigned at the election in March - an election it never expected to win - and its attempt to come to grips with cutting the deficit.

The tax measures have produced an outcry around the country, much of it from Labor voters who claim to feel cheated. Lorry drivers yesterday threatened to blockade national highways in protest against the rise in petrol taxes, and winemakers launched a Adollars 1m ( pounds 450,000) campaign to overturn higher taxes on wine, a hike they claimed would staunch the industry's booming exports.

According to a poll published yesterday in the Australian, a national daily newspaper owned by Rupert Murdoch, 82 per cent of Australians believe the government has broken its election commitments - 70 per cent feel unjustifiably so.

Since the budget, public support for Labor has dropped 10 points to 31 per cent, 23 points below the opposition Liberal-National coalition. More chillingly for Mr Keating, only 17 per cent of those questioned were satisfied with the way he is doing his job, with 74 per cent dissatisfied. Mr Keating's approval rating is now below that of Bob Hawke when he deposed Mr Hawke as party leader and prime minister in December 1991.

The opposition and a handful of MPs from the Greens and the Democrats hold a majority in the Senate, which must approve the budget. Together, they have pledged to block the tax rises by challenging them on constitutional grounds.

Mr Keating repeated yesterday that the government would accept no Senate changes to the budget. Graham Richardson, one of his ministers and a key Labor strategist, said the government's refusal could only mean dissolving both houses and calling an election. 'I don't rule out a double dissolution. You couldn't. If the election took place today, we'd be in strife. But it won't take place today.'