Keating steps down as Labor leader

In a clean, bloodless handover of political power, Kim Beazley yesterday replaced Paul Keating as leader of the Australian Labor Party and began the daunting task of restoring Labor's shattered fortunes less than three weeks after Mr Keating led the party to one of its most crushing electoral defeats.

Labor MPs who survived the election bloodbath on 2 March unanimously elected Mr Beazley as leader when they gathered in Canberra to accept Mr Keating's resignation and hear what is likely to be his final address to them. Mr Keating, 52, is expected to leave politics, after a parliamentary career spanning 27 years, eight as Treasurer and four as Prime Minister.

Mr Beazley, 47, the former deputy prime minister, scraped back to parliament by a handful of votes in Western Australia, relying on the distribution of preference votes. After the share-out in a few undecided marginal constituencies, the new conservative Liberal- National coalition government, led by John Howard, is likely to have a majority of more than 40 in the 148-seat House of Representatives.

Few Labor MPs questioned Mr Beazley's qualifications as the man to lead them out of their crisis. In contrast to Mr Keating, who left school at 15 and made his way through the jungle of Labor politics in New South Wales, Mr Beazley is the son of a respected former MP and minister. After education at the University of Western Australia, Mr Beazley went to Oxford University as a Rhodes Scholar and returned to teach politics at Murdoch University in Perth before entering parliament in 1980.

He comes from the Labor right and was a central figure in the party's transformation during the 1980s and 1990s under the leadership of Bob Hawke and Mr Keating. Mr Beazley is an intellectual, but less aloof than Mr Keating and less likely to offend traditional Labor supporters by appearing to adopt patrician tastes and ways.

The new deputy Labor leader is Gareth Evans, 51, another Oxford graduate and survivor from Labor's 13-year rule during which he served most prominently as foreign minister.

The conservative government is taking its thumping election mandate seriously. Mr Howard has announced that Australians will have to face public spending cuts of almost A$8bn (pounds 4bn) after revealing a revised budget forecast showing a large deficit.