Analysis: Howard's election victory

John Howard has won a third term in office

By Phil Mercer in Sydney

Australia's conservative Prime Minister John Howard has won a third term in office and completed one of the greatest political escape acts his country has ever seen.

Earlier this year, Mr Howard's chances of re-election seemed bleak. His conservative colleagues in state and territory governments across Australia suffered heavy defeats at the polls.

The Labor party was on the march, buoyed in part by public anger at the GST, a 10% tax on goods and services introduced by the Howard Government in June 2000.

Kim Beazley has stood down as Labor Party leader

Mr Howard's salvation came in August when the Norwegian freighter The Tampa was refused permission to land in Australia with its cargo of 400 mainly Afghan refugees.

It was the start of the Prime Minister's hardline stance on asylum which was to prove so valuable in the election.

Mr Howard told reporters that his tough border protection policies had widespread support.

"When you go to the people and you win a comfortable majority, you plainly have a mandate to implement policies and approaches that are consistent with your philosophy," he said.

Labor defeat

The Howard government is an alliance of two right-leaning parties, the Liberals and the Nationals - the junior partners. It was returned to power with a swing of almost 2%.

We have ahead of us some difficult and challenging years but I know that the spirit of the Australian people will be equal to the task

John Howard

The Labor leader Kim Beazley has resigned after his party's comprehensive defeat. The final margin when all the remaining votes are counted in the coming days will be about 10 seats - up from six.

Labor was out-manoeuvred throughout the campaign on the two critical issues - asylum and the global war on terrorism. Senior Labor figures now admit the party should have challenged John Howard more on his attitudes to refugees.

"I know why Labor lost, but I'm not going to tell them," said Peter Costello, the treasurer and the man most likely to replace John Howard when the 62 year-old prime minister finally calls it a day.

Challenges ahead

In his victory speech in Sydney, Mr Howard acknowledged there were tough times around the corner. "We have ahead of us some difficult and challenging years but I know that the spirit of the Australian people will be equal to the task," he said.

The war in Afghanistan was an important issue in the election

There are serious economic challenges ahead. Unemployment is rising and a budget surplus is rapidly shrinking.

It is, however, the asylum issue which could prove the government's biggest problem. The debate has caused deep divisions throughout Australia.

A group of prominent politicians, academics and church leaders have condemned the government's attitudes to refugees as racist and inhumane.

Australia's international reputation has also taken a battering. There is growing anger among Canberra's Pacific neighbours at its plans to send more boat people to remote island nations.

The tiny state of Nauru has become the first off-shore processing centre in return for generous aid packages.

An editorial in the influential newspaper The Australian launched a scathing attack on both John Howard and Kim Beazley before Saturday's poll.

"The system has failed to produce candidates who offer what Australia needs - to look beyond the war against terror and the phoney war on boat people," said the paper.

"In this leadership election, both Howard and Beazley are losers - and Australia will pay the price for years."