Australia's Howard battered but defiant

By Andrea Hopkins

CANBERRA (Reuters): Australian Prime Minister John Howard emerged battered but unbowed on Monday from a big by-election swing against his conservative government, defying growing predictions he will be thrown from office by year end.

Votes were still being counted after a cliffhanger Brisbane by-election on Saturday, but analysts said the final tally was beside the point: a 10 percent swing to opposition Labor in what was considered one of the safest coalition seats in the country.

If the anti-government swing was repeated at the expected year-end federal election, Howard's Liberal/National coalition would lose 50 of its 80 seats, handing center-left Labor one of the largest parliamentary majorities in Australian history.

Labor won the popular vote in 1998 but lost to Howard who focused on holding marginal seats. The opposition party needs a national swing of less than one percentage point to seize power.

But Howard, who dubbed himself "Lazarus with a triple-bypass" during his prolonged battle to win Liberal leadership in the 1990s, said he still had enough time -- and was still the right man -- to lead the coalition to a third-term victory at year end.

"I have no doubt that, properly marshaled, the arguments that we will put over the months ahead will be heard by the Australian people," Howard said on Monday.

He reassured nervous financial markets the government was not about to stop or reverse its course of economic reform as a result of the voter backlash, pledging instead a more generic "cushion" to help vulnerable Australians weather the changes.

In one media conference, Howard three times pledged to use the "next nine months" to win back voters angry over tax changes, soaring petrol prices and free-market reform.

The phrase suggested the widely tipped November election might be pushed back to December to buy the government some time to reverse its popular slide.

An election must be held by January 2002.

"We actually ended up doing better than most people thought we would," Howard said of the by-election in the wealthy suburban Ryan, noting opinion polls had predicted a Labor landslide in the blue-ribbon Liberal seat.

The attempt to look on the bright side was likened by one Labor strategist to examining a train derailment that killed several people and saying "it could have been worse".

But local media appeared less certain of Howard's imminent political death after the by-election than they had been before.

"If Mr Howard and his team steady, it is far from impossible that they could regain some of their lost ground," the Canberra Times said in an editorial.

Recent public opinion polls have shown the coalition has fallen nearly 20 points behind Labor with only 30 percent support -- the lowest rating in Liberal history -- in the wake of two state election losses and much-criticized policy reversals.

But Howard's gritty performance in the waning days of the by- election campaign, with non-stop local appearances and an unusual personal letter to voters three days before the ballot, may have won back a few believers.

"One consequence of a less calamitous result in Ryan than some polls indicated is that an assault on Howard's leadership, which was unlikely, is now even less likely," the national Australian Financial Review newspaper said.

HSBC chief economist and political observer John Edwards agreed.

"I think that just underlines the clever political fighter he is. It's much too early to write John Howard off," he said.

But Australian Defense Force Academy political analyst Malcolm Mackerras said the stark reality of the 10 percent anti- government swing would outweigh the intangibles of prime ministerial defiance, with Howard's own seat and those of at least 11 others in his ministry held by thinner margins.

"Labor is going to win the next federal election anyway," Mackerras told Reuters.