Costello could challenge Howard's leadership

CANBERRA - Australian Treasurer Peter Costello has not ruled out challenging Prime Minister John Howard's leadership during the government's current term.

Mr Costello stressed today that the Liberal Party was at its best when it facilitated a smooth transition to a new leadership.

His comments followed renewed leadership speculation, with News Ltd newspapers reporting Mr Howard had said he intended leading the coalition into the next election.

"In 1995, when I was the deputy leader of the Liberal Party, when John Howard was seeking to return to the Liberal Party leadership, I thought it was in the interests of the party to have a smooth transition," Mr Costello told the Ten network.

"I did everything I could as deputy leader to ensure there was a smooth transition, and there was a smooth transition.

"It set the Liberal Party up for four election victories."

In contrast, the Liberals had stayed out of power during the years when Mr Howard and former leader Andrew Peacock repeatedly clashed.

"There's a very big message to the Liberal Party, which is where the leadership works together and where the leadership is properly organised with the interests of the party and the interests of the members and where instability is avoided and where people in good faith are able to deal with each other, that's when the Liberal Party is successful," Mr Costello said.

A Ten interviewer then asked: "I take it from that you're ruling out a challenge to John Howard in this term?"

Mr Costello replied: "I'm just saying, and I'm the deputy leader of the Liberal Party, I look to the Liberal Party's interests, and I'm making the point that the Liberal Party has done this badly in the past, and it's done it well.

"It's at its best when it does it well."

Mr Costello conceded the leadership speculation this weekend had not helped the party or the government.

"The only thing I'd say is this, I don't think the events of the last 24 hours have helped the government or the Liberal Party," he said.

"You've seen today's papers. Here am I, I'm meeting a date that I made two months ago to discuss the Budget. We're not discussing much about the Budget.

"This is an issue that is overshadowing the Budget as of today, so I don't think it was helpful.

"But the important thing is not to be distracted."

- AAP