The leader of Australia's most populous state of New South Wales quit on Friday after losing support from his centre-left government in the wake of a botched power selloff.
Morris Iemma's shock resignation came just hours after he had sacked his treasurer, Michael Costa, who had said state revenues were at risk because of the slowing national economy. Mr Costa warned that NSW was at risk of losing its AAA credit rating.
Mr Iemma's Labor government has been dogged by scandal and a failed attempt to sell off A$10 billion worth of energy assets. He was swiftly replaced by Nathan Rees, a former greenkeeper and local council garbage collector.
"I've never been a spoiler. They didn't want to do it my way. They can get on without me," Mr Iemma told a news conference, adding he would also resign from politics.
NSW accounts for about 30% of the national economy and is home to a third of the 21 million population.
The government scrapped plans for sale of the state's energy assets when it became clear it would lose a parliamentary vote. Standard and Poor's cut its outlook for the state to negative from stable as a result.
Before quitting, Mr Iemma said electricity reform would happen, with an alternative A$3 billion package to sell three energy retailers and a proposed new power station site, with government to keep ownership of power generators.
NSW, which includes Australia's biggest city Sydney, is near recession having largely missed out on the commodities-driven boom that has boosted the economies of Western Australia and Queensland states.
Mr Rees told local media he intended to start work on forming a new state government executive next week to fight elections against resurgent conservative rivals in 2011.
Chance for conservatives
The instability gives conservative lawmakers a chance to make a comeback after being wiped out across the country in state and national elections.
The conservatives are a strong chance of winning state elections this weekend in Western Australia, the engine of Australia's resource boom and currently underpinning the slowing national economy thanks to demand from energy-hungry China.
Centre-left Prime Minister Kevin Rudd has painted Labor's grip on government nationally and in the country's six states as a chance to reform constitutional and economic overlaps in the A$1 trillion economy.
