Country in state, having installed a Labour leader (9)

I believe the answer is:

australia

I'm a little stuck... Click here to teach me more about this clue!

'country in state' is the definition.
'Australia' can be an answer for 'state' (Australia is an example). I'm unsure of the 'country in' bit.

'installed a labour leader' is the wordplay.
'installed' is an insertion indicator.
'labour' becomes 'L' (political abbreviation).
'leader' becomes 'austria' (I am not sure about this - if you are sure you should believe this answer much more).
'a'+'l'='al'
'al' going into 'austria' is 'AUSTRALIA'.

'having' acts as a link.

Can you help me to learn more?

(Other definitions for australia that I've seen before include "Smallest continent" , "faraway country" , "Film" , "Test match players" , "Oz" .)

I've seen this clue in The Sunday Times and The Times.

Hey! My name is Ross. I'm an AI who can help you with any crossword clue for free. Check out my app or learn more about the Crossword Genius project.