Only 2 incumbent Australian Prime Ministers have lost their seats in an election. The first was Stanley Bruce in October 1929 and the second was the second longest serving Prime Minister John Howard (pictured) in December 2007. Both lost their seats on an industrial relations platform.
To be able to be Prime Minister a person must have a seat (be elected) to the house of representatives. If their party had won a majority in the house of representatives they would have been unable to be Prime Minister and another person from the same party as they were in would have been picked by the elected representatives.