Lazarus Rising

For the first time in Australian political history there was a televised debate between the Prime Minister and the Leader of the Opposition. Peacock won the debate quite convincingly. As Hawke and others were to learn, the expectations of these debates are such that, as there is an assumed ascendency for the incumbent, a reasonably good performance by the Leader of the Opposition exceeds expectations, and he often ends up ‘winning’ the debate. That is not to take anything away from Andrew Peacock’s extremely polished performance. He put in more than a reasonably good performance; he outclassed Hawke with an engaging, direct style of presentation. Such was the impact of this debate on Bob Hawke that at the next election, in 1987, he refused to debate me as Opposition leader. An overly compliant media allowed him to get away with this piece of dismissive arrogance. Leaders’ debates returned in 1990 when Peacock was again against Hawke and have been a permanent fixture ever since.

At the election the Labor Party was returned with a reduced majority of only 16 seats. Peacock and the Liberal Party had performed beyond all expectations. There was a wide feeling within the party, and elsewhere, that we would be back in government at the following election. This result put paid to any idea of a leadership change, and both Peacock and I were unanimously re-elected to our respective positions at the post-election party meeting.

At the news conference following the party meeting, I gave an answer to the question, ‘Will you rule out a leadership challenge to Mr Peacock during the term of this parliament?', which was to be the source of intense irritation to Andrew Peacock and his close supporters. My response was, ‘I think somebody who has had the track record of loyalty that I’ve had for the cause of the Liberal Party is not really required to answer that question.’

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I took the position that no person could ever be expected to rule out a leadership challenge.

Peacock’s leadership had been consolidated by his election performance, and it was my expectation that he would lead the party to the next election. However, politics is always unpredictable, and I saw no reason why I should not, in an upfront fashion, keep my options open. I understood why my response irritated Peacock. In return, he should have accepted that it was a perfectly legitimate stance for me to take.

One other incident concerning the leadership of the party in those months is worth recounting. Andrew Peacock, Malcolm Fraser and I, with our wives, attended a function staged by the Victorian division of the Liberal Party in October 1984, just before the election, to mark the 40th anniversary of the party’s foundation. After the function, Malcolm, his wife, Tamie, Janette and I, together with Tom Austin, deputy leader of the Victorian Liberals, and his wife, Judith, adjourned to Austin’s hotel room for a drink. In the course of discussion Malcolm lambasted Peacock’s leadership, asserting that he had no policies, and said that the party was headed for ruin at the next election and that I had an obligation ‘to put my hand up'. Both Janette and I were rather taken aback at this outburst, and afterwards confided to each other that maybe Malcolm had in mind two leaders being knocked off for the price of one election. There had, for some time, been low-level chatter that perhaps Fraser might be recalled to lead the Liberal Party. It should be remembered that he had left the prime ministership at a very young age, 52. Hawke, in fact, was six months older than Fraser when he defeated him for the top job.

Whatever may have been the former Prime Minister’s motives, he left me with the unmistakable impression that I should seek the leadership, and quickly do so. I had no intention of doing this and made that clear to him. The very next morning Janette and I ran into him at the airport. Robin Gray, the Premier of Tasmania, was also there and we chatted inconsequentially. As Malcolm left to get his plane, he raised his arm and repeated the words ‘Put your arm up.’ According to the media, when asked about the whole incident, Fraser denied that it had taken place.

Some months later, after the election, Malcolm Fraser rang me and said that in light of changed circumstances, I should ignore the advice he had given me back in October 1984.

The changed circumstances to which Fraser referred were not only the unexpectedly good election outcome, but also the extraordinary way in which Bob Hawke had handled a national security issue involving the US Alliance. There had been an understanding between the Australian and US governments, concluded under the Fraser Government, whereby Australian facilities would be available to help monitor splash-down trials of the MX missile, then under production in the United States. As the time of the trials approached, this became a sensitive issue within the Labor Party because the missile would be capable of carrying a nuclear warhead.

The 1984 election had seen a surge in support for the Nuclear Disarmament Party (NDP), and Palm Sunday peace rallies had attracted large crowds. Hawke’s natural instincts were to honour the agreement with the Americans but, remarkably, he caved in to the left wing. Keating, to his credit, had commented before Hawke’s capitulation that the Government should not take any notice of ‘fifth-graders'. If he is to be believed, Graham Richardson is the person who finally persuaded Hawke to give in to the left. By chance I ran into Richardson in the lobby of the Imperial Hotel in Tokyo just after the decision had been announced. He was quite happy to confide in me that, having canvassed opinion within the parliamentary party, he had offered Hawke the advice to compromise with those who were nervous about being too close to the Americans. There were never any flies on that fixer.

Hawke’s back-flip caused something of a run on the Australian dollar, and coming on top of the worse-than-expected election result, this helped create the impression that the Government had begun to lose its way.

After the 1984 election, which saw the return of Peter Shack to federal parliament as member for Tangney, Peacock made Shack spokesman on industrial relations. This created an interesting position. Shack was very close to Andrew Peacock, having worked on his staff between the 1983 election, when Shack lost his seat, and his return to parliament. On the other hand, he was a strong supporter of a freer labour market. His views on industrial relations were much closer to mine than had been those of Ian Macphee, the previous spokesman, who, prior to entering parliament, had been director of the Victorian Chamber of Manufacturers, which was quite a supporter of the traditional industrial relations order.

1985 gave me an opportunity to give vent to my long-suppressed interest in defence and foreign policy issues. I had some very strong things to say about the Labor Party’s capitulation to the left on the MX missile issue. The strategic defence initiative, which involved the creation of a missile shield against a possible nuclear attack, then in its embryonic phase and receiving active support from the Reagan Administration, was something which I openly supported.

At this stage Paul Keating and I enjoyed an easy personal relationship. He had even sought my advice about moving his young family to Canberra. Our links attracted some media interest because the Canberra gallery appreciated the support I extended when the Hawke Government adopted good policy.

For months the Treasurer had been working on an elaborate plan for taxation reform, to be presented to a taxation summit promised by Hawke in the 1984 campaign and due to take place in July 1985. The centrepiece of Keating’s plan was the introduction of a broad-based consumption tax, at a rate of 12.5 per cent, accompanied by reductions in personal income tax, the introduction of a capital gains tax and a fringe benefits tax. It was a huge and ambitious proposal that mirrored changes for which I had argued when Treasurer, most particularly the proposal to broaden the indirect tax base and reduce personal income tax.

On the day his tax blueprint was released, he asked me round to his office and gave me a copy of the document, saying how important certain reforms were to the future of the country. Mindful of my past support for taxation reform, he was appealing to me for bipartisan help.

Keating’s taxation proposals led to a renewal of tension within the Coalition between those who wanted to oppose it outright for popular political reasons, and those like me, who believed that the national interest required a completely different taxation system. Its foundation was a new broad-based indirect tax in exchange for much lower income tax, something I had advocated for years. How could I oppose it? I made it clear that I backed these parts of the Keating plan.

Due to those tensions, the opposition appeared to want it both ways. It favoured reform, but not this one. In the end this did not matter because the unions heavied Bob Hawke into pulling the rug on his Treasurer over the whole plan. The consumption tax was dumped, leaving a compromise which did not embody such far-reaching reform. The opposition could readily oppose this.

15 LEADER BY ACCIDENT (#ulink_20193b4e-5e1d-5da3-864d-85e773ff2a1c)

In the weeks which followed the collapse of the tax summit, three things caused Andrew Peacock to confront me on the leadership issue. The first of these was my being guest host on the Nine Network’s Midday Show. This program had an enormous audience, and Andrew Peacock had been invited to host it but declined the invitation. My appearance attracted a lot of interest as I was able to nominate people to be interviewed, and amongst those I selected was Bill O’Reilly, the legendary Australian Test cricketer. Secondly, a chance encounter with David Morgan, a senior Treasury official but later to be chief executive of Westpac, led to an embarrassing moment for both me and Jim Carlton, the Liberal MP for MacKellar. In casual discussion Morgan said to me, ‘Hypothetically, if you were Leader of the Opposition, who would you have as your shadow Treasurer?’ and I replied, ‘Jim Carlton'. It was foolish and indiscreet of me and no doubt fuelled the impression, when the story got out, that I was preparing a list of shadow ministers. This was not the case.

The final straw was at the National Press Club on 28 August 1985 when I gave the traditional shadow Treasurer’s response to the budget speech. I spoke broadly and passionately about the need for reform in numerous areas, including the maintenance of my commitment to taxation reform. It was widely reported as the speech of somebody who had a policy agenda for the opposition.

My view was that there was nothing disloyal in performing well as a spokesman for one’s party, even if, on occasions, that performance might outshine the contribution of the leader. At one point a member of Peacock’s staff told my chief of staff, Gerard Henderson, that I should tone down my media appearances because they were overshadowing the leader’s contributions. I thought that rather missed the point.

I was away on a short skiing holiday with my family, at Berridale at the foot of the Snowy Mountains, when Andrew Peacock telephoned me on 2 September and asked that I return to Canberra the following day to discuss the leadership issue. He made what I thought to be an absurd and naïve request that I rule out challenging him for the leadership.

Peacock’s action was ill-advised. The party did not want him to be removed as leader, and the last thing that colleagues wanted was a public scrap between Andrew and me. Yet that is what they got because of his decision to require what I was unwilling to commit to. I had not been plotting to depose him, I was not gathering any numbers, and I wished to continue working with him as deputy leader of the Liberal Party.

When I refused to give a commitment not to challenge, Andrew called a special meeting of the parliamentary Liberal Party to try and oust me as deputy leader. His planning had been poor. Rather haphazardly, he had settled on John Moore, MP for the Queensland seat of Ryan, to be his candidate for the deputy leadership. It was reported that he approached Jim Carlton and Wal Fife, but they had refused to nominate against me. Maybe he was advised that I would capitulate, but of course I didn’t, and set about fighting to retain my position as deputy leader.

I continued to do media appearances, restating my support for him as leader and my willingness to continue working as his deputy. My media appearances also included continued attacks on Labor’s economic management; some colleagues were impressed by the fact that I kept a focus on the main battle, despite the pressure I was under. I carefully telephoned just about every person in the parliamentary party with the simple plea that I be retained as deputy on the basis of my experience and my willingness to work with Andrew as leader.

Clearly the Peacock camp had not done a systematic job of canvassing for the numbers. I gave a crucial indication that if I lost the deputy leadership I would go to the backbench. Apart from people strongly committed to Andrew and hostile to me, the colleagues to whom I spoke clearly wanted the status quo. Many were quite embarrassed by the public stand-off, and none to whom I spoke expressed a view that I had been disloyal.

I received a lot of support from close colleagues and friends. Between midnight and 1 am the night before the ballot, Kerry Packer telephoned me from his property near Scone and asked, ‘Sport, is there anything I can do to help you?’ Loyalty and remembrance of past support was always a strong Packer virtue. During the so-called ‘Goanna’ accusations surrounding Kerry Packer in 1984, when many people shunned him, I had made a point of identifying with him, simply because I did not believe for a moment the allegations raised about him. He never forgot this expression of friendship.

On the morning of the ballot, I expected to lose. I travelled in a Commonwealth car from the Commonwealth Club to Parliament House, with Pru Goward interviewing me for ABC Radio current affairs. Her first question was, ‘Mr Howard, what does it feel like to be in the last day of your time as deputy leader?’ That turned out to be an accurate prediction, but not in the way that she and most others expected. Although the motion to remove me as deputy was carried, when John Moore and I nominated for the vacant position, I defeated Moore by 38 votes to 32. The outcome stunned me and many others. To this day, I believe a number of people who voted for me as deputy leader did so in the belief that I would continue working for Andrew Peacock as leader. They did not contemplate what was to follow immediately after this ballot.

Peacock asked me and the other members of the leadership group, Fred Chaney and Peter Durack, to his office. He told us that he was in an impossible position and that he would resign. He then returned to the party meeting, informed those present of his decision, to cries of ‘No, don’t', and some of ‘Grow up', and called immediately for nominations to fill the vacancy in the leadership of the party. The only other person to nominate was Jim Carlton, and I defeated him by 59 votes to six. There were seven informal votes. After several ballots, Neil Brown from Victoria was elected as deputy leader.

The outcome was nothing short of extraordinary. It was a case of a party changing its leader by accident, not by deliberation. Whilst I was naturally happy, indeed exhilarated, to have the leadership, I had not been campaigning for it. True it was that I was ready to parade my policy credentials and to argue publicly for the things in which I believed, but I had not been organising a challenge, and would not have challenged Andrew Peacock in the circumstances then prevailing within the parliamentary party. If Andrew had not lost his nerve and sought to remove me as deputy leader, I am sure that he would have continued as leader until the subsequent election.

The sudden change in leadership was greeted with much enthusiasm within the party and in many sections of the community. There was widespread press endorsement of me, largely on the grounds that I had been prominent in arguing policy substance. Andrew Peacock gave a gracious and light-hearted press conference in which he rather humorously said that he didn’t know if he had ever wanted to be prime minister. The immediate reaction was one of surging public support for the Coalition and me.

My honeymoon was very short-lived, however. Starting with the leaking of a shadow cabinet strategy paper prepared by Tony Messner, my newly appointed Finance spokesman, the Coalition leaked like a sieve, until a temporary cessation for the 1987 election. The parliamentary party entered a difficult and divisive phase.

The poll resurgence did not last long, and some tactical mistakes of mine did not help. For example, I maintained the rather rigid policy position that there should be an immediate deregulation of housing interest rates. This was economically sensible but politically very dangerous. It presented the Labor Party in the South Australian state election held on 7 December 1985 with a real gift. Although the Liberal Party opposition distanced itself from the federal policy, it was easy for Labor to make the link. I should have anticipated this and embraced a gradual approach on deregulation of housing interest rates — which I was to advocate early in 1986 and which was copied by the Hawke Government several months later.

Although there were flaws in my leadership style, the larger problem was that I was being targeted from within through a torrent of leaks which undermined my authority, almost on a daily basis. The Coalition ended the year in a very weak political position. The early excitement about my securing the leadership had turned to a sense of puzzlement and drift. The great momentum of September 1985 had dissipated.

For much of 1986 the party struggled. My poll ratings against Hawke were dismal, and until the latter part of the year the Coalition itself was well behind the Labor Party. Polls became the nightmare of my existence, as is inevitably the fate of any Opposition leader who does not keep himself and his party reasonably competitive with the Government and the Prime Minister. Not only did I rate poorly against Hawke but, as time went by, popularity polls were conducted between me and Peacock; predictably, Andrew Peacock began to move ahead on these measurements.

One particularly damaging poll, conducted by the Quantum research group, commissioned from Western Australia, was leaked extensively to the Australian Financial Review, which gave it extraordinarily heavy coverage, way beyond what could have been justified by ordinary reporting principles. This included extensive reporting on the morning of a nationally televised address by me. This poll was paid for by a group angry over my anti-tax avoidance action as Treasurer.

The party was in a real bind. By accident it had changed its leader and a substantial section of the party remained profoundly unhappy about this. For some of them, the honourable thing was to grin and bear it and do their best to be an effective opposition. For a much smaller group, the answer was to embark on regular bouts of destructive destabilisation, which of course had a disastrous impact on my leadership authority and badly damaged the opposition.

Despite the instability and leadership problems, I was determined to push ahead on the policy front. Thus the Coalition’s new and quite radical industrial relations policy was released by Neil Brown on 11 May 1986. For the first time it provided for individual contracts and made very significant changes to the old centralised wage-fixing system. Getting the policy out and winning wide acceptance for it was quite an achievement given the turmoil within the Coalition parties.

In the first half of 1986, Paul Keating made his widely reported comment on the John Laws radio program that if Australia did not rectify its terms-of-trade problem, it would end up a ‘banana republic', which I thought at the time was no more than a throwaway line, not the considered warning to the public it was later claimed to be. The terms-of-trade challenge led to an address to the nation from the Prime Minister, with a response from me, in which I laid out an alternative approach. Despite the fog of leadership speculation, my response won considerable praise from the commentariat.

The Liberal Party held a most successful federal council in Adelaide, in September of that year. Its conclusion coincided with the publication of a Morgan Poll which showed the Coalition ahead of Labor by six points. For a leader who had been under siege from the opinion polls for close to nine months, this was a welcome relief. Generally favourable publicity coming out of the meeting boosted the spirits of the Coalition as the year moved on.

Notwithstanding our internal problems, the Coalition had had some notable parliamentary successes. It severely embarrassed Paul Keating over his failure to lodge an income tax return for the previous year. This hurt Keating a lot with ordinary voters. When the document suggesting that Keating had not filed his return came into my hands, I found it hard to believe. So I asked Jim Carlton, the shadow Treasurer, to call on Keating, confront him with what we had and indicate that if the information were bogus then the matter would not be further pursued. It was clear from Keating’s reaction that the information was spot-on. I am glad that I had taken the precaution of checking. That precaution did not for a moment dilute the intense public embarrassment Keating suffered.

Incredibly, Wilson Tuckey, who was a loud barracker for Peacock, criticised me for such caution, and that criticism found its way into the papers.

The ongoing controversy regarding the position of Lionel Murphy on the High Court also provided the opposition with the chance to wrong-foot the Government for an entire week in the parliament. Although spasmodic, these events continued to give Coalition members hope and to remind all of us that we had a real show of getting on top of the Government, if only our own difficulties could be put behind us. That remained our principal challenge.

16 JOH FOR PM (#ulink_b68a4174-1182-52c3-b8c1-144f7137781b)

On 2 June 1987 I arrived back at our home in Wollstonecraft close to 8.30 in the evening. Janette met me at the door and said, ‘They’re in the lounge room'. She was referring to the delegation from the Queensland National Party. This was the end of a quite remarkable day in the distracting saga of the ‘Joh for PM’ campaign, which did such immense damage to our prospects of winning the 1987 election. The delegation had come to signal an unapologetic surrender in a campaign which had engulfed and enfeebled the federal coalition for close to a year.

The events of the early days of June 1987 may have ended the ‘Joh for PM’ push, but its ramifications would haunt the Liberal and National parties for some years into the future.

How did it all come about in the first place? As the Coalition in Canberra, and the Liberal Party in particular, struggled through the early part of 1986, there were murmurs out of Queensland that Joh Bjelke-Petersen, that state’s long-serving Premier, might take a tilt at Canberra.

Disunity within the Liberal Party and the constant speculation about my leadership encouraged anti-Labor people to believe that an alternative to the orthodox Coalition approach in Canberra was needed. Importantly, Andrew Peacock and Joh Bjelke-Petersen had a warm regard for each other. It stemmed from Peacock’s heavy involvement, as Foreign Minister, in negotiating with the Indonesian Government on border issues affecting Queensland. Joh liked Andrew, who was always ready to sing the Premier’s praises in public. There was also the Russell Hinze factor. Hinze, a senior Queensland minister, wanted to be state Premier, and to do that he had to get rid of Joh. How better to achieve this goal than to have Joh launch himself in a bid for Canberra, irrespective of the outcome?