Lazarus Rising

by John Howard

  Labor’s dismay was palpable. How could it be, that, in the middle of a recession, with unemployment heading towards 10 per cent and the incumbent government having been there for seven years, it was not possible to achieve a swing of 5 per cent? It defied all political reasoning. Inside the Labor Party, the near-universal judgement was that Hayden was the problem. The media hounded Hawke for a response. He had one of his celebrated temper outbursts, telling some television journalists to ‘get a grip of yourselves!’ This kind of response only reinforced his appeal to the Australian public.

  The Flinders by-election came to occupy a special place in Australian political history. It crippled Bill Hayden’s leadership, thus creating the eventual circumstances for Hawke to take the Labor leadership in a most remarkable way in February 1983. It also produced, in Peter Keaston Reith, the only person who won a seat in federal parliament, but was never sworn in, because the parliament to which he had been elected did not sit again after the poll in the by-election had been formally declared, and lost the seat at a subsequent general election.

  Parliament resumed for a week immediately after the by-election, and there was relief and mild hope at the Christmas drinks in my office for colleagues. It proved to be a false dawn, for the by-election outcome had been precisely the wake-up call which the Labor Party required to galvanise the forces needed to change its leadership.

  For me, the beginning of 1983 was a sad one. My mother died on 9 January, just a few weeks after her 83rd birthday. Mum had survived my father by more than 27 years, and had lived for most of that time with extremely good health. She had taken a quiet pleasure out of my political success, but with the typical caution of a person of her generation, who felt that success for themselves or their family was always somewhat unexpected. Mum’s tenacity and single-minded fidelity to things in which she believed had left its mark on me.

  My parents’ lives had been a world away from my own, and even more so from those of my children. My mother was buried from the Earlwood Methodist (by then Uniting) Church, which had been such an important part of our earlier lives. My three brothers had each married there, and my father also had been buried from there.

  It soon became obvious that Malcolm Fraser had not lost his desire to have an early election. He believed it was only a matter of time before Hawke replaced Hayden as Labor leader, and was determined that the poll should take place before this occurred, leaving him facing a much stronger opponent. During his convalescence he had developed a campaign theme, based on the belief that Australia could not wait for the rest of the world to deliver it economic recovery. It was something he pounded home to me when I visited him on holiday in January. The election slogan became ‘We’re not waiting for the world’, complete with lyrics sung by the popular Colleen Hewitt.

  Our January holiday at Hawks Nest was interrupted by my having to go to Canberra on 2 February for a meeting with the major banks to discuss issues relating to the proposed entry of foreign banks into Australia. That was a useful blind for a meeting with the Prime Minister, Tony Eggleton, the party’s federal director, and Peter Nixon, whose advice Fraser always respected. Fraser wanted a poll on 5 March. He remained preoccupied with the possibility of Hawke replacing Hayden and intensely pessimistic about rural Australia, speaking as if he believed that the drought would never break. The mood at that point was optimistic about our prospects, due to the Flinders result and the belief that Fraser would face Hayden. Eggleton said to both Nixon and me, ‘I think we should win.’

  I returned to Hawks Nest that evening, and over dinner I disclosed our plans to Janette, including that Fraser would announce the election the following day. In response she said, ‘Are you sure that they won’t change leaders on you?’ I said that that was highly unlikely. Janette’s assessment had been based on a most equivocal response she had heard Lionel Bowen, the then deputy Labor leader, give to a question about the leadership on radio earlier that day.

  The very next day, 3 February, Janette’s prophecy was realised, as we learned listening to the radio on a drive to the beautiful Myall Lakes, not far from Hawks Nest. In a highly dramatic turn of events, Hayden, that morning, had succumbed to the pressure of his colleagues and stood down from the leadership in favour of Hawke. What it meant to the political landscape was best summarised by a remark of another Hawks Nest holidaymaker who ran a small business. Passing me outside our unit that evening he simply said, ‘So we’ve got an election. Now you’ve blown it.’ He was a Liberal supporter, concerned that the change to Hawke had made it very likely that the Government would be defeated.

  I spoke to Fraser after he had held his news conference and knew that he would face Hawke and not Hayden. He sounded upbeat and remarked that we would be knocking off two Labor leaders at the same time. Yet, he, most of all, must have been totally unsettled by what the Labor Party had done. The truth was that in the space of just 24 hours Fraser had lost control of events. Labor had struck with remarkable boldness, and the dynamic of Australian politics had been turned on its head.

  Janette and I both knew how much Hawke’s accession had changed things and it was very likely curtains for the Government. Australia was in recession, and Bob Hawke had strong public support. We pinned our hopes on the possibility of Hawke blowing up under the pressure of a campaign, with the Australian people deciding that he was too volatile to be entrusted with the prime ministership. He had already obliged with his bad-tempered response to Richard Carleton’s question on Nationwide: ‘Mr Hawke, could I ask you whether you feel a little embarrassed tonight at the blood that’s on your hands?’2 That proved to be wishful thinking. Apart from that intemperate outburst on the day that Hayden had quit, Hawke was a model of balance and restraint during the campaign. He gathered strength as the days went by. The switch had a near-euphoric effect on large sections of the public.

  It was impossible not to feel sorry for Hayden. I sent him a personal note expressing the empathy of a political rival who guessed the agony through which he would be passing. There was one especially poignant TV image of Hayden looking on as a quite adoring crowd of people mobbed Hawke at some public gathering.

  Despite this, it took a while into the campaign before I accepted the strong likelihood of defeat. As a political competitor, that, after all, is a natural state. One keeps hoping and fighting until the end. If nothing else, Australian politics had proved to be remarkably unpredictable during the previous year. A lot of my mood flowed from my respect for Fraser’s campaigning abilities. He had won three elections and, up until then, had been the most successful Liberal leader since Menzies.

  In an election campaign, there are two ways of testing public opinion. There are the published and private polls and then there is what I call the field evidence. The published polls were bad, having strengthened for Labor once Hawke took over. I learned, after the election, that Gary Morgan had done some private polling for Fraser two weeks out from the election which showed that the Government was in a hopeless position.

  The field evidence was uniformly bad. The day after the campaign launch in Melbourne, I flew to Brisbane for a small business luncheon in support of Don Cameron, the member for Fadden. It was a poorly attended event; there was a marked lack of enthusiasm, which troubled me, given that small business was part of our traditional base. Later, passing through Tullamarine Airport, I was stopped by a party activist from Casey, a Melbourne electorate held by Peter Falconer. He was in small business and told me how badly we were doing and that high interest rates had done great damage with small-business proprietors. Grant Chapman, the Liberal member for Kingston in South Australia, invited me to address a public meeting in his electorate, which three people attended. Whilst public meetings at 8 o’clock on a weekday night had long since ceased to be flavour of the month, this was ominous. Cameron, Falconer and Chapman all lost their seats in the 1983 election.

  Both Doug Anthony and I wanted Fraser to take up an offer from Rupert Murdoch, who then owned the Ten Network, for a
debate with Hawke. The three of us thought that it could help Malcolm, but he refused.

  I spent election day visiting polling booths in Bennelong, thanking my helpers for their support, but sensing by then that the election was gone. We gathered at our Wollstonecraft home to watch the results. Once the result was clear, I rang Fraser, who was plainly shattered by the outcome. It was a difficult conversation. He was the fallen giant, who had for so long seemed invincible.

  Hawke’s win in 1983 has been the best of any Labor leader at a change of government. He won a majority of 25 in a house of only 125. During the campaign, Hawke had captured the imagination of many Australians with his talk of bringing people together. In contrast, Malcolm Fraser often sounded shrill, with exaggerated claims that Australians should put their money under the bed if Labor won.

  Overwhelmingly, though, the Coalition lost because Australia was in deep recession, and Labor was led by a person in Bob Hawke whose blend of larrikinism and intelligence had long appealed to lots of Australians. The fates had conspired to deliver Hawke the leadership at the optimum time for him. He never had to face Fraser in parliament, where he could well have fared poorly.

  Following the chaos of the Whitlam years, Fraser had restored calm and order to the nation’s government. The budget was brought under control. It was being steadily returned to surplus until the recession of the early ’80s hit, and this had happened through a time of subdued world economic growth.

  To properly assess Malcolm Fraser’s economic stewardship is to understand that, first and foremost, he was a creature of the Menzies–McEwen period of economic management, when plenty of benign and protective government intervention appeared to work. There was strong growth and low unemployment to show for it. Why, therefore, should those policies not be continued? Fraser, and many around him, brought that attitude back to government in 1975.

  For the seven-and-a-half years that we had worked together, the relationship between Malcolm Fraser and me had been politically close. I was an advocate for Fraser within the parliamentary party, as I always believed that he was the right person to lead the party through the time that we were in government. I also had a strong sense of loyalty towards him, reinforced by his generous promotion of me. Our relationship, although friendly, was very much a professional political one, which was never likely to continue once he left parliament in 1983.

  My differences with Fraser, in government, were confined to certain economic issues. It was during my prime ministership that we really parted company, with Fraser attacking many of my stances on social and foreign policy as well: the handling of Pauline Hanson, asylum-seekers, a formal apology to Indigenous people and involvement in Iraq. His quite unfounded allegation that I played the race card ignored, for example, the fact that during the time I was PM my Government maintained a non-discriminatory immigration policy. I deny the claim in Fraser’s memoirs, co-authored with Margaret Simons, that in 1977 I said to him, in a corridor conversation, that we should not take too many Vietnamese refugees.

  In 1993 Malcolm Fraser announced that he would seek the federal presidency of the Liberal Party, but pulled out when it was obvious that he would not be elected. His withdrawal speech vehemently attacked free-market economics. He said that a small group had pushed our policies further to the right, and that the Liberal Party had become a right-wing conservative one. This was an ideological distortion, but one he would increasingly invoke to explain the growing gulf between him and the party he once led. In truth, the 1980s saw a major shift in the centre of gravity of the economic debate towards a more free-market approach. Attitudes within the Coalition parties as well as the ALP reflected this change.

  For Malcolm Fraser, the harsh reality was that legions of Liberals felt that he had not used the massive mandates of 1975 and 1977 to effect sufficient change. Moreover, as time passed, many staunch Liberals who had gone to the barricades for him in 1975 deeply resented his regular attacks on my Government during our time in office.

  Although I had commenced my ministerial career with anything but a strong commitment to economic rationalism, I had, by the time of the Fraser Government’s defeat in 1983, gone through something of an epiphany. The influences on me had been many and varied, most particularly the experience of administering the Treasury portfolio. In opposition I was to develop my views even further, especially in respect of industrial relations policy.

  In retrospect it was clear during the 1980s that Australia needed broad economic reforms to taxation, the labour market, industry protection and the financial system. As well, governments had to be taken out of the ownership of business undertakings. The economic story of the ensuing 25 years was how both Coalition and Labor governments contributed to that reform task, and how in opposition the Coalition also gave crucial support to ALP reforms — a gesture never reciprocated when the ALP was in opposition. I was a major player in that saga, from both government and opposition, and many of the pages which follow contain a detailed account of that economic journey which did so much to ensure that when the global financial crisis of 2008 hit, our nation was better placed than most to withstand its ravages.

  PART 2

  THE OPPOSITION YEARS

  14

  PEACOCK VS HOWARD

  In March 1983, the Liberal and National parties commenced 13 years of opposition. We would lose five elections in a row, and pass through some of the most despairing years since the Liberal Party’s foundation in 1944. The most traumatic episode would be the split in the federal coalition in 1987, forced by the overwhelming influence, within the National Party, of the Queensland Nationals, led by Joh Bjelke-Petersen, who was, for 19 years, premier of that state.

  During this period we would have four leaders: Andrew Peacock (twice), John Hewson, Alexander Downer and me (twice). At the end of this long period of political exile, the party would, in coalition with the Nationals, regain office under my leadership and stay in power for almost 12 years.

  Through those opposition years, I experienced just about all that could come the way of a long-serving participant in Australian politics. Yet I always retained a total commitment and sustained enthusiasm for political life. Irrespective of the position I held, I kept an unflagging interest in what I was doing. The experience of those years told me that, beyond argument, politics was my life and vocation. Some of the most productive policy work that I did in the whole time that I was a member of parliament occurred between 1990 and 1993, when I was spokesman on industrial relations for the Coalition, and my only expectation was to hold that portfolio in a Hewson Government.

  Being bundled from office is a humbling experience — not that I was unprepared. The campaign had delivered a mounting realisation that there would be a change of government. The adversarial nature of politics requires one to change, almost overnight, from a reasoned decision-maker to a vigorous and informed critic of those now making the decisions. That was virtually impossible. I felt tired, both mentally and physically. What I wanted in March 1983 was a six-month sabbatical. But there was no hope of that; politics was my life.

  I decided on the night of the election to stand for the leadership of the Liberal Party, made vacant by Fraser’s resignation. I knew that my only opponent would be Andrew Peacock, and that he would almost certainly win. He did, comfortably, by 36 votes to 20. As Treasurer, I was far more closely linked to the policies of the just-defeated government than Peacock. That made him a more appealing choice. I was re-elected deputy leader, and wanted a shadow portfolio away from Treasury. Doug Anthony persuaded me to stick with my old area because of my by-then-vast experience with economic issues. Fraser quietly lobbied for Andrew Peacock in the leadership contest. He did not attend the meeting at which the ballot took place, and later explained this to me on the grounds that it would not have been in my interests if I had won only narrowly, implying, unconvincingly, that he would have supported me if he had been there. I had not sought his support and, strangely perhaps, did not feel particularly offended
by his attitude. Many of my friends, however, saw his behaviour as poor repayment of the loyalty I had shown to him over a long period of time.

  The early weeks in opposition were very hard for me because I had to beat off claims that I had misled the public about the true state of the deficit. It was right on the eve of the election that I was given a figure of $9.6 billion as the likely deficit for the following year, which was much higher than the stab-in-the-dark figure I had casually mentioned to some journalists. Moreover, the $9.6 billion was only a starting point, and would be reduced in the normal budget process. This did not stop Bob Hawke and Paul Keating, his new Treasurer, making a huge issue of it. This was their honeymoon; the press swallowed their lines and I took quite a shellacking.

  Andrew Peacock and I were rivals for the leadership of the Liberal Party for some years, but this did not, as many have argued, completely paralyse the Liberal Party in opposition. Rivalry between key figures in political parties is commonplace. From 1986 onwards, the rivalry between Keating and Hawke within the governing Labor Party was barely disguised, periodically spilling into the public arena. Nonetheless, Andrew’s and my rivalry was real, both as personalities and on policy issues.

  In the culture of the Liberal Party, Andrew and I were almost born to be rivals. We were only a few months apart in age. When it seemed, to many people, to matter a lot more, he came from Melbourne and I came from Sydney. He had taken over the seat of Kooyong from Sir Robert Menzies, the great hero of our party. We were of different personalities and styles. Andrew’s urbanity and very considerable personal charm had won him early notice as a future leader of the Liberal Party. He had been a very effective minister in the McMahon Government, and had won a lot of deserved praise for the relationships he established with key figures in the newly independent Papua New Guinea. It was so easy, given our contrasting styles and personalities, for commentators to paint him as emblematic of the progressive side of the Liberal Party, and me as a dull, dogged conservative.