Lazarus Rising

by John Howard

  The Liberal Party made a mistake changing leaders just as I was consolidating my position within the electorate. Momentum had developed out of Future Directions and the strong and successful positions I had taken on the joint Senate ticket in Victoria and wheat policy. That was to be of no avail.

  Sudden changes in the leadership of the two Coalition parties occurred on the same day, with Ian Sinclair being replaced by Charles Blunt at the helm of the Nationals. A new and uncertain era for the Coalition had commenced.

  Quite apart from the negative impact of the Four Corners program, the problem Peacock and his backers had was that the rationale for the leadership change was never established in the minds of the Australian public. It did not signal a sharply different course on policy substance. To the average voter, the change in leadership was nothing more than the product of an internal power struggle.

  Andrew Peacock did not handle the transition well. He must have known that I would react angrily to such an ambush. Peacock offered me the shadow Education portfolio which, important though it was, felt to me like rubbing salt into the wound. Defence was an area of potential interest to me, had status and would have allowed me to range fairly broadly, and I would have happily taken it, but Peacock had decided to give it to Jim Carlton.

  In the wake of the Four Corners program, I said that I would not serve on the front bench whilst Tuckey and Moore were there. Some saw this as petulance; others saw it as perfectly understandable. A coup that was meant to unify and strengthen the party left it looking more divided than it had at any time since the 1987 election.

  For the first time in 14 years, I went to the backbench and commenced, almost immediately, writing a weekly column for the Australian. I loved doing this and enjoyed immensely my association with Frank Devine, the editor of that paper. It was a friendship which continued until Frank’s death in 2009. I wrote about politics, but also about other issues as well. One memorable piece which I enjoyed penning, and which attracted some complimentary reviews, was about the heroic status of Allan Border, who led the Australian cricket team to an Ashes retrieval victory in August 1989 at Old Trafford.

  Although I never set out to attack the Coalition’s position on issues, I strongly defended the policies I had developed. A notable case was the pilots’ dispute, which involved Bob Hawke backing both the ACTU and the airlines against the pilots in a pay dispute. I argued that it was something that should be resolved in the marketplace. This was closer to the real effect of Hawke’s strategy than Andrew Peacock’s.

  In November 1989, Peacock sacked Wilson Tuckey and offered me a front-bench position as spokesman on Manufacturing Industry. I felt that insisting on my original condition that Moore be sacked as well would have seemed petty, but I didn’t particularly enjoy going back to the front bench. I lost a fair bit of money as Frank Devine sacked me immediately as a columnist. My several months back in the shadow cabinet were quite dismal. I did not think the Coalition’s policies were convincing, although to be fair the economic action plan, which contained detailed tax rebates and family benefits and which had been put together by John Hewson and John Stone, won a lot of support. It gave Andrew Peacock a document to argue for and a set of policies to advocate. He was no policy innovator but he had a capacity to absorb a brief and argue publicly for policies, once they had been carefully formulated.

  The Coalition should have won the 1990 election. The Australian economy was in recession, unemployment was over 9 per cent, housing interest rates were at 17 per cent or more and the Hawke Government had been in power for seven years. The polls were quite unclear, and it was obvious that preferences from the Democrats and the Greens would be crucial.

  There are always a number of reasons why a party loses an election. In 1990 a significant, but not the only, reason for our loss was an assessment the electorate made about the economic competence of the opposition and its leader. The public knew that the Australian economy was in an appalling condition, and they asked themselves whether the Coalition could do a better job of managing it than the incumbent Labor Party. In the end, sufficient people in the right places for Labor decided in favour of the devil they knew.

  The policy credibility of the Coalition was mortally wounded by the failure of the opposition to produce a health policy. I had only recently returned to the shadow cabinet when I learned that there was no policy and the plan was merely to outline some principles about health. When I expressed alarm about the political impact of this, I was promptly told by John Stone and several others that I hadn’t been around for some of the earlier discussions and that there was frankly no alternative, given that our expenditure and tax policies had already been put to bed.

  Peter Shack, our spokesman, held a news conference revealing that there would not be a detailed health policy and then drove a nail into the Liberal Party’s coffin by saying that the Coalition did not have a particularly good record when it came to health policy. How could we really expect people to vote for us?

  It was a very uneven election outcome. Due largely to the economic wreckage which Victoria had become under the Cain/Kirner regime, the Liberal Party won no fewer than nine seats in that state. Sharing the ABC’s election night commentary with the Foreign Minister Gareth Evans, I heard him describe it to one of his colleagues on the phone as the ‘slaughter of the innocents’. I had never known him to sound so solicitous towards members of the Victorian socialist left before. In other parts of the country, most particularly in Queensland and New South Wales, the swing went in the opposite direction.

  The result was formally in doubt for some days, but it was obvious to me on the night that the Coalition had fallen short. The Coalition had out-polled Labor on the primary vote by some 4 per cent, but the strong flow of preferences on green issues had saved Hawke’s bacon. Hawke and Graham Richardson’s strategy of courting Greens preferences had found no counter at all from the Coalition. Naturally, I thought that if the party had not changed leaders in May 1989 the Coalition would have had a better chance of winning. Most of the campaign was about the economy, and I was seen as having better economic management credentials to those of Andrew Peacock. Those musings were, however, not only academic but quite pointless.

  Politics is always about today’s reality, not that great realm of what might have been. The party had decided to rid itself of my leadership and reinstate Andrew Peacock. That change having failed, it had no intention of revisiting its decision of May 1989. Whatever feelings I may have had on election night that the party might look again to me as a leader, I was quickly to learn that there was no appetite, even among some of my closest supporters, for a reprise of the Howard leadership. The overwhelming mood in the party was that it should move on from the Howard/Peacock years.

  My loyal but blunt friend Peter Reith told me during an overnight stay at his home just after the election, that I should forget about any prospect of returning to the leadership. As he put it very candidly, ‘You are entitled to feel that you have been badly treated; the party made a huge mistake getting rid of you as you would almost certainly have won the election if you had still been leader, but that is all in the past. The Australian public want the Coalition to look at fresh faces for leadership positions, and not go back to the past.’ He encapsulated the mood then prevailing. I hated hearing this but came to respect the candour Reith had displayed.

  Andrew Peacock and his followers wanted John Hewson to succeed him as leader. Peacock had wisely made Hewson the shadow Treasurer when he replaced me as leader. Hewson had impressed from the moment he took over as shadow Treasurer. He was a skilled economist, understood the political context of the economic debate, and had developed something of an appetite for political life.

  Ready for it or not, John Hewson’s time had arrived. There was a surge of support for him within the parliamentary party and also in the broader community. Peter Reith nominated for the leadership as well. He laid out a detailed program in support of his candidature, including a commitment to t
he introduction of a broad-based indirect tax as part of overall taxation reform. Reith never had any prospect of winning, and sections of the press heaped derision on his enthusiastic campaigning. But his behaviour demonstrated a competitive streak in a man who would come to be a most effective minister. I voted for Hewson out of a combination of past loyalties and a belief that he was seen as the man of the moment, but I had reservations about him.

  During a brief discussion in Sydney just before the ballot, I told Hewson that I thought he was making a mistake accepting what had effectively become a draft for the leadership, that he had no idea how difficult it was to lead a political party, and that he ought to continue as shadow Treasurer and gain more political experience. His response was mild but clearly indicated that he saw my remarks as largely self-serving and not to be taken seriously. This was partly true, but my fears proved well founded.

  Hewson won the ballot overwhelmingly, by 62 to 13. Peter Reith was elected deputy leader by a comfortable margin and became shadow Treasurer. We didn’t know it at the time, but the party was on the road to Fightback!

  18

  THE ‘UNLOSABLE’ ELECTION

  As leader, John Hewson looked and sounded fresh, new, bright and quite different. Almost from the beginning he asserted that he was a non-politician, implying his lack of familiarity with politics was a virtue rather than a potential liability. For a long time this seemed to work. The Australian public was attracted to a person who clearly knew a lot about economic issues and seemed intent on fixing the nation’s problems, not scoring political points.

  Within a short period Hewson moved ahead of Hawke in the opinion polls, and before long stories were being written about how, and not if, John and Carolyn Hewson would inherit the Lodge. Hewson was given extraordinary authority within the parliamentary party and the Liberal organisation. He required and received both support and acclaim for everything he wanted. For a long period of time it ran smoothly. The party was united with two new faces at the top. Also, in the National Party Tim Fischer had scored an upset victory over John Sharp and Peter McGauran to become leader.

  Andrew Peacock and I were both part of the shadow cabinet, with Andrew being shadow Attorney General. Hewson had given me the shadow portfolio of Employment, Industrial Relations and Training. I could not have asked for more. It gave me responsibility for an area with which I was identified and about which I had strong convictions. It would be centre stage in the political/economic debate between 1990 and the next election.

  Although I still felt a lingering disappointment at the unfair frustration of my own leadership ambitions, I saw in this shadow portfolio a real opportunity to pursue issues in which I was deeply interested. I had been arguing the case for reform for six or seven years, and the economic circumstances of 1990 required more than ever, in my judgement, fundamental reform of Australia’s labour markets.

  In the middle of 1991, the leadership volcano erupted for Labor with the disclosure of the infamous Kirribilli House agreement whereby Hawke and Keating had entered into a secret undertaking, witnessed only by Peter Abeles, a close friend of the PM, and Bill Kelty, the secretary of the ACTU, that if Labor were successful at that poll, Hawke would hand the prime ministership to Keating after the 1990 election. By any measure it had been a monstrous fraud on the Australian people. They went to the polls in 1990 in complete ignorance of this secret deal.

  By mid-1991 Keating had grown tired of waiting and, realising that Hawke would not honour the deal, had it disclosed to the public and challenged for the leadership. His first lunge at Hawke, on 3 June 1991, failed; Hawke received 66 votes and Keating 44. It ended their long and successful partnership, with Keating going to the backbench and John Kerin becoming Treasurer. Hawke never recovered from the damage inflicted by this first challenge.

  Late in 1990, after a thorough debate, the Coalition had decided, in principle, to embrace a broad-based indirect tax with compensating reductions in personal income tax as policy for the upcoming election. Peter Reith, as shadow Treasurer, was put in charge of drafting the details of what ultimately became Fightback! although John Hewson was heavily involved and its real architect.

  The key to successfully advocating this huge policy initiative was directly linking the introduction of a broad-based goods and services tax (GST) to major reductions in personal income tax. Promoted as an aggregate reform proposal, it had appeal. If the change were seen as introducing a new tax, it was politically dangerous. A sign of this came from the NSW state election, held on 25 May 1991. Labor’s Bob Carr did better than expected, in part due to his constant campaigning against the introduction of a GST, which he associated with his state Liberal opponents.

  All of the internal resources of the Coalition were devoted to the preparation of the Fightback! manifesto, which would ultimately embrace not only the introduction of a GST of 15 per cent and big income tax cuts, but also the abolition of wholesale sales tax, payroll tax levied by the states as well as other state taxes, plus major reforms to health and social security policies. For good measure, fuel excise was also to be dropped. As 1991 wore on, pressure built for publication of the detailed policy. This was understandable, but for good reasons the Coalition was determined that the policy be bulletproof. It remained haunted by the Box Hill disaster of 1987 and the absent health policy fiasco of 1990.

  Finally, on 21 November 1991, Fightback! was released and received nothing short of a rapturous reception, further boosting the Coalition’s poll position. Australia was in the throes of a deep recession, with a sense amongst Australians that there was something fundamentally wrong with how the nation was functioning. There was willingness, at a time of despair, to accept big changes. John Hewson appeared to have a plan to fix the nation’s problems, and that was immensely attractive. Fightback! was not forced down the throats of reluctant parliamentary Liberals by a bullying leadership. Hewson took his party with him: wet and dry, right and left, all Liberals backed the manifesto.

  Bob Hawke’s inability to respond effectively to Fightback! finally destroyed his prime ministership. He had no cut-through answer to such a sweeping blueprint. Nor indeed did his increasingly hapless Treasurer, John Kerin. The end for him came after an embarrassing press conference when Kerin was unable to recall the full description of the acronym GOS (gross operating surplus) in describing some economic terms. Hawke sacked Kerin and replaced him with Ralph Willis, who had long coveted the job of Treasurer. His first tenure in the position was to be short-lived.

  Hawke’s political impotence in the face of Fightback! was the final straw for sufficient Labor members to desert him and back Keating. High farce intervened when a group of Hawke’s cabinet colleagues, comprising Kim Beazley, Gareth Evans, Robert Ray, Nick Bolkus, Michael Duffy and Gerry Hand, all of whom were committed Hawke men, had gone to the Prime Minister urging him to stand aside. He had listened to them and responded that he had no intention of standing aside for Paul Keating. As their appointed spokesman, Kim Beazley had then fronted the media, described the nature of their waiting upon Hawke, and declared that they all accepted his decision to stay on and fight and would support him in the ballot. It was extraordinary but, in a sense, understandable. They had no desire to destroy Labor’s most successful leader ever.

  The pressure forced the holding of another ballot, on 19 December 1991, and this time Keating triumphed by 56 to 51.

  Hawke’s downfall was a dramatic occasion at Parliament House. We in the Coalition simply watched as the Labor Party pulled down a man who had won four successive elections. There was plenty of bad blood in Parliament House on that December night and it was all on the Labor side.

  An emotional Hawke made a statement to the parliament which John Hewson responded to, with me, Andrew Peacock and others making contributions which, in the proper tradition of a parliamentary system, contained laudatory remarks about Hawke’s contribution to Australian political life. Bob Hawke had been a good Labor Prime Minister. His early years had been commit
ted and reformist and at that time he established a real bond with the Australian public, which impressed me.

  Immediately afterwards, I called to see Hawke in his by then bare prime ministerial office. A strange atmosphere prevailed. The office was already bereft of paper and seemingly of staff. The only people who appeared to be there with the Prime Minister were his personal security detail. I offered some words of commiseration to Hawke. It was the end of a particular Labor era. It was the first and only time that I would visit the PM’s office in the New Parliament House until I was sworn in as prime minister almost five years later.

  As the recession continued, with all its gloom, the new Prime Minister, Paul Keating, embarked on a round of consultation with business and community leaders. I am certain that from the beginning he had in mind a comprehensive economic statement, but understandably went through the motions of widespread consultations. Hawke quit parliament immediately after the visit of President George H.W. Bush, from 31 December to 3 January, was over. The by-election in Hawke’s old seat, Wills, was to be a disaster for the Labor Party, but also a setback for the Liberal Party and the first danger signal for John Hewson.

  The electorate of Wills had always been a safe Labor one in the inner suburbs of Melbourne. No doubt its good burghers were irked at having to traipse back to the polls long before a general election, but the tribal instincts of Labor voters were normally much stronger than Liberals’. Labor was expected to win the seat comfortably.