by John Howard
Both parties made errors in their candidate selections. The chosen Labor candidate was Bill Kardamitsis, a Greek community activist within the electorate. The Liberal Party chose a businessman, John Delacretaz, of Swiss-Italian background, whose command of English was poor. The bolter and ultimate victor was something of a local football legend named Phil Cleary, who was a regular ABC football commentator. His politics were Labor or to the left of Labor. In time, he became a very attractive choice for the mainstream of Wills voters. They had no intention of electing a Liberal; they didn’t want Kardamitsis because he seemed too identified with a particular ethnic group, so the Independent, Cleary, proved to be the easy alternative.
As the 1982 by-election in Flinders had demonstrated quite dramatically, there is huge focus on individual candidates in by-elections. Every utterance of Kardamitsis and Delacretaz was recorded and analysed by the media. It was said that one wag was asked who he was voting for and he replied, ‘The Australian’. This was an irreverent reference to the fact that both Kardamitsis and Delacretaz spoke with strong accents.
John Hewson made the mistake of visiting the electorate no fewer than 13 times during the campaign. This was overkill and would magnify the focus on him if the Liberals did not enjoy a big swing.
Cleary won the seat easily. Superficial media reaction was that it had been a huge reverse for Labor. Calmer analysis suggested that there was no comfort to be derived by the Liberal Party from this by-election either.
In March 1992, Paul Keating produced his One Nation statement in response not only to Fightback! but also the continuing recession. He offered personal tax cuts equivalent to those contained in Fightback! but, of course, without the broad-based goods and services tax. The arithmetic on which the personal tax cuts were based was highly questionable. The Treasury was largely shut out, and there were too many economic projections made in the PM’s office alone for the sake of good policy making. This issue received insufficient attention from a parliamentary press gallery which was increasingly obsessed with the personal contest between Paul Keating and John Hewson.
Paul Keating was always far more popular with the parliamentary press gallery than he was with the Australian public. He and they had a mutual fascination with each other. It was a classic case of what the Americans might call ‘beltway infatuation’. His rhetorical performances at question time, involving fierce invective and heavy attacks on leading members of the opposition, commanded rave reviews from the gallery, but they left the average citizen, worried about his or her job or mortgage, cold and uninterested.
His One Nation statement enabled Keating to argue that he too had a plan, but it was less harsh than Fightback! It gave him some lift but did not alter the fundamentals. Hewson still appeared well on track to win the election, due in the early part of 1993.
Having produced a policy manifesto of sorts, Keating then set about building his political narrative that John Hewson was an extremist. He used the vehicle of question time to pursue his assault. Relatively innocuous remarks made by Hewson about the involvement of the private sector in relation to social security were grabbed by Keating, shamefully exaggerated and turned into dire warnings that even pensions were at risk if the Liberals won. On one occasion he claimed that pensions would be paid through accountants.
However exaggerated they may have been, these attacks began to unnerve Hewson, and some of his responses and rhetoric became clumsy. At the end of August, John Hewson said that one could always tell which houses in a street were rented; it sounded patronising to poorer people and was badly received. Some weeks later he attacked the NSW Opposition leader Bob Carr for not having a driver’s licence, and also left the impression that he was critical of Carr for not having any children. He may not have intended any offence, and did in fact apologise to Carr, but the cumulative impact of these incidents unsettled his supporters.
Then, out of the blue, in the parliament on 5 November, Keating declared that if the Coalition won the upcoming election, then it would have complete freedom to implement the GST proposed in Fightback! Labor would not try to block it in the Senate. Foolishly, Hewson, Reith and others saw this as capitulation by the Labor Party. They even ostentatiously shook hands with each other, loudly declaring that Labor had surrendered. I had a very different view. What Keating had done was to crystallise the principal issue of the coming election around a goods and services tax, making it very clear that the only way to stop a goods and services tax was to re-elect him as Prime Minister. Keating said, ‘I want it made totally clear that a vote for Hewson is a vote for the GST. No Democrats or any other group will save Australia from that.’1 Politically, it was a good tactic.
Along with other colleagues I had begun to hear complaints from business figures, particularly in the car industry, that Hewson would not listen to their legitimate concerns about some of his policies. Andrew Peacock and I compared notes and sought the views, in my case of Robert Johnston, the head of Toyota, and in Andrew’s case, Jacques Nasser, head of Ford (later chairman of BHP-Billiton).
Both of them said that the policy embraced by the opposition was far too hardline. They were fearful of any further tariff reductions but accepted that the old days of high protection had gone. They did not ask that the next scheduled tariff reduction be postponed, only that there be a further Industry Commission inquiry about the state of the car industry before it occurred.
That seemed reasonable to both Andrew and me, especially to a party still in opposition. We put it to John, but he was dismissive, implying, as he often did, that the old thinking in the Liberal Party about industry protection was creeping back. He showed no political touch at all, and only encouraged the view in sections of the business community that he was an economic zealot.
Nonetheless, cracks were to appear in the Hewson façade. The Victorian division had conducted its own polling in individual seats. Its president and director began pressuring Hewson to water down the GST. They claimed that the polling showed a drift away from the Coalition and that Hewson’s radical economic manifesto was the problem.
Michael Kroger, no longer the Victorian Liberal president but someone with whom I maintained close links, buttonholed me in Melbourne one night and said that the party was in real trouble. ‘People don’t want a GST. Why are we inflicting a GST on the public? Why don’t we just focus on the weakness of the economy and the hostility of Australians towards Keating?’ he said. He told me about the Victorian polling, and the line he and other Victorians ran was that food should be taken out of the reach of the GST. Hewson’s first reaction was to resist this; so was mine. I bought the argument that ‘the broader the base, the lower the rate’ was the immutable rule when it came to indirect taxes. Food was covered by the GST I took to the people in 1998.
I did not think that Hewson would shift. Before long, however, he called a meeting of senior colleagues, including me, and sought our views. It was obvious that he intended to soften the GST.
The shift was announced on the kerbside of a Brisbane street after a discussion he had held with Archbishop Peter Hollingworth, head of the Anglican Church in Brisbane. He subsequently announced the details of the change in an address to the National Press Club on 18 December 1992. He excluded food and childcare expenses from the GST. John Hewson also pointed to an additional tax on luxury cars to cancel out an otherwise big fall in their prices following the introduction of the GST.
In retrospect, this had been a psychological victory for Keating. Although in the short term softening the GST might win some public support, in the medium to longer term it represented a major breach in the defences of Fort Hewson. Until then he had been the uncompromising face of hardline long-term economic reform which the dire state of the nation demanded. Now he looked for the all the world like any other political leader, tempering his policies and his rhetoric to win votes. There was nothing wrong with that; the problem for John Hewson was that in the past he had publicly derided such political impulses.
A further complication for the federal coalition was the strong industrial relations reform drive of the new Kennett Government in Victoria. Kennett was elected with a mandate to change industrial relations law, but in announcing the abolition of the 17.5 per cent leave loading, he went beyond his election policy. There was a severe backlash, and we feared there would be adverse federal consequences. So on Saturday 12 December, John Hewson, Peter Reith, Andrew Peacock and I called to see Kennett, his deputy and Treasurer Alan Stockdale, and Phil Gude, Victorian Industrial Relations minister. We asked Kennett to postpone the implementation of some of his industrial relations legislation until after the federal election, due in only a few months time. He completely rejected our entreaties. Jeff Kennett had no intention of accommodating his federal colleagues.
Despite all this, we remained confident that Keating would be defeated when the election was held. The polls had softened for the Coalition, but there remained deep hostility to the Prime Minister, and the ‘It’s time’ factor, combined with the continuing severity of the recession, meant that the omens for the Liberal Party remained very positive. At the end of 1992, unemployment stood at 10.9 per cent, and the budget remained deeply in the red. Due to the recession, interest rates had fallen. It was an abysmal economic scorecard. Many Australians remained resentful about the recession the Prime Minister said they ‘had to have’ and were determined to reap vengeance on the person they blamed for that recession: Paul John Keating.
The Prime Minister called the election for 13 March 1993 and started a campaign which many believed would be his one and only as Labor leader. Instead the campaign turned into a disaster for John Hewson and the Liberal Party. The accumulated strain of dealing with an opponent whom he could never match politically caught up with Hewson and resulted in a defeat which left the party spent and demoralised.
Sadly, John Hewson was unable to sell Fightback! in a politically convincing fashion. That manifesto was a very courageous political document in the proper sense of that expression. It identified Australia’s economic problems and provided a comprehensive response. One might argue with some of the policy prescriptions but what could not be contested was the willingness of the Coalition to deal with every aspect of Australia’s economic malaise. There was no political timidity about Fightback!, or its author, John Hewson.
The debacle involving the birthday cake, when in an interview he could not explain, in simple language, the impact of the GST on the cake, came to symbolise the complications John Hewson encountered in the campaign. Having spent some of his time as Opposition leader deriding the old, and to him, darker political arts such as repetition of clear principles and statements on radio and television, he learned all too late that these skills were essential to winning government.
I watched his debate on Channel Nine against Paul Keating, anchored by Mike Willesee. Those who viewed the program with me sneered at Keating’s crass, almost gutter-snipe tactics. He did not behave like a prime minister. Perhaps because he knew that if he behaved like a prime minister he would lose the election. Keating’s goal was to make Hewson the issue, not — as should have been the case — allow his government’s economic competence or otherwise to be the main campaign focus. That particular debate put the GST, which Keating repeatedly described as a ‘monster new tax’ or a ‘monster’ and ‘a lifestyle change’, front and centre of the campaign. Keating’s tactic succeeded, and from then on the election campaign was very much a referendum on the GST.
The Liberal campaign was dealt a psychological blow with the announcement during the campaign by Brian Mulroney, the Progressive Conservative Prime Minister of Canada, that he was resigning. His party had fraternal links with our Liberal Party and it was widely reported that he had decided to quit because of the unpopularity of his government, due in turn to the botched introduction of a broad-based consumption tax in Canada. Whatever the real merits, the loud and clear message was that Canadians had rejected the equivalent of the GST being proposed by the Liberals in Australia.
In my opinion the Coalition’s health policy proved to be a very heavy liability, particularly amongst women voters. The severe restrictions proposed for bulk billing and other elements of the policy, which combined to significantly weaken Medicare, were immensely unpopular. Bob Woods, the Liberal health spokesman, lost his seat of Lowe, which he had won in 1987. 1993 would be the last time that the Liberal Party would propose major changes to Medicare.
Hewson’s campaign tactics were poor; his rallies were unsettling for people. They were not the forum in which to explain intricate policies. He failed to appear on all the major television programs in the final week of the campaign delivering the reassuring messages about his radical manifesto which Australians desperately wanted to hear. It cost him very dearly in the final analysis. The polls had shown that Australians wanted to change their government, but Keating was able to raise sufficient doubts about Hewson and his program to scare enough people into believing that Hewson would be a dangerous option.
The field evidence was less encouraging than the polls. Three weeks out from the election, I addressed a small gathering of people at the Cumberland Business Club in the electorate of Parramatta in Sydney. People of this type were part of our support base. To my dismay, I was peppered with questions about the detail of how the tax plan would work. It was obvious that these small businessmen had real concerns about the complexities that might be visited upon their activities. That this was the case just three weeks before the election, despite the fact that Fightback! had been in the public domain for some 15 months, really concerned me.
My electorate office was inundated with requests for explanations, and examples of how the new system would work, all indicating a hunger for detail based on growing doubts about the workability of the policy. During the leader debates, Keating probably shaded Hewson. To most observers, including me, the ABC host of the debates, Kerry O’Brien, appeared to go in to bat for Keating in the second debate.
Despite the final Newspoll showing a dramatic contraction in the Coalition’s lead over Labor, I still expected a victory. Like so many others, I found it virtually impossible to believe that a government which had been in power for 10 years could possibly get re-elected with such high levels of unemployment and the economy still severely recessed. Yet I was to be proved wrong. It was quite clear after the results had been posted that the Coalition had comprehensively lost the election during the campaign. Doubts about the Coalition’s policies became the issue, rather than the dire state of the economy. With a final rush Keating actually achieved a positive swing over the 1990 result.
It was a remarkable political achievement for Keating. He spoke the truth when he described it as ‘the sweetest victory of all’.2 Politically he had completely overwhelmed John Hewson and despite being surrounded by appalling economic figures, had managed to make the radical nature of Hewson’s agenda the issue and frightened enough swinging voters back to the Labor fold.
I had spent election day thanking supporters on polling booths in my electorate and invited the campaign team back to our home in Wollstonecraft for drinks. Tasmania had already moved from daylight saving, so early results came through from that state at approximately 6 pm. They were a real shock, showing a significant swing to the Labor Party in all seats. I knew then that the Liberal Party could not win as there was nothing in the campaign suggesting that Tasmania would vote differently from the remainder of the country. The rest of the evening was dismal, and within a fairly short period of time it was clear that we had lost.
John Hewson had implied before the campaign that this was his one shot at the prime ministership, and that if he failed he would give up the leadership. This was of a piece with his style. He would give his all to one go at the nation’s top job, with a no-holds-barred agenda to reform the country, and if that agenda were rejected then he would retire from the scene. The very next day we were to learn that this was not to be the case. He not only made it clear that he wanted to continue
as leader but announced, to the amazement of many people, that he intended to abandon the GST.
This was done without any consultation with his colleagues and was greeted with incredulity. Fran Bailey, the member for McEwen, who had won her seat in 1990 and was defeated in 1993, remarked acidly to me several days later, ‘It is a great pity that he hadn’t abandoned the GST on Thursday instead of leaving it until Sunday. I might then have held my seat.’ Thankfully Fran returned to the parliament in 1996 and gallantly held that marginal seat until retiring from parliament at the 2010 election.
In immediately dumping the GST, Hewson diminished his status in the eyes of many in the party. It was one thing to lose an election after toiling to win acceptance of a radical, but courageous, economic platform. It made matters worse to forthwith jettison the central element of that platform after the loss of the election. Many colleagues had gone to the barricades, and some had lost their seats, believing in and supporting the Hewson prescription. To have that prescription arbitrarily put aside without party consultation, within 24 hours of the election defeat, left them feeling badly used.
So for the second time in a row, the Liberal Party had failed to win government in severe economic circumstances with high unemployment and other negatives. It was only human of me to think immediately of how things might have been different in both 1990 and 1993 if I had been in charge. I began, on election night, to contemplate whether or not the party might finally look back to me as the experienced hand, the one with both political skills and economic credibility. Several colleagues telephoned and raised that possibility.
Within a few days I decided that I would again seek the leadership. It seemed to me inconceivable that the Liberal Party would re-elect Hewson. The party had invested him with enormous support, yet he had lost an election in circumstances where victory should have been assured. There was no one else. Peacock had lost twice: in 1984 and 1990. Reith was heavily identified with the GST, which had been summarily dumped, and did not in any event command a lot of support in the parliamentary party. At that stage Alexander Downer was not seen as being ‘foreman material’. To me and quite a number around me, it seemed logical, indeed obvious, that the sensible thing for the party to do was to bring me back. I was to be proved completely wrong.