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.
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