The Liberal and National parties achieved a nationwide swing of 1 per cent. The final result on a two-party-preferred basis was 50.8 per cent for Labor to 49.2 per cent for the Coalition; we had actually shaded the ALP on the primary vote. Unfortunately for the opposition parties, the swing had not been evenly distributed, and despite the nationwide swing in its favour, the Coalition suffered a net loss of seats to the ALP. The Liberals won the suburban seats of Lowe in Sydney and Chisholm in Melbourne, but lost Michael Hodgman’s seat of Denison in Tasmania as well as the Queensland seats of Forde, Petrie, Hinkler and Fisher. Labor also captured the Northern Territory from the Country Liberal Party. Hawke increased his majority from 16 to 24 seats.
The cumulative leadership difficulties within the Liberal Party, the broken coalition as well as the policy mistakes had severely damaged our chances. It was, nonetheless, clear from a regional analysis of the poll that electors had especially punished the Queensland Nationals. Not only did both parties lose seats in Queensland but the loss of the Northern Territory could also be attributed in no small part to the Queensland connection.
The ‘Joh for PM’ push destroyed more than the Coalition’s prospects in the 1987 election. It began the Queensland Premier’s own political decline. Not only had he been unsuccessful in his bid for Canberra but, in the process, had done much gratuitous harm to what was still seen as his side of politics in its bid to unseat the Hawke Government.
In a few short months he went from being a political Messiah to someone whose best years were behind him. To all but his most ardent followers Joh increasingly became a political liability.
For all the damage he had done to our prospects in the 1987 election, I recognised the huge contribution he made to his state as Premier. At his state memorial service in Kingaroy, some 18 years later, on 3 May 2005, I said, ‘The reality nonetheless is that he made a massive contribution, a defining contribution, to the growth and the expansion of the state of Queensland.’
The ‘Joh for PM’ campaign had wrecked our chances of winning in 1987. I must acknowledge though that disunity in the Liberal Party helped create a vacuum on the anti-Labor side of politics. This encouraged Joh and his supporters to think that they could successfully indulge their ludicrous political fantasy. A completely united, strongly performing Liberal Party would not necessarily have aborted the Joh push but at the very least it would have given its architects greater pause to think.
After the election Andrew Peacock stood for the leadership against me and I defeated him by 41 to 28. He was then easily elected as deputy leader and immediately became shadow Treasurer. Thus began a period of time in which we worked together in quite close professional harmony.
There was a strong feeling within the party that I should be given a fair go. Most accepted that the period leading up to the election campaign, particularly the rupture of the federal coalition, had presented me with an impossible task at the 1987 election and although we had lost seats, the Liberal vote had held up better than might have been expected. Also, due in part to the influx of new MPs from both the 1984 and 1987 elections, there was greater support for my brand of economic policy. Peter Reith, Alexander Downer and Julian Beale had entered in 1984; John Hewson in 1987.
The period from the 1987 election until the end of 1988 was one of calm and unity within the Coalition, with one exception. That was the debate on Asian immigration. After the 1987 election the leaks stopped, and gradually the Liberal Party assumed the appearance of unity. The federal coalition was re-formed, and the federal influence of the Queensland Nationals greatly diminished.
The double-dissolution election had not given the Hawke Government control of the Senate, so the opposition was able to kill off the Australia Card by threatening to block any regulations made under Australia Card legislation, using its majority in the Senate. The Australia Card needed regulations to operate. Bob Hawke did not mourn the loss of the Australia Card.
1988 was significant for the heavy defeats inflicted by the Liberal Party or Coalition whenever there was an electoral contest. Yet in overall terms, the Coalition still finished the year without clear political dominance over the Government. This was because it proved impossible for me to break completely free of doubts regarding my leadership tenure.
There were four by-elections federally. On 6 February Michael Pratt won the seat of Adelaide from Labor, with a two-party-preferred swing of 8.5 per cent. The following month there was a 9 per cent two-party swing to the opposition in the safe Labor seat of Port Adelaide. On 9 April, the conservative voters of Queensland in the Darling Downs electorate of Groom showed what they thought of the antics of the Queensland National Party the previous year. The Liberal Party captured the seat with a 21 per cent swing in its favour away from the Nationals. There was a solid 5.2 per cent drift from Labor. In October of the same year in the seat of Oxley, vacated by the newly appointed Governor-General, Bill Hayden, there was an 11 per cent primary swing against the Labor Party, although it retained the seat. It would take the disendorsed Liberal Pauline Hanson, in 1996, to claim this Labor stronghold from the ALP.
On top of the federal swings there was the Liberal victory in New South Wales, with Nick Greiner ending almost 12 years of Labor Party government.
With Andrew Peacock and me working together, the new leadership flash-point became John Elliott. He had become the federal president of the Liberal Party just after the 1987 election and immediately set about making plenty of statements on policy matters. This was difficult for me and indeed for Andrew Peacock as most of the statements Elliott made were about economics. He regularly advocated the introduction of a broad-based consumption tax. That was something that had never been completely taken off the table, but the timing and political handling of it was entirely a matter for me and the parliamentary leadership.
Media interest in Elliott was huge. He was a boisterous, larger-than-life character, and there was a naïve, even childish, belief within some journalistic and business circles that what the country needed was a key business figure to have a ‘sabbatical from the boardroom', go into parliament for a couple of terms, fix the country and then return to business. To these simplistic souls, it was all as easy as that. The two people who fitted this bill and who were most frequently touted were John Elliott and Ian McLachlan. The interface between business and politics is both frequent and very important. Understanding business is a crucial ingredient to being a successful politician in government, particularly at a senior level. Likewise a pragmatic understanding of the political process will always serve a businessman well. My experience, however, has been that an easy exchange from business life to the political and vice versa is often elusive. Understanding another’s craft is one thing; practising it successfully is something entirely different.
None of these considerations in any way inhibited John Elliott and his backers, either inside or outside parliament. They saw him as the answer. I was regarded as shop-soiled and ‘too political'. I may have had good policy ideas, most of which Elliott agreed with, but I had no ‘charisma'. Andrew Peacock, on the other hand, had urbane communication skills but was seen as a policy lightweight. Elliott was the natural alternative, as he could boast both success and high profile. Whenever he made speeches they attracted enormous publicity and plainly stated slogans gained wide coverage. The fact that he appeared to have a lot of money also did not escape attention. Ironically, given the outcome of the election, the Liberal Party had ended the 1987 campaign with a surplus. During the last two weeks of the campaign our fortunes had improved sharply, and applying the age-old insurance principle, a number of business donors had come good right at the end when, regrettably, their donations could not be prudently spent. So John Elliott began his presidency of the Liberal Party by investing heavily in staff recruitment and other activities designed to build the organisation. This endeared him to many at Menzies House, the Canberra headquarters of the party.
In the public’s eye the Howard–Peacock rivalry was replaced by the Elliott–Howard rivalry. Elliott and I had a difficult,