The Money Men by Chris Bowen (superbooks4u .txt) 📕

much better chance of re-election with a fresher, more energetic leadership than Hawke could provide.

In 1988, Hawke and Keating had struck a deal for an orderly hand-over of the party leadership in the event of another Labor victory at the 1990 election. This had arisen in the wake of Keating’s fury that Hawke had undermined the communications strategy around the 1988 Budget by musing the day after the Budget announcement that Keating was dispensable. Keating did not hold back, telling Hawke, ‘You’ve made a thoroughgoing bastard of yourself. You think I’m dispensable. What you are really saying is the relationship between you and me is over. I’m telling you, you’re dead right. As far as I’m concerned you and I are finished.’33 Keating and his close supporter Dawkins asked Hawke to resign in Keating’s favour, but Hawke remained steadfast. Keating then said he would only stay if Hawke gave a commitment to hand over the leadership after the next election. Formalised at Kirribilli House, the prime minister’s Sydney residence, this agreement was designed to patch up the relationship that Keating had declared to be dead. (When made public years later, it would be known as the Kirribilli House agreement.) But in 1991, Hawke repudiated his agreement with Keating and pledged to contest the 1993 election as ALP leader and prime minister. This followed an ‘off-the-record’ speech by Keating in which he had attacked the lack of tradition of strong leadership in Australia. This was seen as an attack on Hawke, and brought the simmering leadership tensions to the surface.

All the indications were that Labor was heading for a significant defeat in the next election. Keating knew there was a limited future in remaining treasurer only to limp to defeat at the next poll. He decided to strike.

In May 1991, Keating told Hawke he would be challenging for the party leadership. Keating knew he would lose, but he gambled on the fact that his absence from the government would bring the choice between himself and Hawke into stark relief. So he told the ALP that the most effective governing partnership in the party’s history was over, and that the party must choose one of them: Hawke or Keating, but not both. As Keating had anticipated, it was too big a wrench for the ALP to destroy its most popular and successful prime minister at the first opportunity. Hawke duly defeated Keating by sixty-six votes to forty-four in the party room ballot, and Keating retired to the backbench.

Hawke was widely expected to appoint Willis as treasurer, restoring him to the role Keating had taken from him eight years earlier. Instead, Hawke chose primary industries minister John Kerin for the task, claiming he didn’t want a Melbourne-centric government dominated by a Victorian prime minister, deputy prime minister, Senate leader and treasurer.

Opposition leader John Hewson launched a bold, detailed and politically risky manifesto in November 1991, promising a significant shrinking of the state, the massive winding back of bulk billing in Medicare, tax cuts primarily for middle- and high-income earners, radical industrial relations reform and a 15 per cent GST. Lacking Keating’s rhetorical firepower, the government struggled to land a blow even on such a contentious document. The contrast between Keating’s command of details and political messaging and the tentative steps of his successor was highlighted when treasurer Kerin could not remember what the acronym GOS (gross operating surplus) meant during a press conference. (Kerin was removed from the Treasury portfolio in December 1991 and was replaced by Willis.)

Keating used his time on the backbench to float policy ideas that would become features of his prime ministership. Most importantly, in a speech at the Australian Graduate School of Management in Sydney, he mooted further improvements to superannuation, which had been an element of the Accord settlement. He proposed a universal superannuation scheme with compulsory contributions of 12 per cent. The implications of this idea for the national economy would be profound.

By December, the ALP Caucus had realised that Hawke’s continued occupancy of the prime ministership was untenable. Hawke accepted the inevitable and called a second ballot. Keating had a clear though not overwhelming win, collecting fifty-six votes to Hawke’s fifty-one. On 20 December 1991, Keating was sworn in as prime minister by governor-general (and former treasurer) Hayden.

Labor was massively behind the Coalition in the polls when Keating assumed the prime ministership, and the odds on a Labor victory were long. Keating prioritised two aims: he would turn around the party’s fortunes and win the election that was due in less than two years’ time, and he would make his mark on the prime ministership in whatever time he had left in the role.

Just as Keating’s treasurership was marked by an assault on longstanding economic conventions and accepted protectionist settlement, his prime ministership heralded an attack on other shibboleths. He was the first incumbent prime minister to actively argue for Australia’s transition to a republic and a new flag. He made his first prime ministerial visit to Indonesia instead of the traditional trips to Washington and London. He argued that Australia should seek its security in Asia, not from Asia. He used the Mabo High Court decision to enshrine native title in law, and he gave an important address in the inner-Sydney suburb of Redfern in which he acknowledged the wrongs done to the stolen generations and the generally poor treatment of Australia’s first peoples.

Keating also seriously considered adopting Ben Chifley’s precedent of serving concurrently as prime minister and treasurer, so he could keep his hands on the economic levers. His trusted adviser, chief of staff Don Russell, talked him out of it on the basis that the prime ministership had more than enough responsibilities to keep him busy. Keating accordingly replaced Willis as treasurer with his close confidant, Dawkins.

In terms of economic policy, the Keating prime ministership exhibited continuity with the Keating treasurership. The emphasis on micro-economic reform was maintained with the adoption of a national competition policy, which innovatively introduced the competitive ethos