Australia on its debt, and cause a greater proportion of national income to be consumed by debt repayments. The inflation rate remains at a very high 9 per cent at a time when the rest of the developed world has an average inflation rate of 3 per cent. Wages have to come down even further in real terms to reduce inflation and restore confidence in the Australian economy. In these dire circumstances, it seems impossible to envisage Labor being elected for another term of government.
Despite the pessimistic auguries in late 1986, Keating becomes confident by early 1987 that the government will be able to go to the next election with a good economic story to tell. Or at least an improving one. The current account deficit is beginning to come down, and the stock market is powering along. With cuts in income tax due to come into force on 1 July 1987, and with Keating planning to set out a positive picture in the May economic statement, he wants the government to bring forward the next election, due by early 1988, to July or August 1987. A Labor win in a by-election for the State seat of Bankstown in January 1987, when voters ignore a Liberal call to ‘Give Keating a Beating’, makes him optimistic about Labor’s federal chances. More importantly, Queensland Premier Joh Bjelke-Petersen launches a political campaign, which the populist politician hopes will sweep him into federal parliament to become prime minister. It’s a mad idea, since the otherwise canny political bumpkin has little support in urban areas, not even in Brisbane. But he has rich supporters and the backing of former Treasury Secretary John Stone, who agrees to stand on the National Party Senate ticket for Queensland. The ‘Joh for Canberra’ campaign has the advantage for Labor of further destabilising the shaky leadership of John Howard, whose deputy Andrew Peacock throws his support behind Bjelke-Petersen. ‘What made this absurd scenario even more captivating for us’, writes Graham Richardson, ‘was that Joh had exactly one policy — a 25 per cent flat rate of tax — and he could barely string one coherent sentence together’.
For Keating, victory in an early election will bring forward the completion of the Hawke government’s first two terms and thereby allow him to claim that Hawke has had his go as prime minister and that it’s time to step aside in favour of his treasurer. With one eye on history, Hawke prefers to wait until 1988 before calling the election. Holding out until then will make him the longest serving Labor prime minister even if he loses the election. Not that he expects to lose, since an election in 1988 will be in the wake of the Bicentenary celebrations planned for January 1988, which Hawke thinks will help the government’s chances. Keating is almost alone among his colleagues in wanting an early election, and Hawke appears to rule it out on 1 April, when he declares that he favours an election during the coming summer. Within weeks Hawke changes his mind. Labor is strengthening in the polls, Keating’s economic statement produces $2 billion in savings and the Opposition remains under pressure from the ‘Joh for Canberra’ push, which sees Howard sack Peacock from his frontbench. It’s just too good an opportunity to miss. ‘I felt very lonely and a little frightened’, writes Hawke, ‘but a combination of instinct, polling research, and my own political judgment strengthened my conviction that it was time to move’.
© David Day; This is an edited extract from Paul Keating The Story of a Prime Minister: The Biography by David Day; published this week by Harper Collins; rrp: $49.99; Available as an ebook.
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