Drama in the days leading up to the July 1987 Federal election

The three years and more of government have also taken their toll on Keating. Over a long dinner with Keating in August 1986, his future biographer, John Edwards, discovers that the politician is going through a period of some introspection that might even be classed as ‘a strange sort of mid-life crisis’. Keating is quite candid about feeling jaded by it all and wanting to give himself up to ‘the enjoyment of beautiful things and the need for freedom’. In Canberra he keeps most of his precious antiques packed away, only bringing them out to show occasional visitors. Gareth Evans describes one evening at Keating’s house, when he is ‘suitably impressed by the magnificence of the stuff he unpacks and lays out, complete with references to the Christie’s catalogues and other art books that line his shelves’. One day they might enjoy pride of place in the grand terrace in Elizabeth Bay that he has been painstakingly renovating room by room, and which offers the promise of another life surrounded by his antiques and paintings and his young family. And there are the prime ministerial residences, the Lodge in Canberra and Kirribilli House on Sydney Harbour, which one day should rightfully be his to occupy. But when will that be? He’s been working for three and a half years in Hawke’s shadow and believes himself to be the real powerhouse of the government. Yet here he is, stuck in a succession of what he calls rented ‘shitheaps’ in Canberra that provide a depressing backdrop for the few antiques he has on display. His latest house used to be the East German embassy and has reflective windows looking blankly onto the tree-lined street. He’s got close to the top of the political hill, and already feels himself master of all that he surveys. Yet he still has to reach the summit, where the prime ministership lies waiting to be seized. But what will the final struggle cost him, and how much satisfaction is it likely to bring?

Shifting to Canberra has bought him more time with his family but it doesn’t solve all of Annita’s problems. Isolation in Canberra can be just as gruelling as living in Bankstown, particularly for a woman with four young children and no extended family or close friends. Annita and Hazel Hawke get on well for a while, but as their husbands’ relationship starts to cool, so does theirs. Moreover, for a woman who spent years living independently in Rome, it’s not surprising that she would find Canberra, which still has the feel of a country town, to be as boring as Bankstown. It might be all worthwhile if Keating becomes prime minister, but that still seems a long way off and the frustration of seeing her husband being fobbed off or put down by Hawke can’t have helped their relationship. Getting paid employment doesn’t seem to have been an option for Annita and wouldn’t have been approved by the socially conservative Keating. There are also the problems that come from being the family of a prominent and controversial politician. With their father in the news, the children face teasing at school. And Annita has to time a gall bladder operation in 1986 so her health problem doesn’t conflict with Keating’s presentation of the budget. It then allows him, once the chore of budget preparation is out of the way, to assume some of the domestic burden during her post-operative recovery. So it’s not just the cost for Keating but the cost for the people he loves. 

The tragedy of it all is that Keating feels that he has become a prisoner of what he imagines to be his destiny. He recalls a prophetic comment by financial journalist Max Walsh, who described him years before as ‘a conscript of history, and when the rest of us are enjoying our lives, you will be chained down here doing history’s bidding’. That prophecy didn’t matter much to Keating at the time. After all, he’d been imbued by his mother and grandmother with the drive and self-confidence to get to the top of his chosen career, and a sense of obligation to the less well off had been instilled in him by the Josephite nuns and the De La Salle Brothers during his youth. Lang too had told him of his duty to use his oratorical talents for the benefit of the working class. He’s now done that, and he’s finding to his frustration that it’s not enough. The people he’s trying to help are not necessarily appreciative, and he’s forever pestered by ‘journalists who never believed a word he said, who gave him no credit for the good things he did and who tried to destroy him’. The cost sometimes seems too great to bear, and the enticements of another life too hard to resist. But these are daydreams. He’d set his course in life as a teenager, and he’s become supremely good at what he does. So the moment of indecision passes, as it always does, and he returns to the fray.

Each parliamentary sitting day, he girds himself for another aggressive performance during Question Time, when he mercilessly assails his opponents across the chamber to assert his political dominance. That’s achieved by being master of his brief, by his adroit use of language, sometimes clever, sometimes brutal or cruel, and by his deploying of political metaphors to grab the attention of his audience and to make what he hopes will be a telling political point. The latter is Keating’s most powerful weapon, which he uses to give his audience ‘the picture in which they can encapsulate the argument’. He asks himself ‘how would an ordinary person think about this’. Then he would ‘sweep up the arguments in a digestible way’ and present it with ‘a flair and a panache in the delivery’. Nobody does it better. Despite the appearance of fury as he leans on the dispatch box to launch yet another verbal attack, there’s more than a hint of sparkle in his eye and a smirk on his face as the guffaws from the Labor MPs behind him spur Keating on to greater heights. ‘There’s got to be a bit of fun in it all’, confides Keating, who says later that he ‘never took it so deadly earnestly’.

That potent mix of fun and fury can be seen in any number of diatribes directed across the chamber. In one he berates his opponents for having governed Australia for decades only to leave ‘everything the way you found it. The place got old and tired and worn out, just like you are … You never ran the place. Well, let me tell you this. We run the place. We run the departments, we run the policy. We comprehend. We know.’ Although you think you’re born to rule, continues Keating, ‘we think we’re born to rule YOU. And we’re going to keep on doing it. And let me tell you this: it’s been ingrained in me from childhood, I think my mission in life is to run you’. It’s the sort of passionate exposition of the Labor cause that heartens and excites his colleagues, even some of those who can’t envisage the unpredictable Keating as prime minister. But it also confirms for some that there is a little of the madman in Keating, which is why perhaps he shouldn’t be prime minister. And there are those like John Langmore who worry that his behaviour in Question Time is causing a decline in parliamentary behaviour as Labor’s opponents attempt to mimic his language and methods. ‘The media love it’, says Langmore, ‘and the rewards are high’, but Keating’s use of it ‘undermines his gravitas’. For Keating, it’s a means of keeping his opponents in check while he gets on with the business of being treasurer. And that business is more difficult than he likes to pretend.

In late July 1986, as the cabinet is concluding its deliberations on the coming budget, the dollar goes into freefall. In the space of a day, it drops by 10 per cent to just US0.57, with Keating calling out the fast-decreasing numbers from a screen in the cabinet room as his despairing colleagues try unsuccessfully to concentrate on the budget numbers. Sitting at the table is Finance Minister Peter Walsh, who recalls being ‘closer to despair than I’d ever been in politics’ as he wonders ‘how the hell were we ever going to get out of it’. Keating phones the Reserve Bank governor, Bob Johnston, who has no solution to offer his worried treasurer. ‘Throw another billion’ at it, says Keating, hoping that the bank’s intervention to support the currency will stop the precipitous drop, while he also increases interest rates and makes other quick policy adjustments to encourage international investors to return. Another way of stopping the slide and restoring confidence is to cut the budget deficit even harder, which the Expenditure Review Committee, chaired by Keating, proceeds to do. Instead of a $5 billion deficit, he announces a deficit of $3.5 billion, which represents no real increase in expenditure once inflation is taken into account. It’s all done to appease international investors, but it doesn’t seem to be working. In October 1986 the current account deficit blows out even further than during the ‘banana republic’ phase, and an American agency downgrades Australia’s credit rating from AAA to AA+. This will increase the interest rate paid by

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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