Labor In Power

By 1987, the Hawke government was fighting for its life. Bob Hawke craved something no other Labor Prime Minister had ever achieved - three terms in government. A miracle, preferably more than one, was needed to prevent the government being wiped out by angry voters. But out of the wilderness came great political opportunities - the environment rose to the fore, to rekindle Labor's electoral fortunes.

The bacon Paul Keating prophesied he would bring home with the 1988 budget turned out to be charred gristle. In the lead-up to the October 19, 1987, stockmarket crash, the economy was virtually on fire. The Reserve Bank had resisted raising interest rates until April 1988, and by then it was too late. Australia was headed for a classic "boom and bust". Thus was ensured "the recession that Australia had to have" - Treasurer Keating's lamented phrase of November, 1990.

At the end of January, 1991, Prime Minister Bob Hawke finally and openly reneged on his promise to stand aside for Paul Keating. A disastrous leadership contest was now inevitable. The rest of the year was virtually consumed by the hostility between the nation's two most powerful men, as the clash of personal ambitions paralysed the government. Ultimately, Paul Keating triumphed, taking over as Prime Minister, and in March 1993, he led the Labor Party to victory for an unprecedented fifth term in government - "the sweetest victory of all".