June 02, 1991

Article at Reuters

Leadership feud could split Australian government

Prime Minister Bob Hawke and rival Paul Keating at a Premiers conference in May 1991

By Wilson da Silva

SYDNEY – It has been called the most devastating partnership in Australian politics: populist, earthy Prime Minister Bob Hawke and hard-nosed, economic reformist Treasurer Paul Keating. 

But the duo which won four elections, brought unprecedented union stability and shook the country from its long protectionist sleep, parted abruptly when Keating challenged Hawke for his job last week, and the feud threatens to split the Labor government. 

Whichever way the party ballot for the Labor leadership goes on Monday morning, one outcome seems likely – that Keating, long the darling of domestic and international financial markets, may no longer be treasurer. 

If Keating fulfils his ambition to be prime minister, the economic levers will pass into someone else’s hands. If he loses, he has indicated he will resign as treasurer and move to the back bench. “If I lose, I don’t think, given the nature of this challenge, I can serve Bob (Hawke) as a minister, so I think it’s the back bench for me,” Keating said in a television interview on Sunday. 

Commentators say months of instability could follow, with Keating plotting his next challenge to Hawke. If Keating loses by a wide margin, he may quit politics, costing Labor one of its most talented ministers. Keating rejects both prospects. 

The rivalry between the two men has been bubbling under the surface for years. Keating, a powerful debater with a sharp intellect, has long considered himself the architect of Australia’s transformation into a modern economy. 

But while Keating makes the unpopular decisions Hawke, prime minister since Labor won office in 1983, often appears to take the credit. The Labor Party is now split between the two men. 

One is a leader who has taken Labor to an unprecedented four electoral wins, but who has plunged in the opinion polls behind the opposition and been tainted by highly- publicised friendships with shady businesspeople and failed entrepreneurs. 

The other is a capable minister who has dragged his party from its socialist ways to find victory in the political centre, refashioned the Australian economy and demoralised conservative opposition parties with his often-vicious debating invective. 

But Keating is unpopular with voters, scores poorly in opinion polls and is regarded as aggressive and arrogant. 

Some politicians say Hawke has a 20-vote lead among the 110 Labor parliamentarians who will decide the issue, while others say it is as slim as five. 

Analysts say a narrow victory would cripple Hawke, and create instability as factions jockey for power. 

Party secretary Bob Hogg said on Saturday: “The party is clearly in a dreadful position.” 

Analysts say that with Labor presiding over a domestic recession and low in the opinion polls, Labor politicians fear facing parliament without Keating to maul the opposition. Even his detractors acknowledge his oratorical skill. 

Keating was named Euromoney magazine’s finance minister of the year in 1984. He has floated the Australian dollar, opened the country to foreign banks, lowered taxes, held wage increases below inflation and successfully pushed to cut tariffs. 

He has long coveted Hawke’s job. By 1988, the tension drove the two men to make a hitherto secret pact in which Hawke was to resign the leadership in favour of Keating after the 1990 election, which Labor won.

Hawke later told reporters he would not relinquish the prime ministership until after the next poll, due in March 1993. Keating says Hawke has reneged on the private promise and plans to remain indefinitely.