It was the era of big hair and shoulder pads, the hit songs were sung by Madonna and Robert Palmer and Bob Hawke’s Labor government had just won its third term of government.

The activist Burnum Burnum had travelled to Britain to claim the mainland on behalf of Indigenous Australians people on Australia Day. A couple of months later, the Queen was in Australia opening the new parliament house.

The Aids virus was taking hold, one year after the Grim Reaper campaign. Lindy and Michael Chamberlain had their convictions quashed, six years after they were found guilty of murder and being an accessory to the murder of their baby daughter Azaria. Hawke cried before a shocked country at the death of Chinese students at the hands of their own government in Tiananmen Square.



Facebook Twitter Pinterest Robert Palmer’s 1988 hit Simply Irresistible. Video: YouTube

On Thursday, the National Archives released cabinet documents for 1988-89. The documents show the level of Asian immigration was causing fractures within public debate, environmental activism was reaching a new peak around world heritage areas in Tasmania and Kakadu, and the treasurer, Paul Keating, was performing a delicate dance on economic reform in an unstable global climate as homeowners faced rising interest rates.

In 1988, as Australia celebrated the bicentenary of white settlement, Keating maintained his economic deregulation agenda, cutting tariffs on every industry apart from Australian-made cars.

“No Australian government has ever presented such a comprehensive program of change in a single package,” Keating said in 1988. “Spending cuts to deliver the largest budget surplus in our history, tax changes to put our companies at the cutting edge of world commerce, changes to industry protection to promote competitiveness and efficiency.”



While he was bragging outside cabinet, his submissions show he was using the difficult economic times, in the wake of the 1987 stockmarket crash, to urge fellow ministers to stay with his reform agenda. His submissions are blunt and assured, peppered with phrases such as “in a nutshell” and “the key point”.

In February 1988 he told cabinet: “The period ahead looks no less difficult than those we have been through recently.

Facebook Twitter Pinterest While Australia officially celebrated the bicentenary of white settlement, many took to the streets in protest. Photograph: Patrick Riviere/Hulton Archive /Getty Images

“Some commodity exports could do better than is now anticipated and this would afford us more breathing space. On the other hand, the situation could be noticeably worse if there are further bouts of global financial instability, or if the world economy slows to a greater degree than is currently expected.

“The key point is that our external situation means we remain particularly vulnerable to adversities. We must continue with policies which will further reduce our dependence on foreign savings and restructure our economy towards genuine and lasting international competitiveness, and which are demonstrably effective in doing so.

“In a nutshell we have to hold down the growth in domestic demand and keep our new-found competitiveness to go on reducing the current account deficit.”

With typical chutzpah, Keating wanted to deliver a higher-than-expected budget surplus, while at the same time cutting public-sector spending, global borrowing and payments to the states. Keating felt the states should share the commonwealth’s budgetary pain. It was the first cut by a federal government to the states since the early 1960s.

Stay the course, he was telling his colleagues as home loan rates hit 13.5%. In April 1988, ministers were told by the expenditure review committee – commonly known as the razor gang – to expect that all new initiatives should be funded from savings in their own portfolios.

Six months later, Keating famously declared of his 1988-89 budget: “This is the one that brings home the bacon.” The gist of his speech was that everything – job growth, inflation, debt levels, wage increases – was getting better.

“Unquestionably,” he told the media conference afterwards, “a dramatically better state of affairs exists than when I warned in 1986 of the threat of Australia degenerating to the status of a banana republic.”

History has shown that everything was not getting better. As journalist and author George Megalogenis concluded about that particular budget claim, “every forecast he made that evening turned out to be wrong”.

“It wasn’t necessarily his fault – Treasury had misread the local and the international economy after the 1987 stockmarket crash. The risk wasn’t recession but the reverse. A dangerous boom was building.”

Seven months later, Keating’s March 1989 submission to cabinet acknowledged the forecasts were incorrect and said the economy was “too buoyant”. Home loan rates hit a peak of 17%. But still the treasurer argued that his colleagues should stick with the program.

“While some of the budget’s forecasts are now not going to be met, this does not mean that our broad policy strategy or framework is wrong,” Keating’s submission said.

“It isn’t. Rather it is a question of doing more within that framework to ensure that a protracted period of overly strong demand pressures does not eat into the fundamental changes that our policies have wrought and jeopardise the continuation of our strategy.“

The strategy included pushing for more government asset sales or prodding government-owned enterprises such as Qantas and the Australian National Railways towards more market-oriented positions. Telecom, the old government-owned Telstra, caused a storm by announcing the introduction of timed local calls.

While Australians were loath to tighten their belts, a new environmentalism was growing. Cabinet documents show the beginnings of the conflict between the minerals industry and environmental groups that stretches forward to today’s controversies over food production and gas mining.

In opposing corners were the resources minister, Peter Cook, and the environment minister, Graham Richardson, who submitted diametrically opposing views in 1988 on the listing of world heritage areas in Tasmania.

Richardson, who has encapsulated his political approach in the phrase “whatever it takes”, had his eyes on the growing green vote. Labor had been particularly successful in this during the 1983 election in regards to the Franklin dam and had built on that with close negotiations with green groups such as the Australian Conservation Foundation.

Facebook Twitter Pinterest The Franklin river in Tasmania. Opposition to the Franklin dam galvanised the Australian environment movement, and in the late 1980s, environment minister Graham Richardson had his eyes on the growing green vote. Photograph: Peter Dombrovskis/AAP Image

But after the bruising cabinet tussles over Tasmanian world heritage and the Wesley Vale pulp mill, the submissions show the Hawke cabinet was eager to find a solution to the environment versus resource battle under a memo titled “National Strategy for Sustainable Development”.



The Department of Primary Industries and Energy memo outlines a lack of confidence within the resources sector as a result of the gains made by environmental groups.

“These industries are now loudly asking that the government give a clearer direction to both environmental and development strategies in Australia,” it says.

“They want better planning and decision-making. The sector as a whole has lost some of the confidence necessary to continue to expand their productive base.”

Also in this period came the first signs of Australia’s harder-line policy on asylum seekers coming by boat, with cabinet decisions to repatriate Indo-Chinese deemed not to be refugees.

Facebook Twitter Pinterest After the Tiananmen Square massacre, Bob Hawke allowed Chinese students to stay in Australia. Photograph: STR New/Reuters

The government had to decide on a position to take to the international conference on Indo-Chinese refugees in June 1989. (The decision came two days after the Tiananmen Square massacre, which ultimately attracted a further 40,000 refugees as a result of Hawke’s unilateral decision to allow Chinese students to stay in Australia.)

The immigration minister, Robert Ray, wrote: “The draft reflects a long-held Australian view, endorsed by regional governments, that the automatic resettlement of boat people in western countries has promoted a migration outflow from Vietnam.

“This outflow has overtaken the smaller refugee movement from Vietnam which now is probably less than 10% of the outflow.”

The cabinet agreed that Australia would accept 11,000 Vietnamese boat people over the following three years as long as other countries also accepted refugees and those found not to be refugees were repatriated. Ray told cabinet that most of the 11,000 “would have weak resettlement claims on Australia”.

Ray said the return of “screened-out non-refugees” to Vietnam was central to the success of the plan, notwithstanding opposition to mandatory repatriation from Vietnam and the US.

“Other governments, particularly those of first asylum and the United Kingdom, share our view that mandatory repatriation of non-refugees is the only effective deterrent,” the submission said. “To do so otherwise is to invite further outflows of persons seeking resettlement in western countries.”

The submission noted the sensitivity around the policy. “The [plan] will attract the attention of the anti-Asian immigration lobby, and is likely to be supported by the wider community. Involuntary repatriation of non-refugees would not be welcomed by Australian-Vietnamese or refugee groups.”