KERRY O'BRIEN: Bob Hawke's staunchest Ministers knocked on his door twice today, to canvass, amongst other things, his departure from the job. The answer was just as blunt as yesterday.

BOB HAWKE: If I have to have a fight, then I will enter the fight with the necessary determination and relish which is required to win it.

KERRY O'BRIEN: What happens now the Prime Minister is digging in? That's our story tonight.

Welcome to the program and this special edition of Lateline in which we aim to make sense of today's events in Canberra, and assess whether Bob Hawke can survive as Prime Minister beyond next Tuesday's Labor Caucus meeting. To do it, I'll be joined by three important Labor backbenchers: all voted for Bob Hawke at the last challenge; all have stuck with him since - each from a different faction of the party. We'll find out how they're thinking tonight. As well, I'll ask Kim Beazley, one of the Ministers at today's crucial meetings and last night, why they didn't act to end this crisis. But first, let's get the very latest about what happened in the Prime Minister's office and what happens now from senior political writers in the Press Gallery. Geoff Kitney from the Australian Financial Review, Michelle Grattan from the Age, and Glen Milne from the Australian.

Geoff, what does the immediate future hold for the Labor Government?

GEOFF KITNEY: Well, today was an absolute disaster day for the Labor Government, Kerry. On the day that unemployment went past 900,000 - what the electorate of Australia saw was the Labor Party squabbling over the leadership of a Government that is rapidly sinking. I think, probably, today may even have marked the point of no return for Labor. I think it probably now is rapidly becoming irrelevant who leads Labor from here to the next election.

KERRY O'BRIEN: Michelle.

MICHELLE GRATTAN: Yes, I think I agree with Geoff on all that, and the Labor Party now is quite paralysed. It simply cannot resolve this leadership crisis, yet it has to resolve it, if it's to have the slightest chance of avoiding an absolute disaster at the next election - not just defeat, but a terrible defeat. But the Ministers today, I think, just went to water. They went to Mr Hawke intending to tell him that it was necessary to go, but when he opposed that view, they backed off and retreated and left the party in, if anything, if that was possible, a worse state than before they started.

KERRY O'BRIEN: But Kim Beazley, on every other Minister's behalf, has been saying ad nauseam that at no stage did they intend to tell him to go. They intended no more than to put the options to him, and that they were always going to abide by his decision.

MICHELLE GRATTAN: Well, I think it was clear that the option they wanted was for him to depart. It was the only option, the only viable option in the circumstances, and when he didn't take that option, they should have said `Well, sorry, but we can no longer support you. The greater good of the party demands that this issue be resolved by the Caucus'. In the end, it will have to be resolved by the Caucus, maybe not next week because the Keating forces say they won't challenge next week, but at some point; or else this Government is just going to continue crippled as it is at the moment, and I think both Mr Hawke and the Ministers have a lot to be ashamed of in what happened today.

KERRY O'BRIEN: Glen Milne, the kind of round-up that I assume you have done around the Caucus, what has their reaction been to today's events?

GLEN MILNE: Well, I think it shows, Kerry, that I don't think the numbers are important any more. What's important is that the psyche, if you like, of Caucus is shattered. I mean, there's a range of reactions - you'll probably hear some tonight from the backbenchers you have on - but there's a sense of stunned disbelief about what happened today, about the Prime Minister's absolute determination to dig in, despite the consequences, and I think that it's that kind of psychology in the Caucus that matters more now than any sort of shift in numbers, and it's that psychology that the Keating camp are relying on to see a continued drift, drip of numbers towards them, that eventually will force Bob Hawke to realise the inevitable.

KERRY O'BRIEN: The question is, though, if the Keating supporters and Keating himself are not going to stand up and move for a spill on Tuesday, are not going to make the first move, who is?

GLEN MILNE: Well, it's a war of nerves. I think that's what you're underlining, Kerry, and that's quite right - I mean, but at terrible cost for both Labor and, probably, the country. I mean, Bob Hawke is daring Paul Keating to step across the line. Paul Keating and his supporters, particularly Graham Richardson, understand that a public execution of the Prime Minister in the Caucus risks a well of bitterness, a legacy that will probably cripple Paul Keating's prime ministership from the start; so, they're resisting that temptation at the moment. But I would stress to you that on my soundings tonight, they're ruling out next week; but the timing and the ruling out of a challenge doesn't go much beyond that.

KERRY O'BRIEN: Geoff Kitney, what's your best guess of .. I mean, if you believe it's inevitable that Bob Hawke is going to go, what's your best guess on when and how?

GEOFF KITNEY: Well, I think the Labor Caucus should take this matter into its own hands and resolve it next week.

KERRY O'BRIEN: Yes, but do you believe they will?

GEOFF KITNEY: Well, it'll be interesting to see what the Labor backbenchers have to say, but if the issue drags on into next year, the Government will just continue to deteriorate and crumble. The matter is in the hands of the Caucus. It is up to the Caucus to make a decisive judgment. The Ministers were incapable of it today. Somebody has to do it. I think that either the Keating supporters are going to have to force the issue next week or the issue is going to drag on and, as I said at the outset, the Government will be finished.

KERRY O'BRIEN: And very briefly, Michelle, what about the claims by Hawke supporters today, and by those Ministers who've now done what they've done, that there has been strong support flowing in for the Prime Minister, today, and that there is the start of a ground swell back to him?

MICHELLE GRATTAN: I think there has been a lot of phone calls from the electorate and round the party to Mr Hawke's office, and he's been buoyed, as Mr Beazley said, by that, but I think it's a false measure of support. There may be some little Caucus drift back to him, but I still think that in a ballot, Caucus members would realise that they really must move on, and that Mr Hawke is not a viable option any more; but it's close enough for the Keating people to be very fearful, I think, of risking that ballot.

KERRY O'BRIEN: Okay. We'll have to move on now, but Geoff, Michelle and Glen, thanks for joining us. And in a moment, we'll cross to the three Hawke backbenchers to see what they are now thinking. But first, new Finance Minister, Kim Beazley, who took part in all the meetings leading up to Mr Hawke's decision to hang onto the leadership.

Mr Beazley, welcome to the program. You've said tonight that your meetings today with Mr Hawke and your meeting last night, canvassed all the options. Now, what exactly are all the options?

KIM BEAZLEY: Well, really, all the options that have been put up over the last few days in the very intense feeding frenzy, I might say, of media speculation.

KERRY O'BRIEN: I must say, if I hear the word .. the term `feeding frenzy' again....

KIM BEAZLEY: I will use the term feeding frenzy because it's about as accurate a description as anything I can think of for it....

KERRY O'BRIEN: There's plenty to feed on .. plenty to feed on.

KIM BEAZLEY: But virtually every conceivable option that you can think of raised in that.

KERRY O'BRIEN: All right. Now, those options included Hawke stepping down now. The option of a third man other than Hawke or Keating?

KIM BEAZLEY: Well, as I said, I'm not actually going to get into any detailed discussion of them, but there wasn't, to my recollection, there wasn't a single proposition that's been around that hasn't been discussed.

KERRY O'BRIEN: That wasn't discussed?

KIM BEAZLEY: Yes.

KERRY O'BRIEN: Who called last night's meeting?

KIM BEAZLEY: Well, basically, the Ministers who were concerned have met from time to time on general issues, and either in groups of a few, and we more or less agreed, I'd say it was a....

KERRY O'BRIEN: Osmosis.

KIM BEAZLEY: Well, that's not a bad description.

KERRY O'BRIEN: It was a sort of a kind of instinctive drawing together.

KIM BEAZLEY: Something like that.

KERRY O'BRIEN: So you've had meetings on a fairly regular basis. What has been causing those meetings?

KIM BEAZLEY: Well, I wouldn't say on a fairly regular basis, but there have been others before. But basically in this particular instance, what we were meeting to talk about was the speculation which had been going on for a few days.

KERRY O'BRIEN: Okay. And you've had these loose meetings in the past, and these meetings have tended to be a kind of review of how things are going with the leadership?

KIM BEAZLEY: Well, as I said, not necessarily all the .. no, not necessarily with all participants, either.

KERRY O'BRIEN: Did you invite the Prime Minister to attend last night?

KIM BEAZLEY: No, we didn't.

KERRY O'BRIEN: Why not?

KIM BEAZLEY: Because we, in the first instance, wanted to form an attitude to what had been taking place in the media and the sorts of views that were being expressed, to talk that through with ourselves before we sought an opportunity to meet with the Prime Minister to talk to him about it.

KERRY O'BRIEN: At what point .. when you started your discussions, was there any consensus? - this is the discussion of the six of you, before Hawke became involved - any consensus?

KIM BEAZLEY: No, what I've made absolutely clear on a number of programs that I've done on this during the course of the afternoon is this - but I'm not actually going to go into detailed discussions of which option was advocated by whom, whether consensus was agreed on any particular option, and when any consensus was arrived at on any particular option, because one cannot fairly and sensibly cover that in the period of time that's available to us. All I'll say is this....

KERRY O'BRIEN: Okay. ... .. Go on.

KIM BEAZLEY: Let me finish. All I say is this: that at the end of the day, we started where we began with this supposition that we were supporters of the Prime Minister and whilst all views would be argued with him, we'd arrive at a conclusion that agreed with his at the end of the day. And when he decided that all things considered, he intended to remain in the leadership of the party and to fight the next election, then he was going to be supported in that regard.

KERRY O'BRIEN: So, you're not going to tell me how many of you .. how many of his senior Ministers and close supporters believed and believe still in their heart of hearts that his position is untenable politically?

KIM BEAZLEY: I'm not going to go into any detail on that particular set of discussions, except to say this: we all started out with the supposition that we were his supporters. We were not people who were approaching....

KERRY O'BRIEN: But how many of you were supporters who believed that he's finished?

KIM BEAZLEY: We were not approaching him on the basis that we were going to be coming into tell him, `Well, basically, Bob, we or all or some of us have deserted you', or whatever. That was ridiculous because that was neither sentiment nor sensible. And as far as the outcome was concerned, we were going to put all the issues and run through them with him, and at the end of the day, we would support the conclusions that he made on them.

KERRY O'BRIEN: How do you cop the image that you basically went in there to see him today, to tell him that his position was untenable, that he said to you there's no way he was going quietly, he was not going to resign, and you wimped it? You've washed your hands of it and left it to fate.

KIM BEAZLEY: Well, that is the image .. that is an image of a group of people who would want to be participants in the debate, as opposed to accurate analysts of the facts.

KERRY O'BRIEN: Well, you see, accurate analysis of the facts becomes impossible....

KIM BEAZLEY: Now there may be people .. there may be people who want to become active participants in the debate, but you're not included among them, I am absolutely certain, because you're a fair and objective journalist and you would comprehend....

KERRY O'BRIEN: Who is very keen to find out the facts that you're not telling me.

KIM BEAZLEY: Oh! Well, I have told you....

KERRY O'BRIEN: Which immediately suggests that there are things to hide.

KIM BEAZLEY: Well, I have told you .. I have told you the facts ... ... ...

KERRY O'BRIEN: You haven't told me how many of you went into your first meeting or came out of your second meeting with the view that the Prime Minister should go, and that his position was untenable.

KIM BEAZLEY: No, but what I've told you is this, and it's a very important point to consider apropos the question you just raised. None of us went into any meeting on any basis other than that we were supporters of the Prime Minister, whatever the outcome. None of us went into it on any basis other than that. Now, during the course of the morning and the evening, before all sorts of considerations were raised - and all those considerations were raised with the Prime Minister and talked through with him - and at the end of the day, we would back the judgment he made on what he intended to do.

KERRY O'BRIEN: Okay. So let me just get this straight. You're saying that even though some of you may have believed that his position was untenable, you were always going to accept his judgment in the end?

KIM BEAZLEY: I'm not even going to confirm or deny .. it's a sort of when did you stop beating your wife position, because....

KERRY O'BRIEN: Well, you're certainly not denying it.

KIM BEAZLEY: ....as far as I'm concerned, the point that I'm going to make is this: that we were not in the business of providing analysis on tenability or otherwise of the Prime Minister's position.

KERRY O'BRIEN: No, but my .. what I'm....

KIM BEAZLEY: We were in the business of going through the options with him, on the basis that we were his supporters.

KERRY O'BRIEN: But what I'm leading to is this: that if any of you had the conclusion that his position was politically untenable, that the Government and the party are going through, not a slow, but a building haemorrhage that is damaging the party; nonetheless, you would say `It's his option to determine whether he should go or not'. None of you have that responsibility if you believe that it's politically untenable.

KIM BEAZLEY: I would not agree with your conclusions. I mean, we went into it on the basis that quite clearly a point had been reached, with the level of speculation that there was there in the media at this point, that the Prime Minister had to arrive at some conclusion. He could not go on on the basis of simply watching headlines day after day without making....

KERRY O'BRIEN: But isn't he capable of drawing these conclusions himself?

KIM BEAZLEY: ....absolutely clear where he was going and as far as that leadership was concerned.

KERRY O'BRIEN: Now, surely what is implicit in the whole events that have taken place - the meeting before him and the meeting with him - is that there is a lack of confidence on your parts that the Prime Minister was capable of seeing the complete picture as it really was.

KIM BEAZLEY: Now, do you reckon I might actually get an answer to this question?

KERRY O'BRIEN: Go for it.

KIM BEAZLEY: Otherwise, I might actually ask you a few questions and we'll get an even more interesting interview.

KERRY O'BRIEN: Go for it.

KIM BEAZLEY: No, we went into this on the basis that we were going to accept a decision that he made. But clearly, the decision that he makes on these matters is going to be a bellwether of some description for those in the Caucus who want to hear what it is that he intends to do, and want to hear that it's done on the basis of a thorough analysis of all the potential issues that were involved; and that was the basis on which those meetings were conducted. As I said, with the underpinning point that we were his supporters, not a group of disinterested individuals that had suddenly arrived....

KERRY O'BRIEN: Nobody would think you're disinterested, Kim.

KIM BEAZLEY: ....to provide him with some sort of general political science course on the subject of the directions of governments.

KERRY O'BRIEN: Do you believe that the Hawke vote is solid?

KIM BEAZLEY: I'm not going to go through any particular analysis....

KERRY O'BRIEN: I'm not asking for numbers....

KIM BEAZLEY: ....of where the Caucus is concerned.

KERRY O'BRIEN: But do you believe that Hawke's majority, right now, is solid?

KIM BEAZLEY: All the point that we'd make on it is this: he has actually been elected four times by the people; he has been elected in this context by the Caucus by a substantial margin; he is entitled to have his position defended; he is entitled to make a....

KERRY O'BRIEN: But you can defend it, but can't you answer me, because we're running out of time. We're running out time.

KIM BEAZLEY: That's your problem, not mine.

KERRY O'BRIEN: Do you believe .. no, no, do you believe .. well, please answer the question: do you believe that Bob Hawke's support right now is solid, that a majority of the Caucus will support Bob Hawke?

KIM BEAZLEY: I think Bob Hawke is well supported in the Caucus, yes.

KERRY O'BRIEN: Majority?

KIM BEAZLEY: And....

KERRY O'BRIEN: Majority support?

KIM BEAZLEY: And I'm not in the business of analysing any particular level, but I do not believe that Caucus would go against the position that he has determined.

KERRY O'BRIEN: I'm sorry. Kim, you are not answering this question.

KIM BEAZLEY: Well, I would have thought....

KERRY O'BRIEN: Do you believe that the majority of Caucus .. the majority of Caucus has the confidence in Bob Hawke, and supports him?

KIM BEAZLEY: Wouldn't you say that the particular answer that I just gave you would have said yes to that point?

KERRY O'BRIEN: I wouldn't have thought so.

KIM BEAZLEY: Yes, well, as far as I know, and as far as any of us can be certain about these things, the position that Bob Hawke has adopted is a position that will be supported by the Caucus.

KERRY O'BRIEN: And we are out of time. Kim Beazley, thanks for talking with us.

And now to three pivotal backbenchers who have been supporters of Bob Hawke. John Langmore is from the Left, and tonight he's in Parliament House, here in Canberra; John Gayler is from the Right, and he's in his electorate in far north Queensland, based in Cairns; and in Melbourne is Neil O'Keefe, an independent, and just back from a very close cricket match at the MCG, which I suppose demonstrates his level of support for the Prime Minister. Welcome to the program.

John Langmore, as you face this crisis of leadership tonight, what is the key element that you're considering?

JOHN LANGMORE: The central issue in Australia today, Kerry, is unemployment, and so the central issue in this leadership contest is which leader will show the flexibility and the imagination in 1992, to generate the new policies which will contribute to the most rapidly reducing unemployment.

KERRY O'BRIEN: So has Bob Hawke done enough on unemployment yet, as the Prime Minister?

JOHN LANGMORE: No, he hasn't. There were three statements this year, each of which contributed well. The unemployment statement .. the employment statement in November was excellently targeted, but it wasn't large enough. It's absolutely essential that we have another statement in March, April, May next year, which would stimulate the economy, not only through the reduction of interest rates, but also through expansionary fiscal policies.

KERRY O'BRIEN: And do you know where Paul Keating stands on further action on unemployment?

JOHN LANGMORE: Well, he has said that he's concerned about it, that he would reduce interest rates. He's absolutely right in that, and I understand that he would be more flexible about fiscal policy than he has been in the past, too. But I think I'm only one of many backbenchers who will be looking for a clearer indication from both people about what their plans would be for 1992.

KERRY O'BRIEN: Which means that it's really an open .. the leadership is really an open issue for you. How many members of your faction do you believe share your position?

JOHN LANGMORE: I would say roughly half. I think about a quarter committed to Paul Keating, about a quarter committed to Bob Hawke - would never vote for Paul Keating, and about a half looking at their options, principally with unemployment in mind, what can we do to reduce unemployment.

KERRY O'BRIEN: So of that crucial Left bloc, if there is a free vote in a Caucus ballot next time, as I imagine there would be for the Left, you're saying that there are already a quarter of the faction is clearly committed to Keating, a quarter would die hard for Hawke, and another 50 per cent, including yourself, could go either way, depending on that unemployment issue.

JOHN LANGMORE: That's right. Of course, personalities are important as well, and we've all got a lot of experience with both people, but I think that there are many who are still making up their minds, and that issue of employment growth is central in their considerations.

KERRY O'BRIEN: John Gayler, as you've watched events unfold in the recent weeks, but particularly in the past 48 hours, what key factors have occupied your mind?

JOHN GAYLER: I think we've got to get back to basics, Kerry. We've got to get back to the total state of paralysis that the Government is in at present and has been for some time now, and, quite frankly, whilst I have no truck with what my colleague, John Langmore has said we've got to get back to the leadership, we've got to resolve that, and we've got to resolve it once and for all. Now, I suppose the most disappointed people this evening who you've talked to, have been the media, and for them not to be able to hang out the political corpse of Hawke tomorrow on the front pages of their papers, has been somewhat of a disappointment. But surely to goodness, we've got to look at where the leadership goes from here.

KERRY O'BRIEN: Well, just on that point, do you believe that today's outcome resolves anything or solves anything?

JOHN GAYLER: Resolves nought. And we're not going anywhere at all. But everyone talks about the scenario of Hawke standing down and leaving the political scene. Surely to goodness, don't we look at the scenario of Keating if he is not able to maintain his challenge or continue with his challenge, departing the political scene. I mean, I must say that I have a very strong conviction that if Keating and, obviously, he has a little bit of time - no-one has much time on their hands - but if anyone has a little bit of time on their hands now, it's Keating and his camp. What I believe has to happen is that the Prime Minister must bring this to a head.

KERRY O'BRIEN: How?

JOHN GAYLER: Well, I mean, just put his leadership on the line.

KERRY O'BRIEN: You mean at Tuesday's Caucus meeting?

JOHN GAYLER: I don't know whether that's quite so necessary. I mean, the urgency of all this is once again a media beat-up. I don't think that we are looking at the eleventh hour, just at present.

KERRY O'BRIEN: But surely, if there is going to be a change of leadership, and you're obviously saying that that is a prospect, then if that other leader becomes Paul Keating, surely, given his standard in the electorate, he's going to need all the time he can get.

JOHN GAYLER: Well, unless we turn the economy around, Kerry, he's going to need about 10 years, and no-one is going to get that, are they? I mean, the fact of the matter is that apart from leadership, we've got to look at other issues, and there are many within our party who see the simple change of leadership as being the panacea to all our problems; that just doesn't exist.

KERRY O'BRIEN: Do you also take the view that a close victory for either of the two contenders - the leader and the pretender - would be a disastrous outcome? - either a win by a vote or two for Hawke or a win by a vote or two for Keating.

JOHN GAYLER: Potentially a difficult situation, but, Kerry, everyone is talking about if the situation or the scenario is that Keating takes over as leader, then Hawke departs the political scene. I mean, Keating has had one beating within the Caucus, one very substantial beating. Now if another vote is taken somewhere along the line, surely he should consider departing the political scene and .. yes, without any shadow of doubt.

KERRY O'BRIEN: A view of how the Left is shaping up, the Left was absolutely critical to Bob Hawke, and the Left clearly is no longer solid, and it's not just John Langmore that's giving that message.

JOHN GAYLER: I understand that, although I might say that within my faction, which has a membership of one, we don't get involved in too many of these factional discussions. We have 100 per cent support here for Hawke.

KERRY O'BRIEN: Okay. But if .. how do you react if there is a spill motion on Tuesday or in January or February? How do you react if there is a spill motion?

JOHN GAYLER: At the initial vote on leadership, I supported Hawke. I see no reason to change my position at this point in time, and I would see no reason to change it on Tuesday or Wednesday.

KERRY O'BRIEN: But if it became clear to you that the outcome was going to be a close result for one or the other - let's say a close result for Hawke - does that cause you to then have second thoughts about a result which, surely, must be a disaster for the party? - the Prime Minister already wounded scraping in by two or three votes.

JOHN GAYLER: If he scrapes in, then I will support him; then I would think that Keating should consider his political position. Everyone is talking about Hawke departing the political scene, no-one is even suggesting Keating doing so.

KERRY O'BRIEN: Okay. Neil O'Keefe, as a Hawke supporter, what do you think of today's outcome?

NEIL O'KEEFE: Well, Kerry, it's been another disappointing day in this whole process, but my message to Bob Hawke was whatever he decided, I would support. I am personally glad that he has decided to tough it out, and I think that for a number of reasons. First of all, despite what the Gallery might think - and you've got to remember it's a bit of a fairy land there, in the Press Gallery in Canberra - out in Australia, Bob Hawke is very widely regarded and respected.

KERRY O'BRIEN: What about the latest opinion polls?

NEIL O'KEEFE: Yes, look, that's all right. The opinion polls, Kerry, are responding to the fact that we have a desperate economic situation in this country, and I can tell you right now, unless the figures pick up, unless unemployment picks up, John Langmore is right when he says we've got to do more with our policies quickly. I heard John Dawkins saying that today. Unless they change, it makes absolutely no difference who is in the leadership. The fact of the matter is that is the reason people are disenchanted. All this stuff with Hawke being measured by the response to the Hewson package, now the fact of that is, you know, no vision no leadership - all that. What that all boils down to is people are looking for an alternative, simply because they don't like the situation at the moment. If we provide that alternative and we actually get these policies right, and I have to ask this question, Kerry, of the Gallery and anyone who wants to answer it: Whose policies got us to this position? Who was the one who vigorously resisted every backbench cry to start reducing interest rates earlier? Who was the one who said we would have a soft landing? - and we've now scorched the guts out of the economy. I can't turn away from that. I can only say Hawke won the ballot in June. People in the Keating camp declared then that they would not spoil .. they would not disrupt Hawke. They've done absolutely bugger-all to support him for the last six months, and you know who's been up in the Gallery pumping journos every day with questions to undermine the Hawke camp. This week - this is what makes me most angry, Kerry - this week, Willis performed brilliantly, in my view, on Monday; Richardson came out and showed the holes in the Social Security part of the Hewson package; Willis is going to do the same with the Treasury stuff. Where is the reporting of this forensic pulling apart that has begun?

KERRY O'BRIEN: Well, you've got to say that probably the one day out of 21 that your side of politics has had a good set of headlines, was on the Willis thing; so, you can hardly say that that wasn't vigorously reported. But I want to come back to something you said at the outset.

NEIL O'KEEFE: Sure.

KERRY O'BRIEN: You said that today was disappointing. How was it disappointing?

NEIL O'KEEFE: It was disappointing to me, because we found ourself in the situation where senior Ministers even had to go and canvass these options with Bob Hawke.

KERRY O'BRIEN: Now why did they have to do that?

NEIL O'KEEFE: They had to do it because everyone in Australia knows that the leadership is back on the agenda and they know why it's back on the agenda, and everybody's .. in fact you picked up all the press today, and they all said `Today is the end of Bob Hawke'. Well, it's not the end of Bob Hawke. The fact of the matter is that I quite frankly don't care when we have the ballot, Kerry. I know yesterday, I was....

KERRY O'BRIEN: They didn't say that today was the end of Bob Hawke. Effectively they were saying Bob Hawke is finished. There's a difference, Neil.

NEIL O'KEEFE: Oh well, I think that was the conclusion I was drawing. But anyway, that's not the point. The point is this: I was saying yesterday that I didn't want to see a ballot next week, because I think cool heads have to prevail and we have to work this through during January and see where we go from here - what policy changes are run. I'm now of the view that if this is going to continue, and it seems to me that the Gallery is going to continue to press it, if the Keating supporters are going to continue to press it....

KERRY O'BRIEN: Look, Neil, you can't .. I can't let you get away with that entirely. If a Treasurer of six months is going to be sacked, for example....

NEIL O'KEEFE: Yes.

KERRY O'BRIEN: Right. And I can give you three or four or five other critical elements that have happened in the last few weeks....

NEIL O'KEEFE: Yes, and I have to say to that, Kerry, you are absolutely correct on that point. The reason that the Caucus has been spooked this week and lost a bit of its nerve, and that's what's happened, is that there was enormous support in the Caucus for John Kerin and a lot of disappointment that John had to stand aside. We all concede he had to stand aside, and we haven't yet had the chance to see, other than Monday, Ralph on the comeback trail. Now, I know when we get the chance to see that, the base will be a lot more solid, but we've been spooked by those events.

KERRY O'BRIEN: Okay. John Langmore, when it comes to the crunch, do you think that it's better that it be resolved sooner rather than later? I mean, is time a factor in all of this?

JOHN LANGMORE: Yes, it's important that it be resolved quickly, but the resolution is not only for Paul Keating to win, it would be....

KERRY O'BRIEN: No, no.

JOHN LANGMORE: It could be, of course, for Paul Keating to withdraw entirely.

KERRY O'BRIEN: Yes.

JOHN LANGMORE: And there are alternative ways of resolving this.

KERRY O'BRIEN: But when you say that what you want to see is the two leadership prospects, the one who's there now and the one who would be, that it's really up to them now to sell a policy direction on unemployment, is there a danger that it becomes an auction?

JOHN LANGMORE: I think not, because what I would like to see is that they both apply their minds to what needs to be done and give us some idea of what .. of the way they would like to lead us in 1992. Surely it's important that if we're going to vote in an informed way, whenever we vote, and I, like Neil, hope it's February rather than next week, we should do so with as much information about their vision for the future as well as our knowledge about their personalities and their performance in the past.

KERRY O'BRIEN: Neil, very briefly, before we go, do you believe that the game is swinging back to Bob Hawke?

NEIL O'KEEFE: It certainly did today, Kerry, and I think if people can see that there is now a much more solid base and a demonstrated response to the economy's problems, then Caucus will settle down, and Hawke does have that support, yes.

KERRY O'BRIEN: Okay. Well, if that's the case, why not pull it on, on Tuesday, yourselves, and resolve it on Tuesday, finally.

NEIL O'KEEFE: I am personally now ambivalent about when it happens. I do accept that it's probably going to have to happen in the form of the ballot. I now don't care whether it's next week or towards the middle or end of January, but I do have one very strong view about that Kerry, and that is if we have the ballot, I don't care if Hawke wins by one vote - he stays Keating goes. If Keating wins, Hawke goes.

KERRY O'BRIEN: John Gayler, I think you pretty much agree with that.

JOHN GAYLER: Oh yes, totally. And I don't know that there's any necessity for a ballot next Tuesday, but....

KERRY O'BRIEN: It could be dangerous, couldn't it?

JOHN GAYLER: Oh yes, time is running out as well for the Labor Party, so it's got to be sooner rather than later.

KERRY O'BRIEN: And it's in Caucus' hands now rather than Bob Hawke's.

JOHN GAYLER: I think that's another backward step for the party. I mean, it's most unfortunate that we're now going to the ballot. I mean, that's going to cause more splits within the party, but I don't see that there's any alternative now. It's inevitable. I believe that there will be a ballot, and the sooner that we overcome this problem - and can I just re-echo the words of one of my colleagues there, by saying `Look, whoever wins remains as leader and will get my total support. Whoever loses must get out of politics'. We cannot have this ridiculous situation where we have Keating or be it Hawke sitting on the backbench, unsettling the whole party.

KERRY O'BRIEN: Well, if one of them is going to get out, that's going to mean a nasty by-election somewhere along the line. Look, that's where we have to leave it, tonight. John Langmore, John Gayler, Neil O'Keefe, thanks for joining us. And I think it's quite clear from that that it's still an extremely fluid situation.