Bob Hawke had been leader of the Labor Party since 3 February 1983, and Prime Minister since 11 March 1983, with Labor winning four elections under his leadership. However, the unexpectedly close win at the 1990 election, coupled with the deepening economic recession, fuelled tensions within the government over economic policy.
Furthermore, a re-energised Liberal opposition led by John Hewson, a qualified economist, gained ground in the opinion polls. Hawke had alienated key NSW Right faction powerbroker, Senator Graham Richardson by late 1990, with the latter bluntly telling Hawke he no longer had the support of the Right.
Deputy Prime Minister and Treasurer Paul Keating launched his first June challenge against Hawke after the latter apparently reneged on a Kirribilli agreement that he would hand over the leadership in 1990.