At the time of the election, the economy suffered from high inflation and high unemployment, alongside increases in industrial disputation and drought across much of the rural areas. The coalition government was led by Malcolm Fraser, Prime Minister since 1975. Fraser had fought off a leadership challenge from Andrew Peacock, who had resigned from the Cabinet citing Fraser's "manic determination to get his own way", a phrase Fraser had himself used when he resigned from the Gorton ministry in 1971. The Liberals unexpectedly won the December 1982 Flinders by-election, after having lost the March 1982 Lowe by-election with a large swing.
Bob Hawke had entered Parliament at the 1980 federal election following a decade as leader of the Australian Council of Trade Unions (ACTU). Labor factions began to push for the deposition of Bill Hayden from the party leadership in favour of Hawke. Fraser was well aware of the ructions in Labor, and originally planned to call an election for 1982, more than a year before it was due. However, he was forced to scrap those plans after suffering a severe back injury.
On 3 February 1983 at a meeting in Brisbane, Hayden resigned on the advice of his closest supporters. Hawke was elected as interim leader unopposed. Later that morning, unaware of the events in Brisbane, Fraser in Canberra sought and received a double dissolution from the Governor-General, Sir Ninian Stephen, and called an election for 5 March. While an election wasn't due for seven more months, Fraser had been emboldened by the unexpected retention of Flinders. He'd also hoped to catch Labor before it could replace Hayden, and was surprised to learn that Hayden had resigned literally hours before the writs were dropped. In response to his removal, Hayden claimed that a "drover's dog" could lead the ALP to victory. Five days later, the ALP formally elected Hawke as party leader. Fraser also hoped to gain control of the Senate, where the Australian Democrats had held the balance of power since 1 July 1981.
Fraser's campaign used the slogan "We're Not Waiting for the World". Hawke's campaign theme was based around his favoured leadership philosophy of consensus, using the slogan "Bringing Australia Together". The Ash Wednesday bushfires that devastated areas of Victoria and South Australia on 16 February disrupted the Prime Minister's re-election campaign which was unofficially put on hold while he toured the affected areas. In response to an attack from Fraser on the security of the banking system to protect people's savings in which he asserted that ordinary people's money was safer under their beds than in a bank under Labor, Hawke laughed and said "you can't keep your money under the bed because that's where the Commies are!"
As counting progressed on election night, it was obvious early on that the ALP had won on a massive swing. Hawke with wife Hazel claimed victory and a tearful Fraser conceded defeat. Ultimately, Labor won power on a 24-seat swing—the largest defeat of a sitting government since 1949, and the worst defeat a sitting non-Labor government has ever suffered. Fraser soon resigned from Parliament, leaving the Liberal leadership to one-time foe Andrew Peacock, who would later form a fierce leadership rivalry himself with future Prime Minister John Howard.
Prior to 1984 the AEC did not undertake a full distribution of preferences for statistical purposes. The stored ballot papers for the 1983 election were put through this process prior to their destruction. Therefore the figures from 1983 onwards show the actual result based on full distribution of preferences. The 1983 swing of approximately 3.6 points is based on a pure deduction of one result from the other.