Despite gaining almost 51 percent of the two-party-preferred vote, the Australian Labor Party fell short of forming government by 8 seats. The government was re-elected with 49.02% of the two-party-preferred vote, compared to 50.98% for the Australian Labor Party, the largest difference of six election results where the winner did not gain a two-party preferred majority, since 2PP results first estimated from 1937.
The election on 3 October 1998 was held six months earlier than required by the Constitution. Prime Minister John Howard made the announcement following the launch of the coalition's Goods and Services Tax (GST) policy launch and a five-week advertising campaign. The ensuing election was almost entirely dominated by the proposed 10% GST and proposed income tax cuts.
In reaction to One Nation's policies, the other significant parties all agreed to preference against One Nation. One Nation won no lower house seats, with its founder and leader Pauline Hanson defeated on preferences by the Liberal candidate in the Queensland electorate of Blair. In Queensland, One Nation polled 14.83% of the Senate vote, sufficient to elect one senator without the need for preferences. The seat initially went to Heather Hill, but she was subsequently disqualified under Section 44 of the Constitution, and replaced by Len Harris.
On election night of 3 October, the exit poll showed Labor leading the Coalition with 53%–47%. The ALP made the single biggest gain by an Opposition party following an election defeat; the Coalition's majority was cut from 40 to 12. The swing was sufficient in all states to deliver government to the ALP, but the uneven nature of the swing denied Kim Beazley the extra few seats necessary to command a majority in the House.
*Paul Zammit contested his seat as an independent. The figures shown are against Liberal. Tony Smith contested his seat as an independent. The figures shown are against Labor. Pauline Hanson, a member of One Nation Party, contested the seat of Blair in this election after a redistribution, and lost to Liberal Cameron Thompson. The figures shown are a two-party-preferred basis between Labor and Liberal.
**Allan Rocher, Graeme Campbell and Paul Filing all fell out of two-party-preferred; the second figures are against Labor.