Australia's political party system traditionally consisted of the Liberal Party, National Party (originally known as the Country Party) and Labor Party (ALP). The Liberal and National parties were frequently in coalition. A new party, the Australian Democrats, was formed in the 1970s as a breakaway group from the Liberal–National coalition. The Liberal–National coalition was in office from 1949 until 1972, and again from 1975 to 1983, under Malcolm Fraser. The Labor Party, under Bob Hawke and then Paul Keating, was in office from 1983 to 1996.
During his term as prime minister, Keating promoted a plan for Australia to become a republic and for the governor-general to be replaced by a non-executive president.
The general election of March 1996 put the Labor Party out of office after 13 years. The Liberal–National coalition led by John Howard won the largest majority for over 20 years. However, it did not achieve a majority in the Senate, where the balance of power was held by smaller parties such as the Australian Democrats and the Greens.
In February 1998, the Constitutional Convention voted by 89 votes to 52 for Australia to become a republic by 2001, and by 73 votes to 57 to replace the British monarch with a president, though the republicans were not unanimous on how the president should be appointed. It was agreed that there would be a referendum on the issue, but there were disagreements over the wording of the referendum question.
In the early general election called on 3 October 1998, Howard's conservative coalition was returned with a greatly reduced majority in the face of a strong showing by the Labor Party now led by Kim Beazley; the election dealt a crushing blow to the newly established One Nation Party, which had campaigned for a freeze to Asian immigration and reductions in Aboriginal welfare programmes.
In June 1999, Prime Minister John Howard, himself a monarchist, agreed a compromise wording with republicans in Parliament whereby Australians would be asked if they supported 'an act to alter the constitution to establish the Commonwealth of Australia as a republic, with the Queen and governor-general being replaced by a president appointed by a two-thirds majority of the members of the Commonwealth Parliament'.
Despite evidence from opinion polls that most Australians were in favour of a republic, in the referendum of November 1999 almost 55% registered a 'No' vote, with more than 45% voting 'Yes'. The result was widely attributed to widespread dissatisfaction about the right of parliamentarians to choose a president.
Though the November 2001 general election had been expected to be a very close contest, Howard's Liberal–National coalition was comfortably returned for a third consecutive term, gaining 81 seats (Liberal Party 68, National Party 13) to Labor Party's 65. In an election dominated by the issue of Asian immigration, the government's firm action in August 2001 of denying a shipload of Afghan asylum-seekers entry into the country seemed to have proved decisive.
Consequent to Labor's 2001 election defeat, Simon Crean succeeded Beazley as Leader of the Opposition following Beazley's resignation as leader of the Labor Party. Crean continued his leadership until December 2003 at which point he was succeeded by Shadow Treasurer Mark Latham.
The October 2004 election which had been thought too close to predict was again won comfortably by the Liberal–National coalition and Howard was returned to government, winning 85 seats (Liberal Party 73, National Party 12) while the Labor Party took 57.
Former Labor Party leader Kim Beazley was re-elected as leader of the party following Latham's resignation in January 2005 – only to be succeeded by Kevin Rudd in December 2006.
Immigration, the environment, Australia's involvement in the Iraq war and a call for change among some of Australia's electorate were the highlight issues of the 2007 election campaign. In the fiercely fought election that took place in November 2007, Rudd became prime minister following Labor's 18-seat majority win. Official results were the Labor Party 84 seats, John Howard's Liberal–National coalition 64 and independent candidates two seats.
Immediately on being sworn in as Prime Minister, Rudd signalled a significant shift in domestic and foreign policy by ratifying the Kyoto Protocol on climate change.
In September 2008, Quentin Bryce was sworn in as Australia's 25th governor-general replacing Major-General Michael Jeffery, thus becoming the first woman to hold the post.