The government also faced internal problems and tension, with the loss of numerous ministers during its first term due to the introduction of a ministerial code of conduct and ongoing leadership rivalry between John Howard and Peter Costello.

Despite Australia suffering a deep recession in the early 1990s, Labor had increased its lead over the Coalition at the 1993 election, which had seen the Liberals under Hewson offer an ambitious program of economic reform called Fightback!, which proposed a Goods and Services Tax as its centrepiece.

John Howard led a push to significantly increase restrictions on gun ownership, which divided the cabinet and inflamed some rural voters who were an important part of the Coalition's core constituency.

The Senate modified government legislation, including the partial privatisation of the government-owned telecommunications company, Telstra;[19] increases in university fees;[20] large funding cuts in the 1996 and 1997 budgets;[21] a 30% private health insurance rebate;[22] and the Wik 10 Point Plan, giving extinguishment of native title on pastoral leases.

[40] Peter Costello also rejected any suggestion that Australia was not already an independent nation, but said that, while the Australian Constitution works "remarkably well", it was the institution of monarchy that was the crux of his argument for change: " The temper of the times is democratic; we are uncomfortable with an office that appoints people by hereditary.

[42] The 457 visa was the Temporary Business (Long Stay) and was introduced soon after John Howard became prime minister in 1996 Work for the Dole was first proposed by the Liberal Party of Australia in 1987, and was enacted on a trial basis a year after it gained power at the 1996 federal election in their traditional coalition.

[44] The emergence of the 1997 Asian financial crisis shifted regional dynamics, and contributed to the demise of the Suharto administration and Indonesia's transition to democracy, through which the Howard government negotiated bilateral relations.

On election night, John Howard claimed the win as a mandate for the GST, and in surprising and apparently impromptu remarks, he committed the government to reconciliation with Australia's indigenous peoples.

Following intense and controversial negotiations, a deal was reached on 28 May whereby the concessions given to the Democrats included an exemption on basic food, more generous compensation to pensioners, and a reduction in tax cuts to higher income earners.

Habibie was suggesting East Timor receive special autonomy status within the Indonesian republic, which he offered as part of United Nations (UN)-mediated negotiation process between Indonesia and the territory's former colonial ruler, Portugal.

[60] In the face of Australian public and international outrage, the Prime Minister led discussions for a UN peacekeeping force, a position supported by US President Bill Clinton and UN Secretary-General Kofi Annan.

[70] In the first half of 2001, the government suffered a number of setbacks including rising petrol prices, voter enmity over the implementation of the GST and its new administrative obligations on business, a spike in inflation and a sharp slowdown in the economy.

The subsequent federal budget had a lower than expected surplus of $1.5 billion, and contained significant benefits and tax cuts for older Australians, a demographic whose support the government keenly sought.

Former prime minister Malcolm Fraser was dispatched as a special envoy by the Australian Government to seek release of CARE Australia workers Steve Pratt and Peter Wallace imprisoned in Yugoslavia on charges of espionage.

[11] In the 1990s, a wealthy Saudi dissident, Osama bin Laden, leader of Al Qaeda (an internationalist Islamist paramilitary headquartered in Afghanistan) declared a fatwa calling for the killing of "Americans and their allies – civilians and military... in any country in which it is possible to do it" to bring to an end the ongoing enforcement of the blockade against Iraq and presence of US troops in the Arabian Peninsula.

[82] During Howard's visit, on 11 September 2001, four passenger planes were hijacked by Al Qaeda and used as missiles to attack civilian and military targets in New York (World Trade Center) and suburban Washington, D.C. (the Pentagon).

[83][84] In Australian magazine The Bulletin, it was suggested that the Prime Minister viewed Australia as a "deputy peacekeeping capacity to the global policing role of the US" in the Asia-Pacific region, and that he had embraced the term "Howard Doctrine".

Following the 9/11 Al Qaeda attacks, the Howard government initially committed SAS troops as the most high-profile part of Operation Slipper, Australia's contribution to the international coalition invading force in the 2001 war in Afghanistan.

[90] A small number of Australians, including David Hicks, were captured in and around the Afghan Theatre having spent time training or fighting with Al Qaeda aligned Islamist paramilitaries.

[127] After nose-diving at the time of the INTERFET intervention in East Timor in 1999, government-to-government ties with Indonesia had been strengthening in the aftermath of the 2002 Bali Bombing, notably through counter-terrorism co-operation and inter-faith dialogue.

On 2 November 2005, Howard held a press conference to announce that he had received information from police and the Australian Security Intelligence Organisation (ASIO) that indicated an imminent terrorist attack in Australia.

[143] After Mohamed Haneef spent 12 days in jail without charges (he was incorrectly suspected to have supported the perpetrators of the foiled terror attacks in London and Glasgow in July 2007), the anti-terrorism bill and its impact on the separation of powers became more publicly discussed.

[155] On 3 February 2007, the Australian government announced that it could not by itself have a significant effect on mitigation of global warming, though it would continue to make efforts to cut greenhouse gases; it would be necessary for Australia to find means of adaptation.

[158] At APEC 2007, Howard and other leaders signed the Sydney Declaration which saw developing countries officially agree, for the first time, on the need to set goals for cutting greenhouse gas emissions.

This package of revisions to welfare provisions, law enforcement and other measures was advanced as a plan for addressing child abuse in Aboriginal Northern Territory communities that had been highlighted by the "Little Children are Sacred" report in mid-June.

The Higher Education Endowment Fund had provision for tax concessions for private donors and offered $5 billion of seed money to pay for university buildings and research facilities.

[189] In 2005, Howard reflected on his government's cultural and foreign policy outlook in oft repeated terms:[190] When I became Prime Minister nine years ago, I believed that this nation was defining its place in the world too narrowly.

The Australia-India relations trade relationship had not undergone the growth witnessed in other regional markets during the term of the Howard government, but during talks India expressed a desire to purchase Australian uranium.

[159] Opposition Leader Kevin Rudd's policy speech for the Australian Labor Party in the lead up to the 2007 federal election was held at the Queensland Performing Arts Centre in Brisbane on 14 November 2007.

In his first newspaper interview of the campaign, Costello warned of an impending economic "tsunami" approaching the international financial markets, and predicted that the United States economy would weaken in the wake of its subprime mortgage crisis, while the pace of Chinese growth would slow.