In March 1883 the liberals under Berry's successor, Sir Bryan O'Loghlen were defeated at elections, and Service formed a new and much stronger government, taking the Treasury as well as the Premiership.

When Service agreed not to attempt to reduce tariffs, Berry joined him as a minister: such was the fluidity of party politics at this time.

In June 1883, at a banquet at Albury celebrating the opening of the railway line between Sydney and Melbourne, Service raised the question of Australian federation.

He supported Sir Thomas McIlwraith in his action with regard to the annexation of New Guinea, and suggested the inter-colonial conference which was held at Sydney in November 1883.

Service himself desired the establishment of a federal government, but the other premiers were comparatively lukewarm and the proposed council was to have very limited powers.