This party, combined with the Australia Party—under the invited leadership of Don Chipp—formed the nucleus of the Australian Democrats which aspired to a balance of power in the federal Senate and up to four state upper houses for three decades.

[16][17] Many younger urban middle class voters, who would have normally been attracted to the LCL, were abandoning the party for Labor owing to their dissatisfaction with the malapportioned electoral system known as the 'Playmander'.

A young farmer from a rural constituency, Hall had never conflicted with the party line, and was expected to uphold the existing LCL principles,[16] having spoken out in support of the Playmander and the restrictive Legislative Council before.

[17] Labor's leader, Don Dunstan, also introduced a bill for reform of the Legislative Council, which sought to remove its wage and property based qualifications and instil adult suffrage.

[17] The bill passed the House of Assembly with Labor support, but failed in the Legislative Council where the LCL's rural conservatives dominated its restricted electoral base.

[27] The conflict between the two extended beyond politics and on to a personal level,[26] contributing to the polarisation of views within the LCL and making it difficult for an internal compromise to be reached on the issue of electoral reform.

Liberal parties in Australia had long held to a tradition of the separation of houses, independence of members, and the ability of the parliamentary leader to choose his own cabinet.

[29] Hall privately told Legislative Council Chairman David Brookman that he could not work with DeGaris and that he would resign if he was not allowed to choose his cabinet.

In the meantime, there was a strong reaction to Hall's departure among the public, and segments of the LCL, notably the youth wings, demonstrated against the events and made motions of objection.

[37] After this, he thought of establishing his own separate party, citing small opinion polls that supported this action,[38] but Ian Wilson, the former member for the federal Division of Sturt, convinced him to stay within the LCL and bring about internal change.

[39][40] The LM's colour, purple, was described by observers as "LCL blue with a dash of Labor red",[40] signifying the faction's location on the political spectrum.

The LM itself contained two poorly defined internal groups: moderates, concerned with the inequalities of the electoral systems and the LCL's ageing image; and radicals, who espoused the aforementioned in addition to the desire for wide-ranging social reform.

[36] Nevertheless, the LM had generated a large amount of campaign funds and had great name recognition; Hall was also favoured in opinions as a better leader than Eastick by a threefold factor.

[62] Tension continued as rumours spread claiming that the LCL State Council was contemplating the forbidding and vetoing of LM members from representing the party in elections.

Ian Wilson, who had earlier managed to convince Hall not to form a separate party, tried in vain to sway him to remain with the LCL and focus on reforming it from within.

[63] As the LM had already begun establishing an infrastructure while in the LCL, it was able to pick up momentum readily, presenting itself as a centrist moderate party, but it was never able to shed its reliance on Hall.

"[68] The South Australian media, which had earlier warmed to Premier Dunstan, then focused their attention on the LM and gave the fledgling party much-needed publicity.

[76][77] Hall attacked the LCL for its sudden change in stance on reform, and managed to see the first LM policy become law with the lowering of the council suffrage age to 18.

[69] The move was a risk as failure would have left the LM's main drawcard out of the spotlight entirely until a state election which was not due for another two years, but Hall said the party had no future unless it could gain national stature.

He outlined the LM's plans for economic rejuvenation: an end to compulsory unionism, budget and tax cuts, and measures to curb rising inflation and cost of living.

[97] The Liberals, having suffered a 12 per cent reduction in their metropolitan primary vote,[98] and gained their lowest result, quickly dumped Eastick, who was an unimpressive parliamentary performer and seen as an obstacle to reintegration with the LM, as leader.

[103] Hall had been praised for his stance on supply, but the Liberals attacked him, accusing him of being "Labor in a purple disguise" and saying that Fraser needed a compliant senate "not hampered by independents sitting on the fence".

[104] Hall saw the double dissolution as an opportunity to capture senate seats in all the states across the nation, and the LM sought to create bases outside South Australia.

[72] Generally, the LM's attempts to spread its message failed owing to the dramatic and highly polarising effects of Whitlam's dismissal and the constitutional crisis, which produced angry demonstrations around the country.

[104] Hall's hope for Australia-wide support for the LM was dashed owing to the previous events, with the party gaining negligible results for their candidates in other states.

It eventually supported Don Dunstan's bills for electoral reform, both to the House of Assembly and the Legislative Council, and its internal structure was reorganised and modernised, particular with the arrival of Tonkin, its first urban leader.

"[110] He said doing so would entail a surrender of honour and self-respect, and described the LM as the only "genuine Liberal party" in the nation, boldly predicting that its agenda would become dominant in society.

"[110] He said to do otherwise would be to "exist in splendid selfish isolation",[110] and said they could not survive as a relevant force by holding Goyder and Mitcham and losing upper house seats owing to a dwindling vote.

[112] Labor was not pleased with the prospect of its opponents being reunited and potentially more effective, and Premier Dunstan mocked the opposition parties as a "circus",[113] while his deputy Des Corcoran predicted the new entity would not be able to last.

[115] When Don Chipp resigned from the federal Liberal Party, and stated his intention to create a centrist and progressive "third force" in Australian politics, Millhouse's New LM responded.