The campaign on which Gray embarked, to build the Franklin Dam, aroused protests from environmentalists, led by Dr Bob Brown (later a Senator).
Gray in 1982 allied with militant left wing FEDFA trade union leader Kelvin McCoy to form in November 1982 the Organisation for Tasmanian Development (OTD) which was directly associated with notable stickers seen on cars in Tasmania like Doze in a Greenie: help Fertilize the South-West, If It's Brown, Flush It, and Keep Warm This Winter:Burn a Greenie.
However it was finally a High Court of Australia decision (Commonwealth v Tasmania)—despite the persistent clamour for states' rights in which even Joh Bjelke-Petersen was utilised[3]—which stopped the dam's construction.
[5][6] But after seven years in power, Gray's Liberals suffered a two-seat swing at the 1989 election, which left them one seat short of a majority, although they were still the largest single group in parliament.
Bennett refused to accept his advice, believing that Gray had lost the support of the House and was no longer in a position to ask for a dissolution.
A Royal Commission[8] later found that Edmund Rouse, a prominent Launceston businessman and chairman of the forestry company Gunns Limited, had tried to bribe a Labor backbencher to cross the floor and keep Gray in power.
Gray denied any knowledge of this but an ALP appointed Royal Commission criticised his conduct (having an unexplained $10,000 in the freezer was a problem), but found no legal case to answer.