Fraser's government was defeated in the
March 1983 election by the
Labor Party under
Bob Hawke. Fraser immediately retired from politics, and Peacock
contested the party leadership, defeating Howard, who remained as deputy leader. As opposition leader, Peacock faced an uphill battle against the hugely popular Hawke. At the
1984 election he was given little chance of winning, but he performed better than expected by reducing Hawke's majority. In 1985, as Labor's position in opinion polls improved, Peacock's popularity sank and Howard's profile rose, keeping leadership speculation alive. Peacock said he would no longer accept Howard as deputy unless he offered assurances that he would not challenge for the leadership. Following Howard's refusal to offer such an assurance, in September 1985 Peacock sought to replace him with
John Moore as deputy leader. The party room re-elected Howard as deputy, contrary to Peacock's wishes. Despite possessing greater support in the parliamentary party than Howard, Peacock resigned on 5 September 1985, concluding the situation was untenable. Howard was comfortably
elected opposition leader on 5 September, and he appointed Peacock shadow foreign minister. However, after a private car-phone conversation between Peacock and then-Victorian opposition leader (and future Premier)
Jeff Kennett severely attacking Howard was leaked to the press, Howard dismissed Peacock from his shadow cabinet in March 1987, calling Peacock's actions "damaging" and "unloyal". Howard lost the
1987 election to Hawke, largely due to the Nationals pulling out of the Coalition in support of Queensland Premier
Joh Bjelke-Petersen's
quixotic bid to become Prime Minister. After the election, Peacock
stood against Howard for the leadership losing 41 votes to 28, but was elected deputy leader in a show of party unity. Peacock's supporters began to plot against Howard, and in May 1989 they mounted a
party room coup which returned Peacock to the leadership. Peacock, now 50, cultivated a new mature image, enhanced by a second marriage to Margaret St George. On 18 March 1990, Peacock was interviewed by
Laurie Oakes on the television program
Sunday, regarding his stance on the
Multifunction Polis (MFP), a proposal to build a Japanese funded technology city in Australia. Peacock attacked the MFP concept, saying it would become an Asian "enclave". According to
Roy Morgan Research, Peacock's attack on the MFP did not help him politically, and the
Labor Party used the issue to highlight division within the Liberal Party, as the party federal president
John Elliott and others supported the MFP. At the
1990 election the Coalition won a slim majority (50.10 per cent) of the two-party vote and took seven seats from Labor. It also reduced Labor's majority from 24 seats to nine. However, it only garnered a 0.93 per cent two-party swing. Combined with a three per cent swing against the Nationals (who saw their leader
Charles Blunt ousted in his own seat), this prevented the Coalition from picking up the additional seven seats they needed to make Peacock prime minister. This was all despite Hawke's government being in political trouble, with record high interest rates and a financial crisis in Victoria. Although Peacock was credited with helping the non-Labor forces regain much of what they had lost three years earlier, it was not enough to save his job, and he resigned after the election, promising not to make another attempt to return to the leadership. He became shadow attorney-general (1990–92) and shadow trade minister (1992–93) under the new leader,
John Hewson, whom Peacock had supported in getting the job in 1990 over
Peter Reith and to stop Howard returning. After Hewson's election as leader, he endorsed Peacock as his deputy, which caused a furore with Howard supporters. Peacock, however, had no interest in becoming deputy leader again and withdrew happily. Reith was instead elected deputy in a close contest against Peacock supporter
David Jull. The closeness of the deputy's contest was seen as a reflection of the tensions in the Peacock-Howard rivalry that still existed as Reith had been Howard's running mate when Peacock overthrew Howard almost a year earlier. This tension was not reflected in the leadership contest as both Hewson and Reith had supported Howard and Hewson was elected with a lopsided margin of 62 votes to 13 votes for Reith. Peacock believed Hewson to be the best man for the job after seeing that Hewson was a hard-working shadow treasurer. Peacock returned to Foreign Affairs when Hewson lost the
1993 election to
Paul Keating. He retained Foreign Affairs when Hewson was displaced by
Alexander Downer, whom Peacock supported after Hewson initiated the May 1994 spill. Peacock believed Hewson made a mistake in calling a spill; Peacock was not aware of Hewson's intention before it happened but decided afterwards to support Downer as he felt no longer obligated to support Hewson. ==After politics==