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the rural conservatives, whose power was grounded in the legislative council (pictured), sought to retain their influence in both the party and the state through malapportionment in electoral districts and the lcl party organisation.
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. hall himself stated he would approve the bill if it included a clause guaranteeing that the legislative council could only be abolished through a referendum. dunstan agreed, but hall's own party split on the issue.[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.[17][24][25]
behind the votes in parliament was a personal antagonism between hall and ren degaris,[26] the leader of the lcl in the legislative council. degaris, who was elected to the council in 1962, was a staunch defender of its franchise and electoral boundaries. the two were the de facto leaders of the party's two factions; hall representing the urban-based progressives, and degaris the rural-based conservatives.[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.[28]
after the lcl lost government in 1970, primarily due to the electoral reform, hall managed to be re-elected as leader. he convinced a majority of the party's membership that reform was needed, and sought to remove the influence that the party's representatives in the legislative council held. when the dunstan government again introduced a bill to introduce universal suffrage to the council, hall gained the support of 7 out of 20 members in the assembly, but only 2 of 16 lcl members in the legislative council supported the bill.[29] internally, there was much opposition to any electoral reform when the matter was debated at party conferences.[30]
the conservatives then moved against hall, putting forward party proposals to lessen the influence of its parliamentary leader. 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. the rural councillors sought to preserve their power, and demanded that cabinet positions not be decided by the leader, but elected by the parliamentary party as a whole.[29] as this would include the legislative council, dominated by its rural membership,[17] hall's support among moderate liberals would be overwhelmed by the councillors' inclusion.[29] hall privately told legislative council chairman david brookman that he could not work with de garis and that he would resign if he was not allowed to choose his cabinet.[29]
after the parliamentary party agreed on this issue 12–8, hall resigned the leadership on 16 march 1972, stating that "i cannot continue to lead a party that will not follow; i cannot lead a party which has lost its idealism and which has forgotten that its purpose for existence is to govern successfully for the welfare of all south australians. our party is still deeply cleft by the persuasive influence of a number of its members in the legislative council."[29][31] later in the speech, he said "over the last three years i have been subject to a great deal of disloyalty on a continuing basis ... i had hoped this afternoon to move a motion of no confidence in the government; instead, i found out party had moved a vote of no confidence in itself."[31] premier dunstan, with whom hall had never had amiable relations, crossed the floor of the house and shook hall's hand in a gesture of solidarity.[32][33] hall said he "was knifed" and said the conservatives' actions were "a clear example of how deeply the wooden horses of the legislative council have entrenched themselves in the ranks of the assembly membership".[34] the lcl president ian mclachlan put on a brave face, saying "mr hall had some personal problems with the party, but these differences do not make a divided party"[35] but he was quoted the next day as saying that the proposal was mooted to gauge hall's power.[35] the obscure and low-ket conservative bruce eastick was installed as the new leader, as some more prominent figures such as millhouse were seen as too sympathetic to hall. 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. hall had expected to become a normal backbencher, but the groundswell of support prompted a change of heart.[36]
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hall initially sought to appeal to the state council of the lcl. although the body had no binding authority over the parliamentary caucus, who chose the leader, hall and his followers saw it as an opportunity for a media victory. the motion went narrowly against hall, but it generated much attention and potential embarrassment for the conservatives.[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] strong support emerged from within the party for hall's stand, particularly from its youth wing, the young liberals.[41] on 21 march 1972, a faction, but closer to a "party within a party" was formed: the new liberals.[38] on 28 march it was renamed the liberal movement.[38] the conservatives strongly criticised hall and his new movement, accusing them of undermining eastick, disrupting the party and being disloyal.[42]