This article describes the Commonwealth Government's rural policy activities over 1987. In that year, policy was shaped by three interrelated factors: the uneven but marked recovery of commodity prices and the associated diminution of the urgency and political intensity of the "rural crisis"; the Government's survival in the election; and the gradual transformation of policy emphasis from intermittent "political" crisis management towards managerialist and microeconomic efficiency reforms. The intensity of rural politics declined sharply after the election. The amalgamation of the Department of Primary Industry with the Department of Resources and Energy dominated the continued restructuring of rural policy institutions. This restructuring, together with the broadening of the scope of rural policy and the preoccupation with deregulation and economic efficiency, were the incrementalist motifs of the shift towards managerialism.