In 1882, he won St Leonards, with the support of the unions. In January 1883 he was given the portfolio of Colonial Treasurer in the ministry of Sir Alexander Stuart, and was committed to continued railway-building although revenue was under pressure due to a suspension of land sales and no new taxation. Dibbs would later describe this decision as "the gravest political blunder of my life". The Assembly refused to pass an increase in property tax, so he decided to borrow an unprecedented £14m, giving him a subsequent reputation for extravagance. Stuart resigned due to ill-health in October 1885 and Dibbs became Premier. In the October 1885 elections, he was attacked mercilessly by Parkes who defeated him in the St Leonards election, was defeated for The Richmond, but he won The Murrumbidgee. Although his government polled badly overall, he attempted to govern on, but he was forced to resign after less than three months when it became clear that there would be a budget deficit of over £1m.