Upon this defeat, the Liberal Party became badly divided between the moderate (wet) and the conservative (dry) forces within the party. Macphee, as one of the party's leading moderates, became a strong supporter of Andrew Peacock, who defeated John Howard for the leadership of the party. Macphee remained in Shadow Cabinet, continuing as shadow Minister for Employment and Industrial Relations before he was given the job of shadow Minister for Foreign Affairs after the 1984 election. At this election, Macphee transferred to the newly created Division of Goldstein, essentially a reconfigured version of Balaclava.