McLay's first major challenge was Muldoon himself. On his defeat, Muldoon refused to accept any portfolios offered him, thereby becoming a backbencher. McLay's attempts to give Muldoon an "elder statesman" role within the party were rebuffed, with Muldoon insisting on an active role. The relationship between McLay and Muldoon deteriorated further, as McLay outlined a major departure from Muldoon's interventionist economic policies. Muldoon's hostility was to prove a major problem for McLay's leadership, and undermined all attempts to promote unity within the party. Later, when Muldoon made a strong public criticism of the entire party leadership, Muldoon (along with loyalist Merv Wellington) was demoted to the lowest ranking within the National caucus.