On the day the Whitlam government was turfed out, Peter Carey was in Melbourne. He was working in advertising in Sydney at the time but was in town to receive an award. His memory is slightly hazy and the ceremony may have been the next day, but he recalls making some sort of speech that spoke of his shame and rage about the tumultuous events.

Today, Carey is back in Melbourne, still harbouring a deep resentment at the way Whitlam was treated. He is at the end of a tour to promote his new novel, Amnesia. He has one more date - lunch with The Age - before he heads for Bacchus Marsh, where he grew up, to visit his brother and sister. Then after a day or two he's back on the plane to New York, where he's lived for more than 25 years. That's why he has a vital appointment at the physio to get his neck uncricked.

I've encountered Carey many times over the years. He can be grumpy, down in the dumps, irreverent, a smart-arse, playful, funny - but he is invariably good company. Today he is in crackling form - it's been a splendid trip and the book has received almost entirely favourable reviews.

Amnesia is about the release of an internet worm by hacker Gaby Baillieux into the local prison system in order to release refugees. It's not only the security of Australian prisons that is compromised but inadvertently also those of the United States. Her story is being written by drink-fond left-wing hack Felix Moore, who still despises the US for its role in the overthrow of the Whitlam government and sees her act as revenge for that.

Is overthrow too strong a word? Absolutely not, Carey says bluntly.  "Leading up to that time was the most massive misinformation and propaganda campaign that the country has ever seen. All you need, I suppose, is the newspaper proprietors and the local power structure to do that. You don't need the Americans, but in fact they were continually involved."

It's a particularly poignant time to be talking about all this because Gough Whitlam has been dead only a few days. Carey is puzzled by some of the media treatment of Whitlam's death. "I can't imagine what the emotional undercurrent is that propels Gough and his death to this deification by the people who destroyed him"

A novelist will always tell you that it's a mistake to identify him with one of his characters. But in the case of Felix, it's clear that his political views are those of Carey. And his weakness for red wine? "His alcoholism's mine," Carey deadpans. "Three glasses does not a character make."

We have arranged to meet at the Town Mouse, the Drummond Street restaurant that has been getting tremendous word of mouth. It offers small dishes that are designed to be shared and are made from fresh ingredients that seem to emphasise taste and texture. It's also bang next to the Readings bookshop warehouse where Carey has just been signing several hundred copies of Amnesia.

The nice people at the Town Mouse bring us a few plump oysters with chardonnay vinegar sorbet, lemon and a couple of goat's cheese profiteroles and honey from their roof-top hive as an appetiser. Carey has vegetables on his mind and picks two dishes: radishes and dill pickles with whipped feta - we wonder how naughty the feta has been -and heirloom kale, slow-cooked egg, quinoa, comte and mustard.

Given that we are being encouraged to share, I pick the two fillets of snapper on wood-grilled broccoli, with clams, capers and olive oil. Carey fancies a red wine - a bit better than the cask stuff he imposes on Felix - and  after a bit of help we go for a Viti Vini Vinci burgundy. "Fabulous, I like these sorts of wine," he says.

He has always been a political animal. Not for him a gradual slump into conservatism as he ages. "Having kids in their 20s who have to face this world and think about these things all the time - that's certainly made me aware," he says. "They're aware of it and so am I."

And Carey hasn't forgiven Malcolm Fraser for being complicit in what he calls an illegal action. "The new Malcolm Fraser is obviously acting in a different way and therefore is a commendable person, but it doesn't mean that I think differently about the old Fraser."

I remind Carey that in March 2008, backstage before he and Ian McEwan, Siri Hustvedt and Paul Auster did a reading at Adelaide Town Hall during Writers' Week, the question of the impending US election at the which Barack Obama would win the presidency came up. They were all very excited by the prospect. How does he feel more than six years later?

"It's amazing, it's embarrassing the level of passion I felt. I couldn't be more disenchanted. And I feel foolish. Frances [Coady, Carey's wife] knew the next morning, after the election, when he announced his economics team."

With hindsight, I wonder, would Hillary Clinton have been a better bet? "She may well have been. She at least had on her side experience of battling with the right and corporations. On the other hand she had a sort of bullshit campaign with a nasty edge to it."

It was 40 years ago that Carey's first book was published. The poet Robert Adamson said in a review at the time that Carey's imagination was "fired by genius".  He had already been writing for 10 years and getting plenty of rejection letters, but he says he has always felt blessed that things happened slowly for him.

If one of his students at Hunter College, where Carey is a distinguished professor teaching creative writing, were to really excite a publisher, the student "would be paid more than I'll be paid for my next book".

A sudden rise to fame is a difficult thing to deal with. "I don't mean to write, I mean to being publicly known. The editors, young editors, will go crazy for them ... they get over-excited and will overpay, and when the book doesn't work they'll soon punish."

In Amnesia, writing is referred to as a solitary labour. Is that still the case for the two-time Booker winner?

"Yes, yes." Pleasurable? "Sometimes ... there are days when it just feels ecstatic and days when it feels like you're removing yourself and what you're doing can't work and shouldn't work. What you want is somebody who says it felt like a lot of fun to write the book. That's a nice thing because they're feeling energy and a certain kind of joy. But the fact that the book feels like that is no indication that it felt like that to write at all. It means you work hard to make it feel like that."

When he was growing up in Bacchus Marsh, his family ran Carey Motors. His parents were a partnership, he says. His mother ran the spare-parts department and delighted in correcting the many men who came in saying they knew precisely which part number they required. "People would come into the garage wanting to see the manager and she would say, 'I am the manager'. My father was the salesman. To be the salesman is be the artist, in a way."

So what traits did he inherit from them?

From his mother high anxiety, he reckons, which leads to a "flat, controlling disposition" and a sort of general speediness. "My mother attacking a task, whether it be in the garden or the house, would be a total flurry of activity. I'm a little less like that."

And he has understood certain traits of his father since his death. "To say something that you're not meant to say on purpose, to be irreverent or to be interested in being funny and reckless. Those sorts of things are like him. I met a woman in Noosa Heads who knew him who said, 'While you're alive, your father is alive.' I loved it."

There's time for one more question before he's off to have his neck fixed, but it comes from Carey - at his best: "So, did you get enough shit?"