In the late 1970s, Kelly was vocalist for the Melbourne pub-rock band "The High Rise Bombers". Following the dissolution of that group, Kelly formed "Paul Kelly & The Dots". The Dots period, which ranged from 1978-1982, saw the release of three albums, Talk in 1981, Manila in 1982 and the Urban Opera in 1985.
After Urban Opera, Kelly had difficulty securing a recording contract as he struggled with a drug problem. In the liner notes to his 1997 Greatest Hits collection, Songs from the South, Kelly makes special mention of Michelle Higgins, a former Mushroom Records employee who had locked herself into a hotel room, refusing to leave the room until she had secured Kelly at least a two album recording contract.