THE PLAYMAKER A novel by Thomas Keneally Simon and Schuster. 354 pp. $18.95

TO ANSWER the "What is there left to be told about Australia's origin as an 18th-century prison asteroid after The Fatal Shore" question before it can be asked: plenty. Readers who made Robert Hughes's robust history of the convict colony a recent best seller have an imaginatively different saga awaiting them here. Indeed, Thomas Keneally's fictional panorama of life among the prisoner founders of Sydney and their military keepers is one of those free-spirited books that insouciantly tells us, not we it, what company it's to keep. We shall get to other corners of the world in a moment, but to draw a comparison from the American side of things, The Playmaker is the best performance of a novelist's magic that I have seen since William Kennedy's Ironweed.

In the England that sent its convict arks to the southernmost Pacific, a music hall joke asked, "If all the world's a stage, who's the driver?" In fledgling Australia of 1789, the unexpected answer is Ralph Clark, a monumentally homesick young marine lieutenant who is ordered to produce a play when the Sydney penal colony undertakes, somewhat desperately, to celebrate the king's birthday.

Quick as this, Keneally begins his inspired weaving of life and roles, for the designated play is the convoluted society comedy, "The Recruiting Officer" -- "the one play of which two copies existed" in the pinprick settlement -- and the players to be are petty thieves "spat out" by Georgian England. Ralph undergoes a hilariously beleagured casting call, and rehearsals begin. The colony's minister, whose sermons "were capable of making your average sheep thief's eyes cross," listens in on the racy stage dialogue, and is outraged. A pair of uproariously splenetic Scots officers get wind that Ralph has cast a suspected perjurer as his leading actress, and are enraged. On the other hand, Arabanoo, the captive aborigine who has become the governor's court favorite, finds Ralph's playmaking sensational even though he doesn't understand so much as a syllable of it.

Offstage, Keneally's sizable ensemble resounds with private dramas. (With 16 novels to his credit now at the age of 51, this author's career is as capacious as his books. He may be peeking in the mirror with a grin when he has a character here in this ample novel observe of another, "he could narrate nothing in its short form.") Ralph's closest friend, Provost Marshal Harry Brewer, is haunted by a love rival whose hanging he oversaw. Ralph himself, tortured by separation from his wife in Devon, "had become the most notorious dreamer in the colony, with his night cries and his wailings." Convicts and keepers alike, these are scrabbling victims of time and space, these firstcomers to Australia's indifferent vastness, souls who have been dropped "through such an enormous sieve of latitudes and longitudes."

WHAT WE have here is a style of rich, chance-taking fiction that we don't encounter often enough on our own shores. For a generation or so, the U.S. literary fashion has been "show, don't tell." Depict your characters and their surroundings, while forswearing that old literary demon Rhetoric. Thank God, no such advice ever reached Shakespeare. Nor Thomas Keneally in Australia -- nor Nadine Gordimer in South Africa nor Trinidad-born V.S. Naipaul, the world class of writers who, like him, have shown us in such vivifying novels as A Sport of Nature and A Bend in the River that it is possible to write fiction with character as well as characters. While experimental fiction in this country has been nearsightedly eating its own tail and minimalism has been yawning in condescension toward people who have to shop at the K Mart instead of Banana Republic, show-and-tell has been occurring in world literature and, guess what, the old grade school dictum is still valid -- we can learn fresh wonders from the experiences of others.

And so, Thomas Keneally gives us his best zest. He is capable of it in a phrase: Dabby Bryant, the convict woman whose imaginative ministration damps down Ralph's dreams, flaunts to him "thighs olive as sin." Or simply in the narrative flow, as when Australia's first hanging is projected to be a multiple affair and the uneasy Provost Marshal protests to His Excellency, the colonial governor: "Harry argued that -- in number terms -- to hang three in a swipe was equivalent to hanging two thousand Londoners. H.E. waved his hand, saying the court had not taken the trouble to consider percentiles and that therefore neither could he." And when Ralph the smitten playmaker at last finds the courage to unshackle himself from his aloneness, he does so with as triumphantly unexpected a line as a lover could utter, which you deserve the pleasure of discovering for yourself.

One last bit of Keneallian alchemy awaits the reader. At the book's end, this display of novelistic skill turns out to be about actual minor figures of the Sydney penal colony, whose lives in exile are known only in dim archival outline. Keneally justly concludes, "Of them fiction could make much, though history says nothing."Ivan Doig's novel, "Dancing at the Rascal Fair," has just been published.