His strapping 5-year-old grey gelding Baghdad Note charged down the outside of the Flemington straight in the last furlong of the two miles race to overwhelm the leaders and score an easy win.
Baghdad Note, a 25/1 chance, scored by three-quarters of a length from Vansittart. Lightweight Clear Prince was half a head away, third.
Baghdad Note, trained at Wingatui by Bob Heasley, was ridden by leading New Zealand jockey E. J. Didham.
Didham, who rode a great race on the grey, had a grin from ear to ear as he trotted the horse back into the enclosure after the cup presentation.
PROUD MOMENT
It was a proud moment for Mr Falconer.
Photographers and television cameramen clustered round him after the presentation ceremony, urging him to hold the cup higher.
The crowd cheered, and Mr Falconer, a retired businessman, kissed a pretty blonde hanging over the enclosure fence.
He was remarkably composed as he accepted the Melbourne Cup from the Governor-General, Sir Paul Hasluck.
Mr Falconer told the crowd: "Baghdad Note's trainer, Bob Heasley, inspired me to bring Baghdad Note across the Tasman. In fact, he had to talk me into bringing him here."
FULL SISTER
Mr Falconer said he had flown home to Dunedin from Melbourne last week, and while he was there a full sister to Baghdad Note had been foaled. "I think we'll call her Ararat Note," he added.
Congratulating Mr Falconer on another New Zealand win, Sir Paul commented: "We Australians will have to do better."
Trainer Heasley (44) was a successful Dunedin jockey before he took up training.
"Absolutely fantastic," said Wingatui jockey Ernie Didham - his nickname "Midge" is used mainly in the family - after riding Baghdad Note to victory yesterday.
Last night when the Daily Times telephoned Ernie in Melbourne, he was so excited that he was almost lost for words.
But one thing he did make clear - Baghdad Note's performance was absolutely fantastic. "He got out and ran them down."
In praise of the horse's performance he dismissed his own efforts, although he received wide acclaim for a brilliant ride.
"I followed Tails, and at the four and a half furlongs I got round him and came in again and ran the field down," Ernie said.
He summed it up by saying, "She was a great race."