Over the last 20 years, few policy areas in Australia have been contested as fiercely as industrial relations (IR). In 1993, the Keating Labor Government implemented the Industrial Relations Reform Act, which severed a 100-year Australian tradition of centralised wage fixing and state involvement through the conciliation and arbitration of industrial disputes. In its place was a new decentralised and deregulated regime, centred on enterprise bargaining.

Rather than establishing a new consensus, the effect of the Industrial Relations Reform Act has been to shift the parameter of IR policy further to the right. The Howard Coalition Government argued that the changes were not severe enough, and with its 1996 (Workplace Relations Act) and 2006 (Work Choices) interventions continued to dismantle what remained of a unique liberal collectivist experiment in IR. Labor's 2007 response, the Fair Work Act, remains true to the spirit of Keating's 1993 Act and keeps in place many of the reforms adopted by the Howard Government, intended to erode the collective institutions of IR policy. Consequently, the policy debate in IR has become one relating to a choice between an unregulated marketplace, where employers are free to set the terms, and a system where collective bargaining at the enterprise level is propped up by a residualist safety net. Neither option has the capacity to address rising insecurity in the labour market or the production and reproduction of skills, two of the biggest issues (in terms of economic and social costs) confronting the contemporary Australian labour market.

This chapter has four sections. First, we briefly summarise the changes that have occurred in the Australian labour market during the last 30 years. Next, we outline the fundamental policy questions in IR and how the main competing values frameworks attempt to answer them. Third, we review the foundations of IR policy in Australia, from the 1880s to the 1980s. Understanding how industrial relations evolved within a liberal collectivist framework, rather than a social democratic one, is key to explaining the neoliberal turn in IR policy since. Finally, we examine the transformation of IR policy since 1990 to a largely uncontested neoliberal terrain, built around the idea of the enterprise as a unitary whole, and the consequences for the Australian labour market.