The Howard government quickly put aside the comforting words it had used to win the 1996 election. Public service jobs were slashed. New industrial relations laws were passed to wind back the award system, attack union rights, and introduce statutory individual contracts. Public sympathy for the Coalition dropped sharply; its primary support, according to Newspoll, fell from 55 per cent in May 1996 to 40 per cent one year later. Yet Labor failed to capitalise on the Coalition's slide, its poll results rising from 36 per cent to only 39 per cent.

As had occurred during the Fraser government, the trade unions were initially the real opposition to the conservatives. They mounted a series of one day strikes and rallies to protest against the government's harsh budget cuts and anti-union legislation that culminated in a large and angry demonstration outside Parliament House in Canberra on 19 August 1996. Militant unionists and Aborigines forced their way into the building. Labor and trade union leaders turned this impressive demonstration of widespread outrage against the Coalition's policies into a rout by tailing the government and conservative media in denouncing damage to the building's doors and souvenir shop. Even left wing union leaders distanced themselves from the event.

Although the government prevailed against the unions in 1996, it was pushed back on the nation's waterfront two years later when many thousands of workers and union supporters joined the Maritime Union of Australia's (MUA) picket lines all around the country, shutting down the operations of Patrick Stevedores, which had sacked its entire unionised workforce of 1400 and replaced it with scabs.