The new Labor government, elected on Rudd's promise of ‘an alternative, not an echo’, for the most part improvised on themes played by the Howard government over the preceding 13 years. There were some exceptions, but continuity in policy was far more evident than any clean break. Continuity, not just with the Howard government but with the Hawke and Keating governments before that. Adherence to orthodox economics, privatisation and the use of market mechanisms backed by coercive centralised control in the delivery of public services, employer friendly industrial relations reform, firm support for the US alliance, racism towards Aborigines and asylum seekers, and lack of action on climate change all characterised the Labor government of 2007–10. The interests of capitalists prevailed over those of Labor's working class supporters.

From neoliberalism to Keynesianism and back again

The exact content of Labor's economic agenda shifted dramatically during the 2008–9 global financial crisis, the defining event of the period – from neoliberalism to massive government intervention – but in both cases Labor's policy was entirely in accord with the dominant trend endorsed and promoted by the OECD. At the outset, Labor was determined to establish itself as a fiscally conservative government.