Purpose– The purpose of this paper is to examine the challenges facing the Australian fashion industry (textile, clothing and footwear or TCF sector). Just at the point where Australian fashion has achieved international attention for its distinctive design practice, the industry is on the point of collapse. Since the 1980s, radical re-structuring aimed at reducing industry protection to encourage greater international competitiveness and innovation. Key policies have included tariff reduction, new forms of industry assistance, new manufacturing techniques, changing retail forms, and reform of employment and workplace conditions.Design/methodology/approach– Overview of recent trends in the Australian fashion industry due to industry policies and the effects of globalisation.Findings– Severe decline in industry viability.Originality/value– Important multifaceted analysis of the state of the industry and tracking of effects of government policies.