Former prime minister Paul Keating – architect of some of the most profound economic reforms in the country's history during the 1980s – has launched a surprise critique of the liberal economic philosophy he once championed, declaring it has "run into a dead end".

Mr Keating made his remarks in response to a speech delivered by the new leader of the ACTU, Sally McManus, at the National Press Club in Canberra on Wednesday.

Ms McManus declared that "neo-liberalism" had run its course, and that experiments in privatisation had failed, slamming the government over mooted penalty rate cuts, accusing many employers of adopting "wage theft" as a business model, and declaring war on growing inequality.

"We are not saying that the people who introduced some of the policies that you could name as being neo-liberal were bad people, we are saying the experiment has run its course," Ms McManus said, in response to questions.