Guilfoyle joined the Liberal Party in the early 1950s. She was mentored by
Elizabeth Couchman and Senator
Ivy Wedgwood, who encouraged her to seek leadership positions within the party's organisational wing. In 1967, with their support, Guilfoyle was chosen as chairman of the state women's section and elected to the state executive. She also served as a delegate to the federal council. When Wedgwood announced her retirement, she endorsed Guilfoyle as her successor. Guilfoyle won Liberal
preselection for the Senate against 20 male candidates, and was elected from second place on the
Coalition's ticket in Victoria at the
1970 half-Senate election.
Senate Guilfoyle's first term in the Senate began on 1 July 1971. She was re-elected in
1974,
1975,
1980 retiring on 5 June 1987. Soon after taking her seat, Guilfoyle joined the Joint Committee of Public Accounts and the Senate Standing Committee on Finance and Government Operations. Guilfoyle was appointed to the Senate Select Committee on Foreign Ownership and Control of Australian Resources in 1972, and the following year joined the Joint Committee on Prices.
The Herald described her as "a housewife with a big say on prices", she was the second woman appointed to cabinet, after
Enid Lyons, and the second to be given a ministerial portfolio, after
Annabelle Rankin. In December 1975, following the Coalition's victory at the 1975 election, Guilfoyle was appointed
Minister for Social Security in the
second Fraser Ministry. Her new portfolio was initially placed outside of cabinet, but she was reinstated in July 1976 after
Ivor Greenwood's retirement. According to Fraser, she "contributed significantly to cabinet debates ... she could be totally relied on and she could think for herself – she wasn't a captive to the bureaucracy". In the social security portfolio, Guilfoyle was seen as skilful in balancing political and financial considerations. She strongly resisted pressure to cut
her department's budget, arguing that regular increases were needed simply to maintain existing programs. She believed any cuts would be unpopular with both the general public and her party's backbenchers, and there was no guarantee that they would pass the Senate. Fraser agreed with her rationale, and in 1979 she secured a "sizeable increase" in her department's budget. She had an often tense relationship with Treasurer
Phillip Lynch, who complained to Fraser that she was the most uncooperative minister in identifying potential spending cuts. During her tenure, Guilfoyle oversaw a major reform of the national
child endowment scheme, introducing direct cash payments rather than tax rebates. She helped establish it as a permanent measure, renaming it the "family allowance", and resisted calls to introduce means-testing. As well as running her own department, Guilfoyle was also placed in charge of the new Office of Child Care within the
Department of the Prime Minister and Cabinet. Working with
Marie Coleman as the office's director, she oversaw a major expansion of the federal government's activities in the childcare sector, introducing or expanding funding for preschool, daycare, after-school care, and youth refuges. After the 1980 election, Guilfoyle was appointed
Minister for Finance, effectively becoming the deputy to the treasurer,
John Howard. She viewed her position as that of "chief accountant for the country". Beginning with the 1981–82 budget, government ministers were required to take budget submissions to Guilfoyle for approval. That role had previously been filled by the Expenditure Review Committee (ERC), a panel of five ministers. Under the new arrangement, the ERC only reviewed submissions if a minister had failed to come to an agreement with Guilfoyle. She was a key member of the Review of Commonwealth Functions Committee, a cabinet subcommittee nicknamed the "
razor gang" that was tasked with cutting government expenditure. Its report, handed down in April 1981, recommended that hundreds of functions and programs be abolished, reduced, or transferred to state governments. Guilfoyle remained finance minister until the government's defeat at the
1983 election. She was made spokesperson for finance and taxation in
Andrew Peacock's shadow ministry, but resigned the position after the
1984 election, and spent her remaining years in the Senate as a backbencher. ==Later life==