Dibbs entered parliament in 1874 as MLA for West Sydney, as a supporter of business interests and compulsory, secular and free education, which involved withdrawal of the support from denominational schools, provided under the Education Act of 1866. He opposed the first ministry of Henry Parkes on this issue and was loosely associated with the third ministry of John Robertson, but fell out with Robertson, denouncing his education bill as a sham and betrayal, returning to support Parkes. He lost his seat at the 1877 election due to his support for assisted immigration, which gave him a reputation as an "enemy of labour". Subsequently, a seamen's strike broke out against the Australian Steam Navigation Co, because it had begun to employ Chinese sailors on the Australian coast, and he was obliged as a director of the company to defend its policy, further reducing his popularity.