Global education policy has witnessed emphases on choice and competition within an education market (e.g. Bunar, 2010), creating the need for ostensibly reliable criteria to judge the position of individual schools within this market, a need met by high-stakes testing. Less recognized is the renewed impetus that choice has provided to ability grouping practices. In particular, countries like Australia have seen an increase in ability grouping practices, including offering ‘opportunity’ or ‘acceleration’ classes for ‘gifted and talented’ students, to entice middle-class families to government schools and reclaim market share from private schools. This paper draws on Lacan’s three registers of the psyche to examine the dialectics and dilemmas in pre-service teachers’ affective and intellectual responses to the growing educational practice of ability grouping, based on interview data. The paper concludes, with reference to Ozga’s notion of teachers as policy workers (Ozga, 2000), examining how teacher education providers can productively engage pre-service teachers in ongoing identity work in response to controversial policy issues. References Bunar, N. (2010). Choosing for quality or inequality: Current perspectives on the implementation of school choice policy in Sweden. Journal of Education Policy, 25(1), 1-18. Ozga, J. (2000). Policy research in educational settings. Maidenhead: Open University Press.