Hi there. I'm Jacqueline Maley, the host of Inside Politics, The Age and the Sydney Morning Herald's weekly politics podcast. We're bringing you the best episodes of 2024 before we return in early February for the election year. In this episode, which aired in April, we take you to the moment Foreign Affairs Minister Penny Wong signalled the start of a shift of Australia's position on the question of Palestinian statehood in the wake of the Israel-hamas War. Since then, Australia has changed its stance, voting for the first time in more than 20 years for a United Nations resolution that demanded Israel end its presence in the occupied Palestinian territories. We're releasing this episode, which features foreign affairs correspondent Matthew Nott and chief political correspondent David Crowe, on January 3rd. Welcome to the podcast, Matt and David.

Hi there. I'm Jacqueline Maley, the host of Inside Politics, The Age and the Sydney Morning Herald's weekly politics podcast. We're bringing you the best episodes of 2024 before we return in early February for the election year. In this episode, which aired in April, we take you to the moment Foreign Affairs Minister Penny Wong signalled the start of a shift of Australia's position on the question of Palestinian statehood in the wake of the Israel-hamas War. Since then, Australia has changed its stance, voting for the first time in more than 20 years for a United Nations resolution that demanded Israel end its presence in the occupied Palestinian territories. We're releasing this episode, which features foreign affairs correspondent Matthew Nott and chief political correspondent David Crowe, on January 3rd. Welcome to the podcast, Matt and David.

Hi, Jackie.

Hi, Jackie.

Good day. Jackie.

Good day. Jackie.

So first of all, Matt, for those of us who weren't paying close attention this week, can you just brief us on what the foreign minister said in her speech?

So first of all, Matt, for those of us who weren't paying close attention this week, can you just brief us on what the foreign minister said in her speech?

Yeah, so I was here at this event, which was at the Australian National University, which has been having a big national security conference in Canberra with lots of experts from around the world talking about big strategic issues. And Penny Wong was giving the key speech on Tuesday night.

Yeah, so I was here at this event, which was at the Australian National University, which has been having a big national security conference in Canberra with lots of experts from around the world talking about big strategic issues. And Penny Wong was giving the key speech on Tuesday night.

Well, we're coming to the end of our second year in government, and tonight I want to take account of these first two years where we started and where we are now. But mostly, I'd like to give you my perspective.

Well, we're coming to the end of our second year in government, and tonight I want to take account of these first two years where we started and where we are now. But mostly, I'd like to give you my perspective.

Now, we would have expected, given all the things going on in the world that she would mention, perhaps touch on the war in Gaza. But the key component of her speech, the thing she spent most of her time talking about, was this question of a two state solution, and in particular, recognition of Palestinian statehood.

Now, we would have expected, given all the things going on in the world that she would mention, perhaps touch on the war in Gaza. But the key component of her speech, the thing she spent most of her time talking about, was this question of a two state solution, and in particular, recognition of Palestinian statehood.

We need to build the pathway to a peace that is enduring. And just because the simple truth is that a secure and prosperous future for both Israelis and Palestinians will only come with a two state solution recognition of each other's right to exist.

We need to build the pathway to a peace that is enduring. And just because the simple truth is that a secure and prosperous future for both Israelis and Palestinians will only come with a two state solution recognition of each other's right to exist.

Now, this in Australia hasn't been a big part of the debate since the war broke out, but she really put this up in lights in her speech by saying that a two state solution is the only way to end the cycle of violence here, and specifically saying that the international community is considering the question of Palestinian statehood as a way to build momentum towards that two state solution. She didn't commit the government to doing anything on this, but she very notably put this up as something she wanted people to be talking about.

Now, this in Australia hasn't been a big part of the debate since the war broke out, but she really put this up in lights in her speech by saying that a two state solution is the only way to end the cycle of violence here, and specifically saying that the international community is considering the question of Palestinian statehood as a way to build momentum towards that two state solution. She didn't commit the government to doing anything on this, but she very notably put this up as something she wanted people to be talking about.

Now, David, talk us through whether or not this is actually a significant shift in Australia's Australia support or Australia's stance on Palestine because for people who are not, again, following this really closely, Palestinian statehood is recognised by some countries, but Australia is not one of those countries. We sort of say that there should be a two state solution, but at the moment we don't recognise Palestine as a state. Is that right? So is this a shift?

Now, David, talk us through whether or not this is actually a significant shift in Australia's Australia support or Australia's stance on Palestine because for people who are not, again, following this really closely, Palestinian statehood is recognised by some countries, but Australia is not one of those countries. We sort of say that there should be a two state solution, but at the moment we don't recognise Palestine as a state. Is that right? So is this a shift?

I don't think it's a significant shift, or at least not a shift just yet. It was a speech to provoke a debate and to start a discussion. The Australian position is that Australia supports a two state solution, which means statehood for Palestine in a settlement with Israel at some point in the future. And now this is an outcome that's eluded all sides for three decades. And there's a lot of blame to go around about why that's happened. But that's the fact. And really, what Penny Wong was doing was making a couple of arguments about why you might recognise Palestinian statehood. If it was getting you to the outcome of a peaceful resolution and a two state solution.

I don't think it's a significant shift, or at least not a shift just yet. It was a speech to provoke a debate and to start a discussion. The Australian position is that Australia supports a two state solution, which means statehood for Palestine in a settlement with Israel at some point in the future. And now this is an outcome that's eluded all sides for three decades. And there's a lot of blame to go around about why that's happened. But that's the fact. And really, what Penny Wong was doing was making a couple of arguments about why you might recognise Palestinian statehood. If it was getting you to the outcome of a peaceful resolution and a two state solution.

Now there are those who always claim recognition is rewarding an enemy. This is wrong. First, because Israel's own security depends on a two state solution. But of course.

Now there are those who always claim recognition is rewarding an enemy. This is wrong. First, because Israel's own security depends on a two state solution. But of course.

She put a lot of caveats on what she was.

She put a lot of caveats on what she was.

Saying, because there is no role for Hamas in a future Palestinian state. Hamas is a terrorist organization which has the explicit intent of the destruction of the state of Israel and the Jewish people. And we should acknowledge Hamas rains terror also on the Palestinian people in Gaza. It has long been understood that any future Palestinian state cannot be in a position to threaten Israel's security and will need a reformed Palestinian Authority, recognizing she started.

Saying, because there is no role for Hamas in a future Palestinian state. Hamas is a terrorist organization which has the explicit intent of the destruction of the state of Israel and the Jewish people. And we should acknowledge Hamas rains terror also on the Palestinian people in Gaza. It has long been understood that any future Palestinian state cannot be in a position to threaten Israel's security and will need a reformed Palestinian Authority, recognizing she started.

The debate without necessarily having a specific solution, and certainly nothing like a specific policy decision that she was outlining, because there is no such policy decision at federal cabinet level to change the Australian position.

The debate without necessarily having a specific solution, and certainly nothing like a specific policy decision that she was outlining, because there is no such policy decision at federal cabinet level to change the Australian position.

Also, this issue has been building for a long time. We're focused on the war in Gaza right now, but this has been playing out within inside the Labor Party for many years, decades even, really. And there has been a shift on this. Penny Wong has been an active player in this. The prime minister, Anthony Albanese, has been a very active player on this in terms of shifting Labor's position. The Labor Party policy platform says that they support recognition of a Palestinian state, and that this should be an important priority for a labor government. Labor is now in government. So it has been a question since they got in, would they enact the party platform? They've certainly been in no rush to do it. It's a tricky thing to pull off in practice, But for those in the labor movement and the Labor Party, there's a lot of history to this. Yep.

Also, this issue has been building for a long time. We're focused on the war in Gaza right now, but this has been playing out within inside the Labor Party for many years, decades even, really. And there has been a shift on this. Penny Wong has been an active player in this. The prime minister, Anthony Albanese, has been a very active player on this in terms of shifting Labor's position. The Labor Party policy platform says that they support recognition of a Palestinian state, and that this should be an important priority for a labor government. Labor is now in government. So it has been a question since they got in, would they enact the party platform? They've certainly been in no rush to do it. It's a tricky thing to pull off in practice, But for those in the labor movement and the Labor Party, there's a lot of history to this. Yep.

And as we know, Wong and Albanese are both of the labor left, as you just alluded to, which tends to be very pro-Palestine. So there might be a bit of internal pressure, which is certainly what the opposition is saying, which we'll come to later. But Matt, can you just sort of speculate, perhaps on why Wong would do this now, apart from the reasons you've just presented about a growing pressure? I mean, there's stuff happening at the UN level, isn't there?

And as we know, Wong and Albanese are both of the labor left, as you just alluded to, which tends to be very pro-Palestine. So there might be a bit of internal pressure, which is certainly what the opposition is saying, which we'll come to later. But Matt, can you just sort of speculate, perhaps on why Wong would do this now, apart from the reasons you've just presented about a growing pressure? I mean, there's stuff happening at the UN level, isn't there?

Yes. And this was a curious factor for me. Having followed this and written about this was exactly why now? Because I don't think Penny Wong was just doing this for no reason, or because she had a speech to give. She could have spoken about many things in her speech. She very deliberately chose to speak about this. So this is coming up at the UN. As Penny Wong said, political leaders around the world are speaking about this exact question of recognition of Palestine. Palestine has had a long standing request to become a member state at the United Nations. That is going to come up before the UN Security Council this month. Australia is not a member of that council, but then the expectation is that this issue will at some point a bit down the track, come up for a vote in the United Nations General Assembly, and Australia would have to stake a position on it. We could always abstain. But people are that I speak to in this space are saying, keep an eye on that United Nations timeline, because that would be the time we would really have to declare our view on this. Yeah.

Yes. And this was a curious factor for me. Having followed this and written about this was exactly why now? Because I don't think Penny Wong was just doing this for no reason, or because she had a speech to give. She could have spoken about many things in her speech. She very deliberately chose to speak about this. So this is coming up at the UN. As Penny Wong said, political leaders around the world are speaking about this exact question of recognition of Palestine. Palestine has had a long standing request to become a member state at the United Nations. That is going to come up before the UN Security Council this month. Australia is not a member of that council, but then the expectation is that this issue will at some point a bit down the track, come up for a vote in the United Nations General Assembly, and Australia would have to stake a position on it. We could always abstain. But people are that I speak to in this space are saying, keep an eye on that United Nations timeline, because that would be the time we would really have to declare our view on this. Yeah.

Penny Wong's speech was in the context of comments from other countries in the same space. David Cameron, Foreign secretary of the United Kingdom, was talking in February about statehood for Palestine without putting the proviso that a two state solution had to come first. So Penny Wong is totally in line with what David Cameron, a conservative peer in the House of Lords was saying. And so I think that's that's important. Whether this actually affects anything is another matter. As somebody who's a close observer of this pointed out to me when I was writing on it, 138 countries recognize Palestine. Has that made Palestine a state? I mean, recognizing statehood for Palestine can work in theory. And there's an argument that some of this is a superficial debate, because you've got a war in Gaza at the moment, and that should be the priority. Mhm.

Penny Wong's speech was in the context of comments from other countries in the same space. David Cameron, Foreign secretary of the United Kingdom, was talking in February about statehood for Palestine without putting the proviso that a two state solution had to come first. So Penny Wong is totally in line with what David Cameron, a conservative peer in the House of Lords was saying. And so I think that's that's important. Whether this actually affects anything is another matter. As somebody who's a close observer of this pointed out to me when I was writing on it, 138 countries recognize Palestine. Has that made Palestine a state? I mean, recognizing statehood for Palestine can work in theory. And there's an argument that some of this is a superficial debate, because you've got a war in Gaza at the moment, and that should be the priority. Mhm.

Matt, I just want you to tell us about the reaction to this statement, because the opposition leader in particular was very critical wasn't he.

Matt, I just want you to tell us about the reaction to this statement, because the opposition leader in particular was very critical wasn't he.

Yes. Peter Dutton has been incredibly critical of this reality.

Yes. Peter Dutton has been incredibly critical of this reality.

Makes the Foreign Minister's remarks last night utterly illogical, ill timed and indeed inappropriate. It is the most reckless act of a foreign minister I've seen in my 22 years in the parliament.

Makes the Foreign Minister's remarks last night utterly illogical, ill timed and indeed inappropriate. It is the most reckless act of a foreign minister I've seen in my 22 years in the parliament.

He thinks the government isn't doing enough to tackle the problem with anti-Semitism. There very strong comments, particularly as David says, Penny Wong's comments are not that out of line with even what we're hearing out of America. I just wanted to add to what David was saying there in terms of a bit of a reality check. The Prime Minister was out saying that the whole world supports a two state solution.

He thinks the government isn't doing enough to tackle the problem with anti-Semitism. There very strong comments, particularly as David says, Penny Wong's comments are not that out of line with even what we're hearing out of America. I just wanted to add to what David was saying there in terms of a bit of a reality check. The Prime Minister was out saying that the whole world supports a two state solution.

We have said very clearly that we want a two state solution, and we've said very clearly as well, we're working with like minded partners as well to say that Hamas has no role in a future Palestinian state.

We have said very clearly that we want a two state solution, and we've said very clearly as well, we're working with like minded partners as well to say that Hamas has no role in a future Palestinian state.

And in theory, pretty much everyone in the world does, except right now, it seems the Israelis and the Palestinians, who are the people who matter most here and would have to live with these two states. Polling makes this very clear. It's very clear when I was on the ground there that there's incredibly little goodwill between these two sides. The leadership of the groups, Benjamin Netanyahu has in practice opposed a two state solution throughout his career and maneuvered to make sure it doesn't happen. Hamas has basically committed to the destruction of Israel, and the Palestinian Authority is very, very weak and hasn't seriously engaged with peace negotiations in several decades. People say the conditions on the ground aren't there for anything to happen. It doesn't really matter what David Cameron or Penny Wong or even Joe Biden think about this. If Israelis and Palestinians can't get on the same page.

And in theory, pretty much everyone in the world does, except right now, it seems the Israelis and the Palestinians, who are the people who matter most here and would have to live with these two states. Polling makes this very clear. It's very clear when I was on the ground there that there's incredibly little goodwill between these two sides. The leadership of the groups, Benjamin Netanyahu has in practice opposed a two state solution throughout his career and maneuvered to make sure it doesn't happen. Hamas has basically committed to the destruction of Israel, and the Palestinian Authority is very, very weak and hasn't seriously engaged with peace negotiations in several decades. People say the conditions on the ground aren't there for anything to happen. It doesn't really matter what David Cameron or Penny Wong or even Joe Biden think about this. If Israelis and Palestinians can't get on the same page.

So that's the international sort of audience for Penny Wong's remarks. I just want to talk really quickly about the sort of more internal audience, if you like. So what what what is the Labor Party doing in terms of its internals? So, you know, it's obviously giving a nod to some of the branch members who are particularly pro-Palestine. And there's also sort of the worry, perhaps, of Muslim constituents in some of the South west Sydney electorates which Labour holds. David, do you want to talk to that?

So that's the international sort of audience for Penny Wong's remarks. I just want to talk really quickly about the sort of more internal audience, if you like. So what what what is the Labor Party doing in terms of its internals? So, you know, it's obviously giving a nod to some of the branch members who are particularly pro-Palestine. And there's also sort of the worry, perhaps, of Muslim constituents in some of the South west Sydney electorates which Labour holds. David, do you want to talk to that?

I think it's a real concern within labor, in the sense that they've got communities that are in their electorates and they listen to those communities. They listen to communities who say, look, how can you stand silent while this death and destruction is being visited upon Palestinian people in Gaza? And as the conflict has gone on, those calls have got louder. And Labour can't ignore that. And it doesn't ignore that. I mean, but I think Penny Wong wasn't necessarily coming to this debate with her speech this week from a position of great strength. I mean, there's still criticism of her for, for instance, suspending, um, aid funding for the UN organisation in Gaza because of the accusations that it's some of its members were complicit in the Hamas killings. Then the government said, well, we'll decide our policy once we get the full report on what happened there and then before waiting for the full report, they resumed funding. So there wasn't a total consistency there in what the government was doing and people noticed that. So there's still this frustration within the Labour ranks about how this is being managed. And that, I think, helps explain why Penny Wong was sending this message.

I think it's a real concern within labor, in the sense that they've got communities that are in their electorates and they listen to those communities. They listen to communities who say, look, how can you stand silent while this death and destruction is being visited upon Palestinian people in Gaza? And as the conflict has gone on, those calls have got louder. And Labour can't ignore that. And it doesn't ignore that. I mean, but I think Penny Wong wasn't necessarily coming to this debate with her speech this week from a position of great strength. I mean, there's still criticism of her for, for instance, suspending, um, aid funding for the UN organisation in Gaza because of the accusations that it's some of its members were complicit in the Hamas killings. Then the government said, well, we'll decide our policy once we get the full report on what happened there and then before waiting for the full report, they resumed funding. So there wasn't a total consistency there in what the government was doing and people noticed that. So there's still this frustration within the Labour ranks about how this is being managed. And that, I think, helps explain why Penny Wong was sending this message.

Domestic politics does come into foreign policy, but it was noticeable in Penny Wong's speech, given to a very, I'd say, quite elite audience of, you know, foreign policy, national security thinkers. I'm not counting myself. I'm just a humble reporter. But that she did speak about the politics of this. She spoke about the Greens, and she said she thinks the Greens rhetoric on this has been really inflammatory. And they're adding to the tensions in the community, not making it better. She criticised the coalition as well and said they're not playing a productive role here. So she mentioned the two opposing parties and showed that she was trying to position Labour as being in the centre as the sensible force within these two extremes.

Domestic politics does come into foreign policy, but it was noticeable in Penny Wong's speech, given to a very, I'd say, quite elite audience of, you know, foreign policy, national security thinkers. I'm not counting myself. I'm just a humble reporter. But that she did speak about the politics of this. She spoke about the Greens, and she said she thinks the Greens rhetoric on this has been really inflammatory. And they're adding to the tensions in the community, not making it better. She criticised the coalition as well and said they're not playing a productive role here. So she mentioned the two opposing parties and showed that she was trying to position Labour as being in the centre as the sensible force within these two extremes.

So it was a very political speech in that sense. I mean, most people, I would say most Australians are somewhere in the middle on this and have probably quite a moderate line on it. And Wong is trying to present herself and the Labor Party as that.

So it was a very political speech in that sense. I mean, most people, I would say most Australians are somewhere in the middle on this and have probably quite a moderate line on it. And Wong is trying to present herself and the Labor Party as that.

There is something that we can only sort of monitor over time, how the killing of the Australian aid worker in Gaza has shifted debate that has been described to me by some labor people as a turning point. And you can clearly see much greater frustration from Anthony Albanese and Penny Wong towards Israel as a result of that death. How does that play out in the public debate as well?

There is something that we can only sort of monitor over time, how the killing of the Australian aid worker in Gaza has shifted debate that has been described to me by some labor people as a turning point. And you can clearly see much greater frustration from Anthony Albanese and Penny Wong towards Israel as a result of that death. How does that play out in the public debate as well?

Yeah, we're going to keep a watching brief on this. So, Nadia, will you come back and talk to us again?

Yeah, we're going to keep a watching brief on this. So, Nadia, will you come back and talk to us again?

Of course, of course.

Of course, of course.

Thank you for joining us and we'll see you again soon.

Thank you for joining us and we'll see you again soon.

No worries at all.

No worries at all.

Hi. Morning edition listeners, if you're looking for a series to binge over the break, I want to recommend Trial by Water. It's a podcast by some of my colleagues at The Age and the Sydney Morning Herald. It's about a man, Robert Farquharson, who was convicted of murdering his three sons by driving them into a dam, and about the people who are now questioning that conviction. Trial by Water is a compelling and informative podcast series that will make you question the way our justice system operates, so please take a listen and recommend it to your friends. Thanks.

Hi. Morning edition listeners, if you're looking for a series to binge over the break, I want to recommend Trial by Water. It's a podcast by some of my colleagues at The Age and the Sydney Morning Herald. It's about a man, Robert Farquharson, who was convicted of murdering his three sons by driving them into a dam, and about the people who are now questioning that conviction. Trial by Water is a compelling and informative podcast series that will make you question the way our justice system operates, so please take a listen and recommend it to your friends. Thanks.

And now we welcome Shane Wright, who has just sauntered into the Canberra studio to talk to us about Prime Minister Anthony Albanese, who has just unveiled a big agenda to get more stuff made in Australia. So he's given a speech on Thursday to this effect. Hasn't he, Shane?

And now we welcome Shane Wright, who has just sauntered into the Canberra studio to talk to us about Prime Minister Anthony Albanese, who has just unveiled a big agenda to get more stuff made in Australia. So he's given a speech on Thursday to this effect. Hasn't he, Shane?

Yeah. This is interesting because you can see now, the way that the government is aligning, as David Crowe alludes to, often they're aligning the stars for the election next year.

Yeah. This is interesting because you can see now, the way that the government is aligning, as David Crowe alludes to, often they're aligning the stars for the election next year.

Only government can draw together the threads from across the economy and around our nation to anchor this reform and secure this growth. Today I announce that this year our government will create the Future Made in Australia Act. But this is.

Only government can draw together the threads from across the economy and around our nation to anchor this reform and secure this growth. Today I announce that this year our government will create the Future Made in Australia Act. But this is.

Really about May 14th, when Jim Chalmers will get up and deliver his third budget.

Really about May 14th, when Jim Chalmers will get up and deliver his third budget.

In next month's budget and beyond. We'll be building on that foundation in this time of transformative opportunity. Our government will not be an observer or a spectator. We will be a participant, a partner, an investor, an enabler. We will be.

In next month's budget and beyond. We'll be building on that foundation in this time of transformative opportunity. Our government will not be an observer or a spectator. We will be a participant, a partner, an investor, an enabler. We will be.

So you can see the policy. Breadcrumbs. This is more like a loaf that have been strewn out and giving us an insight into what this government really thinks and their policy agenda.

So you can see the policy. Breadcrumbs. This is more like a loaf that have been strewn out and giving us an insight into what this government really thinks and their policy agenda.

Okay. So David, tell us about this new future Made in Australia plan. It's about government serious government investment in manufacturing things locally. But why would we do that when other countries can do it more cheaply?

Okay. So David, tell us about this new future Made in Australia plan. It's about government serious government investment in manufacturing things locally. But why would we do that when other countries can do it more cheaply?

Because the central assumption from Anthony Albanese and the people around him in federal cabinet is that we can actually make things here in an economic way and we can make it pay. Now, I reckon that is hugely contested, but it is their fundamental argument here with this policy. We don't know the full cost, but expect tax breaks, expect grants, expect loans backed by federal taxpayers to big projects that make things. And we're talking about developing critical minerals, turning Australian raw materials into batteries that we can make in Australia, making solar panels in Australia. Now, one background fact here is the government's been concerned for a while that we buy millions of solar cells. 99% of them are made overseas. Most of them are made in China. There's one country in the world economy that basically controls the supply of this, and so it becomes a matter of economic sovereignty and national security. Mhm. That becomes an argument for using state power to make sure we can make that as well. But I'm not sure that it's going to be economically viable. But that's the intention.

Because the central assumption from Anthony Albanese and the people around him in federal cabinet is that we can actually make things here in an economic way and we can make it pay. Now, I reckon that is hugely contested, but it is their fundamental argument here with this policy. We don't know the full cost, but expect tax breaks, expect grants, expect loans backed by federal taxpayers to big projects that make things. And we're talking about developing critical minerals, turning Australian raw materials into batteries that we can make in Australia, making solar panels in Australia. Now, one background fact here is the government's been concerned for a while that we buy millions of solar cells. 99% of them are made overseas. Most of them are made in China. There's one country in the world economy that basically controls the supply of this, and so it becomes a matter of economic sovereignty and national security. Mhm. That becomes an argument for using state power to make sure we can make that as well. But I'm not sure that it's going to be economically viable. But that's the intention.

So there's the economics of it versus the national security angle. Because I suppose there is always the risk that China will turn off the tap for these really essential materials like solar panels. Shane, the Prime Minister, sort of put it in different language. He said that it's not about old fashioned protectionism or isolationism, but this kind of way of doing business is the new competition.

So there's the economics of it versus the national security angle. Because I suppose there is always the risk that China will turn off the tap for these really essential materials like solar panels. Shane, the Prime Minister, sort of put it in different language. He said that it's not about old fashioned protectionism or isolationism, but this kind of way of doing business is the new competition.

We need this change in thinking and approach, because the global economic circumstances are changing in ways far more profound than the consequences of the pandemic or conflict alone. This decade marks a fundamental shift in the way nations are structuring their economies. What do you think?

We need this change in thinking and approach, because the global economic circumstances are changing in ways far more profound than the consequences of the pandemic or conflict alone. This decade marks a fundamental shift in the way nations are structuring their economies. What do you think?

Oh, it's more new, new protection rather than old fashioned. But it is interesting. We've we've seen and we've lived through this in terms of what happened through the pandemic, and we've lived through it with Russia's invasion of Ukraine. What how the the global supply chain has become now victim to the fact that the politics of the world are changing when you've got a China, when you've got India, which is effectively defying the UN sanctions on Russian oil and is doing things like that, and you've got Russia, you've got these big threats and changes to the the Western liberal economic construct of the past 30 to 40 years, when we've seen this huge expanse in economic global chains and real liberalism in terms of trade, in terms of the movement of people, the movement of cash. It's unraveling. And the pandemic has really highlighted this. And Crowe is right in this way. The government has made this decision we have to follow, because the United States is sucking the air and money out of the world as part of its its Inflation Reduction Act and its Chips act. The Europeans are going down the same path because they've been hit by the problems about in terms of linkages to Russia with their gas supply. Yeah, they are living the problems that these things create, and the intersection of politics and economics is right in front of us. As Albanese gets up to speak.

Oh, it's more new, new protection rather than old fashioned. But it is interesting. We've we've seen and we've lived through this in terms of what happened through the pandemic, and we've lived through it with Russia's invasion of Ukraine. What how the the global supply chain has become now victim to the fact that the politics of the world are changing when you've got a China, when you've got India, which is effectively defying the UN sanctions on Russian oil and is doing things like that, and you've got Russia, you've got these big threats and changes to the the Western liberal economic construct of the past 30 to 40 years, when we've seen this huge expanse in economic global chains and real liberalism in terms of trade, in terms of the movement of people, the movement of cash. It's unraveling. And the pandemic has really highlighted this. And Crowe is right in this way. The government has made this decision we have to follow, because the United States is sucking the air and money out of the world as part of its its Inflation Reduction Act and its Chips act. The Europeans are going down the same path because they've been hit by the problems about in terms of linkages to Russia with their gas supply. Yeah, they are living the problems that these things create, and the intersection of politics and economics is right in front of us. As Albanese gets up to speak.

Yeah. So it's about it's about sort of self-reliance, I suppose you could say. Or the Prime Minister might say it's about self-reliance. Just talk us through quickly the stuff that the Inflation Reduction Act in the US, which you just mentioned, Shane, what is that? And Anthony Albanese did specifically mention that vast amount of money that Biden has pumped into the US economy in his speech on Thursday, didn't he? Yeah.

Yeah. So it's about it's about sort of self-reliance, I suppose you could say. Or the Prime Minister might say it's about self-reliance. Just talk us through quickly the stuff that the Inflation Reduction Act in the US, which you just mentioned, Shane, what is that? And Anthony Albanese did specifically mention that vast amount of money that Biden has pumped into the US economy in his speech on Thursday, didn't he? Yeah.

So he talked about the IRA and the Chips act, which are two separate acts. The IRA, which really is effectively trying to build solar, wind EVs and get. And effectively decarbonising the American economy. Now, it has been spectacularly successful in terms of what it's set out to do. The cost of it is on. It was set out at about 390 billion USD when they first announced it. It's probably on track for 800 billion because it's uncapped. But for instance, in the final, the third quarter of last year, $64 billion was invested by American companies into clean energy and transportation. A 42% increase over the same quarter of the previous year. There is a reason US unemployment is as low as it is and why wages are growing. This act has supercharged the American economy and Biden is unapologetic about that. The Chips act, which is all about getting semiconductors, being, manufacturing, being brought back into the US, the Nvidia company, which has gone hell and high water into the manufacturing of AI semiconductors. It's it's now valued more as a company than the entire Australian economy. Yeah, because there is so much activity going on. So you can see that's the economics there's which intersects with the environment, which then intersects with the we can't rely on China. And Australia is the most exposed developed country in the world because we sell so much red earth and LNG to China. And we are you can see that the geopolitical risk that Australia is exposed to because of our financial dependence on China. Yeah.

So he talked about the IRA and the Chips act, which are two separate acts. The IRA, which really is effectively trying to build solar, wind EVs and get. And effectively decarbonising the American economy. Now, it has been spectacularly successful in terms of what it's set out to do. The cost of it is on. It was set out at about 390 billion USD when they first announced it. It's probably on track for 800 billion because it's uncapped. But for instance, in the final, the third quarter of last year, $64 billion was invested by American companies into clean energy and transportation. A 42% increase over the same quarter of the previous year. There is a reason US unemployment is as low as it is and why wages are growing. This act has supercharged the American economy and Biden is unapologetic about that. The Chips act, which is all about getting semiconductors, being, manufacturing, being brought back into the US, the Nvidia company, which has gone hell and high water into the manufacturing of AI semiconductors. It's it's now valued more as a company than the entire Australian economy. Yeah, because there is so much activity going on. So you can see that's the economics there's which intersects with the environment, which then intersects with the we can't rely on China. And Australia is the most exposed developed country in the world because we sell so much red earth and LNG to China. And we are you can see that the geopolitical risk that Australia is exposed to because of our financial dependence on China. Yeah.

So, David, it's worked really well in the US. And obviously the Albanese government would like to get a bit of that action happening here. But is it actually viable that we would compete with the US on that scale? We don't have as much money. How much money will the Albanese government pour into this initiative.

So, David, it's worked really well in the US. And obviously the Albanese government would like to get a bit of that action happening here. But is it actually viable that we would compete with the US on that scale? We don't have as much money. How much money will the Albanese government pour into this initiative.

To be determined? But explicitly, Albanese says we won't go dollar for dollar against the Inflation Reduction Act in the United States. The way I see it is that Albanese is telling voters what he wants to do. The invoice is going to come later. We don't know how many measures will be revealed in full in the budget, but what we do know is that the remarks this week are the start of a process to unveil different things between now and May 14th. What concerns me, I think, is the oversight is yet to be revealed. How many checks and balances are there on who's going to get this money and the terms that they that they get it on. Because, you know, there's a lot of scope for things to go wrong when taxpayer money is thrown around like this.

To be determined? But explicitly, Albanese says we won't go dollar for dollar against the Inflation Reduction Act in the United States. The way I see it is that Albanese is telling voters what he wants to do. The invoice is going to come later. We don't know how many measures will be revealed in full in the budget, but what we do know is that the remarks this week are the start of a process to unveil different things between now and May 14th. What concerns me, I think, is the oversight is yet to be revealed. How many checks and balances are there on who's going to get this money and the terms that they that they get it on. Because, you know, there's a lot of scope for things to go wrong when taxpayer money is thrown around like this.

So it's a vision, but it's at the moment it's still quite a blurry vision. So Shane, this is all part of the government's broader economic agenda, which Treasurer Jim Chalmers also weighed in on this week with a with a speech about hardening up competition across the economy. Can you tell us a little bit about that just quickly.

So it's a vision, but it's at the moment it's still quite a blurry vision. So Shane, this is all part of the government's broader economic agenda, which Treasurer Jim Chalmers also weighed in on this week with a with a speech about hardening up competition across the economy. Can you tell us a little bit about that just quickly.

Yeah, this has been one of the more interesting and sleeper issues, because the idea of the the whole concept of competition as an economic driver has been disappearing for, well, since the GFC. Really? Uh, this government. Chalmers, he's got a competition minister in Andrew Lee, very active in, in this space because there's so much more evidence showing that countries with less competition, with higher market concentration aka Australia, with everything from retail to to airlines to banks. It's holding back productivity growth and that's one of the great issues. So you've actually seen this week Chalmers outline in terms of mergers and acquisitions, which is this is a law really the laws in this space have not changed for 50 years. The SEC had been looking for a lot of new powers to actually say, we're allowing too many businesses to merge, and that's dampening competition, that's hitting wages, that's hurting productivity. So they've outlined what they're going to do. As you'd expect, those sectors are there where companies want to merge and reduce competition, aren't so keen on it.

Yeah, this has been one of the more interesting and sleeper issues, because the idea of the the whole concept of competition as an economic driver has been disappearing for, well, since the GFC. Really? Uh, this government. Chalmers, he's got a competition minister in Andrew Lee, very active in, in this space because there's so much more evidence showing that countries with less competition, with higher market concentration aka Australia, with everything from retail to to airlines to banks. It's holding back productivity growth and that's one of the great issues. So you've actually seen this week Chalmers outline in terms of mergers and acquisitions, which is this is a law really the laws in this space have not changed for 50 years. The SEC had been looking for a lot of new powers to actually say, we're allowing too many businesses to merge, and that's dampening competition, that's hitting wages, that's hurting productivity. So they've outlined what they're going to do. As you'd expect, those sectors are there where companies want to merge and reduce competition, aren't so keen on it.

They're very cross about it, aren't they?

They're very cross about it, aren't they?

It's intriguing to see how this will play out, because it's not just mergers and how they're vetted. It's non-compete clauses facing employees. Like we've got a situation where a burger flipper can't go to a different franchise, or because they've effectively carved up and prevented competition. So they've got a competition review over the next two years. This is going to continue rolling out and cause some tension. That's probably been missing in the economic and political debate for some time. Mhm.

It's intriguing to see how this will play out, because it's not just mergers and how they're vetted. It's non-compete clauses facing employees. Like we've got a situation where a burger flipper can't go to a different franchise, or because they've effectively carved up and prevented competition. So they've got a competition review over the next two years. This is going to continue rolling out and cause some tension. That's probably been missing in the economic and political debate for some time. Mhm.

Thank you very much, gentlemen.

Thank you very much, gentlemen.

Cheers, Jackie. Cheers.

Cheers, Jackie. Cheers.

Today's episode of Inside Politics was produced by Kai Wong and Rachel Clun, with technical assistance by Debbie Harrington. Our executive producer is Ruby Schwartz. Inside politics is a production of The Age and The Sydney Morning Herald. If you enjoy the show and want more of our journalism, subscribe to our newspapers today. It's the best way to support what we do. Search the age or Smh.com.au forward slash. Subscribe. I'm Jacqueline Maley, this is inside politics. Thanks for listening.

Today's episode of Inside Politics was produced by Kai Wong and Rachel Clun, with technical assistance by Debbie Harrington. Our executive producer is Ruby Schwartz. Inside politics is a production of The Age and The Sydney Morning Herald. If you enjoy the show and want more of our journalism, subscribe to our newspapers today. It's the best way to support what we do. Search the age or Smh.com.au forward slash. Subscribe. I'm Jacqueline Maley, this is inside politics. Thanks for listening.