Rate cut still likely despite Iran-Israel crisis
Don't miss out on the headlines from Interest Rates. Followed categories will be added to My News.
In mixed news for households, the conflict between Israel and Iran is unlikely to impact future rate cuts unless the worst-case scenario plays out.
Economics forecasts say the conflict that started on Friday will add about 0.2 per cent to headline inflation on the back of higher petrol prices.
AMP chief economist Shane Oliver told NewsWire the escalation just added more 'uncertainty' but hadn't changed the probability of a July rate cut.
'I don't think the probability of a July cut has changed, we still expect a rate cut in July, August, November and February, taking the official cash rate to 2.85 per cent,' he said.
Petrol prices could jump on the back of the Israel-Iran crisis. Picture: NewsWire / John Gass
IG market analyst Tony Sycamore said it would all depend on the fallout, with the worst-case scenario being Iran blocks the Strait of Hormuz, which is the primary route for oil producers including Saudi Arabia, Iraq, the UAE, and Kuwait.
While pointing out blocking the Strait of Hormuz was a 'last resort' move by Iran, Mr Sycamore said if it did happen, it could impact interest rates.
'This would hamper central banks' ability to cut interest rates to cushion the anticipated growth slowdown from President Trump's tariffs, which adds another variable for the Fed to consider when it meets to discuss interest rates this week,' he said.
Mr Oliver agreed, saying any blockage could lead to a dramatic spike in oil prices.
'During the Ukraine conflict we saw oil get to above $US120 a barrel, which would see petrol prices push well above $2 a litre, impacting inflation and more importantly household spending power,' he said.
'The RBA would then have to work out what is more important and I suspect they would look through the inflation spike and be more concerned about the negative impact on economic growth.'
Higher oil prices could flow through to the wider economy. Picture: NewsWire/ Gaye Gerard
Regardless of whether it sways the Reserve Bank of Australia, the fallout will still hurt Australian consumers.
Futures markets for Brent oil have spiked in recent days and are now pricing $US77 a barrel when it was just more than $US65 this time last week.
Every $US1 increase in the price of oil roughly adds 1 cent a litre to how much Aussies will pay when they fuel up.
MST Financial senior energy analyst Saul Kavonic warned that 'higher oil prices will flow directly through to the pump', adding to the cost-of-living pressures.
'If you start to see prolonged higher prices or even an energy crisis scenario, it will also flow through to our electricity prices via international gas prices,' Mr Kavonic told the ABC.
He said this would eventually hit Australian consumers.
'It will flow through to the cost of living because nearly every single thing that you buy and use on a day-to-day basis has energy as a core input cost along its supply chain,' Mr Kavonic said.
Originally published as 'More uncertainty': Rate cut on the cards as economic fallout continues
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Nor can we assume that Albanese, or Marles, or for that matter Penny Wong, have the wit and the speed to shift American opinion. There has not even been any sort of softening-up process. The turning point, perhaps, will be when Albanese finally gets his meeting with Trump. Even there, more likely than not, it will be statements from Trump rather than Albanese to which even Australians will pay most attention. We are not leaving "home". It's the US throwing us out. Albanese, presumably, has rehearsed his reaction to many of the propositions that Trump can be expected to put. He has, after all, put very similar ones to other countries, and he has, additionally, made it quite clear that we are nothing special in his eyes. But Albanese has not confided his strategy or tactics to Parliament, in the media, or in open forums. He has not addressed conferences at which the government's opinions are communicated. What is on the public record, whether in relation to the strategic thinking around AUKUS or Australia's strategic situation generally, is full of waffly words and slogans that could mean anything. Is discussion to be an invitation-only jamboree, or can every parrot in every pet shop have a go? MORE JACK WATERFORD: Could it be that Albanese expects that a matter so vital is to be resolved merely in Cabinet, without any wide public discussion? Or some committee of old Labor warhorses such as Kim Beazley and Stephen Smith? Is there a soldier in the land (or for that matter a spook) to whom the political, social and military problems should be consigned without the popular will being engaged? Is there a place at the table for Paul Keating, Malcolm Turnbull, Gareth Evans or Bob Carr, or any of the third of the electorate who vote, not for Labor nor the Liberals but for parties such as the Greens, the teals, or independents such as David Pocock? Is productivity, for which a conference of insiders is planned, more important than the place of Australia among the nations of the world? One has to hope that Albanese's silence about a time and a place for public discussion and debate is not for want of a plan to engage the population. But so far, on form, one has to expect that he lacks a plan. He has no model for public discussion, and no apparent appetite for it. This could involve reverting to the style of government that he delivered in his first term. Secretive. Unwilling and seemingly unable to communicate with the general public, including those who want Labor to succeed. (Labor is always more awkward, and guilty looking, in consulting its own traditional supporters rather than hostile captains of industry.) Will there be ready but unaccountable access for some special interests, such as the arms industry and the defence establishment? There's an already established pattern of insiders given undue and improper influence, in the same manner as the gambling and liquor crowd and the old media lobbies on other issues. One thing is for sure. No one can say that Albanese has a popular mandate, arising from the landslide election, to do what he wants on such a fundamental change in our circumstances. Defence and foreign affairs scarcely figured in the election, and the two major parties had no disagreements of any substance. No citizen acquired any extra information from any defence debate. It may be true that a debate, if it occurs, will be rancorous. The big vested interests are keen on throwing about claims of being soft on national security and having ambiguous and uncertain loyalties. It could become as unpleasant as the Voice referendum. But that is not a reason for having a secret debate, or no debate at all. This matters too much. Our own sense of identity, culture, history and future are involved. Australia needs to develop an understanding of Australian nationality which has moved on, a bit at least, from when white men flew a flag containing a Union Jack at Gallipoli 110 years ago. It's a debate that embraces Australians whose ancestors were not here at the time of Gallipoli but are in every sense citizens nonetheless. A debate that involves Aboriginal Australians, whose interests were usually ignored while compiling patriotic encomia and pap. A debate involving young Australians who will have to live in a harsher, hotter and more hostile world because of pragmatic decisions made by current politicians on both sides of the fence. It's not for Albo to run Australians inside or out of the arena. Some within a smug party, having won the election more comfortably than anyone expected, have come to think that the election was won by Albanese's calm, patience and political genius. That the very landslide is a refutation of suggestions that first-term Labor was a "disappointment", with an inarticulate leader too timid to go far or fast, or to take ordinary voters into his confidence. Any prime minister who wins a second, or third, term will see it as a vindication of his or her personality, governing style and methods. They will expect that internal and external critics treat them with more respect in future. Particularly for their political skills. One wouldn't want to deprive Albanese of any credit he deserved. But it is just possible that a sizeable proportion of the increased vote for Labor came more from fear of what sort of leadership or policies a MAGA-Down-Under Peter Dutton might have delivered than from enthusiastic re-endorsement of Albanese and his team. Or embrace of Albo's vision - whatever it was - of old alliances, new alliances, and how we trade with, talk with and share with our neighbours. Anthony Albanese is falling back into the sort of bad habits that could bring him down as Labor leader. Despite talking of national conversations about productivity, about tax, and about Australia's sense of itself, he seems to think discussions can take place behind closed doors, with selected participants working off his agenda, and with the general public unable to see, hear, or get even a smell or a taste of what it was all about until it has come to its predetermined conclusion. That's not a way to build a national consensus or a common understanding of how the nation will face the future. While backroom deals and fixes may see him through some of the economic problems, a failure to have a wide consultation could do him great damage when it comes to Australia's reorienting itself to current circumstances in our neighbourhood, and in whatever remains of the Western alliance. It may be that the AUKUS deal can survive, in one form or another, the big shifts brought on by Donald Trump. Australian ministers, from Albanese down, are pretending, or hoping, it can, even as NATO and other Western alliance defence arrangements seem headed for collapse. Some seem to think that the US can maintain a system of alliances around the western Pacific - involving Japan, Korea and Australia - even as European relationships implode. Perhaps, but, whether in the Pacific or the wider world, there cannot be any reversion to the situation before Trump arrived, or the situation after Trump imposed unilateral tariffs on all of his allies. No post-Trump president will be able to pretend that nothing happened during the Trump Reich, and that normal service can quickly be resumed. Trump has fractured the Bretton Woods system of international trade - what Richard Marles insists on calling "a rules-based international order" long after the game has changed. He has repudiated much of the web of relationships around Europe and the Middle East, particularly over the future of Ukraine. The value of American guarantees, promises and understandings (including ANZUS and AUKUS) is much diminished, as is the idea of one-in, all-in if someone breaches the peace. And who knows how Israel's adventures into Iran have changed the strategic map of the Middle East. If America is to have its druthers, future trade arrangements between nations will be based on bilateral arrangements, not multinational ones. Alternatively - and more likely - new regional and political alliances will form around multilateral agreements which do not include the United States. The trans-Pacific partnership - quite possibly including China, Canada and Europe - might well be a model. America may make an individualised deal with each nation, but even if it draws back from initial tariffs settings, most nations will see the wisdom of seeking markets anywhere but in the US. For many countries, a primary market will be China, preferred as a buyer or a seller ahead of the unreliable US. Australians can hardly help but be aware that the whole system of our international relationships is changing, and that Australia itself may have little influence on the final wash-up. We are not a big enough player to be invited into all the big-boys' clubs. When the US thinks of its alliances, Australia is not the first country that comes to its mind: we are probably 12th in the queue. To the extent that America-First recognises old obligations, the deals in squaring off the 11 higher in priority will severely pinch what is available to us. It will be worse if the US picks off its "allies" one by one in the manner of the supplicants (Australia included) seeking to negotiate individual deals for themselves. I am always reminded of what a senior American official once said to Margaret Thatcher when, in Washington, she spoke of the bonds of kinship and special relationship. The official said, "Madam, you may be right about this common history and so on, but I assure you that when the US is thinking of its national interest, it thinks of Britain about as often as when Britain, considering its own interest, thinks of the Isle of Wight". Polls show that Australian trust of the US has plummeted. Our distrust of Trump's America is higher than almost any other country, even Canada, and we haven't been threatened with an imperial takeover. A majority rate China as more trustworthy, even in spite of the freeze in relationships and trade sanctions after China was consciously baited by the Morrison government. Other polls show that Australians well understand the difference between a national leader and his policies, and the temper of the general population. But after the Trump election, there is also unease about his constituencies, the authoritarian, even fascist push, the influence in policy of racism, bigotry and anti-immigration feeling and the increasing influence of the Christian fundamentalist right. Much goodwill has evaporated. In contrast, the defence and intelligence establishment has not wavered in preferring the US even to Australia itself. But politicians on both sides of the fence are increasingly conscious that there is no automatic Australian mood to support the US if there were an attack on Taiwan. Nor is there any Australian instinct to see the world through American eyes. National unease is hardly helped by war in the Middle East, the reduction of Gaza and the massacre of its population, by events in Ukraine and by the apparent incapacity of Europe to unite militarily if the US is not an active partner. There is no shortage of information in public forums, much of which is highly critical of the US. Anyone can have a well-informed opinion. But that opinion is hardly being guided by Albanese or the Australian government. Very little is emerging officially canvassing possibilities about what could or should happen. Ministers seem to be denying that anything much is happening. Albanese seems to think that public comment or discussion by official figures should be avoided, lest it cause offence to Trump and inspire or incite some violent reaction. In Canada, Britain, Germany and France, ministers are openly discussing the brave new world. But not here. It is unlikely that Trump or the official US will judge that the comparative silence from Australia means that there is no discussion occurring here. But they may well deduce that the silence from the politicians, and from military and intelligence figures, suggests that the docile ally will not make much fuss. Or that it is unlikely to shift towards our own view of the world, rather than America's. An obvious example might be the American trade war with China, or in making it clear that Australia is not planning on getting involved in any measures to defend Taiwan. But there are also other issues - for example, over the nuclear submarine purchases, or vital US intelligence gathering and command equipment at Pine Gap and elsewhere. Albanese is mouthing polite nothings, other than insisting that he is not about to double our defence spending just because an American media figure-cum Secretary of Defence says we should. Marles, the weakest link in the Australian chain, is a dead letter in any argument, even or particularly when he seems to be parroting a position that has originated in the US. It cannot be expected that significant change to the relationship will occur only incrementally. Or that it will evolve naturally from events in the control of others. Nor can we assume that Albanese, or Marles, or for that matter Penny Wong, have the wit and the speed to shift American opinion. There has not even been any sort of softening-up process. The turning point, perhaps, will be when Albanese finally gets his meeting with Trump. Even there, more likely than not, it will be statements from Trump rather than Albanese to which even Australians will pay most attention. We are not leaving "home". It's the US throwing us out. Albanese, presumably, has rehearsed his reaction to many of the propositions that Trump can be expected to put. He has, after all, put very similar ones to other countries, and he has, additionally, made it quite clear that we are nothing special in his eyes. But Albanese has not confided his strategy or tactics to Parliament, in the media, or in open forums. He has not addressed conferences at which the government's opinions are communicated. What is on the public record, whether in relation to the strategic thinking around AUKUS or Australia's strategic situation generally, is full of waffly words and slogans that could mean anything. Is discussion to be an invitation-only jamboree, or can every parrot in every pet shop have a go? MORE JACK WATERFORD: Could it be that Albanese expects that a matter so vital is to be resolved merely in Cabinet, without any wide public discussion? Or some committee of old Labor warhorses such as Kim Beazley and Stephen Smith? Is there a soldier in the land (or for that matter a spook) to whom the political, social and military problems should be consigned without the popular will being engaged? Is there a place at the table for Paul Keating, Malcolm Turnbull, Gareth Evans or Bob Carr, or any of the third of the electorate who vote, not for Labor nor the Liberals but for parties such as the Greens, the teals, or independents such as David Pocock? Is productivity, for which a conference of insiders is planned, more important than the place of Australia among the nations of the world? One has to hope that Albanese's silence about a time and a place for public discussion and debate is not for want of a plan to engage the population. But so far, on form, one has to expect that he lacks a plan. He has no model for public discussion, and no apparent appetite for it. This could involve reverting to the style of government that he delivered in his first term. Secretive. Unwilling and seemingly unable to communicate with the general public, including those who want Labor to succeed. (Labor is always more awkward, and guilty looking, in consulting its own traditional supporters rather than hostile captains of industry.) Will there be ready but unaccountable access for some special interests, such as the arms industry and the defence establishment? There's an already established pattern of insiders given undue and improper influence, in the same manner as the gambling and liquor crowd and the old media lobbies on other issues. One thing is for sure. No one can say that Albanese has a popular mandate, arising from the landslide election, to do what he wants on such a fundamental change in our circumstances. Defence and foreign affairs scarcely figured in the election, and the two major parties had no disagreements of any substance. No citizen acquired any extra information from any defence debate. It may be true that a debate, if it occurs, will be rancorous. The big vested interests are keen on throwing about claims of being soft on national security and having ambiguous and uncertain loyalties. It could become as unpleasant as the Voice referendum. But that is not a reason for having a secret debate, or no debate at all. This matters too much. Our own sense of identity, culture, history and future are involved. Australia needs to develop an understanding of Australian nationality which has moved on, a bit at least, from when white men flew a flag containing a Union Jack at Gallipoli 110 years ago. It's a debate that embraces Australians whose ancestors were not here at the time of Gallipoli but are in every sense citizens nonetheless. A debate that involves Aboriginal Australians, whose interests were usually ignored while compiling patriotic encomia and pap. A debate involving young Australians who will have to live in a harsher, hotter and more hostile world because of pragmatic decisions made by current politicians on both sides of the fence. It's not for Albo to run Australians inside or out of the arena. Some within a smug party, having won the election more comfortably than anyone expected, have come to think that the election was won by Albanese's calm, patience and political genius. That the very landslide is a refutation of suggestions that first-term Labor was a "disappointment", with an inarticulate leader too timid to go far or fast, or to take ordinary voters into his confidence. Any prime minister who wins a second, or third, term will see it as a vindication of his or her personality, governing style and methods. They will expect that internal and external critics treat them with more respect in future. Particularly for their political skills. One wouldn't want to deprive Albanese of any credit he deserved. But it is just possible that a sizeable proportion of the increased vote for Labor came more from fear of what sort of leadership or policies a MAGA-Down-Under Peter Dutton might have delivered than from enthusiastic re-endorsement of Albanese and his team. Or embrace of Albo's vision - whatever it was - of old alliances, new alliances, and how we trade with, talk with and share with our neighbours. Anthony Albanese is falling back into the sort of bad habits that could bring him down as Labor leader. Despite talking of national conversations about productivity, about tax, and about Australia's sense of itself, he seems to think discussions can take place behind closed doors, with selected participants working off his agenda, and with the general public unable to see, hear, or get even a smell or a taste of what it was all about until it has come to its predetermined conclusion. That's not a way to build a national consensus or a common understanding of how the nation will face the future. While backroom deals and fixes may see him through some of the economic problems, a failure to have a wide consultation could do him great damage when it comes to Australia's reorienting itself to current circumstances in our neighbourhood, and in whatever remains of the Western alliance. It may be that the AUKUS deal can survive, in one form or another, the big shifts brought on by Donald Trump. Australian ministers, from Albanese down, are pretending, or hoping, it can, even as NATO and other Western alliance defence arrangements seem headed for collapse. Some seem to think that the US can maintain a system of alliances around the western Pacific - involving Japan, Korea and Australia - even as European relationships implode. Perhaps, but, whether in the Pacific or the wider world, there cannot be any reversion to the situation before Trump arrived, or the situation after Trump imposed unilateral tariffs on all of his allies. No post-Trump president will be able to pretend that nothing happened during the Trump Reich, and that normal service can quickly be resumed. Trump has fractured the Bretton Woods system of international trade - what Richard Marles insists on calling "a rules-based international order" long after the game has changed. He has repudiated much of the web of relationships around Europe and the Middle East, particularly over the future of Ukraine. The value of American guarantees, promises and understandings (including ANZUS and AUKUS) is much diminished, as is the idea of one-in, all-in if someone breaches the peace. And who knows how Israel's adventures into Iran have changed the strategic map of the Middle East. If America is to have its druthers, future trade arrangements between nations will be based on bilateral arrangements, not multinational ones. Alternatively - and more likely - new regional and political alliances will form around multilateral agreements which do not include the United States. The trans-Pacific partnership - quite possibly including China, Canada and Europe - might well be a model. America may make an individualised deal with each nation, but even if it draws back from initial tariffs settings, most nations will see the wisdom of seeking markets anywhere but in the US. For many countries, a primary market will be China, preferred as a buyer or a seller ahead of the unreliable US. Australians can hardly help but be aware that the whole system of our international relationships is changing, and that Australia itself may have little influence on the final wash-up. We are not a big enough player to be invited into all the big-boys' clubs. When the US thinks of its alliances, Australia is not the first country that comes to its mind: we are probably 12th in the queue. To the extent that America-First recognises old obligations, the deals in squaring off the 11 higher in priority will severely pinch what is available to us. It will be worse if the US picks off its "allies" one by one in the manner of the supplicants (Australia included) seeking to negotiate individual deals for themselves. I am always reminded of what a senior American official once said to Margaret Thatcher when, in Washington, she spoke of the bonds of kinship and special relationship. The official said, "Madam, you may be right about this common history and so on, but I assure you that when the US is thinking of its national interest, it thinks of Britain about as often as when Britain, considering its own interest, thinks of the Isle of Wight". Polls show that Australian trust of the US has plummeted. Our distrust of Trump's America is higher than almost any other country, even Canada, and we haven't been threatened with an imperial takeover. A majority rate China as more trustworthy, even in spite of the freeze in relationships and trade sanctions after China was consciously baited by the Morrison government. Other polls show that Australians well understand the difference between a national leader and his policies, and the temper of the general population. But after the Trump election, there is also unease about his constituencies, the authoritarian, even fascist push, the influence in policy of racism, bigotry and anti-immigration feeling and the increasing influence of the Christian fundamentalist right. Much goodwill has evaporated. In contrast, the defence and intelligence establishment has not wavered in preferring the US even to Australia itself. But politicians on both sides of the fence are increasingly conscious that there is no automatic Australian mood to support the US if there were an attack on Taiwan. Nor is there any Australian instinct to see the world through American eyes. National unease is hardly helped by war in the Middle East, the reduction of Gaza and the massacre of its population, by events in Ukraine and by the apparent incapacity of Europe to unite militarily if the US is not an active partner. There is no shortage of information in public forums, much of which is highly critical of the US. Anyone can have a well-informed opinion. But that opinion is hardly being guided by Albanese or the Australian government. Very little is emerging officially canvassing possibilities about what could or should happen. Ministers seem to be denying that anything much is happening. Albanese seems to think that public comment or discussion by official figures should be avoided, lest it cause offence to Trump and inspire or incite some violent reaction. In Canada, Britain, Germany and France, ministers are openly discussing the brave new world. But not here. It is unlikely that Trump or the official US will judge that the comparative silence from Australia means that there is no discussion occurring here. But they may well deduce that the silence from the politicians, and from military and intelligence figures, suggests that the docile ally will not make much fuss. Or that it is unlikely to shift towards our own view of the world, rather than America's. An obvious example might be the American trade war with China, or in making it clear that Australia is not planning on getting involved in any measures to defend Taiwan. But there are also other issues - for example, over the nuclear submarine purchases, or vital US intelligence gathering and command equipment at Pine Gap and elsewhere. Albanese is mouthing polite nothings, other than insisting that he is not about to double our defence spending just because an American media figure-cum Secretary of Defence says we should. Marles, the weakest link in the Australian chain, is a dead letter in any argument, even or particularly when he seems to be parroting a position that has originated in the US. It cannot be expected that significant change to the relationship will occur only incrementally. Or that it will evolve naturally from events in the control of others. Nor can we assume that Albanese, or Marles, or for that matter Penny Wong, have the wit and the speed to shift American opinion. There has not even been any sort of softening-up process. The turning point, perhaps, will be when Albanese finally gets his meeting with Trump. Even there, more likely than not, it will be statements from Trump rather than Albanese to which even Australians will pay most attention. We are not leaving "home". It's the US throwing us out. Albanese, presumably, has rehearsed his reaction to many of the propositions that Trump can be expected to put. He has, after all, put very similar ones to other countries, and he has, additionally, made it quite clear that we are nothing special in his eyes. But Albanese has not confided his strategy or tactics to Parliament, in the media, or in open forums. He has not addressed conferences at which the government's opinions are communicated. What is on the public record, whether in relation to the strategic thinking around AUKUS or Australia's strategic situation generally, is full of waffly words and slogans that could mean anything. Is discussion to be an invitation-only jamboree, or can every parrot in every pet shop have a go? MORE JACK WATERFORD: Could it be that Albanese expects that a matter so vital is to be resolved merely in Cabinet, without any wide public discussion? Or some committee of old Labor warhorses such as Kim Beazley and Stephen Smith? Is there a soldier in the land (or for that matter a spook) to whom the political, social and military problems should be consigned without the popular will being engaged? Is there a place at the table for Paul Keating, Malcolm Turnbull, Gareth Evans or Bob Carr, or any of the third of the electorate who vote, not for Labor nor the Liberals but for parties such as the Greens, the teals, or independents such as David Pocock? Is productivity, for which a conference of insiders is planned, more important than the place of Australia among the nations of the world? One has to hope that Albanese's silence about a time and a place for public discussion and debate is not for want of a plan to engage the population. But so far, on form, one has to expect that he lacks a plan. He has no model for public discussion, and no apparent appetite for it. This could involve reverting to the style of government that he delivered in his first term. Secretive. Unwilling and seemingly unable to communicate with the general public, including those who want Labor to succeed. (Labor is always more awkward, and guilty looking, in consulting its own traditional supporters rather than hostile captains of industry.) Will there be ready but unaccountable access for some special interests, such as the arms industry and the defence establishment? There's an already established pattern of insiders given undue and improper influence, in the same manner as the gambling and liquor crowd and the old media lobbies on other issues. One thing is for sure. No one can say that Albanese has a popular mandate, arising from the landslide election, to do what he wants on such a fundamental change in our circumstances. Defence and foreign affairs scarcely figured in the election, and the two major parties had no disagreements of any substance. No citizen acquired any extra information from any defence debate. It may be true that a debate, if it occurs, will be rancorous. The big vested interests are keen on throwing about claims of being soft on national security and having ambiguous and uncertain loyalties. It could become as unpleasant as the Voice referendum. But that is not a reason for having a secret debate, or no debate at all. This matters too much. Our own sense of identity, culture, history and future are involved. Australia needs to develop an understanding of Australian nationality which has moved on, a bit at least, from when white men flew a flag containing a Union Jack at Gallipoli 110 years ago. It's a debate that embraces Australians whose ancestors were not here at the time of Gallipoli but are in every sense citizens nonetheless. A debate that involves Aboriginal Australians, whose interests were usually ignored while compiling patriotic encomia and pap. A debate involving young Australians who will have to live in a harsher, hotter and more hostile world because of pragmatic decisions made by current politicians on both sides of the fence. It's not for Albo to run Australians inside or out of the arena. Some within a smug party, having won the election more comfortably than anyone expected, have come to think that the election was won by Albanese's calm, patience and political genius. That the very landslide is a refutation of suggestions that first-term Labor was a "disappointment", with an inarticulate leader too timid to go far or fast, or to take ordinary voters into his confidence. Any prime minister who wins a second, or third, term will see it as a vindication of his or her personality, governing style and methods. They will expect that internal and external critics treat them with more respect in future. Particularly for their political skills. One wouldn't want to deprive Albanese of any credit he deserved. But it is just possible that a sizeable proportion of the increased vote for Labor came more from fear of what sort of leadership or policies a MAGA-Down-Under Peter Dutton might have delivered than from enthusiastic re-endorsement of Albanese and his team. Or embrace of Albo's vision - whatever it was - of old alliances, new alliances, and how we trade with, talk with and share with our neighbours. Anthony Albanese is falling back into the sort of bad habits that could bring him down as Labor leader. Despite talking of national conversations about productivity, about tax, and about Australia's sense of itself, he seems to think discussions can take place behind closed doors, with selected participants working off his agenda, and with the general public unable to see, hear, or get even a smell or a taste of what it was all about until it has come to its predetermined conclusion. That's not a way to build a national consensus or a common understanding of how the nation will face the future. While backroom deals and fixes may see him through some of the economic problems, a failure to have a wide consultation could do him great damage when it comes to Australia's reorienting itself to current circumstances in our neighbourhood, and in whatever remains of the Western alliance. It may be that the AUKUS deal can survive, in one form or another, the big shifts brought on by Donald Trump. Australian ministers, from Albanese down, are pretending, or hoping, it can, even as NATO and other Western alliance defence arrangements seem headed for collapse. Some seem to think that the US can maintain a system of alliances around the western Pacific - involving Japan, Korea and Australia - even as European relationships implode. Perhaps, but, whether in the Pacific or the wider world, there cannot be any reversion to the situation before Trump arrived, or the situation after Trump imposed unilateral tariffs on all of his allies. No post-Trump president will be able to pretend that nothing happened during the Trump Reich, and that normal service can quickly be resumed. Trump has fractured the Bretton Woods system of international trade - what Richard Marles insists on calling "a rules-based international order" long after the game has changed. He has repudiated much of the web of relationships around Europe and the Middle East, particularly over the future of Ukraine. The value of American guarantees, promises and understandings (including ANZUS and AUKUS) is much diminished, as is the idea of one-in, all-in if someone breaches the peace. And who knows how Israel's adventures into Iran have changed the strategic map of the Middle East. If America is to have its druthers, future trade arrangements between nations will be based on bilateral arrangements, not multinational ones. Alternatively - and more likely - new regional and political alliances will form around multilateral agreements which do not include the United States. The trans-Pacific partnership - quite possibly including China, Canada and Europe - might well be a model. America may make an individualised deal with each nation, but even if it draws back from initial tariffs settings, most nations will see the wisdom of seeking markets anywhere but in the US. For many countries, a primary market will be China, preferred as a buyer or a seller ahead of the unreliable US. Australians can hardly help but be aware that the whole system of our international relationships is changing, and that Australia itself may have little influence on the final wash-up. We are not a big enough player to be invited into all the big-boys' clubs. When the US thinks of its alliances, Australia is not the first country that comes to its mind: we are probably 12th in the queue. To the extent that America-First recognises old obligations, the deals in squaring off the 11 higher in priority will severely pinch what is available to us. It will be worse if the US picks off its "allies" one by one in the manner of the supplicants (Australia included) seeking to negotiate individual deals for themselves. I am always reminded of what a senior American official once said to Margaret Thatcher when, in Washington, she spoke of the bonds of kinship and special relationship. The official said, "Madam, you may be right about this common history and so on, but I assure you that when the US is thinking of its national interest, it thinks of Britain about as often as when Britain, considering its own interest, thinks of the Isle of Wight". Polls show that Australian trust of the US has plummeted. Our distrust of Trump's America is higher than almost any other country, even Canada, and we haven't been threatened with an imperial takeover. A majority rate China as more trustworthy, even in spite of the freeze in relationships and trade sanctions after China was consciously baited by the Morrison government. Other polls show that Australians well understand the difference between a national leader and his policies, and the temper of the general population. But after the Trump election, there is also unease about his constituencies, the authoritarian, even fascist push, the influence in policy of racism, bigotry and anti-immigration feeling and the increasing influence of the Christian fundamentalist right. Much goodwill has evaporated. In contrast, the defence and intelligence establishment has not wavered in preferring the US even to Australia itself. But politicians on both sides of the fence are increasingly conscious that there is no automatic Australian mood to support the US if there were an attack on Taiwan. Nor is there any Australian instinct to see the world through American eyes. National unease is hardly helped by war in the Middle East, the reduction of Gaza and the massacre of its population, by events in Ukraine and by the apparent incapacity of Europe to unite militarily if the US is not an active partner. There is no shortage of information in public forums, much of which is highly critical of the US. Anyone can have a well-informed opinion. But that opinion is hardly being guided by Albanese or the Australian government. Very little is emerging officially canvassing possibilities about what could or should happen. Ministers seem to be denying that anything much is happening. Albanese seems to think that public comment or discussion by official figures should be avoided, lest it cause offence to Trump and inspire or incite some violent reaction. In Canada, Britain, Germany and France, ministers are openly discussing the brave new world. But not here. It is unlikely that Trump or the official US will judge that the comparative silence from Australia means that there is no discussion occurring here. But they may well deduce that the silence from the politicians, and from military and intelligence figures, suggests that the docile ally will not make much fuss. Or that it is unlikely to shift towards our own view of the world, rather than America's. An obvious example might be the American trade war with China, or in making it clear that Australia is not planning on getting involved in any measures to defend Taiwan. But there are also other issues - for example, over the nuclear submarine purchases, or vital US intelligence gathering and command equipment at Pine Gap and elsewhere. Albanese is mouthing polite nothings, other than insisting that he is not about to double our defence spending just because an American media figure-cum Secretary of Defence says we should. Marles, the weakest link in the Australian chain, is a dead letter in any argument, even or particularly when he seems to be parroting a position that has originated in the US. It cannot be expected that significant change to the relationship will occur only incrementally. Or that it will evolve naturally from events in the control of others. Nor can we assume that Albanese, or Marles, or for that matter Penny Wong, have the wit and the speed to shift American opinion. There has not even been any sort of softening-up process. The turning point, perhaps, will be when Albanese finally gets his meeting with Trump. Even there, more likely than not, it will be statements from Trump rather than Albanese to which even Australians will pay most attention. We are not leaving "home". It's the US throwing us out. Albanese, presumably, has rehearsed his reaction to many of the propositions that Trump can be expected to put. He has, after all, put very similar ones to other countries, and he has, additionally, made it quite clear that we are nothing special in his eyes. But Albanese has not confided his strategy or tactics to Parliament, in the media, or in open forums. He has not addressed conferences at which the government's opinions are communicated. What is on the public record, whether in relation to the strategic thinking around AUKUS or Australia's strategic situation generally, is full of waffly words and slogans that could mean anything. Is discussion to be an invitation-only jamboree, or can every parrot in every pet shop have a go? MORE JACK WATERFORD: Could it be that Albanese expects that a matter so vital is to be resolved merely in Cabinet, without any wide public discussion? Or some committee of old Labor warhorses such as Kim Beazley and Stephen Smith? Is there a soldier in the land (or for that matter a spook) to whom the political, social and military problems should be consigned without the popular will being engaged? Is there a place at the table for Paul Keating, Malcolm Turnbull, Gareth Evans or Bob Carr, or any of the third of the electorate who vote, not for Labor nor the Liberals but for parties such as the Greens, the teals, or independents such as David Pocock? Is productivity, for which a conference of insiders is planned, more important than the place of Australia among the nations of the world? One has to hope that Albanese's silence about a time and a place for public discussion and debate is not for want of a plan to engage the population. But so far, on form, one has to expect that he lacks a plan. He has no model for public discussion, and no apparent appetite for it. This could involve reverting to the style of government that he delivered in his first term. Secretive. Unwilling and seemingly unable to communicate with the general public, including those who want Labor to succeed. (Labor is always more awkward, and guilty looking, in consulting its own traditional supporters rather than hostile captains of industry.) Will there be ready but unaccountable access for some special interests, such as the arms industry and the defence establishment? There's an already established pattern of insiders given undue and improper influence, in the same manner as the gambling and liquor crowd and the old media lobbies on other issues. One thing is for sure. No one can say that Albanese has a popular mandate, arising from the landslide election, to do what he wants on such a fundamental change in our circumstances. Defence and foreign affairs scarcely figured in the election, and the two major parties had no disagreements of any substance. No citizen acquired any extra information from any defence debate. It may be true that a debate, if it occurs, will be rancorous. The big vested interests are keen on throwing about claims of being soft on national security and having ambiguous and uncertain loyalties. It could become as unpleasant as the Voice referendum. But that is not a reason for having a secret debate, or no debate at all. This matters too much. Our own sense of identity, culture, history and future are involved. Australia needs to develop an understanding of Australian nationality which has moved on, a bit at least, from when white men flew a flag containing a Union Jack at Gallipoli 110 years ago. It's a debate that embraces Australians whose ancestors were not here at the time of Gallipoli but are in every sense citizens nonetheless. A debate that involves Aboriginal Australians, whose interests were usually ignored while compiling patriotic encomia and pap. A debate involving young Australians who will have to live in a harsher, hotter and more hostile world because of pragmatic decisions made by current politicians on both sides of the fence. It's not for Albo to run Australians inside or out of the arena. Some within a smug party, having won the election more comfortably than anyone expected, have come to think that the election was won by Albanese's calm, patience and political genius. That the very landslide is a refutation of suggestions that first-term Labor was a "disappointment", with an inarticulate leader too timid to go far or fast, or to take ordinary voters into his confidence. Any prime minister who wins a second, or third, term will see it as a vindication of his or her personality, governing style and methods. They will expect that internal and external critics treat them with more respect in future. Particularly for their political skills. One wouldn't want to deprive Albanese of any credit he deserved. But it is just possible that a sizeable proportion of the increased vote for Labor came more from fear of what sort of leadership or policies a MAGA-Down-Under Peter Dutton might have delivered than from enthusiastic re-endorsement of Albanese and his team. Or embrace of Albo's vision - whatever it was - of old alliances, new alliances, and how we trade with, talk with and share with our neighbours.
