Foreign Minister Penny Wong didn’t announce a change in government policy this week when it comes to official recognition of a state of Palestine. But the mere suggestion was enough to create a political furore.

The Coalition immediately went on the attack, accusing Wong of “irreparably” damaging Australia’s relations with Israel. But Wong was simply reiterating a stance the Labor Party incorporated in its national platform in 2021 – and has yet to formally make official since taking government.

The debate this week is reflective of how fraught this issue has been for both main Australian political parties going back decades, as Micaela Sahhar and Stephen Pascoe explain.

In the 1960s, for instance, the Palestine Liberation Organisation was viewed in the same light as the African National Congress was in South Africa – as an irredeemable terrorist organisation.

In more recent years, the Rudd-Gillard government repositioned Australia’s relationship with Israel in a more critical light, but soon after, the country’s politicians returned to the former bipartisan consensus around Israel.

When Labor returned to power in 2022, it began to shift on the issue yet again, reversing the Coalition’s stance on Israel’s West Bank settlements and recognising them as illegal under international law.

A move toward formal recognition of Palestinian statehood would be a major change in policy, Sahhar and Pascoe write. But in their view, much more needs to be done if Australia is to be “a constructive partner in the meaningful achievement of Palestinian self-determination”.

Meanwhile, Michelle Grattan says Wong’s speech indicates the Albanese government is no longer being overly cautious. Besides his harsh criticism of Israel following the strikes that killed Australian Zomi Frankcom and other aid workers in Gaza, Albanese said Australia needs to “break with old orthodoxies” as he introduced a plan for a highly interventionist new industry policy.

As Grattan writes, “Albanese is extremely comfortable with the interventionist pivot. After all, it takes him back to his political roots, when as a young left-winger he was critical of Labor’s embrace of the free market. It also taps into a broad Labor pro-manufacturing strand.”

As for the wider implications, Naoise McDonagh writes that the new Future Made in Australia Act will mark a sharp break with decades of aversion to large-scale economic intervention, as Australia spends billions trying to level the international playing field for its manufacturing industry.

Australia now joins other countries such as the US and Japan in the great “geoeconomic game” profoundly reshaping international supply chains. But there’s a dissonance to the fact that a country whose wealth has been built on international trade is now moving to a posture of protectionism.

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