Opposition Leader Warns Australia-Israel Relations Deteriorating, Affecting US Alliance

Aug 20, 2025

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Opposition Leader Sussan Ley warned Thursday that the Albanese government has "badly mismanaged" Australia's relationship with Israel, claiming the diplomatic breakdown is now affecting the nation's alliance with the United States.

Ley's criticism came as Israeli Prime Minister Benjamin Netanyahu escalated his attack on Prime Minister Anthony Albanese, with reports of a formal letter accusing the Australian leader of "appeasement and pouring fuel on anti-Semitism."

"What we are seeing now is something different. We are seeing a relationship that has deteriorated, and the consequences of that are not good, and they are spilling over into our relationship with the US, our most important ally," Ley told reporters in Sydney.

The opposition leader said the diplomatic crisis represented a fundamental failure of the government's foreign policy approach, describing the deterioration as beyond normal disagreements between allies.

"Of course, along the way, there have been disagreements, there have been robust conversations. That's normal. But what we are seeing now is something different," Ley said.

She demanded the Prime Minister explain his strategy for repairing the damaged relationship.

"The Prime Minister needs to explain how he is going to get this relationship that he has so badly mismanaged back on track," Ley said.

Historic Alliance Under Strain

Ley emphasized the deep historical foundations of the Australia-Israel relationship, dating to Australia's role in Israel's establishment.

"It's a strong relationship. It's an enduring relationship. It dates back to 1947, when Australia was the first signatory for a UN resolution that created the State of Israel," she said.

The opposition leader criticized the government's unilateral recognition of a Palestinian state, arguing it had proceeded without resolving fundamental questions about governance and borders.

"My criticism of the government is that they have gone ahead with a unilateral recognition of the state of Palestine without these issues being resolved in an unconditional way, with a terrorist group, Hamas, in charge, with conditions that seemed to me, to be honest, to be quite impossible to meet," Ley said.

She advocated for recognition to come only after a comprehensive peace process.

"We want to see a proper peace process. Recognition comes at the end of the peace process," Ley said.

Visa Cancellation Questioned

Ley questioned Home Affairs Minister Tony Burke's decision to cancel the visa of Israeli politician Simcha Rothman, despite acknowledging some comments may have been "reprehensible."

"The point I make is that the issuing of a visa is not connected to the things people say," Ley said. "Not issuing a visa to an elected representative from a parliament of another country is something that the Home Affairs Minister needs to be very strong in his explanations for."

The opposition leader said she had not reviewed Rothman's specific comments but emphasized the high threshold required for denying entry to foreign parliamentarians.

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Housing Crisis Dominates Economic Concerns

Ley used the government's economic reform roundtable to launch a comprehensive attack on Labor's housing policies, warning that home ownership dreams were "retreating" for younger generations.

"For the younger generation, the Gen Z and the millennials, that dream of home ownership is retreating and it is just not good enough," Ley said outside the venue where Treasurer Jim Chalmers was conducting the three-day economic discussions.

The opposition leader said building costs had become "impossibly expensive" due to government regulations, with construction timelines too slow and skills shortages hampering development.

"It is becoming impossibly expensive to build homes. It's too slow. The rate of home building is dropping. And the skills are not there," Ley said.

She highlighted Treasury advice suggesting the government would fail to meet its 1.2 million homes target over five years.

"The government's own Treasury advice has leaked that it is not going to build 1.2 million homes in five years. But the people that are being let down are young Australians who deserve home ownership," Ley said.

Red Tape Burden Quantified

Ley revealed that regulations, including the National Construction Code, were adding 20 percent to home building costs, describing the burden as "unacceptable."

"What we heard today was that regulations, including that code, are adding 20 per cent to the cost of a home. That is unacceptable," she said.

The opposition leader provided stark statistics about construction costs, claiming regulatory burden comprised half of total building expenses.

"Remember that estimates of building a home and that cost are that 50% is not the building of the home itself. It's not the construction that we see around us today. It's rules. It's regulation. It's red tape," Ley said.

She welcomed potential government discussion about freezing the National Construction Code but demanded broader reform.

"Where the National Construction Code is unhelpful, of course it should be paused," Ley said. "But this government has to do much more than pause the National Construction Code in order to get housing supply back on track in this country."

Government Spending Criticized

Ley accused the government of pursuing tax increases rather than addressing spending growth, citing former Reserve Bank Governor Philip Lowe's criticism of government fiscal policy.

"So far, all I've heard coming out of this talkfest is a plan to raise taxes. And when Labor talks, you pay," Ley said.

She referenced Lowe's assessment that the government was "addicted to spending," noting government expenditure had risen from 25 percent to 27 percent of GDP.

"Previous Reserve Bank Governor Philip Lowe has identified, in fact belled the cat, that this is a government addicted to spending," Ley said.

NDIS Reform Commitment

Despite broader criticism, Ley offered bipartisan cooperation on National Disability Insurance Scheme reform, while warning about spending growth.

"I want to reiterate my commitment to work constructively with the government with respect to the NDIS. I want the NDIS to be there for the next generation," Ley said.

However, she emphasized the need for spending control.

"But the spending is getting out of control. The government has talked about this, but they're not walking the talk," Ley said.

The opposition leader encouraged constructive dialogue between government and opposition on NDIS sustainability.

"Can I encourage them to have those constructive conversations with the opposition? We will work constructively together with them," she said.

Environmental Disaster Response

Ley criticized Albanese for delayed response to South Australia's algal bloom crisis, describing the environmental impact as ecosystem collapse.

"I haven't forgotten the pain that I saw in the eyes of the fishers, of the tourism businesses, of the community members, of those who care deeply for the environment, who have seen washed up on South Australia's beaches sharks, dolphins, stingrays, birds and all manner of life from the ocean," Ley said.

She characterized the 140-day environmental disaster as requiring immediate federal support.

"As one person described it to me, it is as if the ecosystem is facing collapse. This is a massive issue and it has taken the Prime Minister far too long to go to South Australia to support those communities," Ley said.

Ley demanded comprehensive federal assistance for affected businesses and communities.

"The Prime Minister needs to come up today with a proper support package for South Australia, something real, something that actually supports these businesses and communities. And to do anything less is a failure of leadership," she said.

Housing Solutions Defended

When questioned about specific opposition housing policies, Ley emphasized comprehensive supply-side solutions while rejecting "second-best" options for young Australians.

"We should be looking at everything. But I don't want young Australians to have second-best solutions," Ley said regarding modular housing proposals.

She maintained young Australians deserved traditional homeownership opportunities.

"I want young Australians in this country to have what aspirational Australians have always dreamed of and deserve, which is a home of their own, in the style that they would like, at the time of their life that suits them," Ley said.

The opposition leader said the Liberal Party would continue developing new housing initiatives under Andrew Bragg's leadership while supporting beneficial government proposals and opposing ineffective measures.

"If good ideas are put forward, we will support them. If bad ideas are put forward, we won't hesitate to call them out," Ley said.

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