Australians have just gone through watching fuel prices climb, a cruel reminder of our vulnerability to instability half a world away.
Conflict in the Middle East squeezed global supply, and the impact on Australians was immediate. Tradies felt the pinch at the bowser between jobs, small businesses grappled with soaring freight costs, entire industries were strained by diesel dependencies, and families commuting on the M1 were left to manage their budgets under mounting pressure. Many of these challenges are ongoing.
But this isn’t just about events overseas. It’s about choices made here at home.
Australia has become too exposed. We rely heavily on fragile global supply chains and too few countries for the essentials we need everyday. COVID-19 was meant to be a wake-up call. Instead, we slipped back into complacency.
In a more uncertain world, that complacency now comes at a heavy cost.
Fuel is our clearest example. Australia has allowed its domestic refining capacity to decline, leaving us reliant on imports. That may have been justified in a more stable era, but today it leaves us exposed to global shocks beyond our control. And when supply is disrupted, Australians pay the price.
This is not just a cost of living issue. It is a pressing national security concern.
Fuel underpins everything: transport networks, food production, local economy, and defence capability. An island nation that cannot guarantee fuel security is an exposed nation.
For too long, we’ve taken for granted the assumption that global markets will always deliver – that we can import what we need, when we need it, at a price we can afford.
Imagine waking up one day and being told you can’t buy a prescribed medicine at your local pharmacy not because you can’t afford it, but because there is no supply. No alternative. No domestic capability to fall back on.
Our former sense of security in global supply chains is being eroded under the weight of geopolitical tension, conflict, and strategic competition.
Overdependence is no longer just an economic risk. It is a national vulnerability.
Higher fuel costs flow through the entire economy. They hit industries already under pressure, drive up the cost of goods and services, and add to the burden on families. For commuters travelling daily, it’s another reminder that global instability is no longer distant – it’s personal.
This is what economic exposure looks like in practice.
The question is how we respond.
There are two mistakes we must avoid. The first is complacency – continuing to assume that global markets alone will serve our interests. The second is overcorrection – attempting to rebuild capability through permanent subsidies and government picking winners.
We’ve seen that approach before, and it doesn’t deliver sustainable industries or long-term strength.
Australia doesn’t need to make everything. But we do need to be clear-eyed about what we cannot afford to lose.
That means focusing on targeted, strategic capability in areas that are critical to our national interest. It means backing high-value, high-skill manufacturing where Australia can compete. And it means ensuring that, where capability matters, we are not entirely dependent on others even if it comes with a financial cost.
This is not about protectionism. It’s about resilience.
Government has a role to play, but it must play the right role. Not to replace markets or prop up industries, but to create the right conditions for investment, competition, innovation, and growth: cutting red tape, ensuring competitive energy and input costs, supporting skills and training, and delivering the infrastructure that allows the industries we need to develop and scale.
If we get those settings right, capability will follow.
Alongside this, we must diversify.
As I said in my first speech in the Parliament, we should diversify our imports and exports so that we don’t rely on any one country that could hold us ransom in the future. A more diversified economy is a more resilient one.
And it can be done. China’s portion of Taiwan’s outbound investment portfolio has dramatically reduced from 83.8% in 2010 to 2.7% in 2025 – an example of a strategic move, on Taiwan’s part, to reduce exposure to economic coercion amidst cross-strait tensions.
We were given a clear lesson during COVID. Supply chains broke down, essential goods became scarce, and governments scrambled to secure supply.
At the time, we spoke a lot about national resilience and sovereign capability. But talk is not enough.
The world is becoming more volatile, the risks are more complex, and the consequences of getting it wrong are more serious.
Australia should not abandon free markets. But we do need to operate within them more strategically. With a clear understanding of our national interest, our vulnerabilities, and our strengths.
Resilience, diversification, and targeted capability must be central to that strategy.
Because the next shock won’t come with a warning – and we cannot afford to be caught unprepared again.
