Australia’s unsettled settlement

Australia is trying to face outwards while parts of its politics are turning inwards.

Its strategic posture remains firmly engaged with the Indo-Pacific. Support for AUKUS is steady, the United States alliance is still regarded as important, and majorities favour coming to the defence of several regional partners, including Indonesia.

Yet beneath this confidence sits a more unsettled domestic mood. A record number of Australians say migration is too high, and support for cultural diversity has fallen sharply since 2024.

This is the tension captured by the 2026 Lowy Institute Poll (Opens in new window). The poll does not simply show how Australians feel about the world; it reveals how Australia’s regional ambitions are shadowed by anxieties at home.

For years, Canberra has framed Australia as being at home in the Indo-Pacific. Yet the region does not read Australia through strategy alone. It also reads Australia through its domestic debates about diversity, migration, and Asia itself.

The unease is not new. Nearly two decades after I first encountered Paul Kelly’s idea of the Australian Settlement (Opens in new window) as a student in South Australia, the concept feels newly relevant – not only as a way to understand Australia’s economic past but also as a lens on its Indo-Pacific present.

Kelly used the phrase to describe the compact that shaped Australia in the early twentieth century: White Australia, tariff protection, wage arbitration, state paternalism, and imperial benevolence. It was a settlement built around protection, seeking to defend workers, industries, living standards, racial boundaries, and security from the outside world.

This was more than a set of policies. It offered a promise of security: that Australia could protect its way of life by keeping the pressures of the outside world at a manageable distance – Asian migration, external competition, labour insecurity, and geopolitical vulnerability.

Much of that settlement has since been dismantled. White Australia was abandoned. The economy was opened. Britain receded as Australia’s imperial protector. Multiculturalism became part of the national story. Asia became central to Australia’s prosperity and strategic imagination.

But the old protective instinct was never entirely buried. By the late 20th century, domestic defence had become a liability: a system designed to shield Australia from the world was harder to sustain amid globalisation, regional integration, and shifting power in Asia.

What became an economic burden then now risks becoming a strategic one.

This is why Pauline Hanson’s renewed visibility (Opens in new window) deserves closer attention. Her politics draws on the emotional residue of domestic defence, with its belief that Australia can be made safer by turning inwards. Her rhetoric about immigration and multiculturalism does not merely reopen a domestic debate about who belongs. It reopens an old regional question: has Australia really moved beyond White Australia, or has the anxiety simply found a new language?

White Australia may have ended as formal policy, but it was never only an immigration regime. It was one pillar of a larger settlement. Its power lay in the story it told about Australia’s place in the world: a British-derived society seeking security at the edge of Asia.

That story has been officially repudiated. Yet politics also moves through memory and nostalgia. Hanson’s appeal lies partly in the promise of restored control – over borders, identity, and national direction. It treats diversity as pressure and migration as threat, while leaving Asia as something still not fully inside Australia’s national imagination.

Hanson will not write Australia’s regional strategy. She will not determine AUKUS, ASEAN engagement, or the US alliance. Her significance lies elsewhere: she complicates the story Australia tells about itself – a confident multicultural democracy at home in the Indo-Pacific, yet still unsettled by older anxieties about race, migration, and belonging.

Australia is not exceptional in this regard, and most Australians do not want to return to the old settlement. Still, the protective reflex remains politically available. Under pressure from housing costs, wage insecurity, strategic uncertainty, or demographic change, the promise of control can still find an audience.

In the Indo-Pacific, however, that instinct no longer protects Australia. It weakens it.

Australia’s prosperity depends on trade with Asia. Its universities depend on international education. Its security depends on regional partnerships. Its diplomatic credibility depends on whether neighbours believe Australia sees the region as home, not as threat.

That is why submarines alone cannot build Indo-Pacific credibility. AUKUS, maritime security, and ASEAN engagement all matter. Strategy also depends on whether Australia can present itself as a country whose identity is not unsettled by the region it seeks to engage.

The old Australian settlement has been dismantled, yet Australia is not fully settled. Can Australia build an Indo-Pacific future while parts of its politics still reach for the protective instincts of the past?

Australia once had to move beyond White Australia to be taken seriously in the region. The lesson is not that history repeats itself, but that old patterns return when their logic is forgotten. Resisting the politics of exclusion is part of what it means to remain credible in the Indo-Pacific.

Australia cannot face Asia while turning inwards.