Until recently, many people hadn’t heard of the Conflict Islands. This group of 21 atolls lies within the Milne Bay Province of Papua New Guinea, between Milne Bay and Misima Island. They are within PNG’s border, subject to PNG’s legal system and foreign owned. They are also now for sale, subject to PNG’s legal system.

This is problematic for a number of reasons. For Australia, there are the security concerns associated with the proximity of the islands to Australia. They lie less than 1,000 kilometres off our coastline.

The Jomard Passage, declared by the International Maritime Organisation as a ‘particularly sensitive sea area’, is close to the Conflict Islands. On average, about 30 large commercial ships transit the passage every day, some from Australian east coast ports. It could be a significant revenue earner for Milne Bay Province through services provided by local pilotage companies. Last June, the PNG government declared the passage a compulsory pilotage area.

The main island in the group, Irai, has the capacity for a 3,000-metre runway.

With increasing interest from China in the region, Australia is right to be concerned about what happens to the islands.

For the PNG government, there’s the question of the islands’ foreign ownership. Land in PNG is normally held by customary landowners. In the early colonial period, there were quite a few plantations on small islands, the land being ‘purchased’ from local ‘chiefs’ for trinkets. Most have ceased operating under plantation management. Some have been abandoned and reverted to customary control. Some were unoccupied but have remained under freehold title and have since been bought and sold.

However, since independence in 1975, ownership of land is confined to the state and citizens of PNG. The country’s constitution provides that only citizens can acquire freehold land (section 56(1)(b)). Because some land was owned by non-citizens at the time of independence, provision was made to enable transfers of that land into the future. A special law was passed—the Land (Ownership of Freeholds) Act 1976—to enable owners of freeholds to apply for them to be converted to state leases.

There is also the pressure from local clans who claim the islands as their own territory and have long been pushing both the PNG central government and the Milne Bay provincial government to restore their rights to ownership.

China’s wider Pacific interests need to be noted here. In June, Chinese Foreign Minister Wang Yi conducted a tour of seven Pacific island states, including PNG, to press a joint plan to give China a greater role in regional maritime affairs. While the offer was turned down by island leaders, China will continue to push for a regional ocean security pact.

And let’s not forget the islands’ natural beauty. Described in tourism promotions as a ‘slice of heaven’ and a pristine tropical paradise at the top of the Coral Sea, they were visited by cruise ships pre-Covid-19. They are also home to 30 permanent residents and a turtle conservation program.

It’s a sensitive time to be selling. The Australian owner of the islands, Ian Gowrie-Smith, is offering to negotiate with the Australian government to sell them, given the political and possible security implications of any potential Chinese purchase. It appears that he bought the land in 2003 from Honolulu residents Lu and Mary Anne Nevels for US$25 million.

If the Conflict Islands are still on a freehold title, Gowrie-Smith can only sell that title to a citizen of PNG. If he wants to sell the islands to a non-citizen, he must first convert the titles to state leases. If the titles have already been converted to state leases, then he’s free to sell them to whomever he wishes, but any dealing would be subject to the approval of the PNG lands minister. One would assume that that would come with conditions of use, such as permissible development or protection of the environment. It’s a positive sign that the minister (who is also deputy prime minister), John Rosso, has been energised by all the publicity to have the matter investigated by his officials.

It’s a tricky situation. Australia generally isn’t in the business of buying foreign land and we wouldn’t want to offend our close neighbour and friend, especially when we’re now negotiating a new security agreement. And China will be watching how this plays out and, one could imagine, is keen to be involved. PNG has now indicated it doesn’t want that outcome.

Prime Minister Anthony Albanese has played a straight bat, arguing that it’s really a private transaction under relevant PNG law and we can’t be on the hook for every island in the Pacific.

A better approach might be for the Australian and PNG governments to encourage a group like Seacology or the better resourced Nature Conservancy to buy the islands and continue the marine and turtle conservation work there.

That would be a sustainable solution for environmental management with no negative security implications. It would avoid the political and environmental implications or even a possible military threat posed by Chinese ownership. It would play well with Australians and just might be acceptable to the residents of the islands.

Price may not be a big issue. The owner is reportedly expecting something north of $36 million for the islands. The Nature Conservancy has bought huge properties in Australia. A few years ago, the group partnered with Victoria-based Tiverton Agriculture to acquire two cattle stations in New South Wales in one of the highest value land-for-conservation deals in Australian history. The joint venture paid $55 million for the properties.

Perhaps a cheap long-term Australian government loan could help if necessary. Given what we’re now spending to limit geopolitical contest in our neighbourhood, such a loan wouldn’t touch the sides. Let’s hope for a happy outcome for the Conflict Islands.

China’s ambassador to Australia, Xiao Qian, has a friendlier way of presenting the Chinese Communist Party propaganda department’s talking points than many of Beijing’s wolf warriors, but it’s the same content, just in nicer wrapping. At his National Press Club speech yesterday there was no strident shouting about Australian ‘finger-pointing’ or emotional claims that Australia had breached the UN charter.

One distinctive thing about his storytelling is the passive, almost invisible role that the CCP has played in the Australia–China relationship and in Chinese actions in the world, contrasted with the active role that the Australian government must take to ‘reset the relationship’.

As the ambassador tells it, it’s all about the emotions and reactions of a highly strung 1.4 billion Chinese people who are quick to feel anger and act on that impulse, all the while apparently feeling great personal warmth and friendship for others, including the Australian people. In this world, the CCP is not a highly controlling autocratic regime; at most it simply acts as a conduit for its people’s emotion.

So, while the Chinese customs folk have put tariffs on some Australian products, the Chinese government has apparently not put in place $20 billion worth of economic sanctions against Australian exports. No, apparently it’s just that the Chinese people had received ‘very negative messages’ from the Australian government and so ‘are not happy’ and not buying Australian products. A warm atmosphere between us—to be created by the Australian government—can change that.

There was also a continued theme from his previous public comments. He told us again that ‘China’s policy of friendship and cooperation towards Australia remains’.

He told us that both governments ‘need to adopt positive policies towards each other’. He said that ‘there has been a good start’ and assured us that the Chinese government is ready to engage with the Australian government to resolve differences.

But there’s little sign that this is the position of his seniors in Beijing, where it seems the expectation continues to be an Australian compromise first as the price for deeper engagement.

The actual content of the speech was core, boilerplate CCP messaging about mutual benefit, proper handling of differences, and China never seeking hegemony, expansion or a sphere of influence.

It had a surreal quality because of the absence of the Chinese government as a real driver of events and decisions in the world he presented, and because that government’s military aggression and expansive territorial claims in places like the South China Sea and against Japan in the East China Sea seemed not to exist.

Some coded references were still clear: Australia is a great nation, but it must not be influenced by ‘a third party’—which is the standard CCP way of telling countries that they are mere pawns of the US without minds of their own, while right-thinking nations listen to China and act in accordance with its interests—independently, of course.

But the high point of his Alice in Wonderland presentation was about Taiwan.

This surreal world was on display with the ambassador’s storytelling about the large Chinese military forces operating aggressively around Taiwan that fired a barrage of ballistic missiles into Japan’s exclusive economic zone. The ambassador distilled this into a single event: a ‘ballistic missile dropped in … an area of dispute,’ he said, and so no one had any right to complain. Indeed, the boilerplate foreign ministry material made an appearance here. China was ‘compelled’ to take ‘legitimate and justified’ ‘countermeasures’ because of the crisis of a political visit to Taiwan.

Most impressive in his rhetorical presentation was the breathtaking lack of proportion and perspective he provided between the Pelosi visit to Taiwan and the large, violent—and continuing—actions by the Chinese military to intimidate and frighten the 23 million people of Taiwan.

To the ambassador, this all makes sense because, ‘It is the US side that fired the first shot.’ Equating the visit of an 82-year-old American politician to a peaceful democratic people with the dangerous and violent military actions ordered by Xi Jinping against Taiwan and Japan isn’t sophistry and isn’t just propaganda—it’s delusion. There are real problems flowing from the limited perspectives inside Xi’s Beijing echo chamber.

And fast behind this was Xiao’s stated belief that most Taiwanese believe Taiwan is part of China and support unification. When confronted with continued polling showing that a large majority of Taiwan’s 23 million people say the opposite, the ambassador simply said, ‘The poll is misleading’.

He spoke several times about ‘the one-China policy’, which is Beijing’s view that Taiwan is a part of the motherland and Taiwan’s government is just a ‘local government’ inside China subordinate to the ‘central government’ in Beijing.

He told us that all nations needed to uphold Beijing’s one-China policy and if we did there would be peace and stability across the Taiwan Strait. That could be true in some dystopian future, but not in the way the ambassador might have us believe. If Beijing attempted to conquer Taiwan and its people and succeeded there would be silence, if not peace, at least after the smoke of the invasion cleared.

Quoting the actual text of Australia’s diplomatic recognition of Beijing’s government back in 1972: ‘“The Australian Government recognises the Government of the People’s Republic of China as the sole legal government of China [and] acknowledges the position of the Chinese Government that Taiwan is a province of the People’s Republic of China”,’ the ambassador warned us that ‘this principle … should not be misinterpreted’. And then he promptly did so, pretending that Australia acknowledging the PRC’s view was the same as Australia agreeing with it.

Once, the ambassador slipped and referred to ‘our one-China policy’ instead of ‘the one-China policy’, creating a narrative gap in which other versions of this critical policy on Taiwan might exist (as they do) and compromises might be needed. But this was a momentary lapse, quickly rectified: Beijing could not compromise on Taiwan and would not renounce force against it, just as Beijing could not compromise on any of its territorial claims in the South China Sea.

The ambassador’s ability to sound urbane while presenting the unapologetically uncompromising position of his superiors back in Beijing is a display worth watching, if only to notice the gap between his words of warmth and friendship and Beijing’s actions. Welcome to the world of the CCP.

Prime Minister Anthony Albanese and his cabinet have already done much to demonstrate Australia’s commitment to continuity and consistency on China policy, and it has been worth watching.

With the international system more precarious now than it has been in decades, the new government could have been forgiven for wanting to take some time to get its eye in before sending any major foreign policy signals.

But it quickly grasped the scale of the China challenge and moved to defend our sovereignty and national interests in ways that are easy to understand and broadly consistent with the previous government’s approach.

Beijing was always going to view the new government’s first few months as an opportunity to get Australia to change course or make a sufficiently large concession that could be used to divide Australian politics along China lines.

But neither occurred.

In responding to China’s military exercises surrounding Taiwan, its Solomon Islands push, the reckless Chinese interceptions of Australian military aircraft and Beijing’s latest list of unreasonable demands to reset the bilateral relationship, Australia’s political leaders have on balance struck the right note: Australia will act in the interests of Australia.

With both sides of Australian politics taking all of this very seriously, as they should, the question now is how to sustain a national focus and resolve over time.

Maintaining a realistic perspective and developing an honest communication style in relation to China matters will be the most useful habits for us to form over the long haul.

While three years in China’s bad books seems like a long time, we need to remember that we’re still in the feeling-out stage of a very long game that we’ll have to play to the end.

There will be many ups and downs in the bilateral relationship for many years to come, and in the next few years at least probably more downs than ups.

A healthy China discourse in Australian politics in this context is one that is not only free of partisanship and false bravado but also openly accepting of the long and potentially painful road ahead for Australia and the region.

To pace ourselves amid all this we need to be ourselves. And being ourselves requires us to focus sufficient attention on what it is we are doing and feeling, and to direct energy away from some of the things we cannot control.

Accepting that we cannot penetrate the black box of Chinese government decision-making or truly know what China’s leaders think of us is a good start.

Much time and energy can be wasted predicting how China will react to something we’re planning to say or do, and whether a punishment for something we have already said or done was intended to deter us or signal something to someone else.

Thinking that way is exhausting. It’s also dangerous, because it makes almost all problems and policy choices seem China-centric.

Beijing’s pressure-and-release tactics are designed to give China prominence and to take a psychological and emotional toll on us, and they often do.

But not letting what China says about us have any meaningful impact on our desire and endeavour to pursue our own interests in our own way will make those tactics far less effective over time.

And it will mean that, no matter what happens, China will not get the better of us.

Australia is now seeing the reality of its bilateral relationship with China: one with tension, in which engagement occurs but is not the goal in itself, and where Australia doesn’t concede sovereignty for economic gain.

The resumption of communication between defence and foreign ministers, and others, is in Australia’s interest because it allows for cooperation while retaining focus on irritants and concerns.

Most importantly, dialogue has recommenced on an unconditional basis, meaning Australia hasn’t compromised on any of its foreign policy, national security and defence settings. That is, the first shift has been made by China, dropping its requirement that Australia change before engaging at the ministerial level—a positive outcome for the new government and our nation.

In re-establishing dialogue without preconditions, the government has reinforced Australia’s strategic policy settings. The prime minister, defence minister and foreign minister have made it clear that Australia’s rhetoric will be carefully calibrated while policies on matters such as 5G, laws such as the counter-foreign-interference legislation, and groupings including AUKUS and Quad will not only be retained but remain core to Australia’s national security posture.

The principle was set out by Foreign Minister Penny Wong, who said Australia will continue to make decisions ‘on the basis of our national interest, our security and our sovereignty’. It was reinforced by Prime Minister Anthony Albanese, who responded to a new set of four conditions from China’s Foreign Minister Wang Yi by saying: ‘Australia doesn’t respond to demands.’

Resuming dialogue without compromising any policy settings means the Australian government has gained the upper hand diplomatically.

Calibrating language doesn’t mean silence. The government has continued to appropriately identify malicious actions, security threats and human rights abuses. Consider Deputy Prime Minister Richard Marles’s frank assessment at the opening of ASPI’s office in Washington DC this month: ‘This is the most dangerous period I’ve lived through—we are witnessing the biggest military build-up since the Second World War … That’s what keeps me awake at night.’

The strategic continuity is clear. It shows that the difficult decisions taken in recent years were important to ensure that future governments didn’t have to make even harder and more disruptive decisions.

Bigger tests lie ahead. For example, China desperately wants to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and some in Australia are already proposing that the Australian government should compromise in this area. That would be a critical mistake, because it would reinforce China’s practice of economic coercion, a malign tactic used against Australia and many of our partners, including Japan, South Korea and the Philippines.

The CPTPP shouldn’t be a compromise to attract more positive rhetoric, or be used by Canberra as a reciprocal concession for Beijing lifting its unfair trade measures; the free trade deal should be open only to countries that meet its strict standards. Meeting and upholding those standards should be required of China, just as for every other applicant, including Taiwan.

A high bar should be set for the accession of the UK, which applied before China. There would also be benefits for Beijing, since trading partners would have increased trust that China had fairly gained access. If we and the other 11 CPTPP countries allow China to join unconditionally, that would only encourage the Chinese Communist Party to continue its coercion.

As Wong has said, Australia should continue to identify ways of ‘stabilising’ the bilateral relationship. This can and should occur without Australia ignoring the impact of China’s international behaviour. Australia has appreciated international support during our period facing coercion and, even in a more stable relationship, we should continue supporting states, such as Lithuania, that face coercion merely for making sovereign decisions.

There could be an early test, given there are signs that Beijing could lift its ban on Australian coal—a key plank in the CCP’s economic coercion campaign. That would be positive for Australian coal exports, but shouldn’t be viewed as a CCP concession that requires a reciprocal concession from us—there should be no reward for beginning to do what is right. If the coal ban ends, it will be driven by Beijing’s self-interest—alleviating supply issues resulting from Russia’s war.

We must also recognise that Beijing continues to strengthen its coercive hand in other ways. For instance, Chinese state media has announced that the new China Mineral Resources Group will help coordination in the steel industry, seemingly with an eye to controlling the price of iron ore, Australia’s most valuable export to China.

That’s why, even as relations ‘stabilise’ and opportunities for cooperation are rightly identified, sunlight should continue to be poured on intimidatory behaviour. Transparency remains a key element in countering coercion, whether it is economic pressure or arbitrary detention. As ministerial re-engagement and trade improve, we must continue fighting for the release of detained Australians including Yang Hengjun and Cheng Lei.

The new Australian government has shown it can both talk and act in the national interest. All sectors should support these active principles in the name of Australian sovereignty.

In this afternoon’s defence debate at the National Press Club, much of the Labor–Liberal consensus was as firm as ever: more money for the military, build nuclear submarines, worry about China.

Both sides concur on scary times. Then the politics kicks in hard, as it must only a fortnight from the vote.

The Liberals argue that Australians should be scared about how ‘weak’ the Labor Party is on defence spending. Stick with the government with a firm record, advises Defence Minister Peter Dutton, and don’t risk Labor.

The pushback from Labor’s shadow defence minister, Brendan O’Connor, is that it’s scary how little the government has actually delivered to deal with the times. O’Connor said that the coalition government had six defence ministers in the nine years since 2013. Under Scott Morrison as prime minister, there’d been four defence ministers in four years. The result had been ‘inadequate oversight and focus on this portfolio’.

These were the political parameters for the election debate between Dutton and O’Connor. View the contest using a series of headings.

Scary strategic settings. ‘We are facing a future that is more uncertain and a region that is less safe,’ Dutton said. What was unthinkable even a year ago, he said, is now our reality, 70 days into Russia’s ‘immoral and illegal invasion’ of Ukraine. China’s intimidation and coercion, he said, is ‘threatening the sovereignty and prosperity of every Indo-Pacific nation’. Ditto, said O’Connor.

China. The two sides agree on a different, scary China (‘alarming’, said Dutton). The politics is in Dutton’s claim that Labor would appease Beijing and that China wants Labor to win the Australian election:

We are dealing with the reality of a new China. Australians should be wide-eyed about this. I think people should be under no illusion. There’s no need to embellish the intelligence that we’re reading. There’s no need to pretend that something is happening.

The fact is that every like-minded country has drawn a similar conclusion about the direction of China. Now there’s no doubt in my mind that the Chinese Communist Party would like to see a change of government at the 21 May election. No question at all.

Responding that Dutton’s comment was untrue, O’Connor said China would get no benefit from a Labor victory: ‘We know China has changed. We know it’s now more assertive, more aggressive, more coercive.’

He criticised the Morrison government for abandoning strategic ambiguity about a potential war over Taiwan. But Labor did not blame the government for China’s shifts, O’Connor said: ‘I’ve made it unequivocally clear that it’s not the Australian government or Australia that has changed its behaviour. It is China.’

O’Connor questioned Dutton on his November comment that it was ‘inconceivable’ that Australia would fail to join the US in a Taiwan conflict. The Labor shadow minister asked the defence minister if he’d reflected that it was wrong to answer the hypothetical question.

Dutton replied: ‘Do I think we would shirk from our responsibility to be a good ally with the US? No, I don’t. And I don’t think that would be in the interests of our country.’

South Pacific and Solomon Islands. O’Connor said the government had ‘dropped the ball in the Pacific. Not being seen to treat Pacific island countries fairly or seriously. Cutting foreign aid. Mocking their concerns about climate change, by failing to comprehend the importance of soft-power diplomacy.’

He said the relationship with Solomon Islands had deteriorated and the Solomons’ security pact with China was a Canberra failure: ‘It’s happened under Scott Morrison’s watch and he has to take some responsibility.’

Dutton responded that Solomon Islands Prime Minister Manasseh Sogavare had not criticised Australia: ‘He’s not saying that the relationship is broken. He’s not saying that Australia is an unreliable partner.’

Defence spending. The consensus on 2% of GDP on defence is a talisman grasped by both sides, even as inflation asks new questions about the value that can be delivered.

Dutton said the government is building a ‘larger, stronger and better defence force’, increasing its size by 30% to get a total force of 80,000 personnel and putting $270 billion into capability this decade.

When the coalition came to office in 2013, Dutton said, Labor had cut defence spending to the lowest levels since 1938, at 1.56% of GDP. Labor had ‘delayed, cut or cancelled over 160 projects’.

O’Connor replied that in the six years to 2013, the Labor governments of Kevin Rudd and Julia Gillard had spent an annual average of 1.7% to 1.8% of GDP on defence. Much had ‘dramatically changed,’ he said, since China’s Xi Jinping addressed Australia’s parliament in 2014.

Labor supported the defence acquisitions announced by the Morrison government, O’Connor said, but the government didn’t deliver what it pledged:

This government has failed to deliver the defence capabilities that this country needs. In almost a decade they have not delivered the assets they promised. [The Australian’s] Greg Sheridan recently wrote that if you could guarantee Australia’s security by announcements that have been made, we’d be the most secure nation in the world.

The spending duel—who has done, or will do, the best job—often becomes an exchange of historical analogies.

History wars and the US alliance. In campaigns, many ghosts rise up, defining the future by referring to the past.

O’Connor began his address by noting the 80th anniversary of the US and Australia joining in the battle of the Coral Sea—‘a tactical draw but a strategic victory’ in the fight for Papua New Guinea and Solomon Islands. The wartime Labor leader John Curtin had been responsible for the ‘strategic pivot’ to the US ‘to defend this nation effectively. Eighty years on, that important security alliance is still in place, and it has been deepened and broadened, and in large part that’s because of the bipartisanship it enjoys.’

Labor’s recent achievement in office had been to get the US Marines to Darwin, O’Connor said, while Morrison had been treasurer when the Port of Darwin was sold to China on a 99-year lease.

‘We live in times echoing the 1930s,’ Dutton said, ‘with belligerent autocrats seeking to once again use force to achieve political outcomes. If history has taught us anything, it is that when dictators are on the march, you can only preserve peace by preparing for war. You can only deter aggression from a position of strength.’

Dutton raised the ghost of Mark Latham, Labor’s leader in the 2004 election, claiming he would have broken the US alliance. The alliance was safe with the Liberal Party, Dutton said, but Labor’s ‘hard left would break the alliance tomorrow’. O’Connor’s interjected response: ‘That’s absurd.’

Nuclear submarines for Australia. The AUKUS agreement offers an entirely new dimension to defence, Dutton said: ‘The range, the stealth, the survivability of nuclear-powered submarines make them an incredibly powerful deterrent and capability for our country, underpinning the security of our nation for the next 50 years.’

The defence minister and his Labor counterpart tacitly joined hands to tiptoe around the question of whether the first of the nuclear submarines should be built overseas—in the US or Britain—to get the capability sooner.

Both promised to build subs in Oz. ‘Our commitment is to see them built here in South Australia,’ Dutton said. ‘Ideally, you build defence assets here,’ O’Connor said. Both pointed to the time it’ll take to train Australians to crew nuclear subs.

The defence minister said Australia was condensing the 18-month timeline to make a choice between US and British nuclear submarine designs.

Both professionals landed plenty of blows. But no knockouts. The defence consensus between the two parties of government skipped through the bout with hardly a bruise.