Global and political tension expected to dominate 2026 news agenda

Global instability and political tension are poised to dominate the news headlines this year — with protracted conflicts, elections at home and abroad, a race for AI domination, and further fallout from the Bondi Beach mass shooting.

While Prime Minister Anthony Albanese would hope political heat over his handling of Australia’s worst terror attack would begin to cool in the new year, the issue is all but certain to plague this government’s agenda.

Up until the December 14 massacre at the nation’s most iconic beach, Mr Albanese had revelled in the most successful political year of any current leader thanks to a thumping 94-seat majority at the May 3 Federal election.

But he’s since faced waves of critical, unflattering coverage over his government’s response, with every next move — from gun reforms, combating anti-Semitism, and hate speech — to be under the spotlight.

Monash University head of politics Zareh Ghazarian labelled 2025 a “high point” for Labor but said “it very quickly unravelled”.

“It’s primarily due to the Prime Minister handing himself into a corner over the issue of the Royal Commission. He has not changed his approach, which has given rise to more questions,” the political scientist said.

“This has the potential to derail the government’s agenda in the new year.”

While the PM will be under intense scrutiny Dr Ghazarian said he “wouldn’t expect there to be internal pressure” on his leadership after positioning himself as a “Labor champion” with back-to-back election wins.

In the absence of a federal royal commission, attention will instead turn to the findings and recommendations out of NSW’s royal commission and the independent review led by former Defence Department secretary Dennis Richardson.

Elsewhere, expectations are high for the Federal Government’s May Budget to tackle systemic issues but will have to balance pressing challenges such as persistently high inflation and expected interest rate hikes from Michele Bullock’s Reserve Bank.

Treasurer Jim Chalmers also faces continued pressure to ensure budget sustainability, questions remain around the Albanese government’s ambition — or lack of — for broader economic reform.

It’s anticipated Dr Chalmers will take further steps on the outcomes of his much-hyped economic roundtable last August.

In the interim, the PM is also expected to take further steps towards universal child care, which he hopes will be a legacy-shaping policy.

But the Federal Government will also have to tackle woes including State hospital funding after stalled negotiations prompted Band-Aid extensions last year, with some agreements due to expire as soon as next month, while States are also agitating over aged care funding.

Labor will also be hoping for a smooth transition of its new “Thriving Kids” program, which aims to divert the growing number of children with autism or developmental delay off the ballooning National Disability Insurance Scheme.

Dr Chalmers also declared there would be a “shift” in how cost-of-living is addressed — switching from temporary measures towards ongoing help — after Cabinet’s December decision not to extend the federal government’s $300 energy rebate.

Dr Ghazarian said that if the government intended to overhaul the country’s economic settings, this would be the ideal year to set long-term plans in motion.

“By the time 2027 starts, the government will be thinking ‘well, there’s another 18 months until the next election’ when they may be a bit more cautious and that appetite for broader or bigger reform may not be there,” he said.

Dr Ghazarian said while a Productivity Commission review examining the GST distribution arrangements was expected to report back by year’s end, it was unlikely Labor would risk the political kryptonite altering the current model could bring.

In July, the first approvals — and consequences — of Labor’s overhauled environmental laws will be seen after the Greens sided with Murray Watt’s amendments in the final sitting week of 2025.

The PM is poised to have another big year on the global stage, with Turkey to host COP31 and the NATO leaders summit, the G7 to be held in France, and G20 in Miami. A string of Asian nations could also be on the itinerary during summit season later in the year.

Perth USAsia Centre chief executive Gordon Flake said Mr Albanese could again be in an awkward position with the US President this year after Donald Trump announced his intention to leave South Africa from the guest list for the G20 in December.

Professor Flake labelled it an “unprecedented” move for a host country to dictate the guest list of a membership based forum.

“It really strikes at the heart of what Australians like to call the rules based order,” he said.

“It’s going to be an interesting choice for Australia. How they respond to that? Do they go ahead and go if South Africa is excluded? Or not? That’s a challenge and something I’d be watching.”

The PM anticipated overseas trips comes after politician travel perks were in the spotlight in December, sparked by Labor minister Anika Wells’ almost $100K in flights to New York for an event she spoke for less than seven minutes at.

The scandal has prompted the PM to ask the independent watchdog for advice and speculation Ms Wells might be booted from her beloved sports portfolio in a reshuffle.

Even the communications portfolio remains tainted after her spending habits overshadowed Labor’s roll out of the social media ban they had been so keen to spruik on the world stage.

And the role will be critical amid continued failures of Australia’s triple-zero network and expectations Labor will aim to make the long-sought Digital Duty of Care a reality.

Labor’s defence investment, focuses, and capabilities will also come into the fore with a scheduled update on the National Defence Strategy.

It comes amid growing geopolitical volatility in the Asian-Pacific, which reached a flash point in December when China unleashed its latest live-fire military exercises around Taiwan. President Xi Jinping had also declared reunification was basically inevitable in his New Year’s message.

The drill — the sixth since former US Speaker Nancy Pelosi’s visit to Taiwan in 2022 — has been seen by experts as a full-dress rehearsal and a test for the US.

While he hopes to uphold a ceasefire in Gaza and is still seeking one in the Russia-Ukraine conflict, eyes will be on the US President during his planned Beijing trip in April as to whether he raises the issues in the Taiwan Strait.

Swinburne emerging technologies expert Dimitrios Salampasis said the trip could also stir up tension between China and the United States over their global race to AI dominance — which he claimed would only intensify in 2026.

He added that all nations — including Australia — would likely focus on future AI and data sovereignty as threats to national security increase.

“From a geopolitical point-of-view, I think it’s a very important issue. Countries going back into protecting specific AI capabilities,” Dr Salampasis said.

“I see a big war between China and the US in terms of AI domination, especially with AI chips and the supply chain.”

Mr Albanese had in July rejected a Chinese offer to incorporate artificial intelligence in the Australia-China free trade agreement.

As foreshadowed by his ambassador Kevin Rudd during a speech in Canberra in October, the PM is to push for an agreement with the US on “critical technology, artificial intelligence and quantum technology” after ticking off a critical minerals deal and AUKUS assurance last year.

Progress on the Australia-America critical minerals deal could be revealed as both nations seek to counter China’s dominance in the market, which is key for technology advancement, particularly in defence.

After the Albanese government quietly made their latest non-refundable AUKUS downpayment, to the tune of $1.6 billion, to the US in December, it’s anticipated Mr Albanese will be keen to continue engagement with Mr Trump.

As AUKUS partners have been promised a rotational presence at HMAS Stirling from as early as 2027, further work to ensure Submarine Rotational Force – West is expected at the major defence hub south of Perth across 2026.

While global forums could bring the pair together again in 2026 after a warm first White House meeting in October, the world leaders could share the stands of the 2026 FIFA World Cup after Australia and the US were picked to play each other when it kicks off across North America in June and July.

Australia will be hoping the benefits of their alliance will shield them from harsher tariffs burdened Mr Trump has placed on other nations as Mr Albanese and State Premier’s aim for better trade diversity.

Amid optimism for a breakthrough, key EU free trade agreement negotiations are expected to conclude in early 2026, aimed at reducing barriers for Australia and to boost market access for goods.

Several high stakes elections will be held at home and abroad this year, with the US midterms in November expected to be closely watched as the first big test of Mr Trump’s popularity.

The national elections could cause a power-shift headache for Mr Trump as the party in the White House historically loses seats in Congress.

Professor Flake said a record number of Republican Congressmen last year announcing they wouldn’t run for re-election was already a clear indicator” that many “also see the writing on the wall”.

It comes after New York voters shook up the political establishment during the mayoral elections in 2025, with “tax the rich” victor Zohran Mamdani — a South Asian and African-born Muslim — sending a message to Republicans.

The United Kingdom Prime Minister Keir Starmer will face a make-or-break year, with the three dozen council elections in May expected to serve as proxy referendums which could reveal the extent of his polled unpopularity.

It’s projected UK Labour Party will cop a bruising with continued prominence of Nigel Farage’s Reform UK alongside disaffection with mainstream politics more broadly.

On home soil, South Australians will go to the polls in March, with Victoria to follow suit in November.

With pollsters claiming fresh-faced Victorian Liberal Opposition leader Jess Wilson was overtaking Labor Premier Jacinta Allan as preferred leader, the election could spell the end of a long-running State government.

Dr Ghazarian said 2026 would be a crucial year for the Liberal arty at all levels.

“I think from May last year, there’s a very clear signal that the Liberal Party is losing ground and support, and these elections in 2026 will be a test of the party’s ability to remain resilient and to find new ways forward,” he said.

Federally, the outcomes of an in-depth review into the diabolical May 3 election loss under former leader Peter Dutton will be released, while speculation will remain over whether rivals will challenge successor Sussan Ley when Parliament returns.

All eyes will be on polling results of Ms Ley’s leadership, which reached record lows at the end of 2025, while minor party One Nation rose to unseen double-digit popularity.

The Coalition’s attack lines on national security and the protection of Jewish Australians will continue, with expectations it will flow into immigration after the party put their policy announcement on ice in December after the Bondi attack.

The rolling protests — from mass migration, pro-Palestinian, neo-Nazi and climate change activists — are expected to continue but will further controversies as authorities try to reign in the growing polarisation and extremism on the rise.

Wild cards for the year are likely to stem from Mr Trump — whose erratic agenda in 2025 included trivial domestic politics like campaigning for the return of plastic straws to the bombing of Iranian nuclear facilities.

But Professor Flake said 2026 could be a year of blow backs for Mr Trump after a fast-paced policy agenda since reclaiming the Oval office in January 2025.

“The fact that he was able to move so quickly at the same time means that the normal process of democratic push back is going to be accelerated as well. 2026 is in my view the year that the chickens come home to roost,” he said.

He flagged that American households would start to feel the pinch of his unprecedented tariffs agenda. It comes as pressure mounts on the President around his involvement in the late convicted sex offender Jeffery Epstein.

“It’s a risky year because if he feels threatened, the one area where he’s a president which actually has a lot of latitude isn’t in domestic policy, it isn’t in the domestic economy — it’s largely in foreign policy.

“And so there’s a risk that, as things don’t go well at home, he will lash out internationally. So it’s a bit of a concern.”