The foreign minister met Palestinian Prime Minister Mohammad Shtayyeh and raised her expectation a $21.5 million humanitarian package would be used to pay for healthcare and childhood education.
"I expressed to them that it was extremely important, given the focus on this, that any funds Australia provides are used appropriately for the provision of the services that we are seeking to fund," she told reporters in Jerusalem.
Opposition home affairs spokesman James Paterson said there were well documented concerns with funding given to the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) being siphoned off by Hamas.
He said it was "totally inadequate" the government was relying on assurances from the Palestinian Authority - which doesn't govern Gaza - that Australian taxpayer money would not be misspent.
Juliette Touma, from the UN's relief agency, said any additional aid going into Gaza was "life saving".
"There is definitely a need for an increase in medical supplies and medicines especially for the chronically ill," she told ABC's RN.
In my meetings with — Senator Penny Wong (@SenatorWong) @Isaac_Herzog and @Israel_katz, I reaffirmed Australia's solidarity with the Israeli people following the atrocities of October 7. We unequivocally condemn the terrorist acts of Hamas and recognise Israel's right to defend itself, but how it does so matters. pic.twitter.com/XY1PGc9cQDJanuary 16, 2024
Senator Wong held talks with Palestinian communities affected by Israeli settler violence, criticising West Bank settlements as inconsistent with the "pathway to a two-state solution".
"We have said as a government we believe settlements are contrary to international law," she said.
"We've also consistently said that they are an impediment to peace."
The visit included meetings on Wednesday with officials from Israel and Palestine as calls for a ceasefire grow, more than 100 days since the deadly October 7 attacks by Hamas.
After talks with Israeli President Isaac Herzog, Senator Wong met with the country's national security adviser Tzachi Hanegbi and visited a Holocaust remembrance centre.
The foreign minister had shared the "strong concerns the Australian people have about the death toll in Gaza" with the Israeli president.
Chief executive of aid organisation World Vision Daniel Wordsworth said while the funding was welcome, the desired outcome was a ceasefire.
"A sustainable ceasefire is critical but so is a long-term, peaceful solution for children in the region," he said.
"Not only are we seeing children killed in Gaza, but we're also seeing children face a lack of access to the humanitarian aid they need to survive."
The federal government has come under fire for not supporting a case in the International Court of Justice, where South Africa has accused Israel of committing genocide against Palestinians in Gaza.
Prime Minister Anthony Albanese said Australia respected the role of the ICJ but "that doesn't mean we agree with some of the assumptions they have in the South African case at all".
Senator Wong will also travel to the United Arab Emirates as part of her week-long visit to the Middle East.
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