Radio interview — ABC Perth Spotlight Forum

E&OE
ABC Perth 
“Spotlight Forum” with Nadia Mitsopoulos
Wednesday, 6 May 2026

NADIA MITSOPOULOS, HOST: Welcome to the ABC studios here in East Perth. I think it's fair to say Australia is going through a kind of stress test at the moment thanks to the war in the Middle East. And just like Covid, a global shock out of our control has exposed Australia's vulnerabilities. Fuel supplies, of course, has been the main issue. Throw fertiliser in as well. And that's all thanks to a fragile supply chain and we're seeing now some produce products are in short supply and costs are rising. Now, this has been a bit of a wake-up call because we've all just assumed the boats will keep on coming in and providing us with what we need. Now this crisis has exposed some structural weaknesses in our country. So, what are they? How do we recover from this and how do we prepare ourselves for the next global shock? In other words, how does Australia stand on its own two feet? And as the Prime Minister said, not rely on someone somewhere else. What can we make here? What do we need to protect and how do we afford to do it. So, this is all up for discussion now. Spotlight Forum today on national resilience. It is a national conversation and on the panel a few people have a real interest in this area. Matt Keogh, Minister for Defence Personnel and Veterans' Affairs. Good morning to you.

MATT KEOGH, MINISTER FOR VETERANS’ AFFAIRS AND DEFENCE PERSONNEL: Good morning. Great to be with you.

MITSOPOULOS: Andrew Hastie, he's been talking about this for years now. He's the Federal Shadow Minister for Industry and Sovereign capability. Thank you for joining us.

ANDREW HASTIE, SHADOW INDUSTRY MINISTER: Morning, Nadia.

MITSOPOULOS: Peter Klinken, former WA Chief Scientist who's actually writing a book on this issue. And Dr. Liz Jackson, Associate Professor of Supply Chain Management and Logistics at Curtin University. Please make them welcome.

ELIZABETH JACKSON: Thank you.

MITSOPOULOS: Lovely to have a studio audience here. If you do have a question, pop your hand up, write it down on the card and we'll try to get through as many as we can. On 102.5 ABC Perth, right across WA. Now, Andrew Hastie. I would like to start with you if I can, because you've long talked about sovereign resilience. What has this war exposed when it comes to Australia's weaknesses?

HASTIE: Well, I think first of all we're living in a period of rupture. We're seeing geopolitical rupture. We've seen that in Europe with the war in Ukraine, we've seen that in the Middle East with the war in Iran, but before that the war in Israel and Gaza and of course we're seeing in the Indo Pacific as well with the rise of China. And as a consequence of that we're seeing economic rupture. And I think what it's revealed is that Australia is a very trade exposed nation. We've offshored a lot of our sovereign capability, whether it's advanced manufacturing and our refining capacity when it comes to liquid fuel and other key things that we need as a country. And as a result, we're going through an intellectual rupture. We have to rethink the paradigm for how we do business as a country. And I like to summarise it like this. Australians pay insurance for home contents, for health, for life, for their employment, for a whole range of things. Why aren't we as a nation investing more in our insurance. So, that when we hit hard times like we are at the moment, we can be more resilient, and I think that's the task ahead of us. We need to be nation building. I think that's going to occupy us for the next decade and beyond.

MITSOPOULOS: So, we can't protect ourselves.

HASTIE: Well, we can protect ourselves. The question is how vulnerable do we want to be? And being resilient means that you can stand on your own two feet, you can absorb a shock. And my concern is that Australia, we bet long on the US being the dominant power in the world. And I think what we've seen is we've seen the rise of China, Russia, Iran. They're challenging US primacy as a strategic power. And because we thought the US would always be the dominant power, we were prepared to outsource a lot of our industrial capacity and outsource a lot of our military capacity to the United States as well. So, I think if we are going to be sovereign, self-reliant, we need to invest in ourselves, we need to do some nation building and that's the task before us.

MITSOPOULOS: I'm going to talk a bit more about that later. Peter Klinken, you're writing a book at the moment, it's called "Australia, are you ready?" What do we need to be ready for? And what's the answer?

PETER KLINKEN: Gets very much to exactly what Andrew was talking about. Where are we as a country? How do we see ourselves? Part of what I'm trying to do there in the book is to say if Australia was an organisation, how would you set it up? Normally an organisation has a vision statement, they have a very clear strategic plan as to where they want to go to. They have an implementation plan, steps to get there. And you have a risk register. Every organisation has a risk register, right? So have we as a nation got a risk register? Have we got the list of things that might go wrong when something hits the fan, right? And how we're going to deal with it? There will be a bunch of things that won't be relevant, but there will be those that will hit the mark. For example, we had Covid come unexpectedly, a pandemic that hadn't happened for 100 years. Were we prepared? Fortunately, we did have some pandemic plans. There are other things that are coming at us really quickly that we aren't really addressing, in my view. And so, what the purpose of the book is to really put all these things on the table and say, come on, guys, let's have a serious, mature conversation about this. Stop screaming at each other and let's say, where do we as a nation want to go?

MITSOPOULOS: You say that we are suffering from the Dutch disease. What's that?

KLINKEN: Well, in 1958, the Netherlands were delighted to find they had oil and gas in often an oil field called Groeningen. I hope any Dutch people in the audience, I hope I got that right, and they went, hallelujah, how good is this? We've got oil and gas. We're going to really go gangbusters. What happened was they found that capital and talent went into the oil and gas industry. The other parts of their economy suffered as a consequence. Economically, they did not then benefit out of that great discovery. So, if you look at Norway, Norway, when they discovered oil and gas in the North Sea about a decade later, they went, we don't want to do what the Dutch did. So, they set up this massive sovereign wealth fund. So, when the money came in, they put it into this fund, which they then invested in a whole lot of other things. So, I think Australia has done incredibly well out of the resource sector over the last 30, 40 years. But we're suffering from the Dutch disease. And so, if you look at the various indices around what's involved in the Dutch disease - innovation, education, manufacturing, all of those things tend to slip in countries that are suffering from the Dutch disease. And if you're looking at Australia's indices, that's where we're headed. And I think we just have to have a good hard look at ourselves and say, okay, how are we going to deal with this? We missed two opportunities, in my view. We missed the 2008 GFC. We didn't have a hard enough look at ourselves. We patted ourselves on the back and said, how good are we? And we missed an opportunity coming out of Covid when there was an opportunity to really look at all the issues that were really fractured during Covid we came in with, she's right, mate. I worry that we've got a ‘she'll be right’ attitude instead of saying, ‘have a go, mate’ attitude right now.

MITSOPOULOS: Ok, Matt Keogh, your government is in power at the moment. Have you got a risk register?

KEOGH: Well, obviously that's why we do things like national defence strategies, because that's always our biggest risk, is looking after our country. But also, the work that's done in terms of pandemic preparedness through the Departments of Health, working with the states, we're always managing risk across a range of areas. But I think the issues that have been just highlighted are precisely why, when we came to government in 2022, so coming out of Covid we had the Future Made in Australia approach to what needed to happen because we established the National Reconstruction Fund. What were we reconstructing? We were reconstructing coming out of Covid, recognising that we'd seen that we didn't have capabilities, sovereign capabilities, that we needed to have here in Australia. And that wasn't just about the things about making medical supplies or masks, but a broader recognition that we need to bring advanced manufacturing back to Australia. We need to have - we can't do everything and you're never going to supply everything, but you've got to have the capability because it's a lot easier to go from turning it up from ten to 100 than starting at zero. And so having the National Reconstruction Fund and those investments that we've been making, in making sure that we're keeping manufacturing in Australia, that we're expanding advanced manufacturing is really, really crucial. And part of that fits, as I mentioned, right back into our National Defence Strategy, defence industry. You know, Peter was talking about the Dutch disease, Western Australia in particular, but Australia is a nation, we're great at extractive industries, but that's very simple economics.

HASTIE: Having that and ship it out.

KEOGH: We're very good at that. But what we also have are those metal processing plants, but they've also hit those rough times economically. We've worked with state governments to make sure that we keep them operating because we need that capability here in Australia. Defence industry is advanced manufacturing. The investments we're making in Henderson, with continuous shipbuilding here in Western Australia, the thing that’s happening with building submarines in South Australia, we'll see WA’s defence industry become our second biggest industry. It'll leapfrog agriculture. That will mean a much more complex economy. All of the componentry that goes into that, all the advanced manufacturing, the intergenerational job creation and having those capabilities here in Australia, not just supporting defence industry, but when you do that, you create those other manufacturing jobs and businesses that then support a whole range of other industries as well.

MITSOPOULOS: We're going to talk more about manufacturing in a moment, but I just want to bring you in, Dr. Elizabeth Jackson, because I just want you to help us understand our supply chains and how fragile they are. Because it feels like such an isolated state like WA and country like Australia. We're the end of the end of the end of the line.

JACKSON: Yeah, absolutely. And being an island nation at the bottom of the southern hemisphere, if we think about the globe, the freight runs around the northern hemisphere, it doesn't run north-south, it runs east-west. And when we're so far at the bottom of the globe in terms of freight connections, we are extremely vulnerable. But I think we, there are reasons for this, and we really need to go easy on ourselves for the decisions that have been made. Supply chains have been constructed and designed and engineered over the last 50 or 60 years with optimisation in mind, with cutting costs in mind. And whether those costs have been cut to keep prices down for the end consumer or whether they have been cut to maximise profits, and neither is right or wrong, they're just very good reasons for cutting costs. We found ourselves in a very vulnerable situation where we just don't have fat in systems like we used to, to be able to withstand the increasing disruptions that we are facing, not only as a state, but a country and also the world. Climate change, geopolitical disruptions.

MITSOPOULOS: But these things didn't happen overnight.

JACKSON: Absolutely.

MITSOPOULOS: These risks didn't happen overnight.

JACKSON: No, they certainly didn't. And I think a point that Peter made --

MITSOPOULOS. So, we don't have disruption buffers, I guess, is what I was getting at.

JACKSON: Correct.

MITSOPOULOS: We don't have that. Okay.

JACKSON: Yeah, we don't have disruption buffers because buffers are expensive and they can be criticised because they are creating waste, waste in stocks, waste in inventories. But if I may pick up on a point that Peter made earlier, resilience is a very, very interesting term and it's got its basis in biology and the evolution of the species. And what resilience is really all about is not recovery. Resilience is recovery plus learning. And these are the points that Peter was making very sensibly about the disruptions we've been through in the past and how we have never stopped to think, what have we learned and what have we done better as a result of those disruptions? And that failure is on us and we have to do better in the future.

MITSOPOULOS: Okay, I want to open it up to the panel, so just come in at any point. I'll get to some of your questions in a moment. For those just tuning in, this is our Spotlight Forum on national resilience, and we will get to some of your questions in just a moment. Just to remind you, I've got Dr. Liz Jackson, she's a supply chain expert. Peter Klinken, former WA Chief Scientist, Andrew Hastie, Federal Shadow Minister for Industry and Sovereign Capability, and Matt Keogh, the Minister for Defence Personnel. 18 minutes past 10 on 102.5 ABC Perth and right across WA. What do we need to make here?

HASTIE: Well, I think history is a good guide here. After World War II, Australia underwent a period of re-industrialisation under Labor Prime Minister Ben Chifley and then Robert Menzies. It was a bipartisan project. At the start of World War II, we had about two refineries in the country. And then after the war we realised the importance of having our sovereign refining capacity, so we built refineries. We also increased our industrial thickness. As a nation, we get to the end of the Cold War, the US sort of strides supreme across the globe and we decide, you know what, we're going to maximise our prosperity. We're going to rely upon the US to underwrite that prosperity through their naval power. And we expected that, you know, 40-year period to continue. And it was Labor governments and Liberal governments that liberalised Australia and opened up our economy to the world by tariff reduction. That was a bipartisan process, and we lost a lot of our industrial capacity. And now, 40 years later, we're exposed to geopolitical risk. Of course we're focused on the Strait of Hormuz now, but a big risk could be a conflict around the Strait of Taiwan. Ninety per cent of the world's chips, advanced chips are made by  Taiwan Semiconductor Manufacturing Company, TSMC, that goes into our phones, our cars, name any sort of technology application that we rely upon. We probably are dependent upon the Taiwan Strait. So, again, we've got to start thinking about how we increase our industrial thickness. To Matt's point, we don't need to make everything, we don't need to be making toasters, but we do need to make, we need to have an advanced manufacturing capability. That we can pivot in a crisis into strategic sectors.

MITSOPOULOS: What though? What else?

HASTIE: Well, what else? Well, I think, you know, we need to - I mean, fuel is, is an important one, you know. We can get focused on end goods, which I think is unhelpful. I've copped a lot of flak for wanting to revive the car industry. I never said we should revive the car industry. I simply lamented the loss of that industrial thickness. I talk about an advanced manufacturing capability, which means that we have supply chains, we have the skills, we have the plant and equipment, we have the capital. And in a crisis, we can shift it as we did during Covid and as we're now looking to shift now. We saw the Prime Minister's announcement this morning --

MITSOPOULOS: Well, if you missed it, $10 billion fuel security and resilience package. So, that's going to mean more fuel and more fertiliser stored onshore. And we're going to have - well, he's going to try and have at least 50 days of fuel supply and storage of diesel and aviation fuel. So, that's what that was. Nicely timed, I must say, with his Spotlight for him. I can see you putting your hand up, Peter Klinken.

KLINKEN: Well, Andrew's talking about, you know, Taiwan and I don't want to, you know, spit any chips here, but lame dad jokes, folks. Get used to it.

HASTIE: I thought it was a good one.

KLINKEN: Thank you.

HASTIE: Won't help your fish though.

KLINKEN: It's a really interesting point about how Australia improved its manufacturing capability. If you look at when we were federated in 1900, whatever it was, 10 per cent of our economy was in manufacturing. We rode the ships back. We'd send all overseas, we'd bring back jumpers. After two world wars and a great depression, Australia increased its manufacturing capability so that in the ‘60s and into the early ‘70s, we got up to 30 per cent of our economy in manufacturing. That has now slid down to between 5 and 10 per cent over the past few decades. All right, so we have lost capability, as Andrew exactly said, for a number of reasons. Many of them were very valid at the time. But we need to have a good hard look at ourselves again right now. If you're looking at how complex our exports are, Australia is the 13th between 12th and 15th largest economies on the planet. We're a G20 country, but we rank 75th in the world in terms of economic complexity. We're between Jordan and Uruguay. Now this is really good news because last year we ranked 105 in the world between Botswana and Cote d'Ivoire.

MITSOPOULOS: So, we're soaring up the ladder.

KLINKEN: Actually, they did a restructuring of the metrics and so we're at 75 and we were 61 a decade ago. So, if this was a sporting team that we're looking at, Australia would be going ballistic. How can you be 75th in the world when you've got all this, an economy that's in the top 20, this is unacceptable. So, this is a serious moment for us to really get our act together.

KEOGH: But I think part of that you mentioned, Peter mentioned there's good reasons how we got there. And Liz was talking about this before. We look at what happened globally in the Western world through the sort of 1980s and then onwards, there was this great removal of tariffs, there was this sort of laissez faire economic model of, well, where can I get things the cheapest? And, you know, our standard of living went up because goods became really cheap. We were able to import them from somewhere else instead of making them more expensively here, which then presents this risk, like, what are we doing about why has nothing happened about it? And it's about having a public conversation, which is what we're having now. There is a marginal increased cost in doing something here that you might be able to do much more cheaply somewhere else, like getting - if we bought all of our fuel from Singapore, it would be cheaper again, but the risk factor would be higher. And so, you've got to be prepared as a country to price that in and to wear that cost. And what is the thing that's prudent to pay that extra, that cost. So, making those investments, like we're doing through the National Reconstruction Fund in fuel security, future energy, in advanced manufacturing, there's a cost to building more of our defence capability here in Australia. But it's not just about building it, it's the skills that you develop in doing it. It's the capability to not just build the ship but then maintain the ship afterwards. Because I can tell you, if you bought all your ships from Spain and then brought them here and we didn't know how they were built, and then you're in a conflict, as soon as they break, you're stuffed, frankly. And so, you've got to make that investment and the community has to come along for that ride, because there's a cost to government, there's a cost to the taxpayer. Often, it's not going to be borne by the private sector entirely because they're going to look for profit margin, cheaper cost, and that's understandable. That's how the economy works and that's why government through Future Made in Australia strategy advantage enhancing defence industry is making those investments to build that learning, that resilience that we need.

JACKSON: Just to pick up a very important point that Matt made about increasing costs. I think an important caveat needs to be made to this discussion about reinstating onshore manufacturing and supporting onshore manufacturing, which as a taxpaying citizen I do from the bottom of my heart. However, there is likely to be - we have to be a bit careful what we wish for because it will result in more costs, higher costs than we are experiencing at the moment as a society. We have become very, very, very used to and very indulged in very cheap and I'll go out on a limb here and be really brave by saying cheap food, our food is cheaper than, believe it or not, than it's ever been in the past. That is a hard pill to swallow. But we do enjoy very cheap food, not only very cheap products, but a massive variety of products and pretty much on demand delivery that we have become very, very, very used to and to pare back from that is going to be quite difficult. So, we do have to look at both sides of the argument before we get too excited about the onshore manufacturing argument.

MITSOPOULOS: But isn't the other problem we don't have cheap labour?

HASTIE: Well, I want Australian workers to get paid. I'm actually opposed to multinationals who move business from Australia to cheaper jurisdictions where workers are not protected. I think that's immoral. I'd rather pay a premium.

MITSOPOULOS: But then sell a product.

HASTIE: Well, sure, but you know, why have people working in sweatshops in jurisdictions which treat people like trash?

KEOGH: But also look at the relative benefit. Advanced manufacturing is about high-end jobs using technology to create those manufactured outputs. So, it's not the cost competitiveness of the actual output, the widget if you like, because what you're developing and building is so advanced and needs advanced technology behind it. It's not cheaper to build it in a low labour jurisdiction you've got to have people who can, you know, have the wherewithal, have the training, the skills. We bring that in Australia with the equipment to produce that output. That's where we need to be focused on. And the labour cost isn't the issue.

HASTIE: One of the arguments that the sort of, you know, broadly speaking neoliberal economists have made over the last 30, 40 years is that, you know, the unions have sent our jobs offshore and that you know, don't you want to pay for cheaper goods? Well, I want to see Australian workers do things that are creative and productive. I think we're much happier as producers than consumers. And I think people should get paid a fair day's work. And it doesn't benefit us as a country when we're almost entirely reliant upon the export of raw commodities and we're not actually building a value chain through our economy. A lot of people, I think, would much prefer to work at home, be the coach of the local soccer team, than do FIFO work and basically dig stuff up out of the ground and send it. If we could bring manufacturing back to our capital cities, wouldn't that be a good thing?

MITSOPOULOS: I remember Richard caught lamenting about downstream processing in the late 90s, and we're still lamenting about it.

KLINKEN: When I came in as chief scientist, I was told, we take big rocks, we turn them into little rocks, and we put them on a ship. We stick to our knitting. We failed at steel briquettes, we've failed at cars. Right. We can't do this sort of stuff, so we'll just ship it all off. And, you know, I shake my head at that. If there was ever an opportunity to be going downstream processing, it's now. Right? This is the moment, especially with critical minerals. When you consider the risks associated with that, that then raises a really important issue around where's the energy going to come from to actually do all of those things? Energy is central to this conversation around whatever we want to do. Energy is at the core of it, and we've got to get that.

MITSOPOULOS: My next topic. Peter Klinken, you're ahead of the game.

HASTIE: Nadia, just before we get ahead, are you going to touch on AI at some point?

MITSOPOULOS: Absolutely, absolutely. We're going to pause and get some news headlines, but I just want to take a quick question because it sort of does speak to what we're talking about. Dr. Colin Hughes, where are you? Hello, what was your question?

DR. COLIN HUGHES: Thanks, Nadia, and the committee for being here today. As a former head of public health, I'm very aware that Australia imports 90 per cent of its pharmaceutical drugs. Recently, up to 400 of those were either out of stock or in short supply following the war started by America in Iran. And as we experienced with Covid, Australia did not have enough PPE and essential medical equipment. Does Australia actually have a risk inventory of the 200 essential drugs that we need? I'm talking about asthma sprays, insulin, antibiotics, and has it actually got regional cooperation to either supply these or are we building capability to manufacture these drugs in Australia?

MITSOPOULOS: Alright, let's get a response for you.

KEOGH: So, there has certainly, out of Covid been a lot more work in maintaining visibility of inventories, but a lot of that is actually maintained by the state health systems. So, at a Commonwealth level, there's sort of an idea of what's being held, but it's not necessarily held directly by the Commonwealth. And there has been quite a bit of work over various governments over time, including here in Western Australia, in trying to encourage more pharmaceutical manufacture here, onshore in Western Australia and keeping those that we have. Obviously, you've got to work with individual pharmaceutical companies who hold the licences for particular types of products at different times as well, which adds complication. But a bit like the issue around critical minerals, you've got to have access to a supply chain as well, because a lot of the issues around medicinal supply into Australia or globally is not so much around whether the manufacturer can get the product to us, it's can the manufacturer get access to the input ingredients that they need to put into that product. So, having onshore manufacturing wouldn't change that necessarily. But to use the, you know, on the flip side, that's why having critical minerals, not just being able to extract them, but develop them here in Australia for other than advanced manufacturing opportunities, it becomes critical because it's about protecting that supply chain.

MITSOPOULOS: You've long said that we should be making more pharmaceuticals here.

KLINKEN: Absolutely. I mean, it just gets precisely to the point that's just been raised. If I can just give an example out of Covid I was involved in four things. One was the production of PPE, one was around sanitisers and the other one was actually ventilators. So, when I rang Roger Cook, literally almost before Covid hit, because so many people were getting in touch with me saying, Covid's coming, what can we do? I said, Roger, what do we need. So, he got in touch with the Director-General, said, these are the things we need. That was on a Sunday. on a Monday they'd made the first face masks. So, these are people here in Perth who are doing that, take that down to the Health Department on Tuesday, and they say, these are better than what we've currently got. So, we were able to manufacture all of that in a very short space of time of high quality, come out of Covid and the procurement systems say, go back to the cheapest option. And they said, because of our free trade agreements, we are then breaking the rules by saying that we can't. We were actually advancing our own industries against these free trade agreements. Seriously, give me a break. You know, where is that supporting our sovereign capability. So, there's some structural issues that need to be addressed. We can do stuff. We are a very capable people, but we can do so much more.

MITSOPOULOS: I'm going to pause there for a moment. We're going to get some news headlines. Here he is in the flesh. Garrett Mundy from the ABC newsroom. Hello, Garrett.

[News headlines]

MITSOPOULOS: Thank you very much for that. Garrett Mundy there from the ABC newsroom. We're going to continue our Spotlight Forum on national resilience. We are going to look at energy security which seems to be central to Australia. All of this. If you do have a question and you've written it down, maybe just pop your little card up and Sue or Damien will come and grab it from you. And it is nice to be with you at 25 minutes to 11 on our Spotlight Forum on national resilience. Well, you've all talked about what we can make here but you made the point Peter. Energy security is central to all of this. So, again whoever wants to start this part of the conversation off because I wonder if energy security and we've been very, very panicked about our fuel supplies or lack of, has that been a strategic blind spot?

HASTIE: I think we've been wedded to ideology when it comes to energy. I think this pursuit of net zero has been foolhardy in the extreme. And I think we have an abundance of coal, gas, uranium. Obviously, we're a sunburnt country. We also have a lot of wind. So, I'm energy agnostic and I think we should be using whatever sources we can to make us more cost competitive as a nation so that we can revive our advanced manufacturing sector and that includes refining fuels. I'm even open to using coal to turn that into crude which would then create diesel and aviation gas for our planes. So, very open minded. Also, a supporter of nuclear power and I think rather than the government getting involved there, we should remove the moratorium and allow capital markets to do their work. And as a final point Nadia, we export a lot of coal, a lot of gas to the world's biggest and fastest growing emitters like China, India, Korea and other countries like that. Why should we deny those resources to the Australian people so that we can become more competitive as a nation and --

MITSOPOULOS: … some will say the environment.

HASTIE: Well, if they're that committed to that then they should call for the ban of all exportations of fossil fuels because we only produce 1.1 per cent of the world's emissions. If they're really worried about stopping climate change, they should be calling on a ban for all coal and gas to China, to India, to Korea and other countries around the world because we export those very fossil fuels to those countries and they use them by the way to make our solar panels and our wind turbines which they sell back to us.

KEOGH: Well, I think that Nadia, your point was why have we not focused enough on energy security? And the great thing for all of us here is that in Western Australia we were very fortunate to have a Labor government many decades ago now that was focused on energy security and we have a domestic gas reservation here in WA and that has meant that we've been able to have energy security not just in terms of keeping the lights on but also in being able to allow manufacturing like the work that Alcoa, who's actually our biggest gas consumer in Andrew’s electorate. It's a good policy union represented workers.

HASTIE: I just say that as a Liberal --

KEOGH: It's a good policy, you know, that's a good thing. That's about looking down the line and saying we need to make sure we've got energy security, but we've got to look at that in the long term as well. So, if you look at the National Reconstruction Fund, 5 billion dollars of that goes into the net zero fund and that does more than just around the generation of electricity that is using renewables. It's also about supporting the manufacturing of things like wind turbines, things like solar panels, so that we have a domestic capability to do that. So, again, it's about that resilience and security of being able to generate the energy that we need cheaply here in Australia, low emissions, but also be able to produce the equipment that we need to do that. And so, you know, we're looking at that diversification of mix. We're coming out of a fossil fuel led economy. We now have more electricity generated by the sun in WA than any other type because of rooftop solar. That is the majority of our supply. Now obviously that's got an erratic nature to it as well. And so, we've got the firming capacity of gas in the system. We've still got some coal left in the system in WA, but as we bring on more wind and batteries, you've got the big battery in Kwinana, you've got the big battery being built at Collie. What is that? What do batteries need? Critical minerals. We have them all in WA and that's why we're investing in making sure we've got that downstream capability as well.

MITSOPOULOS: But isn't Andrew's point you're putting all your eggs in one basket?

KEOGH: No, no, exactly. We're not doing that because we're keeping the gas …

MITSOPOULOS: … the race, is it too quick?

KEOGH: … and we're moving to lots of different types of renewables and that's the important part with battery firming as well.

HASTIE: Just before you hand over to Liz and Peter, just to tie in a point about the war, what a lot of Australians don't realise is that we run a price, a marginal pricing system for our electricity market. And gas is often the marginal generator of power, which means gas prices shape wholesale electricity prices. Now, with the Strait of Hormuz closed, that's 20 per cent of the world's gas offline. Gas prices are going up. The point I'm making is that we're exposed to the world spot price because we export a lot of LNG and that means that potentially our electricity prices are going to go up along with our fuel prices as well.

KEOGH: So, you know, good reason for more local renewables.

HASTIE: Well, but you need those renewables firm by gas Matt, and that's the important point, because gas comes in to firm the market. Guess who provides the marginal generation of power? It's gas and the price as well. So, I think Australians need to realise that gas is a fuel and a feedstock and we're exposed across the economy, and we can expect more pain.

MITSOPOULOS: Maybe if you had a 25 per cent gas export tax, then you'd have more for the domestic.

KEOGH: Well, just to close out Andrew's point on the gas, on the marginal cost, and no one wants to get into the technical cost of gas.

HASTIE: No, no, I don't.

KEOGH: But it's important to realise that, yeah, even with gas firming that might be right. But if you're only using that for a small part of the day, the rest the of the day, the price is being set at a renewable, much lower cost and so your average cost becomes much lower.

HASTIE: And the great irony is that Pauline Hanson is for this war in Iran. She's meant to be for the battlers, but she's MAGA first, she's not Australia first. And the impact of this war that Donald Trump is running in Iran is going to impact Australians. It's going to hit our living standards. And I want to make that very clear. She is MAGA first.

MITSOPOULOS: How did Pauline Hanson get into this house?

HASTIE: Well, she trips to Mar-a-Lago, she's all in.

KEOGH: Well, at the moment, she's out polling Andrew's party. You've got to think about what she's saying.

MITSOPOULOS: That's a whole other conversation. That's another Spotlight Forum that I'm happy to have. Listen, Peter --

HASTIE: I'm Australia first. I reckon everyone here in this panel is Australia first. People need to listen very carefully to what politicians are saying because there are consequences, not just economic, but also security.

MITSOPOULOS: That's why we have you on this panel. You two want to bite into this?

JACKSON: I was just going to add, before Pauline Hanson hijacked the conversation, was that with any plans that are made, we really need to be cognisant of the idea that outputs need to be accessible. So, the big rocks turning into little rocks that Peter was talking about a little bit earlier. I don't build a house with little rocks. I need steel. And I as a consumer, I don't need gas. I need petrol or diesel or a battery to plug in my car. I need materials for energy that are accessible to me and those products that are accessible to me are stored in warehouses. The situation we've got at the moment with fertiliser, one of the issues that we've got is because this country doesn't have enough fertiliser storage, we don't have enough warehouses and we don't, we don't have enough storage space. And there is, you know, nothing more, you know, I'll be so bold as to say there's, nothing more that infuriates taxpayers than driving past empty warehouses and knowing, for example, that PPE isn't being bought for the very, very, very cheapest price, you know, if taxpayers get that message. So, I think as innocent bystanders from this situation, the general public and any opposition government that comes into the future needs to be aware that this concept of buffer stocks and a little bit of waste does need to be part of our supply chain equation, because that is what is going to save us coming into the future. And that is what has been stripped out over the last 50 or 60 years. That has left us, particularly with fuel, with our pants down, the tide out.

MITSOPOULOS: Well, it was something I know the WA Government a couple of weeks ago was telling me. They are now looking for more storage facilities. The Goldfields, for instance. The Goldfields has seven days’ worth of fuel reserves. Seven days.

HASTIE: That's not much.

MITSOPOULOS: No, it's not.

JACKSON: And that's where a lot of our money comes from, correct?

KLINKEN: Yeah.

KEOGH: I think to Liz's point, you know, we've had decades now of, you know, McKinsey or Deloitte or PwC going to every business, you know, that holding stock that you've got to get that right down, got to get that right to get rid of that. That's just costing, burning money in the balance sheet, accountants doing their jobs. And that logic then gets transferred over into things like senate estimates and federal government work and taxation and what, you know, we need to do as governments, but as the media as well, and as the community is recognising, that there are times when government's going to spend more, the absolute minimum cost, you know, those procurement rules that need to look at total cost of ownership and what's the risk that we're prepared to wear and we're going to basically buy our way out, spend a bit more to reduce that risk, because we need to make sure that we've got those stocks. But we also need some businesses to recognise that as well, and their shareholders like it might be great on the balance sheet and the ASX report for Coles to have the bare minimum in their warehouse. But when the proverbial hits the fan, we all need them to have just that bit more in the warehouse.

MITSOPOULOS: Well, when a flood happens and it washes out the East West Rail Link, suddenly we have empty shells.

KEOGH: Precisely. And we end up bringing in, you know, when there's a flood in the northwest and Fitzroy Crossing, the bridge gets removed and we have to bring in the air force to ship every day shopping supplies from Broome up to Derby, because that's the only way to do it. And of course, we do that as a government. But it's also partly, you know, if we had a bit more storage on site, slightly bigger refrigeration rooms, there'd be that little bit more community resilience as well.

MITSOPOULOS: I want to go to Chris, who runs a biofuels company. I've been talking a lot about biofuels lately.

KEOGH: Very important.

“CHRIS”, AUDIENCE MEMBER: Good morning. Yeah. So, we, a biotech firm, we actually produce some of the highest quality biofuels, but we get more interest overseas than we do in Australia. The problem being is that, you know, everywhere we look, we get to a wall. We can't get in; we can't produce it in Australia. So, which platform should we follow? Because we've spoken to the people that we've spoken to, said to us, no, no, you're going to go for the grant, you know, get involved in this. That's months away. We're in a crisis now, so what do we do?

HASTIE: I'd say, Chris, your experience is not unique. I was in the Defence portfolio for about five years, two as a Minister and then three as a Shadow. And every time I met with overseas defence primes, whether they were American, British, French or what have you, their government always sort of seemed to be in the background giving them support. And for some reason, we've adopted this kind of laissez faire model. Australian business can survive on its own. And oftentimes Australian businesses will come up with a great idea. They won't get any support here in Australia and they'll go overseas and the whole business will migrate overseas. We'll lose the jobs, we'll lose the IP, the plant and equipment, all the rest of it. And that's why I think we need more economic statecraft from our governments. They need to be thinking about how they can secure our national interests by investing in Australian businesses, keeping that here and in this instance, biofuels. Whilst it won't be the, you know, the solution or the silver bullet, it certainly will go a long way to making us more resilient.

KLINKEN: Can I chip in there? Australia is a smart country. We generate 3 per cent of the world's new knowledge every year when we've got 0.3 per cent of the world's population. So, we're producing about 10 times on a per capita basis. But we're at the bottom of the OECD in translating that into practical commercial outcomes. Right. So, if you look, there is a gap between generating new knowledge and actually coming up with practical outcomes. If you look at the Germans, they have their universities and Max Planck institutes generating new knowledge in the middle, between the universities and then industry, they have what are called Fraunhofer Institutes. And these Fraunhofer Institutes take those bright ideas and then take them into a pre-commercial state so that they are picked up by Siemens, Volkswagen, etc. In Australia we don't do that. We have our university sector generating lots of new knowledge. We have a gap in the middle for translation. That's where I think the CSIRO really should be playing a role. It's the Commonwealth Scientific and Industrial Research Organisation. So, if we could get CSIRO engaged to really take some of these broad ideas, turn them into pre-competitive products that are really ready to be rolled out, then I think that's going to help the issue around what you're talking about of getting these things to the next stage. Then what we've got to do is make sure we've got an offtake agreement, something locally to buy the manufactured products, then ship it out globally. So, there is, you know, there are structural issues that can be addressed, but I don't think we've actually joined all those dots yet.

KEOGH: And certainly, biofuels and sustainable aviation fuel is something that we've certainly seen as a government as being really important that we develop here. And I can't speak to the specific business here, but we have invested $250 million into low carbon liquid fuels through our Future Made in Australia Innovation Fund. And at the end of last year, we announced $1.1 billion for a Cleaner Fuels Program which is all about investing that development of and production of biofuels. Because it goes to a fuel security issue as well as to an emissions issue. And whether it's diesel, the whole country runs on it. The transport industry at the moment doesn't exist without it. But equally as being as located where we are and as country as big as we are, if we don't have alternatives to aviation fuel, you know, we're in a lot of trouble and that's why we're making those investments in developing that technology and also getting it to the stage of production.

MITSOPOULOS: I've spoken to canola growers and 100 per cent of what they grow goes to Singapore for biofuels.

HASTIE: That's right. And I think the government has a real role here in identifying strategic areas, cultivating them. Many of you know about the Silicon Valley. In the US it's called the Silicon Valley because in the ‘70s the US Air Force wanted silicon transistors rather than germanium ones. It might have been called Germanium Valley. The point is the government was investing heavily in that area and cultivating it as an advantageous industry. Now there's a myth about, you know, it's a couple of tech bros sitting in a garage writing code that started Silicon Valley. No, it was actually government driving investment in that sector. And of course there's huge commercial benefits that, you know, go to the rest of the country when government gets involved and incentivises investment in those areas.

KLINKEN: So, the US has got a really interesting model called the SIBRI, the Small Industry Business Research Investment. And I think it's something like 3 per cent of all the big agencies budgets have to go to building up American innovation and creativity. So, there's a government investment to actually take those products on. I can't see why we can't do something similar in Australia.

MITSOPOULOS: This is the Spotlight panel on national resilience on 102.5 ABC Perth and right across WA it is 10 to 11. Andrew, you wanted to raise the issue of AI, and then I've got a good question about AUKUS that I want to get to as well.

HASTIE: Yeah, look, I just think the AI revolution is coming whether we like it or not. It's going to have disruption; it's going to have disruptive effects on cognitive labour. So, the services sector and to a certain extent physical labour as well. And I think regardless of how we feel about AI, we need to have a plan for it. And I think we also need to have AI models and data centres built on our red soil here. Here in Australia, we can't rely on oligarchs in the Silicon Valley to do the right thing by the Australian people. A ChatGPT or a Claude search is about 10 times more energy intensive than a Google search. And if I was to punch in a search right now into my phone, it would go down. The submarine cables probably terminate in the United States. On the west coast, the data centre would crunch the information I wanted, send it back to me. What happens if those submarine cables get cut. What happens if, you know, a future US government treats us poorly? For example, what happens if an oligarch just doesn't like Australians? Who knows? And I think we need to encourage investment here so that we have democratic accountability for AI. It may reduce the capacity of the AI, but in the end, I think it's better for the Australian people to have some sort of democratic accountability.

MITSOPOULOS: Does that also then become a national security issue?

KEOGH: It does, yes, absolutely. And that's why government's done, you know, both governments have done work around having that, you know, sovereign data centres, sovereign access to it, and you're seeing a lot of that happen in Europe. The AI thing, you know, from a sovereign protection issue is certainly important. The other thing is, if we don't have that technology available here locally, we're not going to develop the skills and talent that we need to be able to harness the benefit of it. We can't lose the opportunity. There are huge potential risks that come with AI and certainly it will change over time, the nature of the employment market, but that doesn't mean you can resist it. All that would mean is that other countries would get the benefit. The important thing for government is also to make sure that we're building the skills across our community to be able to harness the benefits so that people can go into the new jobs that get created. Seen a revolution, the industrial revolution, the technology revolution, the AI revolution. We've had more jobs, they're just very different jobs and they require a higher level of skill and education. And so, it becomes, you know, the investment we've made on fully funding schools in Australia is about uplifting that skills base across the board, making sure that we bring our talent with us so that we can then confront these new revolutions like AI, so we can get the benefit. And also, like, I had a forum with some of my local schools, you know, they're aware, they don't want to lose their critical thinking ability, you know, that we've got to maintain as a, as humans, the capacity to understand and to critique. And the students can see that. And I do want to give a shout out to the Mercedes students who are here today.

MITSOPOULOS: Good supporters of our Spotlight Forum, Mercedes Universities.

KEOGH: No, it's really important. You know, we have the sovereign capability as both the tech and the people who use it.

HASTIE: And ironically, Matt, education includes, you know, a liberal arts education. Because what we need more than ever is wisdom to handle AI, and that means understanding the human condition, the weaknesses in human nature. And so, we can mitigate the challenges posed by AI.

KLINKEN: So, I say if you suppress the humanities, you lose your humanity.

HASTIE: Indeed.

KLINKEN: That's a real challenge. If I could just follow up a little bit on that. We're not just going through an AI revolution. It's the third, the fourth and the fifth industrial revolutions that are happening simultaneously. So, this is the biggest period of change the world has ever undertaken. And if your head's spinning, there's a good reason for it. I'm totally in support of the idea of actually having data centres because of that ecosystem you build around it. It gets back to the question of where's the energy going to come from to actually power up these data centres? They take up a lot of energy. We can do it. Right. The other element in that which is important is the amount of water that's required for cooling. Where's the water coming from? The water requires energy because by and large here in WA, in particular, two thirds of our drinking water is desal. Energy intensive, desal. Then if you're going to use aquifers for around about the next 30 per cent, you know, you've got to pump it up. We generate about 5 to 10 per cent of our drinking water from our dams. So, we need to have a holistic view around how we bring all these different elements together.

MITSOPOULOS: And miners and agriculture, industry of course, are big users of water as well. We've got about five minutes left. I just do want to go to Valerie who has a question. Where are you?

“VALERIE”, AUDIENCE MEMBER: Good morning everybody and thank you so much for being here and offering this opportunity. My concern is, given the current world situation, in particular relations with the USA and the uncertainty of that relationship, where does that put Australia with AUKUS, given that with the Montebello islands in the 1950s, the USA and the UK, we had an arrangement, Australia had an arrangement with those two countries. It's the same triad that we're looking at with AUKUS. And they did not disclose fully details to do with safety and potency to the Australian government or the Australian people. And those were important in that partnership. And also, Australia as a nation where that testing was taking place, as a partner -- 

MITSOPOULOS: I'll just stop you there because we've only got a few minutes left. So, I guess the risks of being so aligned with the US, with AUKUS.

KEOGH: Well, I think if I can start. AUKUS is about a sovereign capability for Australia. Fundamentally, it's about us developing the skills and capability to be able to operate and sustain our own nuclear propelled submarines. And that gives us a much greater defence capability because it means it puts the ultimate question mark in the mind of any potential aggressor towards Australia because of the way submarines operate at the moment. And so, it is a big step forward for us technologically, but also in terms of our defence capability, But it's a capability that we will operate sovereignly. Now, having said that, there's a whole range of other things that we do. Putting aside AUKUS, where we obviously integrate and are connected with the United States systems as well as the US and other partners in how we operate our defence force and the technologies that we rely upon. I mean, our fighter jets are all made in the United States as well. That's not going to change. But we operate them sovereignly and we develop the capability to be able to maintain them here locally. And that's incredibly important. And we'll be building those submarines. So this is a big technology transfer to Australia, working in partnership, which will enhance our sovereign capability and our capacity to defend ourselves.

HASTIE: I'm a proud Australian. I want to stand on our own two feet as a nation. That means we need to have more industrial capacity, and we need to invest more in our defence force and that makes us a better partner with the United States. It's an unequal partnership at the moment. And I think for us to be a sovereign country, we've got to have our own sovereign capability. So, yes, Matt's talked about AUKUS, but I'd like to see us innovating and developing technology that we can export to the world. If you look at Ukraine, if you look at Israel, Gaza and now, of course, the Strait of Hormuz, you see the proliferation of drone warfare. Very low cost. Drones can do a lot of damage to shipping, to aircraft carriers, to tanks. It's revolutionised the way that we fight on land. Now, if you watch some of the videos from Ukraine or Russia, and so I think given our landmass, our know how, I think we could come up with a commonwealth drone program and be world leaders in both offensive and defensive drone technology. Because whether we like it or not, that's going to shape the next war, and we need to have an answer for it.

KEOGH: You’ll be happy to know Richard Marles is at a drone company today in Perth which exports.

KLINKEN: And getting to your point, Andrew, Australia did make the Jindalee over the horizon radar, which the Canadians have now bought. Right, that’s the sort of thing we can do.

HASTIE: We can do it.

MITSOPOULOS: Last 20 seconds to you, Liz Jackson.

JACKSON: Good heavens. So, I think that one of the essence of the question here is, who do you trust? Now, trust is a massive part in supply chain management. And, you know, you can't trust nobody because then you've got no friends. But at the same time, you know, you're a bit of a mug to be trusting everybody. And to me, what this entire discussion today boils down to is the decision to either make or buy in Australia. And you have to trust people. Thank you. Sorry, I'll leave it there.

MITSOPOULOS: Liz Jackson, supply chain expert at Curtin University. Peter Klinken, former WA Chief scientist, Andrew Hastie, Shadow Minister for Sovereign Capability, and Matt Keogh, Minister for Defence Personnel. Thank you for being part of what I think has been a fantastic discussion. Please thank them. That's it from me. We are heading up to the news at 11 o'clock. Thank you for joining.

END
 

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