Prime Minister, welcome to be program.
ANTHONY ALBANESE, PRIME MINISTER: Good to be back on the program.
FERGUSON: Now, the International Monetary Fund warns that the history of government subsidies to industry is littered with failures. That's the word they use. How do you convince Australians that your Government and its agencies have the discipline and the rigour to get it wrong?
PRIME MINISTER: They know, that there is a global competition for new jobs, and new opportunities. This isn't the old protectionism. This is the new competition, which is there, and unless we participate in, we will fall behind. So we've got to be in it to win it, for those new jobs, new industries, and new opportunities.
FERGUSON: Now you're talking about those very large subsidies that have been provided in the US, in particularly the US the massive Inflation Reduction Act, but also in Europe, in Korea and Japan. How does a smaller economy, like ours, compete with these powerhouses when it comes to subsidies and investments in Australia?
PRIME MINISTER: By making sure that we look at the comparative advantages that we have. The resources that we have under the ground, the resources have in the sky, we have the best solar resources in the world. So we can effectively produce green aluminium, green steel. For example, we need to produce batteries here.
FERGUSON: I don't interrupt you, because we will come to some of those specifics. But I guess the question is, it's about how do we compete as a global competition for investment? There's a lot of money on the table in those countries I just mentioned. How does that work in Australia in a much smaller economy?
PRIME MINISTER: We compete on the basis of the advantages that we have. And by not trying to compete on everything, this isn't competition with the IRA, we can't compete with the Inflation Reduction Act. What we can do, is identify where Australia has particular advantages, particularly because of our resources, because of our location in the fastest growing region of the world in human history, our workforce, skills and universities. But making sure as well, that when we have innovation and breakthroughs, like we have in solar technology, we commercialise those opportunities here.
FERGUSON: Is the Budget going to set out the amounts of these investments clearly, the new money available to these projects?
PRIME MINISTER: We've already set out, of course, a range of investments. Critical minerals, $4 billion. The Hydrogen Headstart program, $2 billion. Solar Sunshot, $1 billion. The National Reconstruction Fund is a $15 billion program. So there are a range of funds that we've created, and programs that we've started, or kick-started, ones as well that will develop. There'll be further announcements, not just in the Budget, but in the lead up to the Budget, and indeed, beyond. This isn't something that's a one off event. This is about Australia shaping our economy, so that we can take advantage of the opportunities we see.
FERGUSON: Are we going to see new money amounts in this Budget?
PRIME MINISTER: Yes, you will see new programs, new funding and new opportunities, working with business. One of the things that we have been doing is collaborating very closely with our scientists, with our researchers, with the opportunities which are there, but also with Australian based businesses. The other advantage that we have here, of course, is our superannuation industry. $3 trillion of funds, looking for the opportunity to invest in businesses, and opportunities that produce a long term return. And that is what a range of these projects will do.
FERGUSON: As I said, we will come to some of the specifics in a moment, but I want to quote a particular lines from the speech today about the aims of the policy, you say, "securing greater sovereignty over our resources and critical minerals". What does that mean, in practical terms?
PRIME MINISTER: Well for example, what Canada has done, is have a program of ensuring that their critical minerals, they maintain some national sovereignty or ownership over it domestically.
FERGUSON: Is that what we're going to do, something like the Canadians? Because they're going towards or have already done divestiture? They've got much stricter rules on investment in critical minerals, would we do the same?
PRIME MINISTER: They have very strict rules. But what we want to do is to make sure that we value add here, rather than just export the raw materials, wait for someone else to value add, wait for someone else to create the jobs, and then import it back at greater value.
FERGUSON: Just stay where we were, if you would Prime Minister, because that's a question about whether or not you have 'vertical integration' is a terrible expression for that, I'm sure it leaves most people cold. Staying with our idea of greater sovereignty, are you intending to introduce stricter rules on foreign investment, as you just mentioned, like Canada has?
PRIME MINISTER: No, not necessarily. But you'll see some of the measures in the Budget that will come forward, and in the legislation that I foreshadowed today, the Future Made in Australia Act. But one of the things that we are looking at, is areas of identifying two different motives, if you like, for intervention. One is where Australia has a comparative advantage. The second is where our national sovereignty matters. So for example, we've invested in the creation of mRNA vaccines here. That is, because we identified during the global pandemic, the problem, if we don't have the resilience by having our own pharmaceutical industry here. That's an example of protecting our national sovereignty. Similarly, we can't have a situation where we have the best per capita solar panel usage in the world, but we don't make hardly any here.
FERGUSON: I keep saying we're going to come to solar panels on the detail in a minute, but I just want to stay with this sovereignty question, because you use the word a few times in the speech. This is very precise, this is about resources and critical minerals. So are we going to see new legislation, new rules, around foreign investment in Australian critical minerals and resources?
PRIME MINISTER: We have, of course, foreign investment rules now that look at our national interest and look at our national sovereignty.
FERGUSON: Are you looking to tighten them?
PRIME MINISTER: We will always examine, on a case by case basis, these processes.
FERGUSON: Am I wrong in saying that in your previous answer to the question, you did imply that there would be some tightening of those rules?
PRIME MINISTER: Well, no, but we're prepared to, if it's not working, we will always look for national sovereignty. We welcome, of course, support foreign investment here in Australia, it will play an important role in this transition.
FERGUSON: Is it your thought that there's been too much foreign investment in these new critical industries?
PRIME MINISTER: No, my thought is that there hasn't been enough investment in value adding. That there's been an investment and extraction, but not investment in value adding, creating jobs and increasing our, up the value chain is where we need to go. Because that's how you create jobs and that's how you also protect our national sovereignty, by making sure that we remain a country that makes things here.
FERGUSON: Well, let's look at some of the specifics. I promised you would get there and here we are. Solar, for example, you mentioned the solar panels. Now, in terms of that industry, it's a mature industry. Even in the US where they have enormous amounts of money poured into the manufacture of solar panels, it's very difficult for a manufacturer there to make a buck because the Chinese are flooding the market with a glut of solar panels. So what could the Australian Government possibly do to support making solar panels here when they're being made everywhere else, and even the Yanks can't sell them?
PRIME MINISTER: Well we've already done it. A company that's based pretty close to here, SunDrive, is looking at manufacturing at the Liddell power site. They've got an agreement with AGL, they are producing solar panels that are more efficient than that produced anywhere else in the world. By just adding a couple of percentage points in the efficiency on the solar panel, you can extend the life, you can reduce the number of solar panels that you need, and therefore increase productivity arising from it. We believe that this can be a very competitive exercise, Australia can compete. We've been very good at innovation over a long period of time. There's not a PV solar panel anywhere in the world that doesn't have Australian IP from the Australian National University or UNSW. What we haven't done is commercialise those opportunities and we need to do so.
FERGUSON: Let's talk about batteries. It's another example that people have spoken about. What can Australian do in terms of making batteries that isn't already being done by the Chinese, by the Japanese, by South Korea?
PRIME MINISTER: The point is that we have every resource that goes into a battery.
FERGUSON: But they're already doing it.
PRIME MINISTER: Well, they don't all have the resources that we have, which, if you look at lithium, nickel, copper, we have the combination, which is the best in the world.
FERGUSON: Isn't that an argument for making specialised batteries rather than trying to compete in the battery market, which, as I say, is dominated by those countries?
PRIME MINISTER: Of course it's an argument for us to not try and do everything, but to work out where we have a competitive advantage. And one of the things we want to do with the various systems that we're setting up here, isn't for government to say, "okay, here are the winners," but to set up a mechanism, so government facilitates and is a catalyst for private sector activity. We still want to use market based mechanisms, because that's the way that you get efficiency. And that's the way as well, the market will determine, which of these new industries, get the support, get the drive. But if you don't have that support in the initial period from government, then you simply won't be able to attract the investment. So in part, why we're doing this legislation is to send a signal to the market to provide that certainty, that we are a Government that is prepared to back Australian industry, back Australian jobs, and back making things here.
FERGUSON: Let me just move on to a couple of other issues. Israel in particular. Are there any circumstances in which Australia would move to recognise a Palestinian state before the war in Israel is over?
PRIME MINISTER: Well the conflict of course is taking place there. And what is happening is that there is a global discussion about what happens post the conflict, and how we provide a longer term political solution, which is in the interest of both Israelis and Palestinians. Now that comes down to the two state solution. That is what Penny Wong was talking about -
FERGUSON: That's the question. Are there any circumstances in which Australia would move to recognise a two-state solution ahead of an end to the war?
PRIME MINISTER: Well, there's no proposal at this point in time, but what we know is that Australian recognition is an argument that's significant. What's more significant is, what is the solution in the Middle East that avoids the conflict which has been there for our entire lifetime? How do you get a resolution whereby Israelis can live in Israel, in peace and security, with recognition by its neighbours, in security, knowing that it's not going to be attacked. And how can Palestinians achieve justice, and a sustainable living. It is not acceptable that generations of Palestinians have been forced to live in the conditions in which they have, that is a cause of much disruption and conflict in the Middle East. And indeed, that has flow beyond the Middle East at times as well.
FERGUSON: Just on the question of Zomi Frankcom. Is Air Marshall Binskin on the ground, and is he getting the access that you demand?
PRIME MINISTER: Well, we will deal with that privately -
FERGUSON: Is he there yet?
PRIME MINISTER: We'll deal with that privately. And we'll release a report at an appropriate time. We want Mark Binskin to be able to do the work that he's undertaking.
FERGUSON: Are you concerned that you're not going to get the cooperation you want?
PRIME MINISTER: No, I'm confident that he will receive cooperation. He's someone who is a well-respected figure, globally due to -
FERGUSON: Doesn't mean the IDF will cooperate with him, does it?
PRIME MINISTER: I understand that, but what we are doing, is putting forward, we've put forward someone who is well qualified to have a proper examination, to report to us, so that we can have the accountability and transparency that the Australian public expect.
FERGUSON: And if you don't get it, does Australia remain a friend of Israel?
PRIME MINISTER: Australia's friendship with Israel goes back to its very foundations. Goes back to the work that Doc Evatt did. But friends of Israel need to, like friends of anyone, need sometimes to tell people uncomfortable truths. And the truth is that people are very concerned about the actions and the consequences of what is going on in Gaza. We have made very clear our opposition to a ground offensive in Rafah. And it's important that people who are friends are able to talk straight, and that is what we are doing.
FERGUSON: Prime Minister, thank you very much indeed.
