Podcast interview: Guardian Australia Politics Podcast

04 Feb 2023
Prime Minister
Life as Prime Minister; Leadership; Voice to Parliament; Defence Strategic Review; Defence Spending; AUKUS; Overseas Travel; 2023 May Budget; Stage Three Tax Cuts.

KATHARINE MURPHY, HOST: Hello lovely people of podcasts, welcome to the show. You are on Australian Politics with Katharine Murphy and bizarrely this week we are not in the pod-cave. We are in a secret location.


MURPHY: The Prime Minister’s looking at me with a fair amount of love at this point. Anyway, my guest Anthony Albanese, Prime Minister of Australia, we're obviously having a chat because the parliamentary year is about to start with all bells on.

PRIME MINISTER: Did it ever end?

MURPHY:  No but, Parliamentary, you know what I mean. Obviously, politics never stops, but the parliamentary year is about to start. And also I spoke on, I can't remember how many occasions, with the PM before he was the PM on the podcast. We used to have actually regular chats in the olden times about all kinds of interesting things. I don't think I've had you on the pod since you were PM.

PRIME MINISTER:  You've rejected me, Katharine. 

MURPHY: I don’t know about that. But anyway, I just think we've got lots to talk about and I want to open the conversation not by plunging into a bunch of issues that we are going to plunge into it a little bit. But by talking about leadership more generally because I reckon there'll be a lot of listeners who will be quite intrigued by how you found the transition from being Leader of the Opposition to being the Prime Minister. What habits you might have picked up in order to help you manage an obviously really difficult, intense job. And also I want to get into the idea of ensemble leadership which, I think, is what you've been trying to demonstrate really over the last six months and that's quite interesting. So let's start. Just before we started recording I reminded the PM that there was a great profile of Barack Obama a couple of years ago in Vanity Fair which went to a lot of questions about how he managed the really intense job of being President. I just want to throw you a quote to start the conversation. So he spoke about the first night he slept in the White House after he was elected. So he said: “The first night you sleep in the White House, you think, ‘oh okay, I'm here. I'm sleeping here’. Then in the middle of the night you startle awake and there's this sense of absurdity. There's such an element of randomness in who gets to do this job”. Then he says, you basically, he was a week into the presidency, like it took him about a week and then he felt his body caught up with him that he'd arrived. That this is the presidency. ‘I'm here, this is really happening, on we go’. So can you go back to the first night that you occupied one of the official residences and what that was like. That sort of, ‘Oh, my God. I won’.

PRIME MINISTER: I think I had a big advantage, which of course, was not planned by me, the fact that the election was May 21. On May 23 I was sworn in at 9am as Prime Minister of Australia and by 12 noon I was in the air on the way to Tokyo in the Prime Ministerial plane. The government plane has a meeting room on it and I was briefed all the way up and all the way back from the head of Defence, Foreign Affairs, people from the Department of Prime Minister and Cabinet. I had so much to do in terms of briefings. And that, I think, short circuited the transition. So that on day two, by the Tuesday morning, I was meeting with President Biden, Prime Minister Kishida and Prime Minister Modi. I was clearly on the international stage and that, I think, really helped to concertina the transition.

MURPHY: Interesting.

PRIME MINISTER: I think both publicly as well. Normally there's this period of ‘who's going to do what job?’. We had a swearing in of five key ministers that first morning, that was the decision. There hadn't been the normal caucus processes and all of that slow dynamic that goes through. So I got back on the Wednesday evening and then back down to Canberra again but I think that really helped, as well, the public saw there's been a change of government. We had journalists with us on that visit as well so that really fast tracked everything. I kept staying at my home in Marrickville for some time before I moved into Kirribilli when I was in Sydney. But I got to go to The Lodge probably two weeks after the election, I think. And The Lodge, I'd never been upstairs in The Lodge before. I had no idea what to expect. There's lots of little rooms off two main corridors, there's like two wings almost to it. It's a lot bigger than my old house, let me say that. And there are still elements when I wake up there at The Lodge and it hits me, the significant change which is there. Kirribilli, of course, the Cooks River is a beautiful river but it's not quite Sydney Harbour.

MURPHY: It’s not quite Sydney Harbour.

PRIME MINISTER: It's very different that dynamic, plus the whole dynamic of a lot more is done for you as the Prime Minister. I'm incredibly self-sufficient re the way that my home has always been. People get a shock who visit me at home and see everything being very neat and in place. And my world is very different now. And that's something that -

MURPHY: Takes some getting used to.

PRIME MINISTER: And I hope in a way that I never get used to it. Because once you get used to it you're taking it for granted. And a whole lot of things that make your life easier, which are common sense to make your life easier, are things that other people spend a lot of time organising and putting in place: the security arrangements, the arrangements to get me from A to B. You don't fly commercially, in part because of security issues. But it means you can get from A to B easily. I flew on Friday, I flew from Devonport to Bendigo. I don't know that many planes have ever gone from Devonport to Bendigo.

MURPHY: No, it’s not a conventional route, no.

PRIME MINISTER: Certainly not a commercial route that's about to open up. But that means you can get a lot more done. It's an efficiency mechanism as well.

MURPHY: President Obama said in this piece that the thing that he found that changed the most for him was, just on your point right, that a lot is scheduled for you. A lot is done for you in order to keep you doing the job you need to do, right. He said the big change for him was sort of almost all spontaneity left life. You lost those opportunities where you wake up or you come to at 10:00pm and you need a Magnum and you go down to the 7/11 and you get it, right, and then you bump into someone and you hear a story and that sort of sets your evening on another path or sets you thinking in another way. He said just all of that from life just went and he found that quite disorienting at a human level. Is it similar or different?

PRIME MINISTER: Oh it is. I'm one of those people who would shop for what they were cooking that night and now I can’t just drop into a shop. If you need something, I need a bike pump at the moment. 

MURPHY: Well, if anyone could send the Prime Minister of bike pump I’m sure he’d be very grateful.

PRIME MINISTER: The bike’s there at The Lodge. I look at it, but I need to plan and there needs to be an advance party to the bike pump shop.

MURPHY: Exactly.

PRIME MINISTER: It is much more difficult so I've done things like I bought, it sounds absurd, but I bought enough shampoo and vitamins and that sort of thing.

MURPHY: Knowing you this does not sound absurd

PRIME MINISTER:  For at least six months, because going to the shop is difficult. It requires a major effort. Buying people Christmas presents, I can't just go from shop to shop to shop in the way that you would normally do, you just wander around. But it is something that can be frustrating. You can't just drop into the pub, that's what I used to do. You would go meet people. I know people at various establishments around the inner west where I could always find someone to say ‘Hey, do you want to drop up a beer and a game of pool?’. It's far more complex these days to do that.

MURPHY: And in terms of, obviously it's necessary, right? And which was sort of your point, it's necessary, but it changes your life in all sorts of ways. And sort of like pivoting now to the style of leadership that you're exhibiting in the first several months of the government, which is, I think I use the word Ensemble Leadership, right. It's not just you, there's other players on the stage.

PRIME MINISTER:  Collegiate is the term that I’d use.

MURPHY: Yes, there’s something sort of vaudevillian about it though but in a good way.But anyway, so it's sort of like, those things need to change but I suppose the risk for you as Prime Minister, particularly a Prime Minister who has, you know, sort of organically networked your entire life, right? The job can cut you off. Because people start lying to you, right? Like they don't, they don't want to offend the Prime Minister so they lie. They don't necessarily tell you what you need to know or what you need to hear. They self-censor. Do you have any of that sense that people are sort of changing around you, courtesy of the status in the office or have you not noticed much of that?

PRIME MINISTER: There is a change in how people who see you on the street address you, obviously. You go from some recognition to a lot more recognition. But people, I think, part of the Australian character is that people will just treat you as who you are. And I'm the same person and I try to stay grounded. I have very consciously, though, done some things that seem as though they'd be more difficult than they actually are.

MURPHY: What do you mean?

PRIME MINISTER: I continued to play in the Sydney Badge Tennis Comp last year and I've enrolled again this year. Now I won't be able to play every week and I'm a reserve, the comp goes for 14 weeks. But hanging out with people who I've known for years at the Marrickville Lawn Tennis Club. I’m just me there. Like I'm not treated any differently there from how I was treated beforehand. I've just come to the club with additional friends.

MURPHY: Friends from the constabulary.

PRIME MINISTER: I think that's really important. And I have a bunch of people I grew up with who I still keep in contact with and engage with. I spoke with my best friend from school, from primary school, I spoke with last week. And I think that engagement with people who are not part of the system here is really important, that you maintain those connections. I didn't make a lot of rugby league games last year but at Souths I'm just the same person I always was and hang with the same people I've hung with for a long time there. I think you have to make a conscious decision to do that. And I tried to do that. It is difficult in this job because some people who you meet with will I guess, hold their fire re their views on things. But there's enough people around me as well. I have a very strong core of people, political friends, who will tell me exactly what they think. Now some of those work in this building, but many of them don't. Many of them are just people who work in private or public sector jobs who I continue to engage with and catch up with. Not as much as I used to because I'm busier, but I think that's really important as well to have people who will tell you if they think that you've got it wrong.

MURPHY: I don’t suppose you want to name names in terms of who's around in your orbit, who's been influential for you in the transition?

PRIME MINISTER: I think people will see who they are and will know who they are re the key members of the government. But also people like Tim Gartrell and the people who have worked with me for a long period of time.

MURPHY: Yeah, you brought people back too.

PRIME MINISTER: Yeah, and some people came back who worked for me when I was last a minister. But there's a bunch of people in this office who I have been friends with and engaged with professionally, as well, for a very long period of time. There are three or four people I went to university with and was active in Young Labor with in the 1980s. Nathan's Godfather works in this office now, he had never worked for me before. He agreed to come and to bring his expertise outside of this building for decades into this office and that brings me a sense of trust. But as well, they are people that will tell me exactly what they think as well. I have tried to surround myself with people who are not just ‘Yes, people’, but who have ideas and capacities and part of that capacity is to be honest about their views. And one of the reasons why I doubt whether there's anyone in this building who has as many long term staff as I do. I think that says something about the culture that I've always cultivated in an office where my name is on the door but everyone has a responsibility to making sure that the output is as good as possible.

MURPHY: Everybody, everyone has some ownership. Which again brings us back to the ensemble and this sort of retro return of a government by Cabinet. Your ministers are, well appear to be, I don't know, maybe there's all kinds of fur flying behind the scenes and foot stamping and everything else but everybody seems to be owning their own portfolios, running policy in their areas and you're not styling yourself in messianic terms, at least not yet. Maybe you will grow so enormously fond of yourself that you'll need to burst through and be at the centre of everything. While you are clearly running the show, all these other people are out and about prosecuting agendas. In a leadership sense, how does that work? How do you facilitate that?

PRIME MINISTER: Leadership isn't about thinking that you always know best. Leadership is about listening as well as leading. And the capacity of people in the Ministry that I have is just exceptional. You have a bunch of people who have served as senior ministers in the government of past: Penny Wong, Tony Burke, Chris Bowen, Katy Gallagher as Chief Minister of the ACT. People who have not served as ministers before like Ed Husic and Anne Aly and Kristy McBain, really serious people coming through and then an incredibly talented backbench as well. And I think the job of leadership is to maximise the capacity of the organisation that you lead. And you do that by having faith in people, making clear what the overall direction of the government is going to be, but also recognising that you can't run a Federal Government from the PMO. You have to have faith, not just in people who are elected members of the Cabinet, the Ministry, the Caucus, but also of the public service, maximising the respect that you give them you'll get more out of them if they are focused on achievement and they know that they are valued. On staff as well, the same attitude I have in the office here as well. I encourage that openness and engagement from offices across the board. And when we had the Christmas party here at the end of last year, we had just one of the areas at the National Portrait Gallery, the feeling in the room of that sense of, in ideological terms, that sense of collectivism was tangible, you could feel it. And that sense of being a part of something big which being in government provides you with the opportunity to achieve. So I made the very conscious decision that I would, when I became Opposition Leader, lead in the way that I wanted to lead in government because I think that it flows naturally through. So Tony Abbott, some people would argue was a successful Opposition Leader. Sure, if we go back and find a podcast, we would have discussed this in the past. He was not my role model because I think that the way that he acted as Opposition Leader meant that when he came into government it was impossible to just flick a switch and go to governing because it was a negative response. I wanted to lead in a positive way and to encourage genuine discussion, which I did in the Shadow Cabinet and the Cabinet and its processes - the National Security Committee, the Expenditure Review Committee, the other committees of Cabinet and our processes - working in a way in which there is a spirit of cooperation, a spirit of respect. You've got to enable people to say something that is inappropriate and not the best suggestion without them being ridiculed or having a go at them. You'll only get a good idea if people are allowed to come up with a bad idea and have a debate about it as well, rather than being silent and worried about that.

MURPHY: But also ,though, you're at the head of the queue. And you're right, there is this sort of sense of an esprit de corps, certainly in the government. But obviously the long term risk, or not even the long term risk given the way time accelerates in politics. It's sort of like you've got to manage rivalries, competitions between individuals because everybody wants to advance, everyone wants to succeed. So, how conscious are you of that? I mean, obviously we’re only six months in.

PRIME MINISTER: It's a competitive business. That's the truth. And that can often be difficult for people to manage. Part of my management style is to give everyone respect, for everyone to be able to contribute. Not for there to be just a small inner circle who get to dominate. And I think that if you look at what people are saying about the former government, I mean the absurdity of going so internal and such a concentration of power so that the former Prime Minister chose to appoint himself to the multiple Ministries is the opposite of leadership, from my perspective because Ministers clearly didn't even know that was going on. So I'm pretty transparent about the way that we're doing things in the Cabinet. And it goes back to 2019. I read recently, for someone who's doing a another task - a book, I read the speech I gave on the day I became Labor leader. That's kind of what we put in place, that's the template. And then the big speech I gave during 2019 when we had the review of ‘these are the four stages, this is what we will do’. And we did that and took people into our confidence as well, I said that publicly. I said, for example, we would have our 2030 target after Glasgow, said that well in advance. That's a risk to do that, because people know what you're doing. But, here again, we're mapping out for, we’ll get into the policy stuff, but for 2023 we've mapped out. We will be doing national security issues in the first quarter, the Defence Strategic Review, other activities. We have other reform agendas that we're taking in the lead up to the Budget in May. And then in the second half of the year we will have the referendum, saying well in advance what the timetable of that will be and the processes leading up to that, we'll get into those as well. But I think doing that gives people the confidence that they're valued, that their ideas are worth putting the effort into, and there are no Ministers that are not performing in my view and that's extraordinary. That 30 people, many of whom have never done this job before, and many of whom have different jobs than they've ever done before, are managing to deliver outcomes, and change, and do positive things for the country. You would expect that, if you pick 30 people then there's going to be ups and downs.

MURPHY: Or a spectrum.

PRIME MINISTER: But there's no one that I look at, and I've gone through with all 30 Ministers.

MURPHY: You’ve done performance reviews?

PRIME MINISTER: What the plans are for this year, and what it looks like in 2025 as well. And that I find I get a great deal of satisfaction for how the government has begun on the front foot and I think people responding in that really positive way.

MURPHY: Okay well, let's do some issues now. And I think you've basically identified the ones that want to talk to you about. I want to talk to you about the Voice, I want to talk to you about the Defence Strategic Review, because I'm not sure that the Australian community really has their head around that yet and how big that is potentially. And also, just anyway, we'll get into some other issues. But let's just start with the Voice. Can you win this thing if Peter Dutton says no?

PRIME MINISTER: Well, I think that the question is wrong, and that's the first thing. It’s not a matter of ‘you’ as in ‘me’. This is an opportunity for Australians. I have the same vote that you do, that every person listening to this podcast does. This isn't something that's my idea, this is something that was first mentioned in the 1990s. It came together, this current process really began in 2012. There was a five year process leading up to Uluru and since then. This has come from the bottom up, from meetings of Aboriginal and Torres Strait Islander Peoples saying, one, the ‘what’ is recognition in the Constitution. The ‘how’ is through a Voice to Parliament, is what they want and they want that to be constitutionally enshrined. Now, it's something that I'm strongly, strongly supportive of and am incredibly committed to. And I have faith that the Australian people, when they go into a ballot box, will vote yes.

MURPHY: Is there any universe, and I'm sorry to sort of ask two negative questions to start with because it's sort of, in a way, it's the wrong tone. But these are really essential points, right? Peter Dutton may say no.

PRIME MINISTER: Oh, absolutely. And I think there are internal dynamics in the National Party, in the Liberal Party and in the Greens Party. In part, what we're seeing is their internal mechanisms playing out.

MURPHY: So I mean, you're right to check me and say, ‘I, Anthony Albanese, and not the single winner or loser of this process’, you're right to check me.

PRIME MINISTER: That's important. I don't do it out of any gratuitous means. It's important that Australians know that, and this is what gives me optimism. It's about showing respect for Aboriginal and Torres Strait Islander Peoples and the wording, the draft wording that I've got out there, says ‘in recognition of Aboriginal and Torres Strait Islanders, as Australia's first peoples’. That’s how it begins, the recognition. So it's respect for them. But it's also about how we perceive ourselves as Australians. I think Australians will get a great deal of satisfaction by celebrating the fact that we do share this great land with the oldest continuous culture on earth and that that will be a positive thing for people to embrace. And thirdly, of course, it's also about the way that the world sees us as well. Whether we're a mature nation, whether we're prepared to acknowledge our history.

MURPHY: Of course, but the point is, rather like the marriage equality debate, I mean obviously quantifiably different but analogous in this sense, right. In the marriage equality debate the majority decides the rights of the minority. We're going through another process now where the majority decides the rights of the minority. And because of the history of the country, what I'm trying to say is, in the event that Peter Dutton says no and decides to make an issue of this, decides to blow this up, you've got to countenance the possibility that the referendum fails because that's what history tells us.

PRIME MINISTER: Of course, referendums have historically failed more than they’ve been successful. 

MURPHY: Exactly. So can I ask you this, because obviously you as Prime Minister have to obviously try and move the country forward. But you also have a responsibility to the citizens of the country, including to First Nations people. Is there a universe in which you would countenance stepping back from the referendum if you judged it was not going to be successful?

PRIME MINISTER: To not hold the referendum is to ensure that it's not successful.

MURPHY: So is that the answer no?

PRIME MINISTER: No is the answer. Because it of course is a risk to hold a referendum, particularly where, at the moment is only the Labor Party that is saying that they are committed to a Yes vote. But it's like worrying about winning a grand final, so therefore you don't run on the field and forfeit. And that's essentially what it is. It would be forfeiting the opportunity for recognition in the form in which Aboriginal and Torres Strait Islander People are asking for.

MURPHY: So this process is locked and loaded. When are we likely to see the referendum? I mean, you're not obviously going to tell me the date today that the campaign starts. But when do we expect it?

PRIME MINISTER: The timetable can be worked out pretty easily because you have the machinery of referendum. There's legislation at the moment. There's a committee report that will come down in the next week or so when Parliament resumes, and then that will be debated and carried, I would hope, because we haven’t had a referendum this century, that's got to be updated. So that's the first process. The Referendum Working Group is meeting in a couple of days’ time. It's continued to work through, along with a Constitutional Advisory Group of eminent lawyers, former High Court justice, and others working those issues through.

MURPHY: And they're looking at the wording?

PRIME MINISTER: They're looking at the wording, they’re looking at all of that. You will have legislation introduced during this period of sittings. So before the end of March there will be legislation introduced to the Parliament that will have in it the draft wording to be debated. There will be a parliamentary inquiry in which people can make submissions to it which will go for at least six weeks. And then during the budget sessions that begin in May and then June, you will have that debated and voted on and hopefully passed. It needs to pass in order to have a vote. So the Parliament will have a say, and every parliamentarian will have a say and there will be a parliamentary process of a committee report leading up to that as well. So that takes you up to June. And then once the legislation passes it has to, according to the Act, be at least two months and 33 days. Don't ask me why that particular figure is in there because that makes no sense to me why it's not three months. But anyway, it's two months and 33 days. I guess it’s a bit like the 33 days for a Federal Election and I assume that why it has to be between that period and six months.

MURPHY: So then it's September, isn’t it, thereabouts?

PRIME MINISTER:  Between September and December. So that's the timeframe which is there. But it's also the process. That is one of the furphies that is out there is that somehow there's not enough information. There is this whole process. And the danger of this as well, is that people get overloaded with information and there's going to be an opportunity for that to occur. What's interesting is that I put forward the draft wording in July of last year at the Garma Festival, that's what people are actually going to vote on. I haven't had any Member of Parliament yet come up with come up with a single change of any word that's been put forward.

MURPHY: Just on the sovereignty question, because the Greens Senator Lidia Thorpe has raised this and we saw in the Australia Day marches, Invasion Day marches around the country, there was a fair bit of purchase about this point at the grassroots level. She's concerned that saying yes to the Voice is tantamount to Indigenous people ceding sovereignty. Does the government - I'll just tell you everybody listening, you should see the Prime Minister's face. There's a specific question, do you have legal advice from the Solicitor General or eminent legal minds that basically can guide the government on this question? Is there any risk that sovereignty is ceded?

PRIME MINISTER: Of course we have legal advice about the whole range of questions. And indeed the wording itself that's put up isn't words that, you know, I sat down in a room and came up with. All of these issues, people looking for a -distraction is probably the wrong word - but there are some people, either of a hard right position or a hard left position, who come to the same conclusion and are clearly co-operating, of not providing support for what is being proposed overwhelmingly by, you can call it the mainstream, call it the overwhelming majority, of Aboriginal and Torres Strait Islander Peoples in the lead up to Uluru and ever since. The remarkable thing that has occurred in the stages of this process has been that Aboriginal and Torres Strait Islander peoples who haven't always agreed on a range of issues are on the same page. Now, not everyone is on the same page. This is not a radical proposition. And I said the other day, it's not a radical proposition, it's not surprising that some people are on the radical position, you have also a range of positions being put forward which also won't be advanced by this. 

MURPHY: Power of veto, all that sort of stuff.

PRIME MINISTER:  All of that. It won’t have power of veto. It won't be a funding body. It won't run programs. It won't also mean that people's backyards are threatened. And so you will have people from opposite starting points but they end up at the same point. And that isn't unusual in civil politics.

MURPHY: That's right. And look, some people obviously will oppose this because they are opposed to it and will find whatever means of injecting that opposition, right. But these are basic questions. I just want to go, just again, to sovereignty just so that we're clear.

PRIME MINISTER: Well, this isn't about that. This isn't about that, Katharine. So you can you can go down rabbit holes, I'm not going to assist you.

MURPHY: It's not in this sense, right? I think that people, there will be people in the community who hear that message, who hear that the Voice means we accept the white man's Constitution.

PRIME MINISTER: One of the things that Noel Pearson speaks about very powerfully is that there are three parts, if you like, to Australia's history. And all of them can't be just erased. One, is Indigenous ownership of this land for 65,000 years.

MURPHY: Sovereignty never ceded.

PRIME MINISTER: The second is the fact that the First Fleet arrived in 1788 and that changed our history. And yes, there are some negative things with that but there are also some incredibly positive things with that as well and that is important to acknowledge as well. And the third is that, particularly in the post-war period, the development of the modern multicultural, diverse society which we have here. Now, there are some people who want everything post-1788 to be erased. That is not my position. That is not the government's position. That is not something either which, in my view, is a constructive way to move the nation forward. We share this continent. Everyone has a place in this continent. And some of the debates that take place put forward views that I don't share. That is why some of the debates that people are looking for, whether they be in some of the views that were put forward on Australia Day. I don't think that Lidia Thorpe’s views are representative of a majority of Aboriginal and Torres Strait Islander Peoples, and I don't think they're representative of a majority of Greens voters.

MURPHY: Sure, but just in terms, just one more and then we will move off this. I agree with you that the sovereignty point and the Voice are two separate propositions, it's sort of like ships in the night. But the point is this is, it's a reasonable question to ask: what is the impact of the Voice on this sovereignty question? Because obviously, Indigenous people say sovereignty was never ceded. Is there anything associated with the Voice that obviates that point?

PRIME MINISTER: It’s about our history and it's about what it's about. The argument that is taking place is a bit like some of the debate from others as well saying, ‘what is the impact on the definition of Aboriginality?’ Which was one of the questions that Peter Dutton was putting forward. There are a range of questions, Katharine, which are not what this referendum is about. And one of the tactics to defeat the referendum is asking so-called questions which have nothing to do with what this referendum is about. This referendum is about two things: recognition and consultation. That's what it's about. Recognising Indigenous people in our Constitution, who currently aren't recognised. And secondly, that Aboriginal People and Torres Strait Islander peoples should be consulted about matters that affect them. That is what it is about.

MURPHY: All right, let me move on to unhelpful questions on defence. No, I'm joking. Obviously, the Defence Strategic Review is coming. Can we start with a conceptual question and then I've got some specifics. How do you see the threat environment at this point in time?

PRIME MINISTER: We live in an insecure world. We have a land war taking place in Europe where a large country has invaded a much smaller, less powerful country which has sovereign borders, which has a democratically elected government and is attempting to change the circumstances there through brute force through an illegal invasion. We have a strategic competition in our own region with two great powers now - the United States and the People's Republic of China - with competition in the region.

MURPHY: So dangerous? If you had to describe it in a word?

PRIME MINISTER: One of the things that the Biden Administration said when Joe Biden became President, and my government has reflected as well, is to try not to reduce foreign and international relations to single words. It is an insecure world in which we need to put in place measures that increase peace and security in our region.

MURPHY: Just picking up on that point, do you think that Australia needs to think more seriously than we have in the past about self-defence?

PRIME MINISTER: Yes, put simply. Yes, we do.

MURPHY: And so what does that mean?

PRIME MINISTER: What that means is, the reason why we're having the Defence Strategic Review run by Angus Houston and Stephen Smith was, what are the assets that Australia needs to defend ourselves or to deter any action against ourselves? Where should they be located? And how is that best dealt with in terms of our capacity? So it's not necessarily just about ‘we spent so many dollars’, but ‘was that the best use of every dollar?’.

MURPHY: What are we spending the dollars on?

PRIME MINISTER: It is a change from the former government who had massive blowouts and a failure to deliver, in many cases, what was committed to.

MURPHY: Will this require enhanced self-defence? Will this require more defence spending in total? Because obviously in a budget you spend money, you save money, right. In terms of defence spending, what are we looking at? Are we looking at more defence spending with not many offsets or what are we looking at?

PRIME MINISTER: Well, I won't go through the budget process with you on your podcast here, Katharine. But I think it's fair to say that there certainly won't be less. But we also are looking at appropriate value and making sure that our capacity is increased.

MURPHY: So what that means is that some projects may be advanced, but maybe others are terminated?

PRIME MINISTER: Well, we're working through those issues. But it just means that, 'when you're spending $1, is it going to the right place?’ is obviously what a Defence Strategic Review is. And we know that there's been a change in the warning times of when conflict might occur as well, and that changes some of the dynamic.

MURPHY: It reaches you faster.

PRIME MINISTER: You would have a ten year window of conflict. That's not necessarily the case anymore. Indeed, it's not the advice. So we need to make sure that we have the right assets. We’re examining that. We're working through the AUKUS arrangements with the United Kingdom and the United States. But we're also looking at our capacity in general here as well. And I'd put it in a framework which is even broader than the one that you started with which is that one of the lessons of the pandemic is, in general, we need to be more self-reliant. We need to be less vulnerable to international shocks, which might be a health shock through a pandemic, it might be a cyber-issue, it might be a supply chain issue, or it might be military conflict.

MURPHY: Or it might be unreliable alliances or alliance partners. If we think about the United States, is Joe Biden going to be there after the next election?

PRIME MINISTER: That, of course, is a matter for the people of the United States. But if you look at our interdependency in a whole range of areas the pandemic should have given the world a wake up call. In the United States, the Inflation Reduction Act is a major reform that will see the US become more self-reliant. If you look at a range of areas, including the transition to renewables, we need to make more things here. When you look at access to pharmaceuticals, we need to make more things here. When you look at heavy manufacturing, we need to make more things here.

MURPHY: And defence capability feeds into that.

PRIME MINISTER: And defence capability is a part of advanced manufacturing that has spin offs as well.

MURPHY: Can I ask you a question that I have always wanted to ask you and I've forgotten to ask you on a number of occasions. Just with AUKUS, which you mentioned a minute ago, obviously it's a pretty important eventuality, let's call it that. Would Labor have pursued AUKUS if Scott Morrison hadn't in essence, walked down that path and committed Australia to nuclear submarines from the US?

PRIME MINISTER: AUKUS is not just about nuclear submarines, that's important. It's about our defence arrangements, it’s about interoperability. To me it seems when we had the decision to make, I as Labor leader was surprised by some of the analysis which seemed to forget that there's nothing, if you take a step back, there's nothing terribly surprising by us having relations with the United States and the United Kingdom. The United States Alliance was forged during World War Two, really by Curtin who turned to America in 1941 when it was so critical. And then the Alliance formally grew out of that over a period of time. And the United Kingdom, of course, is a very important part of our history as well.

MURPHY: But my question though, isn't does 'Labor want to do something with our alliance partners?' That's not my question. My question is, would you have done AUKUS?

PRIME MINISTER: That's a hypothetical question.

MURPHY: But it's interesting, isn't it? It's a sliding door moment. So do you think that…

PRIME MINISTER: No, I think that there would have been, your question leaves out, I guess, it sees AUKUS as being an arrangement between politicians. AUKUS is an arrangement between nations who are friends. Whoever was in government would have had similar…

MURPHY: So you think you would have gotten there anyway?

PRIME MINISTER: Similar Defence Department, Defence personnel and Foreign Affairs advice. And that's why our relationship with both those nations has been pretty consistent over a considerable period of time, regardless of who has been in office at any particular time.

MURPHY: Sure. And it's not a trick or a trap question. I'm just genuinely interested, you think you would have got there anyway?

PRIME MINISTER: We obviously weren't a party to the arrangements and that was a decision that the former Prime Minister took even though he was asked to include the Opposition in it, but he chose not to do so. That says something about the United States as well and it's understanding of the relationship between our two nations. That it wasn't a relationship between political parties, it was much deeper than that. And that's why the relationship is so important.

MURPHY: What's our interim solution? Because obviously, these submarines and we've made the point in this bit of the conversation, obviously, that the Defence Review is about more than AUKUS, obviously.

PRIME MINISTER: We’re working through the solutions.

MURPHY: You could share it now, with the podcast.

PRIME MINISTER: And we will be having appropriate announcements.


PRIME MINISTER: Given appropriate processes that we'll work through our Cabinet.

MURPHY: So you haven't decided yet what the interim solution is?

PRIME MINISTER: We’ve decided a whole range of things. But one of the things that I've decided, even more significant than that, is the way that this government will operate. Which is that we operate properly. We have proper processes. We'll go through all of that. The Cabinet will confirm decisions that are made. But the National Security Committee has been meeting regularly. We've been meeting already this year and we will continue to engage. We have our Foreign Minister and Defence Minister as we speak overseas meeting with their French counterparts. And then the United Kingdom counterparts as well will be having a discussion, and there's already been significant discussions with our friends in the United States.

MURPHY: And the timing, approximately? Obviously, I'm deeply disappointed for the record that you're not going to unveil the AUKUS interim solution on the pod.

PRIME MINISTER: Unveil everything on the pod. We’ll probably do it in a bit of a…  

MURPHY: A broader context…

PRIME MINISTER: A broader forum and perhaps in in consultation as well.

MURPHY: With the Allies, sure. But what's the timing?

PRIME MINISTER: Well, we've said in the first quarter of this year.

MURPHY:  But weeks? Months?

PRIME MINISTER: We said in the first quarter.

MURPHY: I’m getting nowhere with these questions.

PRIME MINISTER: What's a quarter of 12, Katharine? Three.

MURPHY: Yeah, I know.

PRIME MINISTER: We're already in the last day of January. So therefore...

MURPHY: Another couple of months. Okay, at some point in the next couple of months. Will you either go to Washington or Beijing this year, do you think?

PRIME MINISTER: I fully expect to. Well, I will be going to the United States this year.


PRIME MINISTER: On at least one occasion and we'll make that announcement at an appropriate time.

MURPHY: Hopeless.

PRIME MINISTER: I will be going to the APEC meeting that’s being held in the United States in San Francisco in either October or November, they haven't finalised the date yet. So perhaps you can get onto them and finalise it.

MURPHY: Sure, you will be going to APEC.

PRIME MINISTER: But I will be going to the United States before then.


PRIME MINISTER: Before then.

MURPHY: Interesting, okay. And Beijing?

PRIME MINISTER: I don't have a scheduled meeting there. President Biden has invited me to the United States, and President Biden will be here in Australia as well this year at the Quad Leaders Meeting with Prime Minister Kishida and Prime Minister Modi. And I have extended to the President an invitation when he comes to address the Parliament.

MURPHY: Is that likely, do you think?  

PRIME MINISTER: Well, we're hopeful. It depends upon diaries and we haven't finalised the arrangements for the Quad Leaders Meeting yet, the timetable. That will be done as soon as possible. There are a range of logistics involved.

MURPHY: They would be unfathomable.

PRIME MINISTER: They are extraordinary. But we have, draft provisions are in place of a venue and timing as well. But we’ll wait and see for confirmation.

MURPHY: Watch this space. And I'm very conscious, you've been generous with your time and I appreciate it. And we must be absolutely be on the clock by now. Budget, just a couple of things.

PRIME MINISTER: There will be one.

MURPHY: Well no, not only one, there'll be two. You did one October and one in May. There will be two in the same financial year because, you know, this government is glutton for punishment.

PRIME MINISTER: We've got to give you something to talk about.  

MURPHY: I'm totally up for the Budget, I'm pumped. So obviously, that's in May. Now there will be two things. Obviously, energy rebates because of high energy prices will be a feature of that Budget given the agreement you made over December in terms of rolling that out with the states, so there's a cost of living component in the Budget. But there will also be, I'm sure you're acutely conscious and I can't wait for you to roll your eyes at question, a drumbeat amongst well-meaning NGOs and others about the stage three tax cuts. We had this debate in October, we had a precursor debate about whether or not this is the most appropriate, I know you're aware of the debate. The question’s coming, in May, is there any universe where the government adjusts - because you're not talking about scrapping them, I've never heard anyone talking about scrapping them - is there any universe where that package gets adjusted in May?

PRIME MINISTER: We have not changed our position.

MURPHY: But that's doesn't actually answer the question.

PRIME MINISTER:  It does actually.

MURPHY: Well then can you express it more affirmatively, because ‘we haven't changed our position’ leads…

PRIME MINISTER: It’s exactly what we said last time.  

MURPHY: So is the answer no?

PRIME MINISTER:  Nothing has changed. There is no debate going on about changing any arrangements for those things in May and we have not changed our position.

MURPHY: Is the answer no?

PRIME MINISTER: But then you get into, Katharine, asking hypotheticals about a range of things on the Budget and you know, you've been around for a long time, Katharine. You know that people do not respond to budget question that way. So people can go and speculate to their heart's content.

MURPHY: It’s not very productive speculation if you’ve got no intent.

PRIME MINISTER: It wasn't last time, and it won't be this time. I haven't changed our position. We have not changed our position.

MURPHY: Right. Is there any universe where the position…

PRIME MINISTER: You can ask the same question a different way, but you'll get the same answer.

MURPHY: No, sure. But the persistence isn't madness. The persistence just reflects the fact that the locution is slightly open ended. You're basically saying 'we haven't changed our position', which doesn't preclude changing your position if you feel differently in a week's time.

PRIME MINISTER: Katharine, I've noted that the Coalition are out there running a campaign one way, and some other people will be out there running a campaign the other way. And this is all about something of which a decision in May will have zero impact.

MURPHY: Well, that's as definitive as I think we can get on that point.

PRIME MINISTER: But we've not changed our position.

MURPHY: In the Budget, apart from obviously the energy rebates, cost of living is a problem more generally for people. 7 per cent or whatever that dreadful inflation figure was the other day. More interest rates rises coming down the pipe. Obviously, the government has been concerned about overheating the economy by putting more cash handouts or whatever in the mix. But what is most front of mind for you?

PRIME MINISTER: Cost of living is a big issue which is why we designed the energy policy the way that we have, in a way that would take pressure off inflation. But also, the fiscal position of the Budget that we inherited, with the trillion dollars of debt and not much to show for it, is something that requires discipline. It requires a responsible budget which is what we delivered in October and we'll deliver that again in May. There are enormous pressures, spending pressures, on the budget. One of them we've discussed is defence, another is the NDIS, another is aged care and health issues. There are other pressures on expenditure. And one of the pressures on expenditure, on the budget, is debt that we inherited where the increase in interest rates impact how much has to be paid on the debt which is there as well. So that places increased pressure as well. So we are conscious about that. But we'll continue to work. The ERC is doing its work. We met this week, we met last week, we'll meet next week, continuing to do the work of getting a policy agenda. One of the things about the Labor Party is there's lots of Ministers with lots of ideas. We can't do everything that we would like to do in our first year, we've been in government for seven months. We've done what we said we would do plus some additional reforms like paid parental leave. The expansion of that was an addition that came out of the Jobs and Skills Summit. But we will be responsible in how we do it because to do otherwise is to be counterproductive, because if it's not a responsible budget, it could place more pressure.

MURPHY: It overheats the economy.

PRIME MINISTER: It's counterproductive. So we're very conscious about that, but conscious as well of concentrating on the areas of productive investment that lead to a stronger economy down the track. So infrastructure investment, the National Reconstruction Fund in new industries and jobs, fee-free TAFE, childcare is economic participation and productivity measure as well. So we're looking at those productive areas of economy as well. How we drive productivity will be one of the themes of the Budget.

MURPHY: Okay. Well, we might have a conversation sometime after the Budget.

PRIME MINISTER: I'm sure we will.

MURPHY: See where the sum of human knowledge leaves us.  

PRIME MINISTER: We might talk to each before May, surely.

MURPHY: Well yes, I think that's inevitable. Sadly for you I think that's inevitable. Anyway, thank you, Prime Minister very much for your time. You've been generous with it and I appreciate it and I'm sure the listeners will appreciate it. Thank you to you guys for listening. I'm sure you'd be interested in this conversation. You know where the Prime Minister is on social media, you can track him down. You can track me down, and we'll be back next week for the opening of the Parliament.

PRIME MINISTER: See you then.

MURPHY: God help us all.