Interview with Hamish MacDonald, Breakfast, ABC Radio National

Hamish MacDonald
Electric vehicle battery manufacturing; Petroleum resource rent tax; AI regulation in Australia.

HAMISH MACDONALD: This is RN Breakfast. One of the most interesting outcomes of Indonesian President Joko Widodo's recent visit to Australia was an agreement to work together on manufacturing batteries for electric vehicles. Indonesia wants at least 20 per cent of the cars it produces to be electric vehicles by the year 2025.

Australia and Indonesia both have an abundance of the critical minerals needed to make EV batteries and last week Ed Husic, the Minister for Industry and Science, visited Indonesia to advance those plans. He's in our Parliament House studios this morning. Good morning to you.


HAMISH MACDONALD:  What are we actually going to be doing here and how soon?

ED HUSIC: I think there are a number of things. The Indonesians are very serious about this target that you just referenced. They, for instance, signed an MOU with the Koreans, with Hyundai to set up an EV manufacturing plant just outside of Jakarta. I went and visited the plant last week. They're already building or manufacturing those vehicles so it shows what can be done with that type of determination by them.

They have large stores of nickel, and we have large stores of lithium. These are really important for the batteries of today and talking about how they access those minerals and how we work together, really important.

The other thing is too about working out how we can get involved in different levels of the battery value chain together. And I think there's just so much work, Hamish, countries are well in advance of us in getting their act together and transitioning towards net zero. But there is a lot of work to be achieved in manufacturing, the renewable energy equipment that's required for that transition, and finding ways to work with one of the biggest countries on our doorstop, that's important long term not just for them but for our long-term good too.

HAMISH MACDONALD: I do want to zero in on the value chain that you just referred to there, are we just going to be continuing to supply lithium and let the production happen elsewhere, or are we also talking about manufacturing too in Australia?

ED HUSIC: We are certainly determined to have a higher ambition and that's why we've started work    

HAMISH MACDONALD: Determined to have a higher ambition, what does that mean?

ED HUSIC: Well what that means is we actually are putting together at the moment a national battery strategy designed to lever off all parts of the country that have got those skills that the future battery industry's Cooperative Research Centre based out in Perth tells us, that there's a lot of jobs, a lot of money to be made if we get involved in different parts of the battery value chain, not just in mining and refining but looking at what we do on processing, on cell manufacture, systems integration.

And also, we have to think long term about recycle and reuse, Hamish, because we just don't need a lot of this equipment ending up in landfill at the end of its life. There are a lot of parts we can get involved.

And to your broader question, yes we do, we have to deepen the economic complexity in this country. We make a lot of money from mining and farming, and we'll continue to do so, but the next chapter of our economic history's really going to be written around value adding and that's what we've got focus on.

HAMISH MACDONALD: So, for those listening this morning trying to understand what you mean by all of this, are you saying we might actually make these batteries in Australia in the future, or we'd make components of those batteries and then look at the end of the supply chain when they've been finished with?

ED HUSIC: That's exactly what I'm saying. We are looking at what we can do, what it will take to stand up cell manufacture in Australia, because at the moment we're thoroughly dependent largely on one country, that's China, to get a lot of this material. But there are other parts of the world where they've been able to work this out and be able to start moving on this. We want to be able to do the same.

We've got a lot of people, very smart people that are working on this and, as I said, our own CRC is saying there's a lot of scope for us to do it. So we're working through in terms of the development of the national battery strategy. We've done a lot of consultations with industry talking that through.

Our National Reconstruction Fund will have a target fund within it for value adding and resources of about a billion that's available there, plus what we've got on offer for energy for the manufacture of zero or low emissions technology. So we want to move the capital in, train people up, get our thinking very clear and precise on where we need to go and not miss the opportunities that are there.

As everyone often remarks, we contributed to the development of solar panels that then got manufactured by other countries and we missed out on the value add that we could have done, and we're determined not to miss that opportunity and to see what we can do here.

HAMISH MACDONALD: It has long been said that Australia has never really capitalised on the opportunity of having Indonesia right next door. It is a growing economy; a growing nation and its ambition has grown remarkably in terms of its economy under Joko Widodo. Is there anything in your visit that demonstrates that actually things might change or will be different in the trade relationship between our two countries that demonstrate that we might actually take full advantage of our neighbour?

ED HUSIC: Hamish, the big impression I got listening with people last week, and also through the visit that the President had here in early July, people were saying to me, particularly senior business leaders, that they can notice a new energy in the relationship between Australia and Indonesia, and not just at a national level between leaders but rather business to business. And that's been the big challenge for our country, the depth of our relationship at a business-to-business level between ourselves and Indonesia is very shallow. So seeing that new energy, as it's been described, is a really good positive sign.

The other thing that I saw visiting Jakarta is firms that had been set up that have got operations in both countries and it's as a result of Indonesians studying in Australia too. One particular firm that's helping small businesses be able to open up new income streams, Bukalapak, their founders went to uni respectively in Sydney and Melbourne. Then they went back. They've started this business. A thousand people hired in Jakarta; they've got others hired here in Australia at a smaller number. But they're maintaining that connection and I think if we do get more of those joint business opportunities opening up it will be really important, especially for Australia being able to access larger markets for their products and their technology and thinking.

I think longer term it would be great, particularly in early-stage innovation, Hamish, for younger start ups where we can set them up together with Australians and Indonesians operating in both markets. Indonesia has a huge digital economy, 200 million Internet users. There's a lot of good prospects there but we've obviously got to organise to make sure that we seize those opportunities.

HAMISH MACDONALD: I'm talking to the Industry and Science Minister Ed Husic. On another matter, the Greens and the crossbench are calling for the petroleum resource rent tax take from this to be doubled.

ED HUSIC: M'hmm.

HAMISH MACDONALD: This is clearly something that is being debated fiercely. There's also pressure on the Coalition from the industry itself to support the proposal being put by your Government. But on the bare numbers of this are Australians being dudded in terms of this tax take?

ED HUSIC: We inherited a bunch of work that had been commenced by the Coalition. They were looking at what needed to be done to refresh the PRT. We've gone through that process of talking with industry and others and calculating what's required. This is, as the Treasurer has indicated, the sensible course that's being taken. It will generate a significant amount of revenue and it's certainly interesting to see that the Coalition has not responded to what industry has said is a fair deal. And this can go ahead, provide certainty for the sector if the Coalition's prepared to back that in.

HAMISH MACDONALD: Respectfully, Minister, I'm just trying to take it slightly away from just the pure politics of it for our audience who probably is interested in what we're actually getting from these companies for their access to these resources. I mean essentially what's being argued is not increased taxes, just a change to the point at which the concessions effectively come in and that could double the amount that the Australian public purse receives over the course of a decade. I mean it doesn't seem on the face of it a radical thing to do given how much profit producers are taking because of the access to what are ultimately public assets.

ED HUSIC: And respectfully in response I thought the bulk of my response did focus on the process, the thinking, the work that had been done to get to that point. The political element is one that is at the heart of getting these type of changes made, and this type of change can be made if the Coalition does the proper thing in respecting industry response.

And to the heart of your question, yes, there'll always be people out in the broader public that will take different views about what type of tax level should be brought in. Is it too high? Is it too low? That is always an active debate when it comes to tax. I think it's preceded us well and truly generations before and will follow us into the future no doubt. But we believe this is the right balance. Understand that people have different views. It's now a point of being able to get what we believe is a sizeable contribution to get that locked down.

HAMISH MACDONALD: On the question of artificial intelligence, this is an area you're looking at in your portfolio and we'll have to move on fairly quickly, we've got a bit more to get to this morning.

ED HUSIC: I'd love to talk tax all day.

HAMISH MACDONALD: Obviously the US and the EU are quickly moving forward with legislation and regulation. How far are we from actually implementing regulation on this?

ED HUSIC: Well actually tomorrow we will be closing off consultations that we opened up a few months ago around a safe and responsible framework for the use of AI. It is a really tricky thing to do because AI has delivered us a lot of benefits, but we need to make sure that the concerns that people have, particularly around automated decision making, get factored in. Yes, there are other jurisdictions    

HAMISH MACDONALD: But will we    

ED HUSIC:  working ahead.

HAMISH MACDONALD: Is this going to be self regulation or are we going to impose actual rules?

ED HUSIC: Well I was just going to make the point we're going to work through those consultations and hopefully get something that can be used across portfolios when they're dealing with AI. In terms of some of the other points - sorry, just your last question then?

HAMISH MACDONALD: Is whether we're actually going to impose regulation or is this going to be self regulation?

ED HUSIC: Oh, self regulation. Look, we've talked about having a risk-based approach, low, medium, high risk. I think in the high-risk area it will be unrealistic, particularly for tech firms, to think that governments won't intervene, and you're seeing a very active discussion in different parts of the planet on that.

I think with the tech sector, and I've made this point privately and I'll make it openly now, I think the era of self regulation is over when it comes to high-risk elements where people have got concerns. There does need to be a stronger framework in place. But we are very focused on getting the balance right.

HAMISH MACDONALD: Ed Husic, thank you very much.

ED HUSIC: Good on you, thank you for your time.