Interview with Melissa Clarke, ABC Radio National Breakfast

MELISSA CLARKE, HOST: Tim Ayres is the Minister for Industry and Innovation and joins us now. Tim Ayres, welcome back to Radio National Breakfast.

SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: Oh g'day Mel. Good to be on the show.

HOST: Now there had been some pretty protracted negotiations between Rio Tinto and Hydro Tasmania over getting a power pricing agreement. Does this deal help cover the difference?

AYRES: Yes it does. I had made it publicly and privately clear to the parties to this process that what we wanted to see from the Commonwealth Government, was Hydro Tas, the Tasmanian Government and Rio Tinto resolve the best possible power deal. Now that did take time, but we got there. And this deal, $100 million from each Government, does fill that gap in a smart and sensible way. It's a careful way to invest in this facility. But it fills that gap and it secures 550 direct jobs, but a thousand indirect jobs that would not otherwise survive in Northern Tasmania, had it not been for this intervention. It's a critical intervention in the industrial capability of the Northern Tasmania economy.

HOST: And I understand the funding is linked to the price of aluminium in this deal. Can you explain how that works?

AYRES: There's a series of thresholds where the funding diminishes over time. So, if the aluminium price is at a particular threshold, the contribution declines until it reaches zero if it reaches the next threshold. So, if the company is in a position where it is very profitable because of the high aluminium prices, and aluminium prices are at and around that level now, then the Government's contribution declines. We’re always in these deals looking to secure the maximum advantage for the facility.

HOST: So, in this case –

AYRES: So, hundreds and hundreds of jobs, but also being sensible and careful with public expenditure.

HOST: So, in this case we have taxpayers carrying some of the risk when aluminium prices are low to make sure it can keep operating. So, why not put in a mechanism that sees taxpayers get a better return from Rio when aluminium prices are high?

AYRES: Well in this case, the judgement was to deliver these payments on this basis, so capped, and focused on making sure that we minimise the Government's exposure here, if the facility is doing really well. The overwhelming objective here is to secure these 550 jobs, thousand indirect jobs, in what is a part of Australia where these blue-collar jobs are not just really important here, but there's this capability here that can make Australia's economy stronger. Build resilience and capacity for the future.

HOST: The jobs are important, the capability is important. So, the question comes to, you know, making sure that the Australian Government's investment here is the best way to go about it. You and the Prime Minister have both said that Rio Tinto has been investing in this smelter, that they've been keeping up to date with the latest technology. Also, that aluminium prices are quite high right now. So, why does Rio Tinto need financial help from the Government to cover power costs, when it does have multibillion dollar profits? And it clearly sees a good enough future to have kept investing in this plant in recent years?

AYRES: Well, you're right about the investment. I mean, it looks old from the outside, this facility, but the world's youngest aluminium ingot casting machine has been installed there. There is constant investment. It would not be possible to secure the future this facility had they not constantly been investing in Bell Bay Aluminium. And that investment will continue to keep that production going. Now, the truth is, large firms like Rio Tinto make aluminium all around the world. And the hard truth, for areas like Bell Bay Aluminium, is they have to make decisions based upon where can they most efficiently produce it.

HOST: So, even though they could make profits here, they could make even bigger profits overseas. Is that the calculation?

AYRES: Well, we've got to be pragmatic about the Australian interest here. We've acted to secure aluminium production in Central Queensland. At the Boyne smelter near Gladstone, we've acted in relation to Tomago. 5,500 jobs relate to that facility in the Hunter Valley. It's one of the core parts of the Hunter Valley's industrial capacity. In both of those mainland deals, they have come with very large underwriting of new electricity generation and transmission. So, that will, over time, deliver outcomes –

HOST: But that's not the case with Bell Bay though?

AYRES: Yeah, that's right. But deliver outcomes for the modernisation of the electricity network. That's good for not just the aluminium smelters, as it reduces cost, but it's good for big and small customers, industrial and household customers on the mainland. This deal is a shorter deal –

HOST: It's only five years. Why is that? Why was it not 10 years like a lot of the other power purchasing agreements?

AYRES: Well, that is where these large and complex negotiations landed. But it provides for investment In Bell Bay, jobs and the capacity for 1,000 indirect jobs, 550 direct jobs, well into the 2030s. It's the right thing to do for Australian manufacturing. We're an unapologetically pro-manufacturing Government. We're intervening in both current and future industrial capability to make the Australian economy stronger and to re-industrialise parts of our economy.

HOST: Minister, before we let you go, I also want to ask you about AI, because it's another area of responsibility in your portfolio. I've just been curious to watch over the last week or so, as we've seen more information about this OpenAI hack that we've had. Initially, when that news broke, about the Medicare portal breach, we had a really stern message from the Prime Minister at the UN General Assembly. The frustration that OpenAI hadn't been more forthcoming, hadn't notified the Australian Government quickly enough. But in more recent days, it seems the message from the Government has been, OpenAI has been very helpful, that we need to be working closely with them, and that we're very grateful for the assistance they've given us. What's behind this change in tone towards OpenAI?

AYRES: Well, it reinforces the Government's approach here, which is about making sure that artificial intelligence investment here supports Australia's national interest, happens on Australia's terms. Where there's large data centre investments, that they happen in the right places, that they bring their own electricity generation and transmission investment with them.

HOST: So, was the initial frustration at OpenAI? Was that initial message a bit too stern?

AYRES: Oh, it was a direct message. And it's what Australians would expect Anthony Albanese to deliver directly to the CEO and founder of OpenAI, a direct private and public message. And that's been followed by extensive, enhanced cooperation, working through the issues in a constructive way. And it underscores why it is, that we're legislating AI standards, why it is that we're seeking to secure the right level of artificial intelligence investment, including training investment here in Australia, because it makes Australia stronger. It means that we are part of shaping the technology and that is crucial for Australia and Australians.

HOST: And Tim Ayres, I appreciate your time this morning. Thanks very much for joining us on Radio National Breakfast

AYRES: Thanks, Mel.

ENDS.