Kevin Rudd has issued an implicit challenge to the Albanese government to embrace radical new thinking and an East Asian-style commitment to industry policy or risk Australia slipping out of “the first rank of nations”.
In a major speech to the National Press Club in Canberra, the former Labor prime minister said Australia had become a “complacent country” that no longer punched above its weight, “if in fact that was ever the case”.
He warned that after drifting for decades, Australia was now living “on borrowed time”, amid unprecedented strategic, economic and technological upheavals. Three “mega-changes” – the rise of China, artificial intelligence and rapidly accelerating climate change – were testing the nation simultaneously, demanding a policy response beyond anything yet contemplated, Dr Rudd said.
“We can navigate these changes successfully, but it will require a radical change in our national psychology – a new sense of national urgency, combined with a new, vital sense of shared national purpose,” he said.
“The alternative is to slide into becoming a second-rate country. Because that requires no effort at all.”
Laying out a manifesto for national competitiveness he insisted was directed at “all Australians in leadership positions”, Dr Rudd called for a new focus on economic resilience underpinned by productivity-led growth, industry policy and a powerful new class of technocratic leader.
He urged the government to “foster world-class companies” across seven key sectors: AI, biotechnology, energy, critical minerals, defence industry, finance, and – nearly a decade after Australia’s last car company closed – automotive manufacturing.
Each should have its own “industry tsar” answerable to the prime minister, with engineering and private sector experience and a “project management mindset”, Dr Rudd said.
He made no mention of the government’s $22bn Future Made in Australia policy, and warned “departments of words rather than departments of action” now dominated the bureaucracy.
The prospect of government intervention would “terrify the Treasury”, Dr Rudd said, branding the department “the self-appointed Knights Templar of Australia’s economic orthodoxy” for embracing the productivity agenda while shunning industry policy.
He said the government also needed to be prepared to increase defence spending beyond its promised 3 per cent of GDP by 2033 if strategic circumstances required it, and suggested its unfinished AI policy framework was holding up investment.
Dr Rudd said successful regional economies including those of Japan, Korea and Singapore had “long embraced industry policy frameworks”, while “China’s entire economic framework is built on a maximalist industry policy dedicated not only to national self-reliance but to the domination of global supply chains”.
Adam Smith, the father of modern economics, had never contemplated “a single-party state cornering a third of global manufacturing and behaving as a unitary, co-ordinated actor across all global markets”, Dr Rudd said, citing its near-monopolies in critical minerals and rare earths.
Both US political parties had responded with industry policies of their own, and Europe, “contemplating the collapse of manufacturing”, was reaching the same conclusion, he said.
The former Australian ambassador to the US and globally recognised expert on China said Australia faced an “everything, everywhere, all at once” moment.
He put the prospect of a Chinese invasion of Taiwan by 2028 at one-in-three, and warned Beijing was determined to surpass the US in military, economic and technological power within the next decade or, failing that, by the centenary of the People’s Republic in 2049.
On technology, China led the world in 69 of 74 critical technologies, as tracked by the Australian Strategic Policy Institute.
“Silicon Valley is brilliant. But it faces the sheer scale of China’s market, the disciplined concentration of resources by the Chinese party-state, and the depth and breadth of its industrial subsidies,” he said. “The tectonic plates are shifting beneath our feet.”
He said AI, the “mega-disruptor”, also had profound national security implications for Australia, warning AI-enabled weapons could operate without human restraint, and AI-powered cyber attacks would threaten the nation’s critical systems.
Dr Rudd said the 75-year-old US alliance remained “necessary” but Australia needed to improve its self-reliance. “This is why AUKUS is essential,” he said, adding that Australia’s defence relationship with Japan should also be elevated. As Labor contemplates a cut to immigration numbers amid a challenge from One Nation, he also warned “any return to the politics of race and religion” would undermine national security, noting Indonesia’s nearly 300 million people and its booming economy to Australia’s north.
On AI regulation, he called for media companies to be able to negotiate a price for AI use of their content within an agreed cap, a legal right for Australians to block their data being used, and a requirement that every data centre have its own dedicated power source so consumers were not left to foot the bill.
Dr Rudd, the global president of the Asia Society, ruled out a return to politics. “Unlike Tony, I’m not on the comeback trail,” he said. He also ruled out a UN job, after his bid to become secretary-general was cruelled by the Turnbull government. “I want nothing else for Australia but to thrive, to flourish and to remain in the first rank of nations in this increasingly difficult, dangerous and volatile world,” Dr Rudd said.
Kevin Rudd has issued an implicit challenge to the Albanese government to embrace radical new thinking and an East Asian-style commitment to industry policy or risk Australia slipping out of “the first rank of nations”.
In a major speech to the National Press Club in Canberra, the former Labor prime minister said Australia had become a “complacent country” that no longer punched above its weight, “if in fact that was ever the case”.
He warned that after drifting for decades, Australia was now living “on borrowed time”, amid unprecedented strategic, economic and technological upheavals. Three “mega-changes” – the rise of China, artificial intelligence and rapidly accelerating climate change – were testing the nation simultaneously, demanding a policy response beyond anything yet contemplated, Dr Rudd said.
“We can navigate these changes successfully, but it will require a radical change in our national psychology – a new sense of national urgency, combined with a new, vital sense of shared national purpose,” he said.
“The alternative is to slide into becoming a second-rate country. Because that requires no effort at all.”
Laying out a manifesto for national competitiveness he insisted was directed at “all Australians in leadership positions”, Dr Rudd called for a new focus on economic resilience underpinned by productivity-led growth, industry policy and a powerful new class of technocratic leader.
He urged the government to “foster world-class companies” across seven key sectors: AI, biotechnology, energy, critical minerals, defence industry, finance, and – nearly a decade after Australia’s last car company closed – automotive manufacturing.
Each should have its own “industry tsar” answerable to the prime minister, with engineering and private sector experience and a “project management mindset”, Dr Rudd said.
He made no mention of the government’s $22bn Future Made in Australia policy, and warned “departments of words rather than departments of action” now dominated the bureaucracy.
The prospect of government intervention would “terrify the Treasury”, Dr Rudd said, branding the department “the self-appointed Knights Templar of Australia’s economic orthodoxy” for embracing the productivity agenda while shunning industry policy.
He said the government also needed to be prepared to increase defence spending beyond its promised 3 per cent of GDP by 2033 if strategic circumstances required it, and suggested its unfinished AI policy framework was holding up investment.
Dr Rudd said successful regional economies including those of Japan, Korea and Singapore had “long embraced industry policy frameworks”, while “China’s entire economic framework is built on a maximalist industry policy dedicated not only to national self-reliance but to the domination of global supply chains”.
Adam Smith, the father of modern economics, had never contemplated “a single-party state cornering a third of global manufacturing and behaving as a unitary, co-ordinated actor across all global markets”, Dr Rudd said, citing its near-monopolies in critical minerals and rare earths.
Both US political parties had responded with industry policies of their own, and Europe, “contemplating the collapse of manufacturing”, was reaching the same conclusion, he said.
The former Australian ambassador to the US and globally recognised expert on China said Australia faced an “everything, everywhere, all at once” moment.
He put the prospect of a Chinese invasion of Taiwan by 2028 at one-in-three, and warned Beijing was determined to surpass the US in military, economic and technological power within the next decade or, failing that, by the centenary of the People’s Republic in 2049.
On technology, China led the world in 69 of 74 critical technologies, as tracked by the Australian Strategic Policy Institute.
“Silicon Valley is brilliant. But it faces the sheer scale of China’s market, the disciplined concentration of resources by the Chinese party-state, and the depth and breadth of its industrial subsidies,” he said. “The tectonic plates are shifting beneath our feet.”
He said AI, the “mega-disruptor”, also had profound national security implications for Australia, warning AI-enabled weapons could operate without human restraint, and AI-powered cyber attacks would threaten the nation’s critical systems.
Dr Rudd said the 75-year-old US alliance remained “necessary” but Australia needed to improve its self-reliance. “This is why AUKUS is essential,” he said, adding that Australia’s defence relationship with Japan should also be elevated. As Labor contemplates a cut to immigration numbers amid a challenge from One Nation, he also warned “any return to the politics of race and religion” would undermine national security, noting Indonesia’s nearly 300 million people and its booming economy to Australia’s north.
On AI regulation, he called for media companies to be able to negotiate a price for AI use of their content within an agreed cap, a legal right for Australians to block their data being used, and a requirement that every data centre have its own dedicated power source so consumers were not left to foot the bill.
Dr Rudd, the global president of the Asia Society, ruled out a return to politics. “Unlike Tony, I’m not on the comeback trail,” he said. He also ruled out a UN job, after his bid to become secretary-general was cruelled by the Turnbull government. “I want nothing else for Australia but to thrive, to flourish and to remain in the first rank of nations in this increasingly difficult, dangerous and volatile world,” Dr Rudd said.