PAUL CULLIVER, HOST: Tim Ayres, Assistant Minister for Trade and Assistant Minister for a Future Made in Australia. Hello to you, Senator.
SENATOR TIM AYRES, ASSISTANT MINISTER FOR A FUTURE MADE IN AUSTRALIA AND TRADE: G'day. It's very good to be here in the studio and in the Hunter.
HOST: What brings you to Newcastle today?
SENATOR AYRES: Well, I've got to speak to a big audience of manufacturing and engineering businesses this morning about the government's Future Made in Australia agenda. I've been a regular visitor to the Hunter, not just when I've been Assistant Minister for Future Mate in Australia and for Trade, but during all of the time that I've been elected and in my previous life as a manufacturing union official. No stranger to the Hunter, it's good to have an opportunity to come and account for what has been achieved so far in this first term of an Albanese government. What there is that is more to do in manufacturing. There's a lot of work to do to implement the biggest pro manufacturing package in Australia. And of course, the threat that the election represents in terms of the alternative. We have a big pro manufacturing package and our opponents, if elected, would tear it down.
HOST: Part of the speech you'll be giving today, I understand we'll be talking about decarbonising some of our heavy industries. Why bother?
SENATOR AYRES: Well, that's what business wants to talk about here. That's the subject that they are focused on. I'll give you a good example. So, the Tomago aluminium business, its owners have made a decision that that business is to shift to zero or close to zero emissions. Electricity is the energy input into that process. They are not engaged in that big program of activity because they're a bunch of hippies. They are engaged in that—no doubt they've got very strong sustainability objectives and all that sort of stuff—but they are engaged in it for entirely commercial reasons. That is, the markets that they sell into will be demanding zero emissions aluminium from Australia. And that is an enormous opportunity for Australia. But that is why the government has committed this $2 billion package for the aluminium sector to make sure it's not up for debate, really, once they have made a commercial decision about going to zero emissions electricity. What is up for debate, though, is whether that activity happens in Australia or in the Middle East or in China or in the United States. And this government is determined to make sure that we build our critical minerals processing, our iron processing and our aluminium processing. First step there, of course, is protecting our current businesses and making sure that they continue to manufacture here. That's why we did the $2 billion package for aluminium opposed by Peter Dutton that's why we did that big intervention into Whyalla Steel, our second biggest steel producer in Australia. We are serious about supporting manufacturing.
HOST: Alright, well, we obviously can't talk about exporting steel and aluminium without talking about the tariffs that have now come into place in the US. How big a hit is the aluminium and indeed the steel industry going to take in Australia from this tariff?
SENATOR AYRES: Well, I don't want to undersell it or oversell it. At one level it is 0.18% of Australian exports. But it is meaningful and important for the steel and aluminium sectors and will impact each of those sectors and each of those businesses in different ways depending on how exposed they are to the US market. The big issue here is that it is very clear that in the United States, even under the previous administration, the direction of travel was to more protectionist approaches. The new Trump administration has been elected. It is very clear that they are going to take a starkly protectionist pro tariff approach and that that means that we must do two things. One is focus on the bilateral relationship and getting market access for Australian businesses to the United States, but also other markets around the world. Second, it is another message that we are very focused on diversifying the Australian economy and building our manufacturing capability so that we are more resilient as a country. That's what the Future Made in Australia agenda is all about, is about making sure that we are moving up the value chain and we are selling more manufactured products into the world over time. Because it is a security and economic resilience question for Australia. As the world becomes less predictable, more contested, more volatile, the Albanese government is focused on making sure that we are building our manufacturing capability.
HOST: I know there are multiple, multiple overtures by the Australian government to the US to try to get this exemption ultimately not secured. Is that a failure of the Albanese government?
SENATOR AYRES: Well, it's certainly the case that no country around the world has secured an exemption. And I think Peter Navarro, one of the senior US government representatives in this area, an advisor to the President, made it very clear that they regarded it as a mistake last time around to offer exemptions to any country. So, it's a harder hill to climb for Australia to be singled out for exemptions in this case. We will continue to pursue that because it's in the national interest to pursue it. There are other decisions that the Trump administration has indicated that it is going to make in early April around broader tariff arrangements. So, we are focused on the bilateral relationship. We will continue to put the full court press of effort into that work. As I say, we must also act for the medium term and the long term to diversify the Australian economy. We have to do both things at the same time. Big effort on the bilateral relationship, big effort working with trading partners around the world. But also we are determined to rebuild our manufacturing capability.
HOST: There's some conversation around the idea that the Trump administration want to have reciprocal tariffs. The idea that if there's a particular support mechanism in one country for an industry that's trading with the US that might be seen as an unfair sort of support that's provided, say in Australia. Therefore, the US might impose stronger tariffs or restrictions. There is some conversation that maybe the Future Made in Australia package tax credits and the like could be seen as an impetus for reciprocal tariffs from the US. Is that something that the government is concerned about?
SENATOR AYRES: Well, it's unclear at this stage what the approach is the administration is going to take, but it is clear that around the world governments are acting to secure industrial capability in their countries. And the thing about future made in Australia is it's not a tariff-based approach. Tariffs are a bad idea. We are opposed to what the United States government is doing here. In the end, what it will do is just put prices up for American consumers and offer very little strategic benefit. But we are focused in key areas on making sure that we are backing processing happening here in Australia. So, for example, we are one of the world's biggest iron ore exporters, but our steel industry accounts for less than 2% of global steel. It is in Australia's interest to fortify our regional economies and to diversify the national economy by moving up the value chain in iron production and steel production. We have a set of very clear national advantages here. We are an iron ore producer. We have vast solar and wind resources, so access to very low-cost electricity for these new industrial processes and enormous space and technical and engineering capability in areas like the Hunter Valley and the Illawarra, where we've got the capability to engage in this sector. That means it won't happen by itself. It won't happen with the prescription that you get from Peter Dutton and Angus Taylor, which is that everybody should pull their socks up and hope that the market gets us there. It will require government action and government partnership with industry to deliver these outcomes. And it requires some incentives in the short term. And the incentives that we are offering are production credits that are only payable not in the hope that production occurs, but after production occurs in Australia. So, we think it's a smart, well targeted approach. It will deliver the outcome that Australia needs for our not just our economic future, but our security future. We think that's an agenda that Australians support because they know that we've gone backwards on manufacturing over the course of the last 30 years, and we need to rebuild regional economies like the Hunter.
HOST: All right, Senator, I believe you've got a speech to get to, so I'll let you get to that. And I appreciate your time.
SENATOR AYRES: Really good to talk to you.
ENDS.
