ASIA
13 September 2026
Kevin Rudd on Australia’s security and Artificial Intelligence
Key points on Artificial Intelligence from Kevin Rudd’s speech, “The Complacent Country: Navigating Australia’s Future in an Uncertain World”
Kevin Rudd, a former Australian Prime Minister, recently made an excellent speech entitled “The Complacent Country: Navigating Australia’s Future in an Uncertain World”.
Set out below are the key points pertaining to Artificial Intelligence:
“First, the global strategic, economic and technological forces now bearing down on this nation are of an order of magnitude, severity and complexity that is unprecedented in our postwar history.
Second, 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. The alternative is to slide into becoming a second-rate country. Because that requires no effort at all.
And third, we are more than capable of rising to this challenge. We have the talent and the resources; the only question is, do we have the national imagination?”
Rudd sees Australia confronting three main security challenges – the rise of China, Artificial Intelligence and climate change. This note will focus on the AI revolution, which Rudd says is replete with great risks and equally great opportunities.
According to Rudd, AI is “the mega-disruptor currently driving most other technological and economic change. This too has become a two-horse race between China and the United States amid their ongoing, razor-sharp strategic competition.
According to Stanford University: Both sides are now investing comparable amounts in AI R&D; China leads significantly in AI patents, and is closing the gap in computing power.
The US is ahead in frontier models – although Anthropic’s most advanced model is only 3% more capable than its Chinese equivalent; and Chinese firms are way ahead in AI adoption – for example, China accounted for more than half of all industrial robots installed worldwide last year.
The national security implications for Australia are profound.
First are the direct military applications – the risk of AI driving weapons systems without “humans-in-the-decision-making loop”.
Second, AI in the hands of state or non-state actors poses unprecedented challenges to our cyber defences, potentially compromising our civil infrastructure, biosecurity and financial system, including individual bank accounts.
And then the danger of AI agents acting autonomously once they jump their creators’ sandboxes.
In the last four months, there have been at least six escapes involving both US and Chinese models.
Regrettably, inevitably, more will follow. And soon.
For Australia, this means that – alongside our critical debates about AI’s social and economic impacts – these national security threats compel Australia to become a substantial AI power in our own right.
The alternative is to become totally dependent on the goodwill of others. This is the antithesis of national resilience.
So What Then Must Be Done?
These mega-changes are unprecedented in our modern history. Incrementalism will no longer work for Australia. Urgency must be our national watchword if we are to navigate our future as an independent, prosperous and resilient nation.
Defending the Nation
Our first responsibility is to ensure the security of our people in this the most contested region of the world. Our alliance with the United States remains a force multiplier for Australian defence needs.
It supports Australia:
In defence technology, at the forefront of the next-generation of asymmetric capabilities.
In cyber defences, amid ever-compounding cyber insecurity.
In intelligence, to track the unpredictable changes in our regional circumstances.
And ultimately in deterrence through our mutual defence obligations under ANZUS.
These are not trivial. They are not sentimental. They remain material.
But while our alliance of 75 years remains necessary, it is not sufficient for our long-term national security.
We must also re-embrace national self-reliance to anticipate the full range of future uncertainties.
This is why AUKUS is essential.
First, it provides Australia with sovereign capabilities through a fleet of attack-class submarines unrivalled in the Indo-Pacific.
We will first buy them, and then build our own, indigenising this critical capability in Australian hands.
The immutable facts are that we are an island nation – 100% dependent on freedom of navigation for our trade sector, which accounts for nearly a third of our national income.
We also have the world’s third-largest Exclusive Economic Zone – bigger than the entire landmass of Australia – with vast waters and untold resources to protect.
It is inconceivable, given these facts, that a nation such as ours would not seek a world-class navy with world-class capabilities.
These cold, hard realities cannot be wished away by well-meaning, pearl-clutching seminars from the far left, or by the professional populists of the far right.
Second, AUKUS Pillar II offers Australia’s defence industry virtually untrammelled opportunities to collaborate with American firms and access the massive scaling opportunities of the US defence market.
Minister Conroy’s Defence Industry Development Strategy lays out in crystal-clear terms Australia’s defence industrial base needs for the future.
It’s a great strategy.
Responsibility now lies with the Defence Delivery Agency for its implementation.
For that reason, for example, Austal and its American subsidiary in Mobile, Alabama – which is now America’s fourth-largest shipbuilder - must remain in Australian hands.
Austal America is the most profitable part of the Australian company.
And it integrates Australia with next-generation American shipbuilding.
Austal, ASC and others will be essential to the wider re-industrialisation of Australia.
Third, all this requires a robust defence budget.
This year’s National Defence Strategy lifts annual defence funding to 3% of GDP, using NATO’s methodology, by 2033.
The Prime Minister is to be congratulated for this against the many competing priorities the government has faced.
Australia needs to remain open to further defence expenditure in response to our changing strategic circumstances.
The defence budget will also need to accommodate revolutionary new manufacturing approaches, such as 3D printing, to build more of what we need right here.
This will require ongoing vigilance.
Lest we repeat the mistakes of the 1930s when conservative governments – in their complacency – left Australia effectively naked heading into the existential security crises of 1939-1941.
Fourth, we must continue to widen our diplomatic and defence collaboration across the region and the world as this materially shapes our national security environment.
The Prime Minister has played a central role in negotiating new security treaties with PNG, Fiji, Vanuatu, Tuvalu and Nauru.
Defence Minister Marles has led this engagements with India, Japan, Korea and NATO.
Our defence treaty relationship with Japan should be elevated.
Just as our strategic and defence dialogue with China should expand to keep open our lines of communication.
Foreign Minister Wong has also been at the forefront of shaping our regional foreign and security policy environment, trekking relentlessly across Asia and the Pacific as our most able bridge-builder to the region.
How Australia is perceived across our region matters for our national security.
Just as any return to the politics of race and religion in this country undermines that security.
Remember: the world’s largest Islamic country is also our very near neighbour, Indonesia, with nearly 300 million people and an economy set to soon surpass our own.
These enduring truths of our national circumstances cannot be wished away at the simple stroke of a populist pen.
National Economic Resilience
Our national security, however, is unsustainable unless it is anchored on two sure economic foundations:
first, long-term, productivity-led economic growth; and
second, long-term national economic resilience.
These are distinct, but related tasks.
Total Factor Productivity growth is the essential, dismal science of more efficiently converting inputs into outputs, thereby driving growth in real wages and incomes.
National economic resilience is about:
creating an investment environment that nurtures new industries to become the drivers of future growth; and
sustaining the capabilities, industries and institutions necessary to keep the nation functioning during any sustained international crisis such as war, disruptions to the global energy trade or a pandemic.
For many decades, the self-appointed Knights Templar of Australia’s economic orthodoxy – the Treasury – have embraced the productivity agenda, but rarely if ever national economic resilience.
They see the concept of national economic resilience as code language for that ultimate economic apostasy: “industry policy” – that policy that dare not speak its name.
And as with the Inquisition of old, they seek to put such heresies to the torch at the first sign of life.
Well, my melancholy duty is to inform the Treasury that national productivity policy and national economic resilience, are not mutually exclusive. They are mutually reinforcing.
The truth is that successful regional economies – such as Japan, Korea and Singapore – have long-embraced industry policy frameworks.
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.
250 years ago – when Adam Smith outlined the laws of supply, demand and price efficiently allocating resources in an economy – he did not conceive of a single party-state cornering a third of global manufacturing and behaving as a unitary, coordinated actor across all global markets.
Yet this is now reality as China distorts global markets through unprecedented industrial subsidies directed by what Beijing calls “top-level design”. Critical minerals and rare earths are a case in point.
In the United States, both Republicans and Democrats have responded by embracing different forms of American industry policy of their own.
Europe, contemplating the collapse of manufacturing, is reaching the same conclusion.
Industry policy is now the global rule rather than the exception.
The question isn’t whether Australia needs a robust industry policy for its economic future, but what sort of industry policy intervention is needed.
Let me propose seven sectors where government and industry should collaborate to foster world-class companies – each sector primed to make the most of AI-driven productivity growth.
The first is AI itself, where we have a unique opportunity to become an international powerhouse.
I say this because of the sheer magnitude of inbound investment that stands ready to come here – right across the AI stack – based on American assessments of our ability to use world-class chips to deliver top-quality AI services across the Asia-Pacific.
This is also because of our relatively sophisticated quantum computing sector which ranks among the top five countries in the world – thanks to the industry policy legacy of Cooperative Research Centres (CRC’s) established by the Hawke and Keating governments.
Quantum will be a quantum gamechanger for next-generation AI.
Quantum is also one of China’s top priorities in the next Five-Year Plan. They have identified it as a paradigm-shifting technology alongside semiconductors and nuclear fusion.
The second sector for a new national industry policy is biotechnology where Australia’s research is already world-class.
We already do about 5% of the high-income world’s clinical trials for world-class drugs.
We need a venture capital industry that will get off its arse and start putting serious risk capital to work in this sector.
And we need a new industry policy to match it.
We can develop a fleet of new companies like CSL, including our very own Big Pharma, to develop life-changing and life-saving drugs for debilitating diseases like cancer.
Third is energy, in particular renewable energy, which lies at the heart of Australia’s energy transition. The Clean Energy Finance Corporation’s $33 billion revolving fund has a central and continuing role in bringing homegrown renewable companies to scale.
Fourth are critical minerals and rare earths. The world is crying out for what we can deliver in mining, refining and magnets, with companies like Lynas already leading the way. The recent US-Australia agreement is a clear example of industry policy taking the lead. We can also do this with the world.
Fifth is defence industry. The policy environment is now accommodating. But demand signals from government must be clear, long-term and insulated from capricious changes.
Sixth is the automotive sector – a sovereign capability we are sorely missing.
Seventh is finance, anchored in the global scale and sophistication of our $4 trillion super pool.
That is bigger than the Saudi and Emirati sovereign funds combined.
In my view, each of these seven sectors should have its own industry czar (let’s call them Industry Commissioners) within the Prime Minister’s portfolio, operating with full prime ministerial authority, and working closely with relevant private sector players.
But What About AI?
Given AI’s centrality to each of these industry sectors – as well as to productivity growth across the economy at large – let me conclude on this.
The Prime Minister’s July statement offers an intelligent framework for developing and concluding Australian government policy for this most critical sector.
It deals with the social implications of AI, its employment implications, and the wider policy settings still to be concluded.
I would recommend the following broad principles.
First, I am confident that the copyright question that is crucial for our creative industries is readily resolvable and to the benefit of the creatives.
Second, all Australians should have a workable legal right to prevent their data being used by AI companies. There can be no ‘open season’ on Australians’ personal lives.
Third, media companies should be able to negotiate a price for AI companies to utilise their data within an agreed financial cap.
And finally, any data centre built in Australia must be required to have its own dedicated energy source (typically an attached solar farm) to prevent hiking consumer prices. And they should be capable of connecting to the grid so that, if the centres’ power demands decrease, the surplus can be fed back in.
At present, many AI investments are on hold while we resolve these matters.
Other countries are tailoring their own policies right now to take our place.
We need to move with urgency to maximise the upsides and develop our own Australian AI, built on our own data, rather than making ourselves dependent on others.
That is the opposite of national resilience in a world where AI cannot be magically waved away.
Set out below are the key points pertaining to Artificial Intelligence:
“First, the global strategic, economic and technological forces now bearing down on this nation are of an order of magnitude, severity and complexity that is unprecedented in our postwar history.
Second, 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. The alternative is to slide into becoming a second-rate country. Because that requires no effort at all.
And third, we are more than capable of rising to this challenge. We have the talent and the resources; the only question is, do we have the national imagination?”
Rudd sees Australia confronting three main security challenges – the rise of China, Artificial Intelligence and climate change. This note will focus on the AI revolution, which Rudd says is replete with great risks and equally great opportunities.
According to Rudd, AI is “the mega-disruptor currently driving most other technological and economic change. This too has become a two-horse race between China and the United States amid their ongoing, razor-sharp strategic competition.
According to Stanford University: Both sides are now investing comparable amounts in AI R&D; China leads significantly in AI patents, and is closing the gap in computing power.
The US is ahead in frontier models – although Anthropic’s most advanced model is only 3% more capable than its Chinese equivalent; and Chinese firms are way ahead in AI adoption – for example, China accounted for more than half of all industrial robots installed worldwide last year.
The national security implications for Australia are profound.
First are the direct military applications – the risk of AI driving weapons systems without “humans-in-the-decision-making loop”.
Second, AI in the hands of state or non-state actors poses unprecedented challenges to our cyber defences, potentially compromising our civil infrastructure, biosecurity and financial system, including individual bank accounts.
And then the danger of AI agents acting autonomously once they jump their creators’ sandboxes.
In the last four months, there have been at least six escapes involving both US and Chinese models.
Regrettably, inevitably, more will follow. And soon.
For Australia, this means that – alongside our critical debates about AI’s social and economic impacts – these national security threats compel Australia to become a substantial AI power in our own right.
The alternative is to become totally dependent on the goodwill of others. This is the antithesis of national resilience.
So What Then Must Be Done?
These mega-changes are unprecedented in our modern history. Incrementalism will no longer work for Australia. Urgency must be our national watchword if we are to navigate our future as an independent, prosperous and resilient nation.
Defending the Nation
Our first responsibility is to ensure the security of our people in this the most contested region of the world. Our alliance with the United States remains a force multiplier for Australian defence needs.
It supports Australia:
In defence technology, at the forefront of the next-generation of asymmetric capabilities.
In cyber defences, amid ever-compounding cyber insecurity.
In intelligence, to track the unpredictable changes in our regional circumstances.
And ultimately in deterrence through our mutual defence obligations under ANZUS.
These are not trivial. They are not sentimental. They remain material.
But while our alliance of 75 years remains necessary, it is not sufficient for our long-term national security.
We must also re-embrace national self-reliance to anticipate the full range of future uncertainties.
This is why AUKUS is essential.
First, it provides Australia with sovereign capabilities through a fleet of attack-class submarines unrivalled in the Indo-Pacific.
We will first buy them, and then build our own, indigenising this critical capability in Australian hands.
The immutable facts are that we are an island nation – 100% dependent on freedom of navigation for our trade sector, which accounts for nearly a third of our national income.
We also have the world’s third-largest Exclusive Economic Zone – bigger than the entire landmass of Australia – with vast waters and untold resources to protect.
It is inconceivable, given these facts, that a nation such as ours would not seek a world-class navy with world-class capabilities.
These cold, hard realities cannot be wished away by well-meaning, pearl-clutching seminars from the far left, or by the professional populists of the far right.
Second, AUKUS Pillar II offers Australia’s defence industry virtually untrammelled opportunities to collaborate with American firms and access the massive scaling opportunities of the US defence market.
Minister Conroy’s Defence Industry Development Strategy lays out in crystal-clear terms Australia’s defence industrial base needs for the future.
It’s a great strategy.
Responsibility now lies with the Defence Delivery Agency for its implementation.
For that reason, for example, Austal and its American subsidiary in Mobile, Alabama – which is now America’s fourth-largest shipbuilder - must remain in Australian hands.
Austal America is the most profitable part of the Australian company.
And it integrates Australia with next-generation American shipbuilding.
Austal, ASC and others will be essential to the wider re-industrialisation of Australia.
Third, all this requires a robust defence budget.
This year’s National Defence Strategy lifts annual defence funding to 3% of GDP, using NATO’s methodology, by 2033.
The Prime Minister is to be congratulated for this against the many competing priorities the government has faced.
Australia needs to remain open to further defence expenditure in response to our changing strategic circumstances.
The defence budget will also need to accommodate revolutionary new manufacturing approaches, such as 3D printing, to build more of what we need right here.
This will require ongoing vigilance.
Lest we repeat the mistakes of the 1930s when conservative governments – in their complacency – left Australia effectively naked heading into the existential security crises of 1939-1941.
Fourth, we must continue to widen our diplomatic and defence collaboration across the region and the world as this materially shapes our national security environment.
The Prime Minister has played a central role in negotiating new security treaties with PNG, Fiji, Vanuatu, Tuvalu and Nauru.
Defence Minister Marles has led this engagements with India, Japan, Korea and NATO.
Our defence treaty relationship with Japan should be elevated.
Just as our strategic and defence dialogue with China should expand to keep open our lines of communication.
Foreign Minister Wong has also been at the forefront of shaping our regional foreign and security policy environment, trekking relentlessly across Asia and the Pacific as our most able bridge-builder to the region.
How Australia is perceived across our region matters for our national security.
Just as any return to the politics of race and religion in this country undermines that security.
Remember: the world’s largest Islamic country is also our very near neighbour, Indonesia, with nearly 300 million people and an economy set to soon surpass our own.
These enduring truths of our national circumstances cannot be wished away at the simple stroke of a populist pen.
National Economic Resilience
Our national security, however, is unsustainable unless it is anchored on two sure economic foundations:
first, long-term, productivity-led economic growth; and
second, long-term national economic resilience.
These are distinct, but related tasks.
Total Factor Productivity growth is the essential, dismal science of more efficiently converting inputs into outputs, thereby driving growth in real wages and incomes.
National economic resilience is about:
creating an investment environment that nurtures new industries to become the drivers of future growth; and
sustaining the capabilities, industries and institutions necessary to keep the nation functioning during any sustained international crisis such as war, disruptions to the global energy trade or a pandemic.
For many decades, the self-appointed Knights Templar of Australia’s economic orthodoxy – the Treasury – have embraced the productivity agenda, but rarely if ever national economic resilience.
They see the concept of national economic resilience as code language for that ultimate economic apostasy: “industry policy” – that policy that dare not speak its name.
And as with the Inquisition of old, they seek to put such heresies to the torch at the first sign of life.
Well, my melancholy duty is to inform the Treasury that national productivity policy and national economic resilience, are not mutually exclusive. They are mutually reinforcing.
The truth is that successful regional economies – such as Japan, Korea and Singapore – have long-embraced industry policy frameworks.
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.
250 years ago – when Adam Smith outlined the laws of supply, demand and price efficiently allocating resources in an economy – he did not conceive of a single party-state cornering a third of global manufacturing and behaving as a unitary, coordinated actor across all global markets.
Yet this is now reality as China distorts global markets through unprecedented industrial subsidies directed by what Beijing calls “top-level design”. Critical minerals and rare earths are a case in point.
In the United States, both Republicans and Democrats have responded by embracing different forms of American industry policy of their own.
Europe, contemplating the collapse of manufacturing, is reaching the same conclusion.
Industry policy is now the global rule rather than the exception.
The question isn’t whether Australia needs a robust industry policy for its economic future, but what sort of industry policy intervention is needed.
Let me propose seven sectors where government and industry should collaborate to foster world-class companies – each sector primed to make the most of AI-driven productivity growth.
The first is AI itself, where we have a unique opportunity to become an international powerhouse.
I say this because of the sheer magnitude of inbound investment that stands ready to come here – right across the AI stack – based on American assessments of our ability to use world-class chips to deliver top-quality AI services across the Asia-Pacific.
This is also because of our relatively sophisticated quantum computing sector which ranks among the top five countries in the world – thanks to the industry policy legacy of Cooperative Research Centres (CRC’s) established by the Hawke and Keating governments.
Quantum will be a quantum gamechanger for next-generation AI.
Quantum is also one of China’s top priorities in the next Five-Year Plan. They have identified it as a paradigm-shifting technology alongside semiconductors and nuclear fusion.
The second sector for a new national industry policy is biotechnology where Australia’s research is already world-class.
We already do about 5% of the high-income world’s clinical trials for world-class drugs.
We need a venture capital industry that will get off its arse and start putting serious risk capital to work in this sector.
And we need a new industry policy to match it.
We can develop a fleet of new companies like CSL, including our very own Big Pharma, to develop life-changing and life-saving drugs for debilitating diseases like cancer.
Third is energy, in particular renewable energy, which lies at the heart of Australia’s energy transition. The Clean Energy Finance Corporation’s $33 billion revolving fund has a central and continuing role in bringing homegrown renewable companies to scale.
Fourth are critical minerals and rare earths. The world is crying out for what we can deliver in mining, refining and magnets, with companies like Lynas already leading the way. The recent US-Australia agreement is a clear example of industry policy taking the lead. We can also do this with the world.
Fifth is defence industry. The policy environment is now accommodating. But demand signals from government must be clear, long-term and insulated from capricious changes.
Sixth is the automotive sector – a sovereign capability we are sorely missing.
Seventh is finance, anchored in the global scale and sophistication of our $4 trillion super pool.
That is bigger than the Saudi and Emirati sovereign funds combined.
In my view, each of these seven sectors should have its own industry czar (let’s call them Industry Commissioners) within the Prime Minister’s portfolio, operating with full prime ministerial authority, and working closely with relevant private sector players.
But What About AI?
Given AI’s centrality to each of these industry sectors – as well as to productivity growth across the economy at large – let me conclude on this.
The Prime Minister’s July statement offers an intelligent framework for developing and concluding Australian government policy for this most critical sector.
It deals with the social implications of AI, its employment implications, and the wider policy settings still to be concluded.
I would recommend the following broad principles.
First, I am confident that the copyright question that is crucial for our creative industries is readily resolvable and to the benefit of the creatives.
Second, all Australians should have a workable legal right to prevent their data being used by AI companies. There can be no ‘open season’ on Australians’ personal lives.
Third, media companies should be able to negotiate a price for AI companies to utilise their data within an agreed financial cap.
And finally, any data centre built in Australia must be required to have its own dedicated energy source (typically an attached solar farm) to prevent hiking consumer prices. And they should be capable of connecting to the grid so that, if the centres’ power demands decrease, the surplus can be fed back in.
At present, many AI investments are on hold while we resolve these matters.
Other countries are tailoring their own policies right now to take our place.
We need to move with urgency to maximise the upsides and develop our own Australian AI, built on our own data, rather than making ourselves dependent on others.
That is the opposite of national resilience in a world where AI cannot be magically waved away.