Kevin Rudd on China, AI and Climate: ABC Insiders Podcast
E&OE TRANSCRIPT
ABC PODCAST INTERVIEW
INSIDERS ON BACKGROUND
REORDED 10 SEPTEMBER 2026
Kevin Rudd
David, great to be back in Canberra. Only a little bit of PTSD being in the House.
David Speers
You have been back in this building since you were PM. I should note, as ambassador, you sometimes would pop in for a visit.
Kevin Rudd
First time on the floor yesterday.
David Speers
Oh, there you go.
Kevin Rudd
That was kind of interesting.
David Speers
Yeah, right. Sitting on the sitting on the floor of the House of Reps, on the sidelines there.
Kevin Rudd
I'm very happy to be on the sidelines.
David Speers
Good to hear. Good to hear. Look, I want to go to the challenges you laid out at the National Press Club, starting with China. Now, you argued that China now easily has the second most powerful military, second most powerful economy, and techno-industrial complex, and you've warned, and this may not have been the first time you gave this warning, that there's a one in three chance of China moving to take Taiwan in just a couple of years. How do you arrive at that conclusion?
Kevin Rudd
Well, I've been looking at the U.S.-China relationship over Taiwan for the better part of 50 years since I was a junior woodchuck at the Australian National University, and through a period of working in our embassy in Beijing and Prime Minister, Foreign Minister, and China analyst since then, so I don't reach these conclusions lightly, and I've never been in the Taiwan alarmist category, nor am I now. It's just that I think I got a responsibility to point to elevated risk, and the reasons for it as follows: One, if you look carefully at the pace and intensity of Chinese military preparedness, it has been moving at angular levels. That is, sharply up. Two, in the last half-decade plus, China's annual military exercises relevant to Taiwan look more and more like dress rehearsals. Number three, in terms of tripwires, if you look carefully at the upcoming Taiwanese presidential elections for January 2028. There is indeed a possibility of the re-election of the pro-independence party for their fourth consecutive term under current President Lai Ching-te, and this party is anathema to the PRC. And what concerns me is President Xi looking at that and seeing it as a tripwire for pulling the military lever if he makes a profound miscalculation about the level of American ultimate resolve in providing the defence for the Taiwanese, given that's been the assumed reality since 1949.
David Speers
Well, there's another thing about 2028, the year that you're talking about here, and that is that it's the final year of Trump's second term. Is that a factor here as well?
Kevin Rudd
As I said, the capacity for Chinese miscalculation goes to the heart of their analysis of President Trump himself --
David Speers
Which would be what?
Kevin Rudd
Well, if you look at President Trump's declaratory positions on Taiwan, particularly in his interview with Fox News coming out of his summit in Beijing with Xi Jinping in May, President Trump said a number of things: basically, Taiwan is 9500 miles away from America, it's 50 miles away from China; secondly, the Taiwanese stole our semiconductors; and thirdly, I'm not going to proceed at this stage with implementing the latest Congress-approved arms shipment to the Taiwanese of some 12-14 billion, unless the Taiwanese behave themselves. Now that's a haiku summary of a much longer interview, but I don't think anyone would dispute its essential accuracy. My concern is the Chinese Communist Party analysing that and reaching, I think, a dangerous conclusion that therefore American resolve has evaporated. And the reason I say a dangerous conclusion is, notwithstanding what the president has said, what you have had is a complete reaffirmation through the operations of Indo-Pacific Command, now Pacific Command under Admiral Paparo, of forward-leaning American naval military support for Taiwan, and most recently within the region, full-scale, large-scale military exercises in the Philippines so, at an operational level, the United States Navy is making absolutely clear where it stands.
David Speers
Yeah, but this wouldn't be a call for U.S. Pacific Command, would it? This would be a call for Trump.
Kevin Rudd
Deterrence ultimately rests on two propositions: Chinese perceptions, in this case, of American political resolve; and Chinese analysis of American military capabilities. On the capabilities front, that gives Chinese PLA planners, military planners, a lot of room for pause because the US capabilities kit is formidable.
David Speers
But on the political front?
Kevin Rudd
On the political front, what my concern is is that they misread President Trump's ultimate position on this. If you looked at it hypothetically -- and I have rarely engaged in hypotheticals on this question, but it's relevant to the overall analysis of deterrence -- what our Chinese friends need to think through very carefully is that if they made a judgment that they could get away with this, the net-effect would be to cause President Trump to look weak domestically within the United States as the first president to have blinked on the question of deterrence since 1949. And under those circumstances, what I know about President Trump is that President Trump would then act in order to reassert his strength. So you have a profound danger at that point that our Chinese friends may have miscalculated, and I have little doubt on that score.
David Speers
I guess the counter view on that might be: Look, what's happening in Iran. Here we are with Trump bogged down in a war that he doesn't seem to be able to extract himself from or extract the United States from. Does he really want to get involved in a much bigger, more complex, more dangerous situation in Taiwan? And how do you think Xi would be looking at what's going on in Iran right now?
Kevin Rudd
I think you're right to say, David, that the Chinese will factor-in the Iran dimension into their overall calculus. Here, they will look at questions about the impact of Iran and the entire U.S. naval operation there, and broader military operation in the depletion of the US arsenal, what we call in the business magazine depth --
David Speers
And that's real?
Kevin Rudd
Yeah, that's been a real factor. It's not a fatal factor, but it's a real factor. And the United States has formidable reserves as far as these particular munitions are concerned, secondly, they will question, as a result of Iran not ever being resolved so far successfully militarily, whether the United States would therefore have the resolve to engage in a much larger enterprise. But remember, on the question of deterrence, at the end of the day, it is about this: Does President Xi, as Chairman of the Central Military Commission, wake up one morning and reach a conclusion that the risk is now attenuated, and doesn't therefore really exist, and that he can get away with that sort of a military operation? I think any sober and real calculation of all the risk elements would still cause him, on balance, to conclude this is too risky an enterprise, which is why I say, in 2028, this is still not a probability. I am pointing, however, to it being an elevated possibility -- one in three. They're the reasons I've given for it. And therefore between now and then we have to attend to this with great focus, because the single factor which preserves the peace is a continued and effective deterrence.
David Speers
So what then does that mean for Australia? Because by 2028, we're not going to have the first of our nuclear-powered submarines. We don't get the first Virginia-class sub if all goes to plan until 2032. So what should we do?
Kevin Rudd
I'll take you a $10 bet that we will get the first by the end of 2032. You've heard it on the national broadcaster.
David Speers
OK, but either way, by 2028, we're still not seeing one of them. So what should we be doing right now in the next year or two?
Kevin Rudd
Well, in terms of the fabric of US-plus-broader-allied deterrence postures, as it relates to Taiwan, that covers multiple domains of activity on any given day, and I would prefer not to engage in the detail of what that means in day-to-day activities. All I'm saying is, the United States and its Indo-Pacific allies understand full well that this is a combined deterrence exercise, and therefore, if people were to think through the reverse side of this equation -- which is, what the Indo-Pacific would look like if Taiwan fell militarily? -- I think they would quickly double down on the ultimate rationale for ongoing deterrence. Now it is by far and above the cheapest, most affordable, least disruptive investment that any government can ever make in preserving the status quo, and that's what we want. Because the alternative, in a post-deterrence-failure world -- let's say if Taiwan fell -- the geopolitical consequences for the Indo-Pacific would be beyond imaginary.
David Speers
Do people understand that? What are those geopolitical consequences?
Kevin Rudd
If you were to think it through, let's just assume that Taiwan fell tomorrow -- whether the United States acted or failed to act militarily, but let's just assume that deterrence failed. Number one, our friends in North Asia, led by Japan, in my judgment, would then begin immediately reconsidering their own future military options, including nuclear options. There's already a nascent nuclear weapons debate unfolding in Japan; this would be turbocharged. Secondly, if that was to occur, there's no way any self-respecting president of the Republic of Korea could remain non-nuclear in an environment where Japan had become nuclear.
David Speers
It's already got its problems across the border with North Korea.
Kevin Rudd
And thirdly, if you look at those scenarios, what would be the North Korean and PRC reactions to early notification that South Korea and Japan were going nuclear? Would they seek to preempt to prevent that from occurring?
David Speers
Preemptive strikes.
Kevin Rudd
Would they seek to? That's an open question. Furthermore, what are the implications beyond that for the rest of us in the Indo-Pacific? And finally, I've just skipped over quite neatly the fact that we'll be in the midst of an immediate recession and probably a global depression, brought about by the collapse of the semiconductor supply route from Taiwan, which currently provides the vast bulk of the world's advanced computer chips, which underpins most industries in the world today. And secondly, before you even began to factor in what trade and economic sanctions would flow between the world's largest and second-largest economies. Apart from that, it's all a walk in the park, mate. So I'm an old-fashioned deterrence guy, which is which is why deterrence matters.
David Speers
But I don't think this is well appreciated. What you've just laid out there, this nightmare scenario economically, militarily, Taiwan must not fall is what you're saying?
Kevin Rudd
If the Taiwanese reach a political accommodation with the PRC at some point in the future, that's a matter for both sides. If Taiwan was to fall militarily through a failure of deterrence, and/or a failure of America to fight, or America fighting and losing, those consequences are writ large. And I haven't even touched on how the NATO allies would respond to the above. But it would be a rewriting of the global geopolitical order overnight, just as the world changed after the guns of August sounded in 1914.
David Speers
Let's move to the second complex challenge that you've laid out. This second national security issue bearing down on Australia, the AI revolution. There are overlaps here. As you point out, It's a two-horse race right now, AI between the US and China. Who's winning?
Kevin Rudd
Depends on the matrix for analysis. As you know, the AI stack is a complex equation. It's about chips, computing power and speed. It's about AI infrastructure. It's about frontier models, and it's about. Diffusion that is across the general economy, thereby picking up the productivity yield across the various sectors of the economy through the introduction of AI efficiencies. If you looked across the stack on chips, the Americans remain ahead largely because of TSMC, that's the Taiwan Semiconductor Company, but also, frankly, Intel chips as well as locally produced Qualcomm chips in the United States; these are advanced. China is closing the gap, but the speed difference now is somewhere between two and three nanometers, and probably six and seven nanometers, which matters a lot in terms of total compute grunt. If you went to the frontier models measure, what you would find is that American frontier models, particularly those by Anthropic, are more developed, more enhanced, and more capable than those of the Chinese. But in one recent study by Stanford University, probably only by a factor of 3-5%, and this race changes almost by the month. Thirdly, and this is the important fact we need to conclude here in Australia, is that in the adoption rate -- that is the application rate or the diffusion rate of AI into the real economy -- the Chinese are ahead by about two-to-one in terms of the number of firms taking up AI into their mainstream businesses and producing what Xi Jinping hopes to be the ultimate productivity yield.
David Speers
Why does this race matter for Australia? Will we, at some point, have to choose one side or the other when it comes to AI, or have we already made that choice?
Kevin Rudd
The Australian AI industry, as it's developing, is firmly linked with the United States, and there are a range of not just geopolitical reasons for that, but also our ability to access the world's fastest and best chips in this country is predicated on our status as a reliable Five Eyes partner.
David Speers
But there are also businesses here using cheaper Chinese products.
Kevin Rudd
Thats true; they are cheaper, and they have been diffused more generally. But to go to the core of your question, which is why does it matter for Australia? The choice factor is one. The core factor, though, which I sought to emphasize in my address to the National Press Club was as follows: If we don't develop in Australia our own across-the-AI-stack national AI industry, our ability to generate effective and rolling AI defenses, by which I mean cyber defenses, against each new frontier model which emerges will be compromised. We will be totally dependent on others providing those defenses to us, and I don't believe that Australian mums and dads, families, small businesses, large businesses, the whole country, wants our future AI defense entirely dependent on somebody else. So therefore, when we've got an opportunity to pull in large-scale investment from the big AI companies in in the world, safeguarding, of course, our employment considerations and the other considerations concerning creative industries, the media, etc. the whole job is to build a capacity in this country which is able to generate not just wealth for Australia -- that's important -- but also the technology base to generate the rolling set of defences we're going to need.
David Speers
But how realistic is it that we have that whole-of-stack AI industry in Australia? Compute, we can sort of see the data centers, you can see the future there; can we really have our own frontier models in Australia?
Kevin Rudd
Absolutely. Look, the virtue of being ambassador in the United States for a few years, I've spent a fair bit of time in Silicon Valley. Guess what? Silicon Valley is full of Australians. I met two, by the way, who thanked me for giving them a laptop in 2008 because that's how they began. And they brought their laptops out and showed me. These are postdocs working in advanced positions in Mag-Seven companies.
David Speers
We have clever Australians, but do we have the money that you would need for frontier models here?
Kevin Rudd
Already in the last three years of the Albanese government, and through some great work by officials at our embassy, we've secured some $30-35 billion worth of direct investment across the AI stack into this country from companies such as Amazon, from Microsoft, from Google, and from Anthropic. Our analysis is that there are tens of billions of further investment waiting in the queue to come to this country as well. This will enable us not just to build our own national compute capabilities, but on top of that, once you've delivered compute and the workforce training skills which come with that, you also then rapidly can move into the development of frontier models as well. You can't do the latter without the former,
David Speers
And that's what I wanted to ask you: the data centers is where there's big debate going on about them here. You've witnessed what's happened in the US with the community backlash in so many states over this. Can we avoid that here? Do you see communities getting on board Australia becoming a global hub for data centers?
Kevin Rudd
I believe that once the government has framed its final AI policy here -- based on the prime minister's speech of a month or so ago -- the answer to that is yes, and it would be necessary to build in the sort of safeguards that we've spoken of, both for individual citizens, for creative industries, for media companies. But I believe we can land those things, and on our ability to become a major center for compute, given we have access uniquely -- apart from four other countries in the world -- the world's leading chips. We do not have a problem with lack of space. We can locate data centers in areas which don't create environmental despoilation for surrounding communities. We have the same land size as the United States, with a population half that of the state of California for God's sake. In America, it's densely populated; the ability to stick data centers in parts of America where you don't have a local community reaction is huge. We don't have that, and we've also therefore got the real estate for the data companies concerned to build solar farms next door, which service those compute needs. And on top of that, that keeps not only electricity prices normal for consumers, but if subsequently demand falls, they can pump that extra renewable energy back into the grid for use for other purposes.
David Speers
Are you arguing there's a national security imperative here to be a home for these data centers. We spoke on this podcast a little while ago to Rachel Noble, the former head of Australian Signals Directorate, and she was making this point that if we can be an attractive place for the data centers, that will give us leverage to be able to access the models that we're going to need for our cyber security.
Kevin Rudd
And leverage not just to access them but to develop them, co-develop them, then develop them. We must become an AI power in our own right, because I cannot say to you today we can suddenly turn the switch off and say, "AI go away". No one has that power; this genie is out of the bottle. The question is, how do we manage the genie? And therefore, having looked at this now for quite a number of years -- and I've got a team of people who work on this in terms of US-China relations in my Asia Society think tank at present -- the only conclusion I reach from Australia is that we must have this set of capabilities ourselves -- sovereign capabilities -- not least because we need to defend ourselves. These independent AI agents, acting autonomously, have a capacity to run amok. We need to have a system here and a capability whereby we can instantaneously upgrade our defenses based on our local knowledge of how these things work and how to defend against them, and not be dependent on some person in Washington or elsewhere approving it.
David Speers
Just on AI running amok: generally, how do you view this AI revolution? Are you the glass half-full -- there's going to be all these productivity benefits, and everything will be wonderful -- or are you the glass half-empty that we'll soon lose control to our AI overlords?
Kevin Rudd
Well I always prefer a glass of scotch myself.So if we're talking about water, no, I never have a full glass of scotch. But I would go -- I'm probably a a two thirds 1/3 guy. two-thirds positive, one-third negative, and when I look at the yield from AI, most particularly in the rapid development of effective cancer treatment drugs, and again leveraging the Australian industry advantage here, which is we already do 5% of the world's clinical trials in Australia. If we used an OECD standard, much higher than that. Then, if you've got AI being able to rapidly harvest the findings from those clinical trials, your ability to get a treatment drug from the laboratory into the pharmacy would be down to a year or two, and not a decade or two, so that's the advantage side. But I'm not blind to the disadvantage. I'm not blind to the vulnerabilities. But we Australians are capable of walking and chewing gum. We're smart people.
David Speers
You even floated at the Press Club that we could bring back a car industry.
Kevin Rudd
Absolutely.
David Speers
What 3D-printing parts and having AI, what robots put them together?
Kevin Rudd
Absolutely. Why not?
David Speers
Right.
Kevin Rudd
Because at present we are dependent, 100%. Thank you, Tony Abbott, thank you, Joe Hockey, for killing the car industry in 2014 with the most modest level of industry support of all 12 other car manufacturing countries in the world, killing their industry overnight.
David Speers
Other German manufacturers are struggling. VW has just laid off. What is it? 50,000 workers. So there has been pain felt by traditional car makers.
Kevin Rudd
Well, that's true, but I mean these are now operating with legacy industries and have to be able to, frankly, transform. But if you were to sit down with our friends -- for example, in Kia, Hyundai, Toyota, or elsewhere -- and look at how you about how you could actually start this afresh, I'm all for simply national economic resilience. With 100% current dependency on the import of everything driven on these roads. I don't think it's smart place to be --
David Speers
To entirely on China?
Kevin Rudd
-- to rely on any country when sea lines of communications in a crisis could be cut, and thereby we have no means by which to get around a very large continent.
David Speers
Have you suggested this to Anthony Albanese, Tim Ayres, or anyone in the government?
Kevin Rudd
I know these ministers very well, and I've certainly spoken to the PM since I've been home. Yeah, they're across the Rudd plan.
David Speers
The Rudd Mobile!
Kevin Rudd
The Rudd Mobile -- I think that was called the ute back in the day.
David Speers
I remember the Ute.
Kevin Rudd
I bet Malcolm does too.
David Speers
That's a whole other story. Climate change, the third of the national security challenges that you pointed to -- and I don't want to trigger memories over the fights you had in this building over the CPRS all those years ago. We are where we are now with climate change. We don't, I think it's fair to say, hear a great deal of political debate in in certainly recent years in this building anyway about climate change and what's going on. And yet your warning is this is one of the big security risks. Why?
Kevin Rudd
If you've just had a little look in the last week or two at what unfolded in Nepal, just get ready for the future. What is that? It's the product of extreme weather events: the sudden collapse of glaciers, the sudden melting of large slabs of the Antarctic ice sheet, the sudden melting of large slabs of Greenland, the the melting of the permafrost across most of the Russian Far East, and what we call Siberia. Therefore, to assume that we are simply on a gradual climate trajectory, which might become a little warmer and stickier at different times of year, or a little moister and wetter at other times of year, is frankly a scientific delusion. What the scientists point to is the genuine dangers of step change, the genuine dangers of a quantum shift, the genuine danger of us triggering ourselves into significant cataclysmic climate events. So the data is all there. The International Panel of Climate Change Scientists -- these are not politicians, they're a bunch of humourless scientists who wear white coats and just look at data -- they have been telling us this for the last 25 years, and we're now seeing more and more evidence. Just look at the temperature increases here: 1.1 degree already in the last century -- because of the impact of hydrocarbons -- in this country in this century, add to that another 1.9 on the basis of no policy change. Ask any farmer listening to your program what a three-degree temperature change means on average in terms of crop predictability. Let me tell you: it's big -- I grew up on the land, you know, I sort of have a bit of a feel for this stuff -- so therefore it ain't gone away. It may not be a fashionable political debate at the moment. It'll come roaring back the moment we have a catastrophic weather event in this country.
David Speers
So finally, Kevin Rudd, when you put together these challenges that you've laid out -- and we could add others, political polarization that's going on here and around the world, growing distrust and so on -- is governing now harder than it was nearly 19 years ago when you became PM?
Kevin Rudd
I mean, back in the Mesolithic period -- Kevin 07?
David Speers
I was around too. So no, no, not that long ago.
Kevin Rudd
Okay, so Neolithic period. So to be fair to Albo and the team, I think it is harder. I mean, it was tough back then, but remember, I ran the first social media campaign in 2007 for any election campaign in Australia.
David Speers
Kevin 07.
Kevin Rudd
That's right, and it wasn't my idea, by the way, but someone else's -- they were much smarter than I was -- but if you look at the, not just the evolution of social media since then, and the manipulation of social media by both state and non-state actors -- and throw now on top of that, the impact of algorithmic manipulation before we speak about the further turbocharging of that again by AI -- the ultimate dilemma for all people in the political process today, center-left and center-right, is: what is true and what is fabricated? What is the difference between fact and what is the difference between that and opinion? Now that is a much more difficult-to-navigate terrain today than it was when I was first elected. So I have great respect for those who have succeeded in the political process. Nonetheless, going back to AI and cyber defenses, the ability to defend the integrity of the democracy in open societies with open economies and open polities, and therefore a free media, it is more imperative for us to have a national AI capability able to marshal those defenses on a rolling basis; otherwise, it goes to the absolute heartland of what it means to be the live, beating heart of a viable democracy in the 21st century.
David Speers
Well, despite all those challenges, I'm glad you're still two-thirds glass full, Kevin Rudd. And good to talk to you while you're here in Canberra. Thanks so much.
Kevin Rudd
Thanks, David. Thanks for having me on the show.