National Press Club Address: The Complacent Country
The Complacent Country:
Navigating Australia’s Future in an Uncertain World
Address to the National Press Club of Australia
The Honourable Dr. Kevin Rudd AC
26th Prime Minister of Australia
Global President of the Asia Society, New York
Canberra, 10 September 2026
This address is entitled “The Complacent Country”.
But before anyone gets too excited, my remarks are not directed at the Australian Government.
Nor against His Majesty’s Loyal Opposition.
Nor even against the howling banshees of a resurgent One Nation Party, although they might get a passing mention.
Nor even against the Fourth Estate, including my old buddies at News Corporation.
No. This speech is directed more widely. To all Australians in leadership positions – or those who aspire to leadership positions, great and small, across all areas of society.
And beyond that, to every Australian citizen, because you are the ultimate arbiters of our national fate.
My message is this:
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?
Donald Horne wrote that Australians sought comfort in the myth of the “Lucky Country”.
Over the decades, we have drifted to become the “Complacent Country”.
It is my duty to report that the deep systemic forces now being unleashed across the world and now washing across our shores no longer afford us that luxury.
We are now on borrowed time.
I still hear Australians consoling themselves with the view that we punch above our weight. The truth is that it’s a long, long time since we did. If in fact that was ever the case.
For some decades, Australians have reflexively responded to hard truths by lamenting the government of the day, or the political class generally, for their failures.
The uncomfortable truth is that governments come and go, but it is our collective responsibility as a people to pass on to our children and grandchildren a country that remains in the first rank of nations.
So what has motivated me to come here and say this?
Well – don’t worry – unlike Tony, I’m not on the comeback trail.
And – before you ask – no, I’m not running for UN Secretary General. Malcolm took care of that last time round.
No, my reason is this:
I’ve now lived and worked abroad for more than a decade, and I have seen what is coming our way.
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.
And maybe it’s the deep pragmatism of my upbringing in country Queensland but, when I see these dangers barrelling toward us, I feel compelled to say so.
And to meet these dangers we need a radical change in our national mindset.
From accepting the terms delivered to us by the rest of the world, to actively carving out our own terms of engagement.
From merely using the world’s leading technologies to claiming our place among the creators of those technologies.
From being the world’s best miners to becoming the world’s best refiners and manufacturers of world-class products.
From being a branch office for global institutions financial instructions to becoming the financial capital of the Indo-Pacific
From being price-takers to becoming price-setters.
The biggest thing obstructing us is our national mindset.
As a people we have become so risk-averse that we fail to comprehend that the even greater risk is standing still and trying in vain to preserve the status quo.
National Security Challenges
There are three sets of radical changes now reshaping our national security that demand radical new approaches to our national resilience.
the rise and rise of China at a time when America continues to debate what sort of global power it wants to be;
the AI revolution, replete with great risks and equally great opportunities;
and the proliferation and intensification of extreme weather events due to rapidly accelerating climate change.
All three of these are unfolding simultaneously – everything, everywhere, all at once.
To its great credit, the government is working across all three of these fronts.
But government cannot do it alone.
And my appeal today to the national body politic is to reckon with these hard truths and find within itself a deeper sense of national urgency.
This is serious. It’s not a game. It’s the future of the country.
In my remarks today, I will address the first two of these challenges, China and AI. The third, climate change, will be the subject of a later address.
The Rise and Rise of China
Australians have heard so many statistics about China’s rise that they have become numb to the gravity of it.
China is now easily the world’s second-most powerful military, the world’s second-most powerful economy, and the world’s second-biggest techno-industrial power.
China’s stated ambition is to surpass the United States militarily, economically, technologically in the next decade – and if not certainly by the centenary of the People’s Republic in 2049.
Militarily, the numbers speak for themselves.
The PLA Navy’s overall battle force now consists of more than 400 ships – almost 40% bigger than the US Navy.
It has many more principal surface combat ships – roughly 150 to 110 – and has reached parity in numbers of submarines, although America has the edge in nuclear-powered attack submarines and ballistic missile submarines).[i]
These disparities are widening because China’s shipbuilding capabilities massively exceed those of the United States.
The economic numbers tell a similar story.
China’s GDP, measured by market exchange rates, has almost doubled in the last decade to 21 trillion dollars – to become two-thirds the size of the US.[ii]
Measured by purchasing power parity, China is already one-third bigger than the US, on track to being two-thirds larger in a decade’s time.[iii]
China became the world’s biggest trading nation in 2013.
The biggest exporter in 2009.
And the biggest manufacturer in 2010.
It now commands almost a third of all global manufacturing.
China is now:
spending more on research and development than the US, approaching $1 trillion a year;
it is leading in 69 of 74 critical technologies tracked by ASPI;
and it is publishing more articles in leading academic journals than anyone else across the natural, applied, chemical, physical, biological and earth sciences.[iv]
These formidable techno-industrial achievements have not come about by mistake.
They are the product of relentless industrial policy.[v]
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.
The tectonic plates are shifting beneath our feet.
Artificial Intelligence
The second mega-change sweeping across our national security landscape is AI – 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.[vi]
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.[vii]
t’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.[viii]
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”.[ix] 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[x] – 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.[xi]
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.
Of all the short-sighted acts of economic vandalism in recent decades, the closure of our car industry by the Abbott-Hockey government stands apart.
Australia under my government had one of the most modest industry subsidies in the auto world.
But politics triumphed over reason, sacrificing tens of thousands of jobs, tearing the beating heart out of Australia’s engineering and manufacturing base, and rendering us 100% dependent on auto imports.
Now the 3D printing and EV revolutions mean we can rebuild an Australian auto sector and repair this fatal vulnerability in our national security.
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.
And with global infrastructure banking giants like Macquarie, there is no reason why Sydney cannot become the financial services capital of the Indo-Pacific within a decade.
Hong Kong, Singapore and the UAE are all under pressure. The ball is at our feet.
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.
Ideally these would be senior engineers with strong private-sector experience. Industry plans, if they are to succeed, require a project management mindset.
This prospect may terrify the Treasury.
But we can’t risk investors, whether from home or abroad, facing death of a thousand cuts as they stumble through the bureaucratic maze.
Each industry plan would have a tailored set of tax, regulatory, policy and permitting incentives – commonwealth, state and local.
That is how Korea, Japan and Singapore have done it
Finally, each industry sector plan would need broad cabinet approval.
But then the Industry Commissioners need a broad discretion to deliver on the agreed objectives.
Their success should be measured by real-world outcomes of actual investments made, new companies established and new jobs created.
None of this is risk-free – just ask Japan, Korea, Taiwan and Singapore.
But they have all done the maths and compared the even greater risk of inertia and decided it’s worth taking the risk.
So should we.
All this must occur within the wider framework of macro-economic discipline.
Monetary policy, interest rates and exchange rates remain fundamental.
So too with fiscal discipline. I remain the same Keynesian who led Australia’s intervention in the GFC when global demand collapsed and when we intervened to prevent recession as happened across the developed world.
But when the economic cycle returns to normality, the parallel Keynesian discipline is one of fiscal repair and a return to fiscal balance.
I am not therefore arguing for some sort of mega state-investment fund.
But to better deploy what we’re already allocating, applying private-sector discipline to launch companies, projects and, where relevant, precincts (such as our own Silicon Valley).
That also requires a private-sector appetite for risk, which should be owned up front, acknowledging that there will be both successes and failures.
Nothing ventured. Nothing gained.
We need to make our own luck.
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.
Conclusion
If there is agreement on the mega-challenges we now face, and the need for a new sense of national urgency in the task of wrestling them to the ground, how then is this done?
If we go back to first principles: it is the responsibility of the elected government to set defence, industry and technology priorities for the nation.
Then, once those national priorities are set, the public service arm of government accepts responsibility for the measurable delivery of these objectives in the real world.
Our history shows how successful this model has been during times of crisis.
When the political arm set national rearmament priorities in 1940, it appointed three engineers – Essington Lewis from BHP, John Storey and Laurence Hartnett – to reorganise industrial production. And they delivered.
And, after the war, when the political arm set national reconstruction priorities, they appointed a phalanx of senior mandarins led by Nugget Coombs, Douglas Copland and John Dedman. And they delivered.
Menzies, Curtin, Chifley, and their cabinets set the objectives.
And the professional public service – animated by a no-nonsense, project-management, engineering culture – then delivered.
This is the only logical division of labour that works in our political system where governments come and go.
It is also how other successful advanced economies do it.
The three animating principles of a professional public service are: permanence, independence, and a meritocracy that rewards those who deliver measurable, real-world outcomes.
However, over the last 30 years, we – by which I mean the political class – have done things to undermine all three.
Howard shattered permanence by sacking a third of department heads in 1996.
This then had obvious implications for independence.
And all of us have fostered a risk-averse public service culture that rewards compliance with process rather than the delivery of outcomes.
And process in the end produces inertia before reaching its perfect end-state which is entropy!
Stasis in turn results in government by talking point instead of government through action.
Public service departments become departments of words rather than departments of action.
Our hard-working mandarins deserve better than that – including a much greater tolerance for risk and being judged on their results.
Cabinet ministers deserve better than this – so that agreed national priorities can be turned into on-the-ground reality.
The private sector deserves better than this – so that they can get on with the hard business of long-term investment decisions.
And the Australian people, above all, demand better than this – to know that, when their elected leaders announce a priority, the machinery of government will be laser-focused on delivering results that are consistent with these priorities.
That is why it’s encouraging to see Assistant Minister Gorman and the Secretary of PM&C Kennedy now headed resolutely in this direction.
I remain profoundly optimist about our country’s future.
We are a good people
We have a great history.
And we can have an even greater destiny.
But only if we now seize it with both hands.
And without, once again, simply sinking into the mire of petty partisan rancour.
***
[i]https://media.defense.gov/2025/Dec/23/2003849070/-1/-1/1/ANNUAL-REPORT-TO-CONGRESS-MILITARY-AND-SECURITY-DEVELOPMENTS-INVOLVING-THE-PEOPLES-REPUBLIC-OF-CHINA-2025.PDF; https://www.rand.org/pubs/research_reports/RRA3294-1.html
[ii]https://cebr.com/world-economic-league-table/
[iii]https://power.lowyinstitute.org/data/future-resources/economic-size-2035/gdp-2035/
[iv]https://www.nature.com/nature-index; https://data-explorer.oecd.org; https://techtracker.aspi.org.au
[v] Particularly ‘Made in China 2025’ and ‘National Medium-to-Long-Term Science and Technology Development Plan to 2035: https://www.gov.cn/zhengce/content/2015-05/19/content_9784.htm; https://www.gov.cn/lianbo/bumen/202409/content_6975154.htm
[vi]https://hai.stanford.edu/ai-index/2026-ai-index-report
[vii]https://www.defence.gov.au/about/strategic-planning/2026-defence-industry-development-strategy
[viii]https://cebr.com/world-economic-league-table/
[ix] 顶层设计
[x] https://www.austrade.gov.au/en/news-and-analysis/media-centre/media-releases/report-highlights-australias-quantum-industry-capability
[xi]https://www.who.int/observatories/global-observatory-on-health-research-and-development/monitoring/number-of-clinical-trials-by-year-country-who-region-and-income-group