KIERAN GILBERT, HOST: Let's go live to the Minister for Industry and Innovation, Tim Ayres. Appreciate your time. First time we've spoken since your elevation to Cabinet. We appreciate you making the time for us. On that story Julia is just referring to there, I know the government is pushing ahead with the super tax change, but isn't it a bit messy when you've got a whole cohort, including those on the defined benefit scheme, which I know you're not on? It's an older scheme, but isn't it messy when they get one treatment, and your average punter gets another?

SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: Well, superannuation tax reform is complicated, Kieran. The principle here is that there's equivalent treatment for people on accumulation funds over $3 million and people who have defined benefit schemes over the $3 million level. So, while the mechanism is, and it always is, in superannuation tax reform, whatever the change that is being made, policymakers have to ensure equivalent treatment between these two types of funds.

HOST: Is it equivalent when they don't have to pay it up front?

AYRES: Yes, it is equivalent. It's worked out in the scheme of the legislation. Don't ask me to go to sort of article 3, subsection C, point 9 of how that's going to work out. It is complicated work done by experts in the drafting that delivers equivalent treatment, and it has to be done fairly because there are many hundreds of thousands of Australians—firefighters, police, people in the public service— who are on defined benefit schemes. So, it's got to be an equivalent and fair treatment. But what is the principle here that is driving this set of reforms? It's the people who have accounts with more than $3 million in it. There are 30 Australians with superannuation accounts with more than $100 million.

HOST: How many firefighters would have that?

AYRES: Well, not many. But you've got to design the system so that it delivers an equivalent outcome. That's the point here and that is what has been achieved. But why are we doing this? I think most Australians—

HOST: You can see why people are pushing back a bit because it's the politicians who we know would have well over $3 million in comparable dollar terms. And I guess it's about that unrealised gain taxation. Why not scrap that bit and move ahead with other reform in that space?

AYRES: Well, because, Kieran, that's the way that superannuation tax reform has to grapple with that question. Now, consider people with over $3 million in their superannuation account. What's been done here is that the different tax treatment, which means a slightly lower concessional rate, that is, there are very generous concessions for everybody on superannuation. In terms of their superannuation accounts. It's the amount above $3 million that is treated differently. It's done in this way because the overwhelming majority of people are in industry funds and retail funds, and this is the most efficient way to allocate—

HOST: If you've got to sell your farm, that's not efficient. If you've got to sell a farm or something, I mean, that's very inefficient.

AYRES: Super is designed to give Australians a dignified retirement. That is the purpose of the system. Now, it is true that there are some people who, rather than put something in a family trust, of taking advantage of the generous concessions in the superannuation tax environment. But let's go back to the core principle. Superannuation is designed to provide a dignified retirement to Australians. For most Australians the average super balance is $165,000. The average balance at retirement is $340,000, $380,000 for men, $300,000 for women. As a government, we are building a superannuation system and refining it for the future. And I don't think there are many Australians— and it just shows the coalition haven't learnt their lesson here. Trying to beat up a scare campaign about these questions. There aren't many Australians in the suburbs and regions who think that the generous tax treatment that's given to Australians on $380,000 in order to support them building up towards a dignified retirement balance should be afforded to people with an account that's over $3 million. They will still have a very generous tax treatment for the amount over $3 million. It's not applied to the whole balance, just the amount over $3 million. I don't think the coalition's fair dinkum here, and I think most Australians would enthusiastically agree with the government's position that we need to treat people with a balance over $3 million a bit differently. I think that is fair dinkum. I think that is fair enough.

HOST: Sure. Yeah. I know the government's cracking ahead with it. As I said at the start, there's no sign of any compromise on that. And I think with The Greens, you'll be able to get what you like in the upper house. But on the defence spend. What about the US call for 3.5% of GDP? Is it a bit rich for them to be dictating the terms to us given we still make a massive contribution in terms of the alliance, not the least of which our facility at Pine Gap, but the rotation of Marines. Should we be saying just hold up a bit, ease up and not to mention the AUKUS investment?

AYRES: Well, can I have it both ways, Kieran, if I can. The first thing is Australia does pull its weight in the region in our national interest on defence and security. There has been a very significant contribution with our strategic partners in the United States, our long-term strategic partner, but also in building defence and strategic relationships in Australia's national interest in the region. We are not like the previous government that that did defence spending by press release. You don't make Australia stronger by setting a target. You don't make Australia stronger by press release. You do it by funding the capabilities that are required to make Australian defence capacity more lethal with more of a deterrent capability consistent with our strategic and national interest and the government—

HOST: How do you convince Donald Trump of that?

AYRES: We will determine our own defence policy and we will work closely with the United States. We've made a significant commitment over the long term, already drawing down on that commitment to produce AUKUS pillar one and AUKUS pillar two. So, nuclear powered, conventionally armed submarines and all of the technologies in AUKUS pillar two. That is a significant and the correct decision in terms of delivering the right kind of Australian defence capability for the future. We've seen an uplift of more than $10 billion over the forwards in lifting our defence capability. We will continue to work through that by identifying the capabilities that Australia needs and then spending on those capabilities. And I think that's where Defence Minister Richard Marles and Defence Industry Capability Minister Pat Conroy have been, is steadily working away in a workmanlike kind of way to build our defence capability with the Defence Force and the private contractors working with the United States. But we'll keep talking obviously to our partners in the United States.

HOST: Does it elevate the importance now of that meeting between the Prime Minister and Donald Trump which we expect in the next fortnight, not just on this issue of defence but on the parallel issue of tariffs, which as you know, as a former Assistant Trade Minister, I know you had a keen focus on it previously. But this is obviously as Industry Minister too, it's got implications for much of Australian industry. And it seems again, not, as the Prime Minister said himself and I think the Trade Minister said, it's not the act of a friend.

AYRES: Three quick things on this. Every discussion between the Australian Prime Minister and the United States President is important. This discussion will of course go to those strategic questions, but also to our economic interest. You're right. The worlds of trade and industry intersect in this era like at no other time. And the United States decisions in relation to tariffs are, as you say, not the act of a friend. They are an act of economic self harm. Steel prices within the United States have gone up significantly since the first tariff announcement. So, we will do two things here, Kieran, that your listeners would expect the Australian government to do. From the Prime Minister down, put the case strongly for Australia at the bilateral level with the United States to take away these tariffs that hurt Australia and hurt the United States’ national interest. If there was really a reciprocal tariff, it would be zero. That's the truth of it. But the second important piece of work is to strengthen our work on economic resilience. When I became the Assistant Trade Minister working with Don Farrell, we said that the job here in trade and industry terms for Australia was to diversify the economies with whom we trade and invest. But secondly, to diversify the goods and services that we offer the world, diversify our economy and move it up the value chain. I'm really thrilled with the opportunity, as the Industry Minister, to contribute to that work, to build on the foundations that have already been laid, implement, coordinate, and deliver with impact our Future Made in Australia agenda. Whether that's in new iron production in Australia, defending the steel industry, supporting the aluminium industry with production credits, building new factories in our outer suburbs, in our regions and reindustrialising our economy. That's the objective here. It is absolutely in Australia's national interest and it's the right response. In a period where it's not just the decisions of the United States, but certainly they are the most prominent. The global trade environment has been disrupted. We need to move in Australia's national interest here.

HOST: We're just almost out of time. Less than a minute left. But just quickly on Alex Antic, fellow Senator, Liberal in South Australia, who said at the weekend that the State Council had voted to, in his words on Twitter, “to call upon the Federal Party to rescind their policy of net zero by 2050. It's time to scrap net zero and save Australia.” You look at what's happening in the UK, Reform UK with Nigel Farage driving ahead in the polls. Is this a window where your government needs to ensure this transition is done and show Australians that it works? Because quite frankly, you look at some of the arguments made by your opponents and if it doesn't work. They're ready to, to go at you again in three years’ time on this issue by the looks of what Alex Antic said at the weekend.

AYRES: They went pretty hard with an extremist agenda on climate and energy policy last time and I'm really humbled by the overwhelming support that the government got. But of course, we recognise that is a mandate to deliver consistently in the Australian national interest. It is in the Australian interest to make the shift to a low-cost reliable electricity system, renewables, backed by gas and storage and hydro—

HOST: You've got to show it works don’t you.

AYRES: —that is the Albanese Government's plan. And yes, absolutely. It is a difficult task. It points Australia in the right direction; it makes our industries more competitive. It will make our power system fit for purpose for the 21st century. It's hard work and we've got to do it together. But you know, the Alex Antic view, which it wasn't just his view, it was the Peter Dutton view, and it appears to be still a matter for debate after this, was dealt with pretty decisively at the last election.

HOST: Tim Ayres, Industry Minister, thanks. We appreciate you making the time. Thanks.

AYRES: Thanks Kieran. Great to be on the show.

ENDS.