Television Interview, Sky News First Edition

SUBJECTS: China relationship; Taiwan; Defence funding; Annual wage review.

PETER STEFANOVIC, HOST: Joining us live now out of Canberra is the Assistant Defence Minister, Matt Thistlethwaite. Matt, good to see you this morning. So, yeah, some pretty scary stuff there from China's Defence Minister over the weekend that his forces were ready to forcefully prevent the territory's independence. So, are you operating on a working theory now that war in our north is inevitable?

MATT THISTLETHWAITE, ASSISTANT MINISTER FOR DEFENCE: Well, obviously, we've seen some increased tension within the region in recent times, but Australia's position has been very clear for a long time, Pete, and that's where part of United Nations exercises that are protecting freedom of navigation, particularly in the South China Sea. And we're acting in accordance with international law, so Australia has the right to participate in those exercises and to be within that region. And we've said to the Chinese government that they have to respect that and they have to operate safely within the law.

STEFANOVIC: Feels like China's stealing for a fight, though, are they not?

ASSISTANT MINISTER: Well, China makes its own decisions. Australia will act in its best interests…

STEFANOVIC: But with what it's doing and what it's saying, you know, in the ocean, in the sea, with its threats to Taiwan, it feels like it's getting ready for a fight. Do you agree or not?

ASSISTANT MINISTER: Well, we want to maintain peace and stability within the region.

STEFANOVIC: Yeah, that's what we want to do. But what's China doing? What are your thoughts on what they're doing?

ASSISTANT MINISTER: Well, there's no doubt that there's been, there's been an increased buildup of China's military capabilities, particularly over the last decade. But we want to maintain peace and security and the status quo within the region. And that's what the international operations that Australia is a part of are all about, maintaining the rule of law, maintaining freedom of navigation, particularly in the South China Sea, and ensuring that we can maintain that peace and stability into the future.

STEFANOVIC: But maintaining that rule of law. If China makes a move on Taiwan, do we go in as well?

ASSISTANT MINISTER: Well, we've said we want to see the status quo maintained in terms of the position of Taiwan, and I think that that's a position that not only Australia holds, but our allies within the region, particularly Japan, South Korea, the United States, New Zealand and other nations in the Southeast Asia region. We want to see peace and stability maintained through the status quo.

STEFANOVIC: Ok. Meanwhile, we've got this report out this morning from ASPI. It's a budget analysis shows that if conflict were to happen in our north, your government's defence plans will not improve our military capabilities for at least a decade. And the expectation is that there may well be war well before then. So, is ASPI right?

ASSISTANT MINISTER: It's simply not true, this claim. If you look at the recent announcement of our National Defence Strategy, what we're doing is, over the course of the next four years, we're investing an additional $5.7 billion. So, I'll tell you some of the capability that comes online in the next four years. Twenty new C-130 aircraft. We're investing in long range strike capability through the Guided Weapons and Explosive Ordinance. So, we acquire Tomahawk missiles and the ability to manufacture them here in Australia. The HIMARS, the High Mobility Artillery Rocket System, that comes online in the next four years. We're investing in the Redback infantry fighting vehicle, 129 of those. They come online from 2027. REDSPICE, the program aimed at ensuring that we improve our cyber capabilities so we get data to the warfighter in a safer and quicker manner. And we've got 760 drones in the arsenal of the Australian Defence Force. So, these claims are simply not true. We've got a lot of capability that comes online in the next four years because the government's making those investments.

STEFANOVIC: Just a switch of topics here, Matt, while I've got you. 2.6 million Australians are in line for a pay rise in the next couple of hours when the Fair Work Commission hands down its decision on the minimum wage. How much is too much here?

ASSISTANT MINISTER: Well, our submission says that we want Australian workers wages to keep moving forward. For the first time in the last couple of decades, Pete, we've got real wages increasing in Australia, which means that Australians incomes are increasing at a greater rate than cost of living. And that's really important in a tight market at the moment.

STEFANOVIC: Could too much hurt inflation, Matt? Could too much hurt inflation today?

ASSISTANT MINISTER: The data indicates that it's not. When we came to government, inflation was in the sevens. It's now down into the three and a half range. So, the data indicates that we've had real wages increasing, but inflation has been moderating. Now, we know we've got more work to do, but the economic management that we're undertaking of ensuring that real incomes are increasing and inflation moderating is the right way to go.

STEFANOVIC: Matt Thistlethwaite, the Assistant Defence Minister. Good to have you with us, as always. We'll chat to you again soon.

ENDS