Television Interview, Sky NewsDay

Subjects: Strait of Hormuz, US-Australian Alliance, AUKUS, AI

TRUDY MCINTOSH, HOST: Returning to our top story, President Trump says the US will be taking over the Strait of Hormuz and charging a 20 per cent toll. Joining me live now is the Assistant Defence Minister Peter Khalil in Washington, D.C. for us, tonight there local time. 

Bit of a tumultuous time, Peter, to be there in the American capital. I wanted to start with this issue of tolls. Does Australia support the US imposing a toll in the Strait? 

PETER KHALIL, ASSISTANT MINISTER FOR DEFENCE: Yeah, hi, Trudy. Look, it’s always – it’s been a very tumultuous time for a number of years now globally and, of course, with the Strait of Hormuz. We’ve said consistently we want to see a resumption of the negotiations and a resumption of the ceasefire and for the Strait of Hormuz to open and for there to be freedom of navigation. So, we know that the impact globally – certainly in Australia – on fuel prices and globally on the economies, all of our economies, continues to be a negative impact as long as this war, this conflict, lasts. So we're really keen on making sure that we are supportive of a ceasefire and for the Strait of Hormuz to be open and for that waterway to allow that traffic to start moving again. 

MCINTOSH: This is a rare break in the alliance. Is it something that we’ll raise directly with the White House – that Australia does not support the US imposing a toll? 

KHALIL: Well, the Prime Minister has been clear about this. We want to see a resumption of the ceasefire and for the Strait of Hormuz to be open and for those waterways, those international waterways, to be open under international law. And the PM has been clear on that, on the record back in April…

MCINTOSH: But has he raised it directly with the President? 

KHALIL: …with the Secretary of State, Marco Rubio, as well. Well, I’m in Washington. I’m meeting here with members of Congress as well as – on both sides of the aisle actually – as well as members of the administration, the Pentagon, and other senior officials because we’re talking about the importance of defence, our defence policy and our alliance and the work that we’re doing to maintain the security and stability of our region, the Indo-Pacific, and why that matters to us… 

MCINTOSH: Sure, but this is a point within the alliance where – we can say it in Australia on domestic media, but should we raise it directly with the White House, that, as a very close ally, we do not support this move to impose a toll? 

KHALIL: Well, that’s a matter for the leadership to determine their conversations with their counterparts. I think it’s been pretty clear that we want to see a resumption of traffic on that waterway, the opening of the Strait of Hormuz. There is negotiations underway. We want to see those negotiations continue. How that plays out, I think the end outcome is one in which we seek to see an end to the conflict, because the longer that lasts, the impact continues on our economies and on our own interests as well. 

MCINTOSH: Does this set a dangerous precedent, though, that if a country like the US can dictate the price of passage, that that could be used as an argument by Beijing, for example, in the South China Sea? 

KHALIL: Well, as I said, I think the PM has stated this back in April, that we want to see the opening of those waterways under international law. And that is a position that we hold. We respect the importance of that, and I think that, you know, pertains to our region as well. We want to see, as an international waterway, the freedom of navigation and the freedom of passage for those ships. We want to see an end to the conflict, obviously, and a resumption of that traffic in the straits. And we certainly want to see, I think, as a general principle, respect for the international Law of the Sea and also the freedom of navigation and passage of all merchant shipping. Because, as Australians, we are a trading nation. You know, 90 per cent, or something like 90 per cent, of our trade goes through the sea lanes. It’s important that those sea lanes are free and open. And that is something that we are consistent about with our partners and our allies and within the international community. 

MCINTOSH: Are you frustrated that that consistent view that Australia and allies have put forward for a long time doesn’t appear to be a priority, necessarily, for the Trump administration – that day in, day out, there’s a huge variation of what’s happening in the Strait of Hormuz. It’s so unclear, and it has huge ramifications for Australians here at home. 

KHALIL: Yeah, it absolutely has ramifications. I mean, the longer that this conflict lasts, the ramifications, the implications for us – we’ve all felt that. I think the good thing, Trudy, is that the Albanese government has done a really good job in, you know, ensuring that we have a fuel supply, you know, going out to our partners in the region and ensuring that that fuel supply is there for Australia. In fact, we have higher fuel reserves and fuel supply now, today, than we did even before the start of the Iran conflict. That’s not to say, however, that we can stand still on that because we want to make sure that that conflict ends, that there is a resumption of traffic through the waterways, that the Straits of Hormuz are opened. That’s something that’s been stated within the US here as well: that there is a keenness and an outcome, and Iran has to meet its obligations under the agreements, under the ceasefire that were made. We’ve been clear about that as well, because that hasn’t been occurring. And we want to see that outcome because I think it’s good for our economy, good for the stability of the region, certainly, and for the global economy. 

MCINTOSH: I’m sure you’ve been having a lot of discussions with counterparts there in D.C. about AUKUS. Do you have to explain to them some of the domestic concerns from within Labor ranks too about the nuclear-powered submarine program? Are they concerned at all that there is some pushback here domestically? 

KHALIL: No, I think the conversations that I’ve had just today – it’s my first day here – have been really positive around the fact that working with the US and our ally, our alliance, within the alliance structure, AUKUS is such an important initiative and engagement. It gives the benefit to Australia of nuclear-powered submarines, but also the Pillar II of AUKUS, which is the technological innovation in AI, in quantum, in electronic warfare and hypersonics and all these other facets that are critically important for a modern force, defence force. And we, of course, are undertaking a huge transformation of our Defence forces. You know, it’s a once-in-a-generation, frankly, transformation with respect to the acquisition of capability. You know, we’ve got things like Ghost Shark and Ghost Bat as well. These are unmanned vehicles, both in the air and under the water. We’re investing in large platforms in our navy and transforming the navy with new frigates and the new submarines that are coming, the Virginia-class. 

So, the US and Australia have worked very closely together, and I think one of the messages that I’ve been articulating today is the importance of being able to see the fact that we are all collectively contributing to the stability and security of the Indo-Pacific. And that is so important for us as Australians because our prosperity, our way of life, is very much tied to our ability to maintain that stability and security and work with our partners and our allies in the region. And the Americans understand that as well. This is, obviously, they have their own domestic constituencies. There are always pressures, Trudy, with respect to defence spending and, you know, we’ve got education, health care, and in America it’s the same issue with the people that they represent. 

So, our articulation of that, frankly, in the Australian public – yes, there’s jobs that are created by AUKUS, but there’s also the why of AUKUS and the why of our Defence investment, which is hugely significant. We’re spending $425 billion in the decade ahead. We’ve increased Defence spending by 53 billion. The Albanese government is really making a huge commitment to that transformation. And explaining that to the Australian people, as I’m doing with you today, the people who are watching, there is a reason for that, and that is because it is fundamentally important to maintain and for us to contribute to the deterrent effect in the region for those who would seek to use force. 

We have strong capabilities that maintain the security and stability of the region and protect our way of life. The prosperity from the trade that we enjoy as a trading nation is predicated on our ability to defend and protect those sea lanes, the maritime domain. That’s why we’re spending, I think, 40 per cent of our Defence spending is going to the transformation of Navy as well as Army into an amphibious force with skill sets and elements there that are generational in its change. 

So these are the conversations we’re having. The Americans are very aware of the work that we do together and with our other partners in the region to maintain the stability and the security of the Indo-Pacific. And I think we’re on the same page on that. 

MCINTOSH: I just wanted to finish, finally, a quick one: AI. So many of these big American AI companies see Australia as a big boom for them in terms of data centres. Where do you land in this internal debate in Labor about, we want to get the investment, but there needs to be guardrails? How big a guardrails should there be? 

KHALIL: Yeah, it’s a great question. I think the Prime Minister – I think the Prime Minister is speaking today at some point about the National AI Plan. 

MCINTOSH: Tomorrow, our time. 

KHALIL: Tomorrow, there you go. I’ve lost track of time. It’s 9.30 at night here, Trudy. But I think that can be captured in essence as, you know, capturing the opportunity of AI. How do we capture the opportunity of AI, which is a once-in-a-generation opportunity, as we’re seeing this technology roll out, and we’ve seen that occur throughout human history where there’s these big technological shifts. How do we capture that opportunity? And I’m sure he’ll go through that. 

The second part is how we share the benefits, making sure that Australians enjoy the benefits of this technology throughout the economy, and that it not only increases productivity and creates opportunities, but it also doesn’t leave anyone behind. And we’re making sure that people are part of that journey. 

And I think the last part, which is what you alluded to, is how do we keep Australians safe. What are the guardrails and regulatory frameworks? And this is something that I think obviously the PM will talk to in his speech. But we are ahead of the curve, Australia. We’ve done a lot of work in this space, and we’re working with our partners on this. AI can be very beneficial. It is a tool, like any other tool. And we’ve got to make sure that we have those three elements in place, and that’s why the National AI Plan that the PM is going to articulate tomorrow is so important. 

MCINTOSH: Peter Khalil, Assistant Defence Minister, in Washington, D.C., great to see you.

ENDS