Interview with Patricia Karvelas, ABC Radio News Breakfast

PATRICIA KARVELAS, HOST: Optus, Medibank and MyDeal customers are probably still changing passwords and replacing documents after the recent data breaches. And if it feels like cybercrime is on the rise, it's because it is. On average, one cybercrime report is received every seven minutes. That's according to the latest figures from the Australian Cyber Security Centre. The Deputy Prime Minister and the Minister for Defence, Richard Marles, is my guest this morning in the studio with me. Deputy Prime Minister, welcome.

DEPUTY PRIME MINISTER RICHARD MARLES: Great to be here, Patricia. How are you?

KARVELAS: Good. The agency's third Annual Threat Report revealed it's received 76,000 cybercrime reports last financial year. That's actually a jump of 13 per cent. What's driving the increase in malicious cyber activity?

DEPUTY PRIME MINISTER: Yeah, it's a good question. In part, we're living more of our lives online and the pandemic has accelerated that. But cybercrime is now big business. I mean, the average impact for a small business is $40,000 per incident. It's something like $88,000 for medium businesses. So you can see that there's a lot of money to be made by cyber criminals. But we're also seeing more state based actors. Now that's, in a sense out in the open with the war in Ukraine, with Russian malware attacks on Ukraine. But they're not the only state actors. And in the murky grey world, which is cyberspace, we're seeing a lot of cross pollination between state actors and cyber criminals. And all of this is giving rise to a much more precarious environment for all of us online. And when I say that, I mean government, I mean big businesses - We've seen what's happened with Optus and Medibank, but this is also the case for individuals and we need to, at every level, be a whole lot more vigilant.

KARVELAS: Let's go to state actors. You just named Russia. Are you talking about China here?

DEPUTY PRIME MINISTER: Look, I don't think it serves to walk down a path of naming others. I mean, what we're seeing in war in Ukraine is something which is in the open, but it is not just Russia. There are a number of state actors. But I think what needs to be understood is that this is a very grey zone. I mean, on the one hand, the Australian Signals Directorate, which leads our effort here, is an organisation of Defence, that’s, in a sense, why I'm talking to you today as the Defence Minister. So we see this as a modern domain of warfare. On the other end, we are talking about cybercrime, but there is an interaction between both. And the common denominator in all of this is we've just got to be a lot more vigilant. We've got to harden our defences here for critical infrastructure, for government, but for big businesses like Optus, like Medibank, the banks themselves.

KARVELAS: Let's go to Optus. Because their response has been seen as rather inadequate. Are they alone or is this a broader trend or an issue in big companies?

DEPUTY PRIME MINISTER: Look, I think that incident is something of a wake up call. And in a way, I hope this Annual Cyber Threat Report adds to the wake up call, not just for Optus, obviously, but for the whole of the corporate sector, but for individuals as well. Cyberspace is a much more challenging environment. I mean, there are a lot of pickpockets out there, but this can be happening on a grand scale. People do need to be more vigilant at an individual level, making sure that they've got their software up to date, making sure that they've got two factor authentication on their apps, on things which contain their data, making sure they're not clicking on links. But it also goes to government, which is why we're spending a whole lot more on the Australian Signals Directorate. It's the case for big businesses and ASD works very closely with companies like Optus, with the big banks to make sure that at that level, their cybersecurity is as robust as it can be. But this is the message across the board. We're in a much more precarious environment and we need to be much more vigilant.

KARVELAS: There are concerns that Australia is now seen as a soft target for this kind of criminal activity, particularly because of these recent major hacks. Your government is proposing tough penalties for serious and repeated privacy breaches. Will big fines motivate corporations to improve their cyber security? Or do you think there needs to be more reform in this area?

DEPUTY PRIME MINISTER: Look, it's part of the answer. So that was an important piece of legislation, but not for a moment are we saying that's the panacea which deals with all of this? I think we do need to be thinking about other ways we can go about this in a regulatory sense but –

KARVELAS: Are there any ideas that you're currently looking at?

DEPUTY PRIME MINISTER: We're kind of examining all of those options, but I think a lot of this is about making sure that the systems are in place across the private sector, across government, that we're just investing a lot more in this space, which we are doing. And so, as I say, the Australian Signals Directorate, which really handles this, is growing significantly because we see this as an important area. But there's also, in a way, a kind of a public cyber health campaign that we need to be running here, which is why, in releasing this report today, we're doing interviews such as this to try and get people aware of their own cybersecurity so that at an individual level, people are being more vigilant and taking more responsibility for their security.

KARVELAS: Will the government launch a formal campaign? Obviously, speaking to you is one thing, but actually, just like we do for public health campaigns.

DEPUTY PRIME MINISTER: Well, I think there is a public health dimension to this and that idea is one that's been discussed over a long period of time. We'll have a look at all of that, but the message today is this is a threat which is growing. It's murky. It is criminals, but it's also state actors and there is a lot of crosspollination between the two and it's given rise to an increased threat that everyone needs to be aware of.

KARVELAS: Moving to another issue in your portfolio, Australia has gifted the Solomon Islands Security forces 60 semiautomatic rifles and 13 police vehicles as part of our security partnership. But overnight, China announced it will provide the island nation with water cannon trucks, vehicles and motorcycles. Are we trying to outcompete China?

DEPUTY PRIME MINISTER: No. The security arrangement that China reached with Solomon Islands is one that has received a lot of awareness and obviously China's actions overnight are part of that. We've just got to focus on our own relationship with Solomon Islands and indeed with the countries of the Pacific. And I genuinely do believe that if we are present, and if we are engaged with the countries of the Pacific, they want to work with us, we are the natural partner of choice, but we've got to be there. And we are under this government, we very much are.

KARVELAS: But are you concerned about these reports of China providing water cannon trucks?

DEPUTY PRIME MINISTER: Well, I mean, we've made our comments about the security agreement that's been reached between Solomons and China. Ultimately, countries in the Pacific are free to have the relations that they want to with any country. What we've got to focus on is making sure that we are deeply engaged with the Pacific, deeply engaged with Solomon Islands, which under this government we are. And I'm really confident that if we do that, and we're focused on the development of these countries - and in the case of Solomons, their development and their internal security, and we've been working with the Solomon Islands police force over a very long period of time - I'm confident that if we do all of that, we will be the natural partner of choice. But we've got to make this a focus, which is why, since the election, we've been out there in the Pacific in force. We've been increasing our expenditure of the Pacific in the last budget. The Pacific, I think, is really aware that there is a change and there is a focus being placed upon them and that's very much welcome.

KARVELAS: Just on some domestic issues. The Industry Minister, Ed Husic, was on RN breakfast yesterday discussing rising energy bills, government intervention. He said gas companies had created a glut of greed problem. Is that how you’d describe it?

DEPUTY PRIME MINISTER: Well, what we need to be doing is getting more gas in the system, in the domestic system, and we're working with gas companies in relation to that –

KARVELAS: But Ed Husic says that, after the Heads of Agreement, which your government signed recently, actually some prices are even higher. So, yeah, the supply seems to have been sorted out, hasn't fixed the price issue though, has it?

DEPUTY PRIME MINISTER: I think there is a way to go and we're open minded about what steps we can take here. Bottom line here is this: we're really aware of the pressures that Australian families are facing with increased energy prices, and that includes gas prices. We need to be making sure that there is adequate supply, which is putting a downward pressure on gas prices. We're working with gas companies to achieve that and it's really important that everyone plays their part in relation to that and we're really aware of it. And of course that's why our Budget was so focused on the cost of living generally. But we need to, and we are, working with the gas companies to try and get an outcome here

KARVELAS: How urgent is it though, Deputy Prime Minister?

DEPUTY PRIME MINISTER: It's urgent.

KARVELAS: How urgent?

KARVELAS: We don't have a timeline for when you're going to sort it out. We've known about the problem for some time. It was articulated in the budget, but with respect, it was articulated with no solution.

DEPUTY PRIME MINISTER: Well, I think we have been working on this with intensity since the moment that we came to office. That's the fact. Throughout the winter, in the budget, and we’ll continue to do so. There is an urgency in the way in which we've been acting because we understand the pressure that this is placing on households and this is part of - a very big part - but part of the broader question of the rise of cost of living and that's why our Budget was entirely focused on that with cheaper medicines, more affordable childcare and the like. But doing something in relation to gas is something that we've been working on, we'll continue to work on and we're open minded about –

KARVELAS: And will it be done by the end of the year?

DEPUTY PRIME MINISTER: As I said, we are engaged in this right now to try and get an outcome which places a downward pressure on gas prices.

KARVELAS: The Greens say households could save over $700 on electricity bills under their plan, which involves modelling from the Parliamentary Budget Office which shows a windfall tax on coal and gas companies could actually bring in a lot of money to help people.

DEPUTY PRIME MINISTER: Yeah, I mean, with respect to the Greens, I don't think that that is a plan which is going to give rise to a downward pressure on power prices. Again, in a broader sense beyond gas, the issue here is this we completely understand that the cheapest form of energy right now is renewable energy. We need to get more of it online, we need to make sure that we've got a transmission system which is modern enough that it can handle that –

KARVELAS: That won't help us for next year.

DEPUTY PRIME MINISTER: No, they are medium to long term answers, but it is important that we are thinking about medium to long term resolutions to this because that's actually how we ultimately solve this. And part of the issue that we are facing right now is that we've inherited a decade of inaction where we saw 4GW go out of the power system with only 1GW going in under the former government where we saw precious little action on trying to get more renewable energy into the power grid which is the cheapest form of energy. And that is very different in terms of what we seek to do. Now, we're not pretending that's going to happen overnight but we are working on this in the short term. In the medium term and in the long term to make sure we get an answer to that.

KARVELAS: Do you think their profits are out of control?

DEPUTY PRIME MINISTER: Well, I think ultimately we need to be as we are getting people around the table to try and get short term answers as best we can to try and get downward pressure –

KARVELAS: Do you get how people hear about their record profits, ordinary people trying to pay their bills and think is this serious, is this happening?

DEPUTY PRIME MINISTER: Well, I think I completely understand the pressures that households are facing with rising power bills which is why it's really important –

KARVELAS:  It’s the record profit angle I really am trying to draw you out on.

DEPUTY PRIME MINISTER: Indeed. I think I am more concerned about acting in a way which gets power prices down and that's what we're focused on, and we're focused on that given obviously the increase that we're seeing in power prices and at the level of the system, which is what we are working at. This is in part a question of global energy markets being significantly disrupted by the war in Ukraine but in part it is about a decade of inaction which we're trying to remedy, and you can't remedy that overnight. You can start though and we've done that and we are looking at shorter term options, particularly in respect of gas when we're talking with gas companies about trying to come up with measures which do see a downward pressure on prices.

KARVELAS: Just briefly, the interim report of the Defence Strategic Review is due this week. Have you received it and when will it be made public?

DEPUTY PRIME MINISTER: Well we're not making the interim report public and that's really because the final report is only a matter of months away. This is a very quick process so we will be having the final report out there in the first quarter of next year. But yeah, I did receive an interim report yesterday as it happens and am working my way through it. I met with the leads, Sir Angus Houston and Stephen Smith and what I can say is that this is happening apace. There is an urgency in all of this given the precarious strategic circumstances that we face in the world today and given the fact that those circumstances, if anything, are deteriorating. We really have to rethink the strategic settings that we have and what kind of a Defence Force we need in the context of those settings, which is the question that the review is answering.

KARVELAS: There are calls to increase Australia's military budget with Shadow Defence Minister Andrew Hastie saying we need to spend well beyond 2 per cent of our GDP. Experts are calling for more than 3 per cent. Are you considering a boost to funding?

DEPUTY PRIME MINISTER: Well, what we are seeing is a rising defence budget. We've made the commitment, as we did in the election, which has been upheld in the Budget of spending the equivalent of 2 per cent of GDP.

KARVELAS: They’re saying that’s not enough.

DEPUTY PRIME MINISTER: Well, what I would say is this: as we look forward, in a rational world defence spending is a function of strategic threat, strategic complexity. And there is a great strategic threat out there. We are rational people and that is what the Defence Strategic Review is looking at and what kind of a Defence Force we need. And our first priority in government is keeping Australians safe and we will act accordingly.

KARVELAS: Thank you so much for coming in.

DEPUTY PRIME MINISTER: Thanks, Patricia.

ENDS