SUBJECTS: Diplomatic fallout from Mr Morrison’s decision to tear up submarine contract with France; Christian Porter’s secret donations.

FRAN KELLY, HOST: Penny Wong is the Shadow Foreign Minister. Penny Wong, welcome back to Breakfast.

SENATOR PENNY WONG, SHADOW MINISTER FOR FOREIGN AFFAIRS: Good morning, Fran. Good to be with you.

KELLY: Given the hostile reaction in France and across our region, do you think Labor was too quick to offer bipartisan support for this decision to dump the nuclear sub contract and flick the switch - the French subs contract rather - and flick the switch to nuclear?

WONG: What I think we see from the regional reaction, from the reaction of the French Government - which has used very strong language - and even from what we see in the American press where American officials are deeply concerned about Australia's failure to brief France properly, I think what you can see here is, again, Mr Morrison has been so focused on making the announcement, that he doesn't take responsibility for doing the whole job. And it is deeply alarming to see such language being used by our French friends, the reporting in America, and some of the comments to which you refer. There is a clear decision that the Government has made in relation to the partnership. It's flagged the likelihood of going down the path of nuclear propulsion, but there's no final decision made. These are big decisions and part of ensuring we safeguard Australia's national interests, is making sure you manage these public announcements, not just to get the front page of papers here in Australia, but with regional partners, which includes France, which is an Indo-Pacific partner.

KELLY: So, Labor is not taking issue with the strategic decision, you're taking issue with the diplomacy. How should the Government have managed this, to not cause such offence?

WONG: Can I just go back and say, we've been briefed that this technology is the best option for Australia's capability. And, you know, we've accepted that advice, but we have many questions about how this will operate - and I can come back to them. But how should the Government have handled it? Well demonstrably, what we see again, is announcement first, focus on domestic announcement, with insufficient regard being had by the leader of the country to how this positions Australia with other partners. You know what this reminds me of? Do you remember the decision, the unilateral decision Mr Morrison made, without regard to anybody, to announce that we would move our capital [embassy] to Jerusalem?

KELLY: Yes, but…

WONG: Why did he, just remember he did that for the Wentworth byelection, and that almost disrupted the negotiations with the Indonesians over the Comprehensive Partnership, to the extent that Malcolm Turnbull had to be dispatched to patch it up. So, this bloke has form and this is not leadership.

KELLY: This is different, the Prime Minister has been in negotiations with the US President and the British Prime Minister.

WONG: Why is this different?

KELLY: What they haven't been in negotiation is the French Government.

WONG: Correct.

KELLY: Is there a way, given the confidentiality around these things, that they could have handled this better? What should, what should the diplomatic process have looked like? Do you have a sense of that?

WONG: Isn't the proof in the pudding? I mean...

KELLY: If you were Foreign Minister, what would you have done? How would you have handled it for the French?

WONG: I would regard this, if I had a reaction like this, if I were Foreign Minister, and we had a reaction like we have had from important partners like France, if I were Foreign Minister and I read in the New York Times and other journals in the United States that American officials were concerned about the way in which America [Australia] had handled this - it's had a consequence on America-France relations, where for the first time in history, France has recalled its American Ambassador. Now, this was difficult news, but I think demonstrably it has not been handled in a way that minimised the impact.

KELLY: But just let me - I'll move on, but just let me ask you again - if you were Foreign Minister ahead of this announcement, what should have been done? We heard from the Ambassador there. He says, France could have been taken into confidence, could have been included somehow in this. What would you have done? Or what do you think wasn't done that should have been done?

WONG: I think that's not an unreasonable proposition to have some earlier discussions, even if you didn't go to some of the confidential issues. But I think one of the issues that, as I understood the Ambassador's point, is that they were blindsided. So, what I'd say to you, Fran, is I think the reaction demonstrates that it wasn't handled in a way that minimised the, the effect on Australia's national interest. It is not in our national interest to make our friends so angry, and so disappointed. I mean, I can understand if the French would be asking, with friends like this, who needs enemies?

KELLY: Well, they are indeed asking almost that exact question. But French anger and humiliation is one thing, what about real-world consequences? How serious do you think this rift is in the relationship with France in terms of ongoing impact in terms of, for instance, the EU Free Trade Agreement, which is in negotiation. Are you concerned about that?

WONG: I would think and hope that it would be unlikely that we would see that sort of response. I understand that that agreement is still in the process of being negotiated. I would hope we wouldn't see that sort of response, but I think clearly, Mr Morrison does need to do something to repair this relationship. Leaving aside just the trade agreement, which is obviously, these are agreements which do enable more opportunities for Australia, leaving aside that, France is an important partner. France is an important part of the group of countries that seeks to ensure that the rules-based order reflects the sort of characteristics that we want. We want to work with them. And he should be making that clear.

KELLY: France is a particularly important partner in terms of the Indo-Pacific, which this is all about, and strategically all about the role of China and the rise of China in the region. You and Anthony Albanese were briefed ahead of the announcement on the decision to buy the nuclear subs. How much information were you given on key issues like cost and jobs and delivery dates? But also, on the ultimate purpose there, the strategic purpose of containing China in the region?

WONG: Well, very little information on some of the issues that you've outlined, which is why we said publicly that that information should be provided. I mean, I think the Government has made a very big announcement, but really the primary focus, or the primary issues are, the only thing that they've really decided - well there's two things - the first thing, in relation to subs, that they've really decided is to junk their submarine contract. So, eight years in, billions of dollars down the drain, and more to get out of the contract. And we have the Government's second submarine plan junked for another submarine plan, after eight years. Remember, the first one was build the subs in Japan. They junked that, now they've junked this. And we have a promise that we will think about making a decision in the next couple of years for a submarine capability that is probably not going to enter the water until 2040. So, I think there's some pretty important questions that do need to be explored, about this decision, both in terms of cost, capability and local jobs, local content. Anthony Albanese has proposed a bipartisan process given we are in a pre-caretaker period, and this is a major defence acquisition, a major decision for the country, for Labor to be part of being briefed through this next period and consulted about the way forward, given the importance to the country. It's regrettable that Mr Morrison has declined.

KELLY: China's Foreign Ministry says the nuclear subs deal "has seriously undermined regional peace and stability, intensified the arms race and undermined international non-proliferation efforts." Peter Dutton says we should prepare for more aggressive behaviour from China after this. And both Malaysia and Indonesia have expressed alarm that the AUKUS agreement could trigger an arms build-up. Malaysia is worried that the subs deal could provoke "other powers in Asia." Do you hear the “drums of war” here? Do you feel this is making the region less safe?

WONG: Well, there's quite a few propositions in what you put to me. Can I just pick up the one at the end, which is Malaysia and Indonesia's response? We have to remember that we need to ensure that we work with partners in the region, including Indonesia and Malaysia and others, as our region is being reshaped - and it is being reshaped. So, this partnership, of which we are supportive, has to be only one aspect of our diplomacy. It's not the only platform for our engagement with the region and our engagement in, and our activity in, the reshaping of that region. And yet again, I fear we've got Mr Morrison so focused on the hoopla and the fanfare, he's not attending to relationships such as those with Indonesia and Malaysia, whose reaction does matter and who we do need, and do want to keep working with, given that we do share an interest in the sort of region we want. In relation...

KELLY: Is that fair though, I mean we've just seen… I beg your pardon, you go.

WONG: I was just going to make one point; on China, I've said this to you before I think Fran, I wish the Government would talk less and do more. And Peter Dutton, and Mr Morrison, to some extent, want to talk a lot about these issues. I think we should be doing more.

KELLY: But haven't we... Isn't this an example of that? I mean we've just seen Peter Dutton and Marise Payne have a trip, on their way to Washington, through the region, talking to some of our partners in the region. And now we have this…

WONG: …Yes, and that is a good thing, it's belated but it is a good thing…

KELLY: …And now we have this, this alliance with the US and the UK focusing on the region - which is really what you've called for, for the US to invest and focus more heavily on this region, isn't it?

WONG: Yes, and look I am, I think many of us are pleased that Marise and Peter went through the region. We've been suggesting for some time that that would be a good idea to actually turn up. But the point I'm making is, some of the comments that you just referenced, I think we would be better off trying to worry a little less about talking tough and a little bit more about doing.

KELLY: Can I just ask you finally, Senator, on another issue, Christian Porter has resigned from Cabinet. The Prime Minister says that was "the appropriate course of action to uphold the Statement of Ministerial Standards." Is that now the end of the matter? Can Christian Porter remain an MP without divulging where this money came from? Should he be handing the money back? What's the next step here? Or is this enough?

WONG: You know that the thing that really stood out struck me about this whole process was the extent to which Mr Morrison's character was on display. And I think the question that most Australians might well ask is, what does it take for this bloke to show some leadership? Now he thinks, Mr Morrison thinks by getting Mr Porter to resign, he can just stop the stories, he can stop this being an issue, he can move on. And haven't we seen that behaviour from him, whenever there is something difficult, for so long. But the reality is exactly as you describe it. We as members of parliament and senators are required to register interests, which might conflict, or be seen to conflict with our public duty. Mr Porter either has to disclose who these donors of a million dollars are, or he has to give the money back.

KELLY: Penny Wong, thank you very much for joining us.

WONG: Good to be with you.

Authorised by Paul Erickson, ALP, Canberra.