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BARRIE CASSIDY: Now to our program guest and we're joined now from Perth by the Minister for Foreign Affairs Stephen Smith. Good morning. Welcome.

STEPHEN SMITH: Good morning Barrie.

BARRIE CASSIDY: If we can start with the death of a soldier in Afghanistan. That's now six deaths in the past four weeks.

STEPHEN SMITH: It’s a tragedy for the family, the Bewes family. It's also a tragic reminder for Scott Palmer's family, the funeral yesterday. But it's also a terrible reminder for all of the 17 families of our soldiers who have been killed in Afghanistan. It's a tragedy for them and a tragedy for the nation.

But just a salutary reminder that Afghanistan is very difficult, very dangerous. But we continue to be committed to our mission in Afghanistan, which is to stare down international terrorism and to stop Afghanistan becoming again a breeding ground for international terrorism.

BARRIE CASSIDY: But what has changed that has led to a spike in these deaths? And is this the casualty rate that the country now needs to, I guess, to brace itself for?

STEPHEN SMITH: We were lucky and fortunate, Barrie, in the sense that we didn't have a casualty for nearly 11 months. And now we've had a half a dozen in the space of four or five weeks. We do need to steel ourselves for further casualties.

There are a couple of factors. Firstly the so-called surge, the increased presence has seen additional conflict, both in Oruzgan and in Afghanistan generally.

But secondly, a number of the deaths we've seen - not just Australians but for the International Security Assistance Forces - have been by roadside bombs. We know that the Taliban have become more expert, more sophisticated and more complex in the way in which they use these booby traps and the roadside bombs. So that's a particular hazard and it's one that we are working very hard to combat against.

BARRIE CASSIDY: Okay on the asylum seekers issue now. And as it stands this morning the prospect of East Timor as a processing centre, is that any more than just a Government thought bubble?

STEPHEN SMITH: No Barrie. We're in a conversation with East Timor as the Prime Minister made clear at her speech last week. She had a conversation with President Ramos-Horta. That was the start of the process. I've spoken on a couple of occasions now to my counterpart, Zacarias da Costa, East Timor's Foreign Minister.

We will be sending officials to East Timor in the course of this week to start a detailed discussion with East Timor about the prospect of a regional processing centre.

We've got to try and find a regional solution to this very difficult problem. And we're going to work very hard with East Timor and with the United Nations High Commissioner for Refugees and with the region generally to see whether we can affect that and achieve it.

BARRIE CASSIDY: So as it stands East Timor is now the most likely prospect to host this centre?

STEPHEN SMITH: Well as I've said, and as Chris Evans, the Immigration Minister has said, and as the Prime Minister has said, it may well be the case that another country in the region expresses or evinces an interest. That will be entirely a matter for them.

But in terms of our policy approach and our framework it needs to be done with the support of both the region, whether that's formally through the Bali Process or whether it's done generally throughout the region. It needs to have the support, the effective endorsement of the United Nations High Commissioner for Refugees.

And it has to be more than just a detention centre, which Nauru was, but a genuine regional processing centre to take away from people smugglers the incentives to move people across the water so that we reduce the movements of boats and we reduce the risks to people on the sea.

So it's got to have what we've never had before, which is regional support to deal with the very difficult problem that Australia faces, that the region faces, that the whole world faces as a result of significant push factors and large numbers of displaced people and large numbers of human trafficking occurring. And Afghanistan is just one of the causes of that.

BARRIE CASSIDY: Yeah but I go back to the question though about East Timor being your primary objective. That's where you're sending the officials this week. That's the country that you're really aiming to host.

STEPHEN SMITH: Well it's the country that we're having the conversation or the discussion with. We haven't opened up and are not proposing to open up a conversation with another country.

I was, for example, in Papua New Guinea during the week. I briefed my Papua New Guinea counterpart Sam Abal as to what the Prime Minister had announced and our conversation with East Timor. In a joint press conference he made it clear that I hadn't asked him for example about the prospect of Papua New Guinea volunteering Manus Island.

So the only partner or country in the region that we are in discussion with is East Timor. And that's a result of the discussion that the Prime Minister had with President Ramos-Horta and then Prime Minister Gusmao making President Ramos-Horta the contact point for those discussions.

Obviously we need to do work with officials. Zacarias da Costa and I gave some consideration as to whether I would for example visit East Timor this week as well. But we've decided in the first instance our officials will deal with it and then he and I will have a further conversation in the days and weeks ahead to progress the matter.

BARRIE CASSIDY: Now why didn't you or Julia Gillard have a conversation with Prime Minister Gusmao when this came up in Cabinet? Given that Julia Gillard is a new Prime Minister why wasn't she given advice that she ought to talk to the Prime Minister as well?

STEPHEN SMITH: Yes we did have an extensive conversation about all of the aspects of these matters in Cabinet. And we also had a conversation amongst National Security Committee ministers.

But I have seen this suggestion, Barrie, that it was somehow inappropriate for the Prime Minister, Prime Minister Gillard to have a conversation with President Ramos-Horta and I just very strongly disagree with that...

BARRIE CASSIDY: No, no, that's not the criticism. The criticism, I'm sorry, but the criticism is that you left the Prime Minister out of the discussion; not that you included the President.

STEPHEN SMITH: Well I reject and rebut that criticism. It's entirely appropriate for the Prime Minister to have a conversation with President Ramos-Horta.

He is not as some people have tried to depict a titular head of state. He is a person who is integral to the operations of East Timor. He is a person who is integral to their political life. And he is also a person who is of great standing in international matters in the region and also plays an international role so far as East Timor is concerned.

But what’s also under-appreciated is it was also the case that the conversation between Prime Minister Gillard and the President necessarily envisaged a conversation between President Ramos-Horta and Prime Minister Gusmao.

And the end result of that conversation was Prime Minister Gusmao saying that he wanted President Ramos-Horta to take charge of the discussions between East Timor and Australia. If he was a titular head of state, as some people have tried to portray him, then he wouldn't be playing that role.

BARRIE CASSIDY: Indonesia, again, Kevin Rudd promised that he would consult before there were any policy changes and that didn't happen on this occasion.

STEPHEN SMITH: Well again that's not the case Barrie. And consultation with Indonesia is occurring. Firstly our officials in Jakarta ensured that Indonesian officials were aware of the fact that the Prime Minister was making a speech to the Lowy Institute and it would deal with these matters. That's the first point.

Secondly I had a conversation with my counterpart Marty Natalegawa to brief him on the content of the Prime Minister's speech and to brief him on our proposed discussions with East Timor.

I've got a trip to Jakarta this week that's been planned for some time. He and I agreed that the sensible thing to do was for him and I to sit down in Indonesia, in Jakarta this week and go through our proposal.

Now Australia and Indonesia, Minister Natalegawa and I co-chair the Bali Process. Through the Bali Process we've been having conversations about how we can make the regional framework better.

There's been very informal discussions at lower levels over a period about whether a regional processing centre might be appropriate. We've decided to raise the matter now formally, to take the cudgels up. It's the first time we've seen a regional leader say let's see if we can get this effected.

So again I will have an extensive conversation with Foreign Minister Natalegawa because we work very closely with Indonesia on these matters.

So I reject the analysis. We've done this in a manner, which in my view, is entirely appropriate.

And as the Prime Minister has said when she made her speech to the Lowy Institute, this is not the end of the matter, this is the start of the matter.

No-one is underestimating or under appreciating just how difficult an exercise this is. And people who expect that you can announce it with a bow-tie on top, all locked up on Day One, frankly don't appreciate the reality of a very difficult issue for all of the countries in the region, not just Australia.

BARRIE CASSIDY: And what role is there for Indonesia in this if you were to set up a regional processing centre on East Timor?

STEPHEN SMITH: We would want and need to have Indonesia's support. We would want to have through the Bali Process regional support for a regional processing centre.

Now the policy rationale for a regional processing centre is very sound. It would ensure that throughout the region there was consistency in the way in which asylum seekers were processed.

We would also need to ensure, and this was the point I have made, and Chris Evans has made, and the Prime Minister has made, we also need to ensure that there would be support from the settlement and resettlement countries throughout the world who take refugees from our region.

And New Zealand is one illustration or example of that; which was why the Prime Minister spoke to Prime Minister Key.

So we need to get support throughout the region and throughout the refugee resettlement national nations to make this viable and to make it work.

BARRIE CASSIDY: And further on Indonesia, Ambassador Bill Farmer is due to finish up at any time isn't he?

STEPHEN SMITH: He finished up last week. He has done a very good job there. He is in my view one of Australia's all-time great diplomats.

And I will be formally announcing today that Australia's nominee for his replacement as Ambassador to Indonesia is Greg Moriarty. He is a former Ambassador to Iran. He's well known to Marty Natalegawa, the Indonesian Foreign Minister.

He's been dealing with some very delicate issues in the Department recently: the repatriation of bodies from the plane crash in the Congo and also recently the terrible plane crash in Papua New Guinea.

So he's a very good professional Department of Foreign Affairs officer and he will be a first class Ambassador to Indonesia. I will be formally announcing today that he is our nominee for the position.

Indonesia has a public agrément process through their Parliament so I can't announce his appointment. I announce his nomination by Australia to Indonesia for that position. And if he is accepted by Indonesia he will do a very good job.

BARRIE CASSIDY: Okay now Kevin Rudd's concept of an Asia Pacific community, do you still intend to pursue that with the same vigour?

STEPHEN SMITH: We think that we might not be too far away from getting a very good practical outcome to the proposal which then Prime Minister Rudd initiated in 2008.

Our rationale was quite straightforward. We wanted the region to have a conversation about the state of the regional architecture. And we made the very salient point that there's not one part of the regional architecture where all of the key countries are in the room at the same time, and able to have a conversation both about investment and prosperity and also peace and security.

BARRIE CASSIDY: We know the background behind it but you say you're not far away when Julia Gillard says there's not going to be that degree of movement. What did she mean by that?

STEPHEN SMITH: Well if you let me finish Barrie, India is not in APEC. The United States is not in the East Asia Summit. As a result of our work we now see the ASEAN countries formally considering whether the United States and Russia should go into either the East Asia Summit, the EAS, or a new group ASEAN Plus 8.

That would be a very good practical outcome. That would meet the purpose of the Asia Pacific community proposal which Prime Minister Rudd initiated some time ago.

It would also meet, because we weren't the only ones out there with comparable suggestions, it would also meet for example the essential ingredients of the East Asia community proposal that former Japanese Prime Minister Hatoyama initiated some time ago as well.

BARRIE CASSIDY: Should Kevin Rudd be Minister for Foreign Affairs after the election?

STEPHEN SMITH: Well I think that depends on two very important factors between now and then.

The first one, of course, is the election. We would have to win an election to then enable Prime Minister Gillard to determine who the Minister for Foreign Affairs would be. So we don't take that election for granted. It's going to be a very tough contest and that's the first requirement.

The second requirement, of course, is what the allocation of portfolios is after the election is entirely a matter for the Prime Minister. It's entirely a matter for Prime Minister Gillard if we are re-elected, for her to determine what the allocation of individual portfolios are. And I'm old fashioned about these matters and I'm entirely comfortable with that.

BARRIE CASSIDY: Well she has a view but Kevin Rudd has a view as well. And he has been telling journalists this week that he is determined to be Minister for Foreign Affairs and he will be making a concerted push for it.

STEPHEN SMITH: Well as I know, as Kevin knows, the allocation of portfolios is entirely a matter for the Prime Minister of the day. And so if we win the election it will be a matter for Prime Minister Gillard. That's entirely appropriate. For the present I continue to do my job as Minister for Foreign Affairs and Trade as diligently as I can...

BARRIE CASSIDY: The argument that he puts is that as a former Prime Minister he deserves it. Bill Hayden said that as well and he got it. Do you really think there is a sense of entitlement there because he is a former leader?

STEPHEN SMITH: I don't think there is a sense of entitlement for us to assume that we will win the next election. That's the starting point.

Secondly the only process that I follow is a process where the Prime Minister of the day determines the allocation of portfolios. And I'm sure Prime Minister Gillard will take into account all of the relevant factors when it comes to the allocation of the Foreign Affairs portfolio and every other portfolio.

I've never made a practice of giving any leader of the Labor Party gratuitous public advice about the allocation of portfolios. It will be entirely a matter for her, as is appropriate.

BARRIE CASSIDY: It is a very important portfolio though. Doesn't Julia Gillard owe it to the people of Australia to make it perfectly clear before the election who will be Minister for Foreign Affairs beyond the election?

STEPHEN SMITH: She has made it perfectly clear that I will be Minister for Foreign Affairs and Trade up to the election. And after the election it will be a matter for her to allocate portfolios.

It is a very important portfolio which is why I apply myself to it assiduously and diligently. Almost the entire work that I do is in our national interest and national security interests and I apply myself to it.

I regard myself as very fortunate to have had the opportunity and I will always regard Prime Minister Rudd as having given me a terrific opportunity and Prime Minister Gillard as having extended that opportunity.

But what occurs after the election will in the first instance be a matter for the Australian people and then a matter for the Prime Minister of the day.

BARRIE CASSIDY: Thanks for your time this morning.

STEPHEN SMITH: Pleasure Barrie. Thanks very much.

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