The Prime Minister, just back from a tour of India, the United State and Fiji, has also rejected Mr Keating's suggestion that France came back to Australia with another offer on submarines and Australia did not get back to them.

It comes after Mr Keating blasted the landmark AUKUS security deal with the US and the United Kingdom as "irrational in every dimension" and Labor's "worst international decision" since WWI conscription which puts Australia "deep in the doo doo".

The ALP statesman also ripped into Foreign Minister Penny Wong and Defence Minister Richard Marles for being "seriously unwise", while questioning Mr Albanese's competency.

"Paul Keating wasn't complimentary about all three of us yesterday, but that is the prerogative to do so," Mr Albanese told Melbourne radio 3AW.

"I fundamentally disagree with his view and I disagree with his attitude towards the state of the world in 2023.

"They know that. Neither of them were shocked by Paul Keating's statements. He has had views that he's put privately before.

"I think it is unfortunate that Mr Keating chose such very strong personal statements against people.

"I don't think that that does anything other than diminish him, frankly, but that's a decision that he's made."

Mr Keating has been a fervent AUKUS critic, arguing since it was announced 18 months ago by the Morrison government that China posed no invasion threat to Australia despite rising aggression in the Indo-Pacific.

READ MORE

But he stepped up his criticism since it was announced on Tuesday that three US-built Virginia class were being fast-tracked for Australia's navy, with the first expected to arrive in 2033 ahead of five AUKUS-designed submarines slated for delivery from the early 2040s.

Mr Keating argued China was a "lonely state" who would not pick a fight with a nation who provided it with iron ore, coal and wheat, and Australia had "manufactured a problem".

"China does not threaten Australia, has not threatened Australia, does not intend to threaten Australia," he said on Wednesday.

But Mr Albanese countered that Australia wanted good relations "based upon our values", but should be able to stand up to China where necessary.

"Our position on China is that we should cooperate where we can, but disagree where we must and we disagree with China with its attitude towards human rights," he told host Neil Mitchell.

"We disagree with some of its actions in the South China Sea. We disagree with its much more forward leaning position in our region, and we will stand up for Australian values and we will stand up for our national interest.

"We don't seek conflict with any nation. And I have not engaged in any rhetoric aimed at increasing tension."

The Prime Minister also rejected Mr Keating's suggestion that the French government came back to Australia after AUKUS was announced, and they had their conventional sub contract ripped up, with another offer on submarines and it was ignored.

"No. That's not right," Mr Albanese said.

"None of the announcements that we made just a couple of days ago would have come as any surprise to the nations that we have good relations with and one of those happens to be France."

As for relations between the two men, Mr Keating stated at the National Press Club address that the two men were not currently speaking and it is clear that remains to be the case.

"I'm always happy to talk with Paul Keating. I disagree with the comments that he made, fundamentally, but he has my respect for what he achieved as treasurer and Prime Minister and that won't change," Mr Albanese said.