Foreword

This report follows the findings of two earlier inquiries by the Committee and identifies a chronic underfunding of DFAT over the last three decades.

The previous inquiries concerned Australia’s relationship with the countries of Africa, and a review of the DFAT 2009–10 annual report.

In the review of DFAT’s annual report, the Committee commented that there was a substantial question regarding DFAT’s future role and the adequacy of the services it provides on behalf of Australia.

An underlying theme throughout this report is the effect of this underfunding on the spread and depth of Australia’s diplomatic network (Chapter Two), the activities undertaken at diplomatic posts (Chapter Three) and the ability to take up innovative forms of e-diplomacy (Chapter Four).

DFAT has experienced cuts and financial constraints through successive governments and this has resulted in a diplomatic network which is seriously deficient and does not reflect Australia’s position within the G20 and OECD economies. Australia has the smallest diplomatic network of the G20 countries and sits at 25th in comparison to the 34 nations of the OECD. Australia clearly is punching below its weight.

The Committee has recommended in this report that the budget priority for overseas representation should be significantly raised because of the benefits that accrue from diplomacy.

The Committee has also recommended that in the medium term Australia should substantially increase the number of its diplomatic posts to bring it to a level commensurate with its position within the G20 and OECD. This amounts to a least 20 posts.

In the longer term, funding to DFAT should be increased to a set percentage of gross domestic product sufficient to reflect Australia’s standing as a middle power.

During the inquiry it became apparent that there appears to be no overall strategy for Australia’s diplomatic engagement with the world or any criteria for establishing, continuing, or closing the diplomatic posts. To address this deficiency, the Committee has recommended that the Government produce a White Paper to set the agenda for Australia’s whole of government overseas representation.

The Committee challenged DFAT to set out its priorities for increasing Australia’s diplomatic footprint under three increased funding scenarios—annual increases of $25 million; $50 million; and $75 million. Chapter Two contains DFAT’s response.

The Committee also received a number of suggestions from interested parties for opening new diplomatic posts in particular countries. The Committee, however, has restricted itself to recommending that there should be additional posts in Asia, and in particular in China and Indonesia.

The Committee believes, however, there would be value in Parliamentary involvement when new embassies are proposed or posts are closed and has recommended that DFAT provide briefings or discuss the matter before this Committee at public hearings.

The Committee’s review of the activities undertaken by Australia’s diplomatic posts is contained in Chapter Three. The Chapter commences with a review of the activities which posts must undertake and proceeds with a review of the ability of posts to efficiently and effectively meet their responsibilities. This includes discussion of staffing levels at DFAT.

The Committee recognises the valuable activities undertaken abroad by Australia’s representatives in promoting Australia’s interests, promoting trade opportunities and assisting Australians abroad. It is unreasonable, however, to expect DFAT and Austrade to be successful in promoting a particular overseas market if business is unaware of the potential, or is focused elsewhere. As a result, the Committee has recommended that DFAT and Austrade broaden their contacts with Australian business boardrooms to deepen business understanding of how government agencies can assist business in facilitating their overseas activities.

In reviewing the effectiveness of overseas representation at the State, Territory, and Federal level, the Committee has identified opportunities for greater cooperation with consequent savings. Co-locating offices and sharing back office capacity may provide a significant benefit. The Committee recommends that the Australian Government place on the COAG agenda discussion of the location, coordination and effective use of State and Commonwealth trade representations in the national interest.

A further way to save costs in the long term is to reduce the potential need for aid and rebuilding assistance by preventing conflict. This can be achieved through Australia acting as a mediator and legitimate third party. Mediation activities in South-East Asia and Pacific regions are poorly resourced so there is opportunity for Australia to take a leading role through the creation of a mediation unit. The Committee has recommended that such a unit be created within AusAID and funded from the aid budget.

Posts also undertake extensive consular work, assisting Australians who are living and travelling overseas. Over recent decades the number of Australians who travel abroad to work or on holiday has increased significantly—the demand for consular services has followed suit.

The Committee believes that meeting the costs of an ever increasing demand for consular services through existing resources is unsustainable. Diverting resources to meet consular demands reduces the ability of DFAT and Austrade to adequately represent Australia overseas.

The Committee has therefore recommended that the provision of consular services should be funded in part from revenue sources such as increased passport fees and a small tiered levy. This should be structured so that it takes into account those Australians who have taken out travelling insurance or who are unable to obtain travel insurance.

Chapter Three proceeds with an examination of the structure and effectiveness of DFAT’s staffing regime. This includes a discussion of the proportion of Australian based staff who are serving overseas, the function of locally engaged staff serving at posts and the language proficiency of staff.

The Committee is generally satisfied with the performance of Australia’s overseas representatives. The Committee notes, however, that issues relating to the effect of recent funding cuts on overall effectiveness, resource allocation of any additional funding and the number and performance of locally engaged staff would benefit from further examination.

Both Austrade and AusAID have undergone recent independent reviews, but it is some time since DFAT was independently assessed. Evidence suggests that such an external review would allow the canvassing of new ideas, allow community engagement, and correct inaccurate perceptions of DFAT’s work.

The Committee has therefore recommended that there be an external review of DFAT to include consideration of the effectiveness and efficiency of DFAT activities; ensuring effective resource allocation; the appropriate use of locally engaged staff; and ensuring that the department has the capacity to attract and retain high quality staff.

E-diplomacy, the subject of Chapter Four, provides great potential to more effectively manage information and facilitate communication within DFAT and the whole of Government, to improve consular service delivery, and to understand, inform and engage audiences both overseas and at home.

The creation of new information and communication systems has transformed the ways in which people receive and transmit information away from the traditional media of newspapers and television, towards the internet and social media platforms. Although DFAT has made significant steps towards a greater online presence, the Committee considers that the internet and social media remain underutilised, particularly as tools for public diplomacy.

The Committee believes that there is merit in establishing an office of e-diplomacy within DFAT as the best way to harness the potential and deal with the challenges of e-diplomacy, particularly in light of the constantly evolving nature of this technology. The US State Department’s Office of eDiplomacy is considered to be a best practice model.

The Committee has also recommended that DFAT make better use of social media platforms to promote Australia’s foreign policy, trade opportunities, and the department’s role to the wider Australian public and key audiences in Asia and the Pacific.

Conclusion

Since World War II, Australia has traditionally played a significant role in the world. For example, Australia was the president of the UN General Assembly in 1948 and was involved in drafting the UN Universal Declaration of Human Rights. Australia was also the first President of the UN Security Council in 1946. Later, in 1986 Australia was instrumental in the creation of the Cairns Group and, in 1989, the Asia-Pacific Economic Cooperation group.

Throughout this Inquiry it has become clear that presence and person-to-person contact remains the cornerstone of diplomacy.

Such representation facilitates a deeper understanding of other countries and the broader international environment, allowing quicker and more informed responses to changing circumstances. It allows for the development of long-lasting networks, which in turn enhance Australian influence and the ability to effectively promote Australia’s position on international issues.

The operations of our diplomatic network are limited by a lack of funding. They are also being challenged by the growth and development of Australia’s economy, the shift of global power towards Asia, the impact of technology, and the rising importance of public diplomacy.

This report along with recent reports by the Lowy Institute highlights the urgent need to rebuild Australia’s diplomatic network and enhance our international standing.

Our diplomatic network must be resourced to grow if Australia is to again punch above its weight in the world.

Mr Nick Champion MP

Chair

Foreign Affairs Sub-Committee

Membership of the Committee

Membership of the Sub-Committee

Committee Secretariat

Terms of reference

The Joint Standing Committee on Foreign Affairs, Defence and Trade shall examine and report on Australia’s overseas representation, in particular:

• the activities that Australia’s diplomatic posts must undertake;
  
  
• their geographic location and spread;
  
  
• the appropriate level of staffing, including locally engaged staff; and
  
  
• the affect of e-diplomacy and information and communications technology on the activities of diplomatic posts.

13 September 2011

List of abbreviations

List of recommendations

Australia’s diplomatic footprint

Recommendation 1

The Committee recommends that Budget priority for overseas representation should be significantly raised because of the benefits that accrue from diplomacy.

Recommendation 2

The Committee recommends that the Government produce a White Paper to set the agenda for Australia’s whole of government overseas representation. The White Paper should include, but not be restricted to:

• a consideration of the value to Australia of its diplomatic network;
  

• criteria for establishing, continuing or closing diplomatic posts; and

  
  
  

• a statement of the Government’s priorities for expanding the network.