The Department of Foreign Affairs and Trade

Secretary's Address to the Australian Institute of International Affairs ACT Branch

AIIA Stephen House, Deakin, Canberra

18 May 2011

Thanks very much Ian.

It is [inaudible] to give a speech when you're in front of some of your former bosses, because you can imagine them marking you out of ten and the like.

In fact, Peter Henderson probably can't remember this, but when you're more junior you can always remember things about your bosses more clearly than what they can remember about you. And when I was in the Department of then Foreign Affairs, in the late '70s, early '80s, I was a trade union representative and I in fact went on strike on three occasions. And Mr Henderson was the Secretary of the Department and each time I was on strike, this was taking formal industrial action, I would get a note from the Secretary asking me to explain my unauthorised leave. And each time I would write back and say that I was taking industrial action in accordance with the following resolution, and I would then quote the resolution out, which would sometimes number one or two pages.

And the point of that story is that Secretaries of the Department have always been very tolerant. So but for his tolerance, I mightn't be here today.

What I'd like to, rather than give a long speech, what I'd prefer to do is to make a few points and really open it up for discussion and questions because I much prefer to go where a group of people want to go rather than necessarily direct where I think they should go.

Ian, thanks very much for your kind words and introduction. Ian and I have worked together in the past and it's a real delight to be here.

Were you to read the opening lines of the DFAT Portfolio Budget Statement, published last week, and I'm sure this room is full of people who did that, you would see DFAT's work is organised around one major theme, and that is the security and prosperity of this country.

You would also see that the ways in which we do this are broadly organised around three main tasks, as set out in the budget statements:

Today I just want to unpack a little bit of that in a way that explains it in somewhat practical and down to earth terms.

I suppose the starting point for any of this is the global environment in which we live and work today. And I think three big things stand out in terms of the global international environment today – none of which I think are particularly startling in the sense that I think they are well known to everyone.

And the first and the obvious one is the major shift in power dynamics.

Global power is probably becoming more diffuse than at any time since the Second World War. The US of course remains pre-eminent but relativities are changing, and we all know that. And we all know about the change shift in economic and strategic weight to Asia.

I always get caught up in statistics, and people always quote a lot of statistics to make their point about East Asia, particularly about China. And it's always interesting to find different things. And in terms of the shift in economic and strategic weight to Asia, interesting to reflect on the fact that according to the IMF, by 2015, China will have grown its economy 25 times in the preceding 25 years. Quite interesting.

India is on its way to big economy status and beyond Asia, Brazil will assume a much more significant position over the next ten years or so.

Europe, despite its problems, will remain a big part of the global economy.

Africa is emerging, in both governance and economic strength. And the Middle East is undergoing far reaching change at the moment.

Inevitably, rising economic power translates into rising strategic weight. East Asia's combined military spend in 2010 represented a 144 per cent increase on 1990. And China's military expenditure increased nearly seven-fold between 1990 and 2010.

In the same period, US military expenditure increased about 40 per cent. It decreased sharply after the Cold War, but then came back after 9/11.

Obviously raw military expenditures and manpower numbers don't necessarily tell us a lot about capability. But these figures do underline just how much relativities are changing.

The bottom line is that the central economic weight will no longer centre around a Europe-North American axis. Instead, there will be a US-Asia centrality in terms of economic weight.

That's a good thing for the people of Asia. It is a good thing also for economies like Australia which benefit enormously from the increase in productivity and prosperity that greater economic integration with Asia has brought.

Yet Asia's growth undeniably brings strategic complexity too as the power relativities that obtained in the 20th century are overturned in the 21st century.

And this leads to the second feature of Australia's global environment – much more will need to be negotiated and done together among major and middle powers.

No one country can tackle on its own global terrorism, nuclear proliferation, climate change.

No one country on its own can achieve the return of the world's financial system to health, global trade liberalisation and fulfilment of the millennium development goals.

So the United Nations will remain fundamentally important as the premier global body promoting a rules-based international order with an unmatched capacity to respond to global security, humanitarian, environmental, human rights and development challenges, via its specialised agencies, funds and programs.

But multilateralism is also in some sort of change. We saw, if you like, I dare say, some limits to multilateralism in the climate change negotiations that took place in Copenhagen at the end of 2009. And the difficulty of bringing 192 countries together at the same time, together with a host of NGOs and the like, and actually seeking to negotiate an outcome to a big, complex challenge like climate change.

The world is feeling its way forward somewhat on global and regional institutions. The G20 has emerged as a premier forum, but still has some consolidation to do. It reflects the modern reality of global shifts, embedding as it does China, India, Brazil and others.

In our own region, architecture is also evolving. Last year saw agreement to bring the US and Russia into the six-year old East Asia Summit. So we now have, for the first time, the United States, Japan, China and India in a single regional forum, which is able, by virtue of its mandate, to discuss everything ranging from economic security to strategic issues. But the broadening of that agenda for the EAS will need to be done carefully.

And of course, we are fortunate enough to be in both the G20 and also the East Asia Summit. And we have a lot at stake, I think, as a country, in the success of the G20 and the success of the East Asia Summit.

The third feature of the world, as I see it, is not surprisingly the vastly greater mobility of just about everything. At the same time that global consensus on global challenges has been harder to achieve, globalisation and new technologies have been connecting up the world more than ever.

So you've got the contradiction of globalisation, more things being connected up, and people being able to communicate more readily globally. But at the same time, nation states finding it increasingly difficult to find the global consensus to global challenges.

And also, with this greater mobility, we have more Australians travelling, living, studying and working overseas than ever before. Indeed, at any one time, we have well over a million Australians living and working around the world today.

Now this is the context in which we look at DFAT's resources and also the fiscal environment. Funding for the Department is tight, and it will remain so. In fact, it's been pretty tight for about 15 years.

It's interesting to reflect on the fact that since 1995-96, the total number of people employed under the Australian Public Service Act has increased by just under 15 per cent. However, DFAT's total staff numbers over that time have decreased by about 5 per cent.

So relative to the rest of the public service, which has gone up just under 15 per cent, we've gone down about 5 per cent. It's a big shift.

But leaving that aside, how do we deploy our resources, and what are they?

For 2011-12, we forecast an average staffing level of just over 3,800. And that includes about 1,580 locally engaged staff overseas.

Of the 2,240 A-based officers in the Department of Foreign Affairs and Trade, about 1,660 are in Australia and about 580 are overseas.

Of the staff in Australia, 40 per cent work on what could be defined as policy; 28 per cent are involved in broad corporate matters, including cultural and public diplomacy, security, IT, staff development and the management of the overseas owned estate, worth over $1.5 billion.

Twenty-five per cent of the Department's employees in Australia work on passports, and that's often forgotten. We are both a functional and a policy department.

About 3 per cent of people in Australia who work with Foreign Affairs and Trade are involved in consular matters, although there's a lot more than that in times of crises. For instance, when we had the Crisis Centre operating 24/7 from the end of January of this year until the end of March of this year, we had over 300 people working through the Crisis Centre over that period of time, employed in over 1,300 shifts. So when we have a consular crisis, we rob Peter to pay Paul and we concentrate our resources in the consular arena.

And about 3 per cent of our staff in Australia work in state offices.

The 580 officers currently working overseas is still well below the 680 who were working overseas in 1996. Although it is up from the low point reached in 2005 when just under 500 were working overseas.

DFAT's overseas network today consists of 95 posts in 77 countries. This constitutes the smallest diplomatic footprint of any G20 country. Our economy is the world's 13th largest. Our aid spend the world's 13th largest. Our military spend the world's 14th largest in absolute dollar terms. Our diplomatic footprint is not in the world's top 30.

The Foreign Minister has identified strengthening Australia's diplomatic footprint as an important goal and over the last two years, we have opened four new missions: Chennai and Mumbai in India; Lima in Peru; and Addis Ababa in Ethiopia.

The Department needs more to do its job effectively in the national interest. But we will continue, as we should, to operate professionally and to deploy people to the locations and functions that best meet the Government's agenda.

As we go forward in the current, necessarily tight, fiscal environment, we are determined not to cut into our global network, not to reduce our service to the public in passports and consular, and not to cut into training and staff development.

Savings, where they have to be made, will be made in Canberra and in areas other than the ones I mentioned.

We concentrate our diplomatic resources, appropriately, in Asia, where we have 42 per cent of our overseas diplomatic positions.

Thirteen per cent of our overseas positions are in North and South America, 11 per cent are in the Pacific, 21 per cent are in Europe, and 13 per cent are in the Middle East and Africa.

And we have three multilateral posts, in New York, Geneva and Vienna.

So apart from their geographic distribution, what do people actually do in DFAT? The short answer is we do a lot more than what probably most people assume. It will be familiar to a lot of people here, but not all.

We issue passports – over 1.7 million of them last year.

We manage consular cases – on average over the last few years, over 25,000 consular cases a year, which involves everything from lending people money, to visiting people in prison, to identifying bodies in morgues.

We promote Australia's image abroad through expos, such as Shanghai, film festivals and cultural and sporting activities.

We manage Australia's Government owned property overseas, which I mentioned earlier is worth over $1.5 billion.

We open fêtes and we open aid projects.

We negotiate counter-terrorism MOUs.

We lead combined civilian law enforcement-military teams in places such as Afghanistan and the Solomon Islands.

We live in grand residences and we live in container boxes.

We see the best, and we see the worst.

We negotiate in the UN and bilaterally, covering all aspects of foreign and trade policy.

We manage sanction regimes.

We lead efforts to win election to international bodies, including the UN Security Council for 2013-14.

We provide and maintain a global classified communication network.

We organise visits and events for Prime Ministers and Ministers.

We speak foreign tongues and act as interpreters – cultural and linguistic.

And we provide common services to officials from other Government Departments and Agencies operating overseas.

We do a lot more than that, but that's a little pen picture.

In short, we are the proverbial jack of all trades.

I could go into detail in respect of some of those activities, but I'd prefer to leave that to questions.

Given the changing world and what DFAT is called upon to do, the key question is whether we have enough to meet the demands and to do the job.

The short answer is we don't.

For a country with global interests and regional priorities, we are well shy of where we should be. But we have come out of the trough of five to six years ago and we have done not too badly in the current tight fiscal environment.

Our challenge is to make the case compelling so that we can, down the track, get what we need to do the job and consistent with what I believe is in our national interest.

That is all I wanted to say by way of overview. I'm very happy to take questions, or join in discussion on anything ranging from policy matters anywhere around the world, not that I know an awful lot about it, but I'm happy to engage in that and I'm happy to engage in any discussion about the Department, policy issues, whether they be East Asia, China, US, Japan, India, Africa, the Middle East, Europe, Latin America –very happy to go there.

So I'm in your hands as to where you want to take it.

Q&A begins…