Secretary's review

The 2013–2014 year was one of achievement and change for the Department of Foreign Affairs and Trade.

In a time of global and regional transition, we delivered important outcomes that advanced Australia’s national, economic and development interests. We implemented the Government’s new priorities and undertook transformative internal change.

In line with the Government’s agenda to promote prosperity for Australia and our partners, we placed economic diplomacy at the core of our international engagement. This included a heightened focus on investment and the most intensive period of free trade agreement negotiations in the department’s history.

We rolled out the pilot phase of the Government’s New Colombo Plan to strengthen Australian linkages in the Indo–Pacific, and we took on responsibility for international climate change negotiations and some additional international tourism responsibilities.

… as the Indo–Pacific’s economic and strategic weight increases, regional cooperation and a commitment to open economies will be crucial to expanding prosperity and narrowing strategic risk …

From 1 November 2013, we assumed responsibility for Australia’s overseas aid policy and programs and successfully integrated the Australian Agency for International Development (AusAID) into the department. This was a substantial and complex undertaking and will take time to bed down.

We helped develop and implement the Government’s new aid policy and performance framework, aligning the aid program with our foreign, trade and economic priorities, and contributing to sustainable economic growth to reduce poverty, lift living standards and enhance stability in our region.

The strategic and policy challenge

The department’s outcomes and performance are influenced more directly by international events than perhaps any other Australian Government department. Global uncertainty—driven by economic shifts and strategic jostling—continued to define our work environment.

In a period of significant change in international affairs, Australia’s interests are served by the preservation of the broad, long-term stability of our region that has enabled an unprecedented growth in prosperity.

Our own society and economy are becoming increasingly globalised. Our economic success is heavily dependent on our international competitiveness and increasing trade and investment opportunities.

The rapidity and scale of technological and social change in the Indo–Pacific—the arc of countries stretching from India, through East and South Asia, to the United States—present unprecedented opportunities for Australia. Nine of our top ten trading partners are in this region.

… our economic success is heavily dependent on our international competitiveness and increasing trade and investment opportunities …

But the changing environment also poses challenges and risk. Shifts in economic power to countries like China, India, and Indonesia bring with them strategic challenges. While the countries of the Indo–Pacific are more economically interdependent than ever, the region, with its legacies of strategic rivalry and historic animosity, retains a capacity for strategic surprise.

Poverty, too, remains a significant challenge in the Indo–Pacific, even in countries that have made great strides. Lingering international economic fragility and shifting strategic priorities add uncertainty to the strategic outlook.

As the Indo–Pacific’s economic and strategic weight increases, regional cooperation and a commitment to open economies will be crucial to expanding prosperity and narrowing strategic risk.

Operating at the front line of Australia’s international engagement, the department’s role is to define these diverse challenges and shape the international environment to advance Australia’s foreign policy, economic, and development interests.

The department’s overseas network and highly-skilled staff are critical to developing and maintaining the knowledge, relationships and international influence needed to advance Australia’s national and economic interests. And we work closely with other Australian agencies in order that a connected, whole-of-government perspective is applied to the task.

Our performance: significant issues and developments

Over 2013–14, we saw good returns on our investments in the bilateral relationships that most impact Australia’s strategic environment and economic prospects.

The Australia – United States Ministerial (AUSMIN) consultations, held in Washington in November 2013, strengthened our alliance with the United States. Ministers advanced joint force posture initiatives for the Indo–Pacific and reaffirmed their intent to conclude a high-standard Trans-Pacific Partnership agreement to expand trade and investment and create jobs. We collaborated on development assistance to promote global growth and reduce poverty through private sector development and innovation initiatives.

Cementing our enhanced bilateral architecture with China, Foreign Minister Bishop engaged her counterpart for the first time under the new Foreign and Strategic Dialogue structure and Minister for Trade and Investment Robb joined the Treasurer for the inaugural Strategic Economic Dialogue. We opened a consulate-general in Chengdu to support stronger economic and strategic engagement with China’s fast-growing central regions.

We significantly deepened our strategic and economic relationship with Japan. In April 2014, the Prime Minister announced the substantial conclusion of negotiations on the Japan–Australia Economic Partnership Agreement, which will deliver Australians significant trade and investment benefits. The leaders announced their intention to elevate the strategic partnership and agreed to improve cooperation in the Pacific, including on development and disaster-relief activities.

Despite difficulties in the relationship, we sustained high-level engagement with Indonesia, supporting a number of visits by the Prime Minister and portfolio ministers. Continuing links between institutions and people from both countries remained important bedrocks in the relationship.

We worked to broaden the Strategic Partnership with India, including at the Foreign Ministers’ Framework Dialogue in Perth in October 2013. We made good progress towards a bilateral civil nuclear cooperation agreement.

In December 2013, we concluded negotiations on the Korea–Australia Free Trade Agreement. The agreement substantially liberalises trade with the Republic of Korea, improving market access in goods and services and securing investment protections. High-level aid talks delivered efficiencies for our aid programs.

Our interests in the Pacific are similarly best served through a secure and prosperous region, and we calibrated our bilateral and regional engagement accordingly. We worked closely with New Zealand to promote the Pacific’s shared vision of security, stability and prosperity.

In Papua New Guinea, we refocused the wide-ranging bilateral relationship away from an aid-donor and aid-recipient paradigm towards an economic and strategic partnership. In March 2014, the Prime Minister signed the Economic Cooperation Treaty which will underpin stronger trade and investment ties.

Reflecting the good progress made by the Regional Assistance Mission to the Solomon Islands (RAMSI), in July 2013 the department managed RAMSI’s transition to a policing mission. Our focus now shifts from post-conflict assistance to the promotion of development and growth.

The department enhanced engagement with Fiji, reflecting the Foreign Minister’s commitment to reset the relationship. We supported the country to transition to democracy and, in March 2014, managed the lifting of travel restrictions.

Beyond the Indo–Pacific, the department was active in strengthening our important relationships in Europe and with Canada and in expanding our links in Africa and Latin America.

Regional and multilateral diplomacy

We employed targeted regional and multilateral diplomacy to advance Australian interests and values and to build regional stability and prosperity.

We worked with ASEAN member states to pursue a stable strategic environment in Southeast Asia. We seek in the East Asia Summit (EAS) an institution that can help manage shifting strategic relationships in the region and complement APEC’s advancement of regional economic integration. Our efforts to enhance the EAS’s political and security agenda delivered results, with leaders this year discussing regional maritime security as well as instability on the Korean Peninsula.

We used Australia’s non-permanent seat on the United Nations Security Council to drive outcomes that enhanced international security and Australia’s development assistance environment. We established a basis for UN support to Afghanistan beyond 2015 and secured the first-ever resolution on small arms and light weapons. Australian advocacy delivered a critical resolution on humanitarian access in Syria.

We promoted democratic values, human rights and international criminal justice, including through our aid program. Our Ambassador for Women and Girls engaged actively on women’s economic empowerment and gender equality.

Economic diplomacy, trade and investment

We implemented the Government’s economic diplomacy agenda to grow the prosperity of Australians and our partners and, in turn, enhance security and stability in the region.

We prioritised negotiations on bilateral and regional free trade agreements (FTAs) with our major trading partners. In addition to the trade agreements with Korea and Japan, we made significant progress in negotiations with China. We advanced FTA discussions on the Trans-Pacific Partnership, Regional Comprehensive Economic Partnership, and PACER Plus in the Pacific.

The department delivered important outcomes at the WTO 9th Ministerial Conference. When implemented, the ‘Bali Package’, including the Agreement on Trade Facilitation, will bring key benefits for Australian exporters.

Working closely with the departments of Prime Minister and Cabinet and Treasury, the department used Australia’s presidency of the G20 in 2014 to shape the international economic agenda. And our posts worked with Austrade to promote inward investment and secure investment access for Australian companies abroad.

Strengthening Australia’s links to the region

We implemented the pilot phase of the Government’s New Colombo Plan (NCP) to lift knowledge of the Indo–Pacific in Australia and strengthen Australia’s linkages to the region. We supported NCP ‘mobility programs’ for 1300 Australian undergraduate students and awarded 40 prestigious NCP scholarships.

Australian aid: promoting prosperity, reducing poverty, enhancing stability

The department supported the Foreign Minister’s reshaping of the aid program to reflect the Government’s policy priorities, aligning our aid investments to promote prosperity, reduce poverty, lift living standards and enhance stability, particularly in the Indo–Pacific region.

The development of the Government’s new aid policy and performance framework, released by Ms Bishop on 18 June 2014, was a key achievement.

The department’s aid for trade investments helped developing Indo–Pacific countries overcome constraints to trade to drive poverty reduction and sustainable economic growth.

The department responded to humanitarian emergencies in 24 countries, including through the deployment of disaster response teams to the Philippines following Typhoon Haiyan to manage Australia’s whole-of-government response and to assist local relief and recovery activities.

Delivering services to Australians

In 2013–14, Australians made more than nine million overseas trips. This generated greater demand for our passports and consular services.

The department issued 1.8 million Australian travel documents in Australia and overseas. We introduced the next generation of passports—the P-series; its additional security features enhancing the integrity and reputation of Australian passports.

The department’s consular services were consistently in demand. We provided consular assistance and services to 14 558 Australians who experienced difficulties while overseas, an increase of 22 per cent over the previous year. Our Consular Emergency Centre, which provides consular clients with 24 hour service 7 days a week, received more than 53 000 calls over the period.

We began development of a three-year strategy to ensure the continued delivery of efficient and cost-effective consular services to Australians most in need of assistance overseas, while promoting higher levels of self-reliance among the Australian travelling public.

Corporate governance and management

The successful integration of Australia’s aid program was a substantial achievement. Aid policy and program delivery sit now within the department’s geographic, multilateral, and trade divisions, strengthening our ability to deliver across the Government’s aid, trade and foreign policy agenda in an integrated way.

Few areas of the department remained untouched by integration, and it was a challenging period for many staff. We maintained a staff consultation and feedback process and sought to address staff concerns as they arose.

In a challenging budgetary environment, we took difficult decisions on resources and staffing. Following an assessment of the efficiencies of integration, the Government decided on a reduction of approximately 500 staff by the end of 2014–15. I am confident the department will achieve the reduction through a careful process of voluntary redundancies and natural attrition.

In line with the 2013 Capability Review, we progressed important work on an action plan to strengthen the core organisational capabilities of the integrated department. We began work on a strategic framework to better articulate the department’s vision, strategic objectives and organisational priorities over the period 2015–2019.

We developed an integrated information and communications technology (ICT) platform and continued work on our ICT modernisation agenda. We responded to challenges in the delivery of our Passport Redevelopment Program by developing a more effective delivery model.

The department oversaw a substantial construction, fit out and refurbishment program of the overseas estate, including the construction of a new chancery and head of mission residence in Bangkok and the ongoing construction of a new embassy complex in Jakarta.

Strong planning and leadership and a conservative approach to spending across the department delivered a sound financial performance.

Outlook

The global dynamic of transition shows no signs of slowing—particularly in our own Indo–Pacific region. The significance of the region to Australia will only grow, as India looks set to join the United States, China and Japan among the top four global economies.

We will increasingly have to grapple with a more crowded geopolitical stage, and in the years ahead we will continue to have to respond to multiple points of geopolitical stress around the region and world.

There are many positives in our regional outlook. Both the United States and China understand their degree of interconnectedness, and countries across the Indo–Pacific understand the benefits of continued prosperity and closer engagement. Southeast Asian countries like Indonesia, Singapore and Vietnam offer positive prospects, including through the development of an ASEAN economic community. We can expect continued strong growth in our region, which is increasingly attracting global investment and becoming a focus of global trade.

… poverty, too, remains a significant challenge in the Indo–Pacific, even in countries that have made great strides …

And while the development landscape has changed since the Millennium Development Goals were agreed, the international aid community is committed to developing a robust post-2015 development agenda to continue to make inroads into global poverty.

The department is well positioned to meet the challenges ahead.

In the coming year, we will lead the Government’s economic diplomacy agenda, undertaking activities that support trade, investment, growth and business.

Implementation of our FTAs with Japan and Korea will be a key focus. We will accelerate the tempo of FTA negotiations with China and progress a comprehensive Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership initiative, and PACER Plus negotiations. We have strengthened the department’s trade capabilities and, I believe, are well placed to lead this agenda. Pursuing the Government’s investment objectives will be a priority.

As Australia’s G20 host year continues, we will promote the role and responsiveness of the G20 and work to shape the global economic agenda. The participation of key bilateral partners in G20 meetings in Australia in 2014, culminating in the Leaders Summit in November, will offer opportunities to progress our bilateral relationships.

… Australia’s interests are served by the preservation of the broad, long-term stability of our region that has enabled an unprecedented growth in prosperity …

We will use our remaining UN Security Council tenure to deliver outcomes that are in Australia’s interests and promote international security and, through that, prosperity.

There has been a spontaneous welcoming by the region of the New Colombo Plan beyond its pilot destinations; from 2015, the department will lead the expansion of the program more widely across the Indo–Pacific region.

The department will implement the Government’s new aid policy, developing aid investment plans for all country and regional aid programs. The implementation of a rigorous system of performance benchmarks and mutual obligations tailored to each aid recipient country’s circumstances will be a key focus for the department.

Innovation, too, will be a focus and the department has moved to establish a new development innovation hub. We will build strong relationships with the private sector, NGOs, philanthropic organisations and academics to achieve high-quality outcomes, and will work with other donors to coordinate and streamline our aid projects.

We will consolidate and enhance the capabilities of the integrated department, finalising and implementing the Capability Action Plan and 2015–2019 Strategic Framework.

It has been a challenging year for the department. Our achievements owe everything to the hard work and professionalism of the department’s dedicated staff in Australia and overseas.

 

Peter Varghese AO
Secretary