Annual Report 2007-2008

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1. Overviews2. Performance3. Corporate4. Appendixes5. Financials6. Glossaries and Compliance Index

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Management of financial resources

The department’s operations in Australia and overseas are underpinned by a sound financial resource management framework. The framework includes:

The department was recognised for having effective internal controls in place to ensure good financial management and a sound financial reporting framework in the ANAO’s Interim Phase of the Audit of Financial Statements of General Government Sector Agencies for the Year ending 30 June 2008, tabled in Parliament in June 2008. The ANAO found no audit issues of a significant or moderate nature in our financial statements.

The challenging international environment continued to make an impact on the department’s operations in Australia and overseas. In the 2007–08 Budget, the Government provided additional funding for us to further advance Australia’s interests internationally, including:

Following the federal election, through the 2007–08 Additional Estimates Budget process, the Government provided additional funding and withdrew funding, as follows:

In 2007–08 the department paid to the Consolidated Revenue Fund a dividend of $25 million from the Overseas Property Office special account.

Review of the department’s resources

In response to the Government’s decision to undertake a ‘root and branch’ review of the adequacy of the department’s resources, we established a small team from within existing resources to work on the review. The review is designed to assess whether our funding base is adequate to allow us to continue to effectively and efficiently deliver the Government’s foreign affairs and trade objectives. We are working cooperatively with the Department of Finance and Deregulation on the review. There have been no other developments or events since 30 June 2008 that have affected or will affect future operations or financial results of the department.

Assets management

Responsible asset management is a departmental priority. To ensure this continues to occur, the department introduced a new asset management policy framework and a streamlined IT-based stocktaking process. These have improved identification, management and stewardship of our asset holdings. Work areas continually review and update their asset purchasing and disposal needs in a five-year asset plan.

Under the department’s rolling cycle for revaluations, asset classes are revalued once every five years, with the exception of Land and Buildings, which are revalued every year. Informal reviews and impairment testing of asset classes covered by the relevant Australian accounting standards are conducted annually to ensure asset values are fairly stated. In 2007–08, the Furniture and Fittings and Leasehold Improvement asset classes were formally revalued under the rolling cycle.

Competitive tendering and contracting

The department consolidated relevant procurements with other Australian Government agencies during the year. These resulted in the delivery of savings through more efficient procurement processes, leveraging the purchasing scope of combined procurements and taking advantage of volume price discounts.

The department reviewed its procurement manual to ensure full compliance with the Commonwealth Procurement Guidelines, and continually reviewed its suite of standard contracts to ensure they reflected the changing procurement environment. The department’s website provides notification of all tenders, including select tenders, expressions of interest and pre-tender notices.

All competitive tendering and contracts of $100 000 or more let during the reporting period provide access for the Auditor-General to the contractors’ premises.

Purchasing performance

The department’s procurement policy provides for the efficient, effective and ethical delivery of the Government’s purchasing and procurement programs. All contractual arrangements entered into by the department are in accordance with the principles of value for money, encouraging competition and non-discrimination. They comply with all relevant Commonwealth procurement policies and legislation, in particular the Commonwealth Procurement Guidelines.

Exempt contracts

There were no contracts in excess of $10 000 or standing offers exempted from being published in the Purchasing and Disposal Gazette (AusTender) on the basis that publication would disclose exempt matters under the Freedom of Information Act 1982.

Consultancy services

The department engages recognised experts on an ad hoc basis to provide specialist expertise or where independent assessments or input are considered desirable.

The selection process for consultancy services both in Australia and at overseas posts is consistent with the department’s broader procurement policies and the Commonwealth Procurement Guidelines (January 2005).

During 2007–08, 38 new consultancy contracts were entered into involving total actual expenditure of $1 898 522. In addition, 18 ongoing consultancy contracts were active during 2007–08, involving total actual expenditure of $3 978 316.

More detailed information, including a summary of the department’s policy on the selection and engagement of consultants and a detailed list of all consultancy contracts let during the year to the value of $10 000 or more, is available in Appendix 11: Consultancy services.

Information on expenditure on contracts and consultancies is also available on the AusTender website (

Photo - See caption below for description
Mark Davidson
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Mark Davidson

Mark Davidson is one of eight Corporate and Financial Management Trainees (CFMTs) who began work in the department in February 2008. After a broad training program of seven rotations over two years, CFMTs are equipped to perform a wide variety of departmental corporate services work in Australia and overseas.

On his third rotation, Mark is currently a member of the ‘root and branch’ review team. This joint DFAT-Department of Finance and Deregulation review is assessing the major functions and activities that the Government expects of the department and the associated resourcing requirements. The results of the review will be considered in the 2009–10 Budget context. Mark’s experience in this role is providing him not only with a strategic overview of the department’s operations, but also with invaluable experience of inter-departmental liaison and cooperation.


Overseas property—leased estate

The department’s overseas property estate comprises Australian government-owned properties (funded from the overseas property Special Account—see Outcome 4) and properties leased from private landlords (funded from the department’s appropriations).

In 2007–08, the department leased approximately 550 properties overseas, including chanceries, head of mission residences, staff accommodation and other facilities. Overseas leased estate projects under way or in the planning and development stages included the partial refurbishment of the chancery in Budapest, construction of staff apartments in Baghdad, new space in the existing chancery in Abu Dhabi and relocation of the chancery within the current commercial office building in Seoul. Work began on the relocation of chanceries to new premises in Belgrade, Madrid and Tel Aviv.

Staff welfare is an important aspect of managing the overseas estate. The department’s Overseas Property Office audits properties in both the overseas owned and leased estates, to ensure compliance with health and safety requirements. This also helps posts to meet compliance obligations.

Domestic property

Under the terms of the lease on its central office (the R G Casey Building), the department has taken up the right of first refusal on additional space in the area vacated by the Department of Defence. Planning has commenced on an additional 3500m² of office space that should be ready for occupancy by October 2008. The additional space will help alleviate accommodation pressures in other areas of the building, and accommodate passport work units operating in other premises.

The department continued and completed the rolling program of security systems upgrades in the R G Casey Building and at state and territory offices. All locations now have integrated security systems monitored and managed centrally.

In the R G Casey Building, the department has an Environmental Management System certified to International Standard ISO 14001. The annual compliance audit of the system was conducted in May 2008 and the department achieved a satisfactory level of performance against established criteria. We have undertaken a pilot program to improve procedures in the R G Casey Building to better segregate recycling and waste streams. This was developed to reduce the amount of recyclable material deposited as landfill.


Key corporate management and accountability challenges for 2008–09 include: implementing savings measures required to meet the Government’s Budget objectives, working with the Department of Finance and Deregulation on the joint review of the adequacy of the department’s resources, and managing the implementation of the new workplace arrangements, including through a new collective agreement with non-SES staff and an equivalent instrument for SES staff for 2009–2012. Implementation of the upgraded Human Resources Management Information System will be a priority. An ongoing challenge will be maintaining an appropriately skilled workforce to manage the Government’s active agenda.

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