Secretary's review

Secretary, Peter Varghese AO. [DFAT]

Secretary, Peter Varghese AO. [DFAT]

In my first Secretary's Review, I'd like to start by thanking my predecessor, Dennis Richardson, for leaving the department in such fine shape. The culture of any organisation derives much of its nature from its chief executive – and Dennis's energy and drive left a lasting imprint on the ethos of the Department of Foreign Affairs and Trade.

Over 2012–13, economic and strategic power continued to shift inexorably from the Atlantic to the Indo–Pacific. Asia has re-emerged as a region of first order economic and strategic significance in its own right. The international system is working its way through a period of flux, against the backdrop of global economic uncertainty. Regional and global institutions are seeking to catch-up and properly accommodate these changes. Australia's future prosperity will depend more than ever before on its external environment and its ability to advance its national interests abroad.

This is of course the core business of the department. And the department's work depends vitally on our overseas network. It is our 95 overseas posts that do much of the heavy lifting in building networks of influence for Australia, advocating Australian interests abroad, supporting official visits, providing analysis, and assisting Australians in distress. The role of the department in Canberra and our offices across Australia is to provide policy advice to ministers and the government, negotiate bilateral and regional trade agreements, lead whole-of-government engagement in regional organisations such as APEC and the East Asia Summit (EAS), engage with business and community groups, deliver passports and consular services to Australians and provide corporate services for the organisation, both at home and abroad.

… Australia's future prosperity will depend more than ever before on its external environment and its ability to advance its national interests abroad …

No department prospers in isolation. Strong whole-of-government collaboration is essential to the successful development and advancement of Australian interests abroad on issues as challenging and diverse as people smuggling, counter-terrorism, cyber security, disaster response, transport security, trade in agriculture, development assistance, peacemaking and peacekeeping. Our overseas missions reflect this increasingly varied mix, with our ambassadors and high commissioners leading teams with officers from 28 government agencies.

Significant issues and developments

If Australia is to take full advantage of the opportunities of the Asian century, we need to work harder to build and deepen our understanding of and engagement with the region.

In the past year, the department dedicated considerable resources and diplomatic attention to our six core bilateral relationships — the United States, China, Japan, Indonesia, India and the Republic of Korea, recognising that Australia's prosperity is tied to that of our key partners. Highlights of the department's work on these relationships included:

  • Leading a whole-of-government effort to develop country strategies out to 2025—a commitment under the Australia in the Asian Century White Paper—to better identify whole-of-Australia objectives and priorities for the Asian century to guide our engagement with Japan, China, Indonesia, India and the Republic of Korea.
  • Sustaining high-level engagement with the US Administration. The Australia–United States Ministerial (AUSMIN) consultations in Perth in November 2012 —co-organised with the Department of Defence—provided an early opportunity to engage with the newly-returned Obama Administration across the gamut of our shared international political, security and economic interests.
  • Laying the groundwork for the enhanced bilateral consultation arrangements agreed with China during Prime Minister Gillard's visit to Beijing in April 2013. Australia now has an annual leaders-level meeting and ministerial-level economic, and foreign and strategic, dialogues. Australia joins the United States, Russia, Germany and Britain as the only countries to have similar arrangements with China. The department led difficult free trade agreement (FTA) negotiations with Australia's most significant trading partner.
  • Further strengthening our already comprehensive relationship with Japan, our most comprehensive in Asia, agreeing to a joint vision for security and defence at the fourth annual '2+2' dialogue between foreign and defence ministers in September 2012. We narrowed negotiations on an FTA to a small number of sensitive market-access issues.
  • Engaging more closely with Indonesia, through the second Annual Leaders' Meeting in Darwin in July 2012 and the second Foreign and Defence Ministers' Meeting in Jakarta in April 2013. Starting negotiations on the Indonesia–Australia Comprehensive Economic Partnership Agreement was a significant milestone.
  • Continuing to build Australia's strategic partnership with India, by supporting the Joint Ministerial Commission, and progressing negotiations on a comprehensive economic cooperation agreement. The department also led the first round of negotiations on an Australia–India nuclear cooperation agreement.
  • With the Republic of Korea, setting up the first '2+2' meeting (held July 2013), the first such meeting the ROK has held with any country apart from the United States. Negotiations on an FTA are close but unfinished owing to differences on a small range of sensitive issues.

Australia's immediate neighbourhood remains a perennial priority for the department. In this we have worked closely with New Zealand. Our engagement is centred on a desire for security, stability and prosperity shared through the region:

  • Supporting the conclusion of the UN Integrated Mission in Timor-Leste (UNMIT) and withdrawing the Australian-led International Stabilisation Force, marking an important milestone in the progress of this new nation.
  • In the Pacific, leading Australia's participation in the Pacific Agreement on Closer Economic Relations (PACER) Plus negotiations, which have expanded and intensified, assisting with the implementation of the Seasonal Worker Program.
  • Coordinating the further drawdown of the Regional Assistance Mission to Solomon Islands (RAMSI), and following national elections in Papua New Guinea, the department led Australia's intensive engagement to provide a framework for our modern and dynamic partnership.

As we look more broadly at the world today, demographic, economic and political shifts require regional approaches to solving our biggest challenges. New players are emerging in all parts of the globe. Increasingly, as relationships among the world's established and emerging great powers shift, we will need to work with regional powers to harness our common interests and influence changes in accordance with our national interests.

Regional institutions will be of enduring importance for Australia. With this in mind, we focused our diplomatic efforts on the EAS and ASEAN. Over time, we hope the EAS will develop into the premier regional institution, driving financial and economic integration, building confidence, and nurturing a culture of collaboration on security issues.

  • The department supported ministerial and leaders' discussions in the EAS and the ASEAN Regional Forum on regional security issues, including on the South China Sea, the Korean peninsula, and non-proliferation. The government announced the appointment of Australia's first resident Ambassador to ASEAN in 2013.

We believe a global rules-based approach and strong institutions are a vital support for and driver of Australia's continued peace and prosperity.

  • Consequently, the department led a whole-of-government effort to secure Australia's election to the UN Security Council as a non-permanent member for 2013 and 2014. In the first six months we have established ourselves as a constructive and capable council member, contributing to international sanctions work, and playing an important role in the council's approach to Afghanistan, the debate on Syria, as well as counter-terrorism.
… we will need to work with regional powers to harness our common interests and influence changes in accordance with our national interests …

Just as the United Nations and the EAS are important to minimising strategic risk, trade policy is central to maximising economic opportunity. We are pursuing Australia's objectives of free trade through complementary routes. Both bilateral FTAs and regional agreements such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) underpin Australia's interest in expanding global free trade.

  • The Australia–Malaysia Free Trade Agreement, Australia's seventh FTA, entered into force last year. In addition, we began RCEP negotiations, involving ASEAN and its six FTA partners.
  • The department led negotiations on nine free trade agreements. The countries covered by Australia's current FTA negotiations and the six FTAs already concluded represent 73 per cent of Australia's global trade—a total of $447 billion.
  • We continue to push for momentum in multilateral trade negotiations despite the stalled World Trade Organization Doha Round, as well as pursuing other paths to trade reform, including taking a lead in the Trade in Services Agreement negotiations.

APEC also continues to operate as an important vehicle for deepening Australia's economic integration with the Asia–Pacific region and fostering habits of practical, reform-oriented collaboration.

Australia's membership of the G20 is vital in times of economic uncertainty. The G20 has the right size and membership to get things done and is key to driving Australia's international economic engagement. It's small enough to make decisions, but weighty enough to have a global impact.

  • In preparation for Australia's G20 presidency from December 2013, the department contributed policy advice on trade, development, food security and energy issues. We escalated our advocacy efforts with G20 countries and a range of international organisations to build support for the G20 forum and its forward agenda.
… Australia cannot assume that our interests and values, or the international rules which we helped shape and continue to adopt, will remain unchallenged …

Delivering services to Australians

Providing Australians with high-quality consular and passport services represents a significant dimension of our work as Australians travel abroad in ever greater numbers. For most Australians, the Australian Passport Office is their only point of contact with the department. In the interests of ensuring the ongoing security of Australian passports we are working to develop the next generation of passports, the P-series, scheduled to be issued in August 2014.

With 8.8 million departures by Australian citizens and permanent residents over the past year, we issued just over 1.7 million passports and assisted 11 927 Australians in difficulty overseas. Many of those consular cases were in remote places and under challenging circumstances. Over the year, a number of high-profile cases involving detention and legal proceedings required substantial resources.

Corporate governance and management

The past year has been challenging, requiring careful reflection on Australia's current and future interests and allocation of resources.

Staff development and language training remained a priority. We increased the language training budget by a modest 3.3 per cent to allow for the language introductory program to include Japanese, Arabic and Indonesian. Despite an ageing information and communications technology system, we completed 42 development projects to improve capability, particularly at overseas posts, and to prepare a suitable platform for long-term improvements. We secured budget funding for the International Communications Network program, which from 2013–14 will replace the present secure communications network for use by the department and other government agencies.

We continued to manage, maintain and improve Commonwealth-owned property and leased estate which is used by 28 Australian government agencies. In June 2013, this was valued at $1.8 billion. We progressed plans to construct new embassy complexes in Jakarta and Bangkok. The department allocated substantial capital and other resources to monitoring, maintaining and improving security at Australia's missions overseas.


The world is becoming more complex and our strategic environment more crowded. Australia cannot assume that our interests and values, or the international rules which we helped shape and continue to adopt, will remain unchallenged. As China and India assume great power status, we must adapt to a changing strategic arena. Our priority interests are better considered now in the multipolar context of the Indo–Pacific, including the security of maritime passages so vital to our increasingly globalised trade.

Taking multilateral approaches to optimise our influence in solving global problems is getting harder as membership broadens. We will continue to respond to this creatively: by advancing institutional reforms, building and adapting other bodies to reflect new and changing needs, and forming new coalitions. The coming year will be a busy period for the UN Security Council, with our membership continuing to provide Australia with unique opportunities to bring the perspectives of Australia and the wider Pacific region to the highest decision-making table in global affairs.

… the corporate challenge … will be to maintain an effective overseas network and adequately staffed Canberra-based operation …

We have a strong interest in preserving and promoting the role of the G20. A successful G20 not only advances Australia's economic prospects, but preserves our influence in a key international body. Our chairmanship in 2014 will not only help us to shape the agenda but also demonstrate the value of our participation in such formative institutions.

2014 will see the end of Australia's military deployment through the International Security Assistance Force in Afghanistan. We must now ensure that the follow-up 'soft power' engagement is right, including through more training of national security forces, assistance with good governance, and providing on-going humanitarian aid.

In the coming year we plan to develop a consular strategy that will outline a three-year plan to promote improvements and innovation in the delivery of consular services. A key element of the strategy will be to focus resources on assisting Australians most in need of help, and to sharpen our public messaging to emphasise that consular assistance should be an option of last resort, not the first port of call when travellers find themselves in difficulty.

The department's greatest assets remain its people and its overseas network. In the tight fiscal environment, the corporate challenge for the department will be to maintain an effective overseas network and adequately staffed Canberra-based operation.

Transitioning from the ageing secure communications network to a new platform will be complex but fundamental to improving the department's productivity and effectiveness.

An important priority for the coming year will be to reflect on and respond to a Capability Review of the department undertaken between April and June 2013, as part of an APS-wide review program agreed by the government in 2011. The department will develop an Action Plan to respond to the review findings. We will continue to provide high quality policy advice and meet our corporate needs but as resources diminish we must look at doing less with less. We will also need to shift resources from corporate to policy functions.

Underpinning all this effort will be the department's dedicated staff, who, I am confident, will continue to display their distinctive professionalism and determination in serving the government with the advice, analysis and follow-through to secure Australia's future prosperity in a changing and challenging world.