DFAT’s 30th anniversary

Speech

Speaker: Secretary of the Department of Foreign Affairs and Trade, Frances Adamson

24 July 2017

Thank you Michael.

Distinguished guests, ladies and gentlemen.

I would also like to acknowledge the Ngunnawal and Ngambrie people, the Traditional Custodians of the land on which we meet, and pay my respects to their Elders past and present. I extend that respect to any Aboriginal and Torres Strait Islander people present.

Let me begin by saying what a pleasure it is to see so many colleagues, current and former, here today to celebrate the 30th anniversary of the Department of Foreign Affairs and Trade.

Birthdays are always wonderful for bringing family back together, and I’m glad to see DFAT’s 30th is no different.

Introduction: an integrated department for the 21st Century

Today I want to reflect on how far we have come over the past three decades.

And indeed on where we are today — and where we want to go in the future.

The fact is, whether we like it or not, DFAT’s operating environment — the world — isn’t getting any easier to navigate.

International engagement is becoming more important, with formidable global challenges — protectionism, climate change, terrorism, to name just a few — needing to be addressed.

At the same time, many of the multilateral institutions and structures set up in the post war years are struggling for legitimacy and effectiveness, inhibiting our collective capacity to tackle those challenges.

There are now many more players to contend with, more parties to convince — in a multipolar world, progress is hard.

In trade policy, the challenge is made more complex by the decline in public support for globalisation in a number of countries. Even in Australia where, according to this year’s Lowy Institute Poll, 78 per cent of Australians believe globalisation is ‘mostly good’ for Australia, only 55 per cent believe free trade is good for ‘creating jobs in Australia’.

In these times, Australia needs an integrated policy approach and corresponding structures and processes that enable us to leverage our national assets to secure outcomes that will underpin our future prosperity and security.

The decision to create DFAT was a far-sighted recognition of that fundamental reality.

It was an acknowledgement that the national interest would be advanced through a contemporary department that brought together our deep strategic understanding of the Indo-Pacific and our world with our trade and investment policy and negotiating capability.

It is widely acknowledged that the amalgamation of the Department of Foreign Affairs and the Department of Trade was the right thing to do in 1987 — it better equipped the government to prosecute Australia’s interests in a world which did not then and does not now, draw artificial distinctions between security, economic and development interests.

The consultations process for the Foreign Policy White Paper has reinforced the point — both the magnitude of the challenges and how we should deal with them.

History of DFAT

Let me start, though, since we are marking an anniversary, with a brief look back.

On 14 July 1987, three days after being re-elected, Prime Minister Hawke announced what he described as “major changes to the structure of the Commonwealth administration”.

Among the changes ushered in with the largest bureaucratic shakeup since Federation was the amalgamation of the Departments of Trade, and Foreign Affairs. It was to be one of the so-called mega-departments created at the time with the aim of ensuring greater coherence in policy advice and strategic direction.

On 24 July 1987, Bill Hayden became Australia’s first Minister for Foreign Affairs and Trade, Michael Duffy the inaugural Minister of State for Trade Negotiations and Dr Stuart Harris Secretary.

Amalgamation was directly linked to the government’s vision of making Australia a more open, competitive economy, and its desire to lock in place the connection between domestic and international policy to address the trade and security challenges in an increasingly globalising world.

As Bill Hayden said in a speech just two days after his appointment, the merger was a recognition that “for Australia, commercial interests [were] just about the dominating factor” in our international engagement.

Two proud traditions of post war public service

As many who were around at the time will recall, the merger came as quite a shock, though for me, on my first posting as a vice-consul in Hong Kong with a ring side seat on China’s economic reforms and opening to the outside world, it seemed quite exciting.

From its Federation-era origins in Melbourne, to a corridor in West Block from the 1930s and later into the Administrative Building in 1959, the Department of Foreign Affairs had come into its own in the post-WWII period, bringing Australia out beyond the end of empire, and into the world.

From the end of the war on, the central preoccupation was, of course, the forging of new alliances in the context of Britain’s withdrawal from East of Suez and its growing preoccupation with Europe.

This shift was of course followed by an era of considerable strategic uncertainty — as we navigated the Cold War period, engagement in Vietnam and a profound realignment of the global world order as a new superpower emerged.

The experience of the Department of Trade — in its various post War iterations, most notably as the Department of Trade and Industry — was also one marked by considerable change.

The Department of Trade was born in 1956 as a result of the merging of the Department of Trade and Customs and the Department of Commerce and Agriculture, with the formidable Sir John McEwen as Minister and Sir John Crawford as Permanent Secretary.

McEwen and Crawford embarked on a policy course of action that would see Australia retreat from the Imperial tariff preference system and begin to develop new markets.

At that time, the real problem for Australia was that its fundamental interest in fair agricultural trade globally was not supported by the major industrialised countries. This was a core factor behind the decision to maintain high levels of protection for the manufacturing sector.

But no discussion of the Department of Trade’s achievements from that era can be complete without reference to the landmark Australia-Japan Agreement on Commerce, signed by McEwen sixty years ago this month — a far-sighted agreement that is still shaping our national economy sixty years later.

At signature, 39 per cent of our bilateral trade was with Britain — compared with just over 4 per cent today.

Seven per cent of our bilateral trade was with Asia, compared with 55 per cent today.

Importantly, this agreement also gave Australian households access to affordable Japanese high-technology imports.

Crawford, perhaps more than any other official of that time, was responsible for winning the argument on the merits of an agreement with Japan, something he recognised as key to Australia moving to embrace East Asia as its trade and economic future.  In fact it was Crawford who coined the term ‘Near North’ to replace ‘Far East’ to encapsulate his view that Australia could no longer afford to take its bearings from a UK perspective.

The agreement with Japan was the first step towards the exponential growth of our resources industry — with Japanese long-term purchases of raw materials putting towns like Port Hedland on the map.

Building on this new policy course, the Trade Department oversaw the expansion of the trade commissioner service, a network that formed an important asset alongside the diplomatic network of the Department of Foreign Affairs.

After years of expansion and success, the Trade Department was changed radically in January 1986 when its then Minister, John Dawkins, decided to create the Australian Trade Commission — Austrade.

The idea behind Austrade was to spin off the Trade Commissioner service and the associated market development and promotion functions in the Department into a separate statutory agency, one that would be more business-oriented and responsive to the needs of exporters.

That decision — splitting the policy and the program delivery functions of the trade portfolio — made some kind of new government machinery change all but inevitable. It is interesting to speculate on what may have happened if, instead of forming DFAT, the government at that time had decided to create an Australian ‘Trade Representative Office’ like USTR.

My own view, one shared by expert colleagues, is that while USTR is a fine institution and well-suited to the US context, it’s arguable whether it would be an efficient structure for a country like Australia, which does not have the same economic power as the US and needs to rely more on coalition-building to secure its interests.

The mood in 1987

Australia’s long era of protectionism began to break down in the 1970s, but reached a crescendo with the big bipartisan economic reforms of the 1980s.

The dollar was floated in 1983 — initially proceeding in the manner of a small boat in rough seas, buffeted between peaks and troughs of global markets for the first time.

For households, high inflation and interest rates generated considerable economic uncertainty, exacerbated by Australia’s current account crisis and the financial crisis of 1987.

Amidst the uncertainty, though, there was a great deal of opportunity.

East Asian GDP grew [World Bank figures] an average 5.6 per cent throughout the 1980s — but investment in Australia more than doubled over the decade.

Old industries were shuttering, but new opportunities for Australia were emerging.

This is to say nothing of the immense technological change underway.

The Government saw that it would need to put its very best foot forward to make the most of these opportunities — at home and abroad — resulting in the decision to amalgamate government functions.

So in 1987 and in the first few years afterwards, two proud departments of state with very different traditions and working cultures — and a history of robust policy disagreement — came together to shape a future policy agenda.

DFAT’s early achievements

With the benefit of 30 years’ hindsight, the decision to create DFAT presents as an inspired one.

Our diplomatic reach was greatly expanded and became more integrated. The new department’s trade policy, negotiations and commercial capability and sharp economic focus on the national interest made it more connected to the domestic policy agenda and to stakeholders in business.

Under John Dawkins as minister, the Department of Trade had shown genuine policy creativity in bringing together the Cairns group of agricultural free traders, a coalition of developed and developing countries to be a major force in world trade negotiations.

The creation of DFAT enabled the government to take a strong leadership role, helping to turn the group into a formidable trading coalition that acted as a third force — alongside the United States and the European Union — on agriculture trade.

The same dynamic saw Australia make a major contribution to the ultimate success of the Uruguay Round of GATT negotiations that led to the creation of the World Trade Organization and agreed for the first time on meaningful global disciplines on agricultural protection and trade distortions.

The same dynamic was on show a few years later when DFAT helped to underpin Australia’s leadership of APEC, realising the vision of merging Australia’s trade, economic and security interests in the region’s architecture.

Reflections

The thirty years between 1987 and 2017 have been years of tremendous change in the trade agenda and environment, not least in the relationship between foreign and trade policy.

In that time, DFAT has achieved much to advance our interests in global trade and investment.

I have already mentioned the Uruguay Round and the creation of the WTO.

And while the Doha Round of negotiations is marooned, Australia has been instrumental in many of the WTO’s key achievements such as the Trade Facilitation Agreement, and the decision in 2015 to eliminate all agricultural export subsidies, a major goal of the Cairns Group. 

Add to that the nine free trade agreements that have entered into force since the merger, most notably with the US (2005), China and Japan (2015) and ASEAN (2010), and those that are in the pipeline including the EU, Hong Kong, Peru and the Pacific Alliance.

And our trade record has also been a key element in our efforts to shape the future economic architecture of the region, building on APEC.

The TPP was a major element in charting this pathway, and while the US has withdrawn, we are playing a leading role in identifying ways of harvesting its benefits.

Similarly, RCEP remains a very significant objective. If it can be achieved, it would create a trade and investment zone encompassing China, India, Japan, ROK, ASEAN along with Australia and NZ and mark an important milestone on the way to a regional wide FTA.           

The integrated structure of the DFAT has been critical to achieving these results. Under successive ministers, to Minister for Trade, Tourism and Investment Steve Ciobo today, we have ensured the right people and the right structures. And the department’s overseas network has been valuable in supporting the negotiating teams by building political support and advocacy.

Importantly, the department has been able to marry deep and effective trade capability while ensuring policy coherence between the trade, security, geopolitical and development agendas. This has given us both strategic clarity and the practical capacity to make connections and linkages to advance our national interests.

The last thirty years have also seen important changes in the culture of the department, some of which can be traced back to the events of 30 years ago.

Today, DFAT remains a highly competitive department with a clear identity and sense of shared vision. But it is also a department where merit is the defining feature of our promotion and recruitment processes. DFAT is a centre of excellence in the public sector and is focussed on innovation in both policy and working methods to achieve government objectives.   

These qualities have been fundamental to DFAT’s charter today which embraces an extraordinary range of functions — consular, passports, foreign policy, development policy, trade policy, arms control, and policy planning.

And they have been central to the Department’s success in managing the most recent machinery of government change — the integration of AusAID in 2013.

In some ways, the integration of 2013 was less radical than the amalgamation of 1987 — although the numbers of staff and budgets involved with the AusAID merger are much larger.

In 2013, Australia’s aid bureaucracy returned to the DFAT fold, AusAID having emerged from DFAT in the first place, rather than two totally separate departments coming together as they did in 1987.

Indeed, DFAT had an important development role in the 90s — particularly in Cambodia and Indonesia — and, much further back, was the agency responsible for Australia’s involvement in the original Colombo Plan.

The DFAT now enlarged and strengthened faces challenges, some similar and others different from those that faced the department in 1987.

Few people in 1987 could have imagined that in the space of a couple of decades China would succeed Japan as our largest trading partner

Indeed our first Ambassador to the People’s Republic of China, Stephen FitzGerald, could have assembled all the Australians present in northern China in one room in the mid 1970s.

By the time I was Ambassador to China a few years ago the extent of Australian involvement had been utterly transformed.

The future: building an organisation with the capabilities we need

In the years ahead, as we continue to forge a culture and a workforce representing all of the various functions of Australia’s international engagement, we will face real challenges.

We as a department will also be involved in helping government to respond to the significant challenges that now threaten the rules-based international order that has underpinned Australia’s security and prosperity since the end of World War II.

As a department, we need to ensure we have the skills and capabilities to thrive and advance Australia’s national interest in the challenging world of the 21st Century.

Based on our record of achievement since 1987, I think there is cause for optimism that the department will rise to these new challenges but we are currently taking a hard-headed look at our capability to implement the Foreign Policy White Paper.

Today we can look back with a sense of satisfaction on the contributions made by many men and women to the Department of the modern era.

As we reflect on the history of DFAT over the last thirty years, the Department’s historians are collaborating with academic colleagues on a history of DFAT and its antecedents since 1901.  My predecessor, Peter Varghese AO, supported the idea and I’m pleased to report that the project is progressing well.

It is my hope that a deeper knowledge of our past as an institution will help us face the challenges of the future.

Conclusion

Ladies and gentlemen, thank you very much for coming today to celebrate DFAT’s 30th birthday.

Thank you to all of you who have served in so many different capacities over the years, here in Canberra, as part of our overseas network and on overseas missions.

In my mind, there is no doubt that Australia has been well served by this national institution over the past 30 years — and I look forward to the next 30 years as a time in which our skills and dedication will be greatly in demand.

Thank you.

ENDS

Last Updated: 25 July 2017