DFAT reset?

Writing in The Interpreter this month, Justin Brown built the case for rejuvenating the Department of Foreign Affairs and Trade. While I agree broadly with his diagnosis, I offer some alternative solutions to the problems he raised. As Brown has noted, the two major criticisms DFAT faces are that it lacks capability at formulating policy solutions and that it is insular from the rest of the public service.

My solutions to these problems are for DFAT to retain and promote more diverse staff and to engage more with other departments and agencies. Additionally, DFAT should consider opening overseas postings to those outside the department.

Becoming more diverse

The lack of capability and expertise at DFAT, and indeed, across the public service, has been well-documented. One significant but often overlooked reason is the lack of diversity among the public service ranks.

As I wrote in the Lowy policy brief Chinese Australians in the Australian Public Service, Australia’s diverse communities are invaluable sources of international expertise, yet people from culturally and linguistically diverse backgrounds are under-represented in the public service, including at DFAT.

For example, proficient Mandarin or Cantonese-speakers accounted for only 1.2 per cent of DFAT’s APS employees in 2020, a figure below community composition. This is unacceptable for a foreign policy department when China looms so large in Australia’s foreign policy. We know that Australians of Chinese heritage are more likely than the general population to speak a Chinese language. Recruiting and retaining more diverse staff for DFAT would lift its language and cultural capability and should be a priority.

At the same time, DFAT needs to do better to match capabilities to role. This is to avoid the recurring problem of sending Mandarin speakers to a posting in Paris while sending a French speaker to a posting in Shenyang.

One significant barrier to diversity in the public service is promotion prospects. At the moment, public servants from non-English speaking background (even those born in Australia) face significant disadvantage in promotion prospects to senior executives. With a new government focused on diversity and racism, I hope this issue will be urgently addressed, including by implementing the Jenkins review recommendations.

Becoming less insular

DFAT needs to engage more with other departments, agencies, as well as state and territory governments when formulating policy. One way to do that is through cross-agency taskforce. Trade is an area where such coordination is welcomed and indeed necessary.

However, the underlying goal of trade is not to build better relationship with other countries. Rather, it is for Australia’s economic growth. It is therefore essential that the department responsible for Australia’s economy, the Treasury, be deeply involved in formulating trade policies. I would suggest that a cross-agency taskforce be established in the Treasury instead of DFAT.

One important way DFAT influences how other departments think of international affairs is through its cable reporting. As a former public servant who worked in non-DFAT agencies, I found reporting from Australia’s overseas posts to be insightful and relevant to my work – they shaped my policy advice. Even when I was working on domestic issues, it is still important to understand the international context and likely reactions of other countries.

As Brown noted, foreign ministries no longer monopolise the flow of information between governments. Most departments and agencies now have an international engagement function. And domestic issues such as freedom of speech at universities, technology competition, and foreign interference, still require international understanding. Helping these departments and agencies to understand what is going on in the world should be a priority task for DFAT.

Postings

Australia’s diplomatic corps should reflect Australia’s community. If Australia is indeed the most successful multicultural country as the government repeatedly claims, then its diplomats, who represent the country in official capacity overseas, should reflect that diversity. Yet this is not the case when I scroll through the photo gallery of Australian ambassadors.

To reduce the problem of insularity, DFAT should also consider open postings to external recruitment. Diplomatic postings should be an open competitive process just like for other APS vacancies. This is done at Austrade, so that those with relevant experience outside the department can bring their expertise inside the department.

Main image via Flickr user Truque da Banana

A number of experts have argued for change at the Department of Foreign Affairs and Trade to ensure it is match fit for the major geopolitical challenges facing the country.

Some criticism of DFAT’s performance – for example, that it is insular and that it spends too much time analysing problems rather than formulating and implementing solutions – has been similar to that levelled at foreign ministries in many Western countries. Foreign policy today is more contestable than it has ever been, and foreign ministries no longer monopolise the flow of information between capitals.

There is little doubt that the recent decline in DFAT’s funding has constrained the department’s capacity. But, regardless of the quantum of its future funding, a heavy onus will be on the department to demonstrate that it is doing what it can to lift output.

In my view, major surgery of DFAT is not warranted. In many areas – notably trade and consular and crisis management – the department has a strong record of achievement, and much of its work happens out of the public view and is routinely underrated.

Much could be achieved through a targeted program of change that I think should be focused on five main areas: structure; capabilities at headquarters; work practices; organisational culture; and talent management.

Structure

Market diversification is one of the biggest economic challenges facing the country. While there is a range of activities relevant to this agenda taking place in and outside DFAT, a concerted and long-term effort is required. A high-level cross-agency task force should be established in DFAT drawing in resources from Austrade and the Agriculture, Industry and Home Affairs departments and charged with driving and coordinating a major program.

As Allan Gyngell advocated last week in the Australian Financial Review, there is a clear case for stepping up Australia’s relations with Europe. The relevant division in DFAT handling Europe is underpowered. A senior representative position should be established and tasked with delivering a coherent plan that connects our Europe and Indo-Pacific strategies.

Capabilities at headquarters

Much time and energy in DFAT is taken up with ensuring that the overseas network is fully staffed. But this has come at a cost of persistent staffing gaps at headquarters, particularly at the middle management level, and some loss of expertise and policy grunt in many areas.

The department’s processes should be adjusted to place more weighting on ensuring all key positions at headquarters are filled and kept filled. Staff should be told to expect to remain in a single position at headquarters for at least three years. In addition, a more concerted effort is needed to place officers returning from postings into areas at headquarters that would benefit from the expertise they developed while overseas.

Work practices

DFAT’s strong minister-focused culture is one of its strengths, but in an era of extraordinarily well-staffed and hyperactive ministerial offices, one of the downsides is that many scarce DFAT resources can be consumed in preparing voluminous briefing books and servicing diverse and unceasing informational requests. And as DFAT has got larger, servicing briefing requests from senior department officials, most notably for Senate Estimates, has also become the norm, representing a further draw on resources.

The department should use the opportunity of the incoming government to reset the systems around the preparation and delivery of briefing material to develop new arrangements that prioritise essential demands, emphasise timeliness and brevity and scrap archaic formatting and presentational requirements.

A similar reset should also be undertaken on cables from posts, many of which are currently unread and represent a skewing of resources. DFAT headquarters should take a more muscular approach by guiding posts on what should be reported by cable to ensure it is targeted to the current policy agenda. Reporting that does little more than service the intellectual curiosity of non-DFAT agencies should be scaled back dramatically.

Organisational culture

Some of the criticism of DFAT as risk averse is lazy. Caution is natural in a department that is programmed to keep all viable options and channels open for as long as possible.

At the same time that DFAT’s resource problems have deepened, it has become highly conservative in its approach to proposing policy solutions, reflecting a concern to avoid being directed to find savings to service new initiatives. The risk is that DFAT may be seen as a status quo agency that lacks creativity.

A long-term campaign is needed to promote a pro-innovation environment in the department. This will require cultural change and a high trust relationship between the department and its ministers. In my view, strengthening DFAT’s collection and analysis of data would also be a practical step forward. Following the example of the US State Department, DFAT should establish a data analytics unit to deliver robust and comprehensive quantitative analysis focused on pollinating policy deliberations.

Talent management

While attention has tended to focus on the pros and cons of political appointments to diplomatic positions, it is important that DFAT put in place modern systems to deliver succession planning for key senior head of mission positions.

There have been instances in the past that suggest the absence of a plan for filling important positions “over the horizon”. Departmental programs need to be developed to ensure that potential candidates for such positions are identified early and provided with incentives, opportunities and guidance from the top down so that they are both qualified and available when such positions fall vacant.

Worry about the underfunding of Australian diplomacy has almost become an annual ritual around budget time. But with an election imminent, this has become a higher stakes discussion given that the federal opposition has promised to rebuild Australian diplomacy if it wins office. Funding is, however, only one part of a vicious cycle where under-resourcing makes it harder for the Department of Foreign Affairs and Trade to prove its value and relevance, meaning it’s underappreciated, in turn making budgetary tussles even more difficult.

So, more money is only half the answer. What’s needed is a bigger agenda to rethink Australian foreign policy. To answer Mercedes Page’s recent call in The Interpreter for a “reimagining” of DFAT as “a 21st century foreign affairs department”, here are four ideas – some new, some old; some big, some small – for a more effective organisation.

Coordinate a national security strategy including capability assessments

The 2017 Foreign Policy White Paper is a remarkable document. Despite its age, its forthright analysis remains well calibrated. However, the white paper’s original deceit has only become starker: its silence on capability and resourcing.

The cardinal principle of grand strategy is the effective alignment of means with ends. In failing to articulate the requisite capabilities, the white paper was always doomed to be more aspiration than strategy. But it doesn’t have to be like this. One reason why the 2020 Defence Strategic Update was so meaningful was that it was accompanied by a force structure plan.

Regardless of the election outcome, DFAT should seek government approval to lead a whole-of-government national security strategy. This should have a broader and deeper remit than previous white papers. Not only should it thoroughly assess capability requirements, but these must be calibrated against every tool of foreign policy across the spectrum of diplomacy, defence, intelligence and development.

Make DFAT a central agency

Key to developing and implementing an all-elements national security strategy is elevating and reframing DFAT’s role. The department should be redesignated as a “central agency” rather than a “line agency”, to adopt Canberra bureaucrat-speak, joining the departments of Prime Minister & Cabinet (PMC), Treasury, and Finance. This would bring DFAT into the centre of government decision-making and coordination. Such a change would serve two important purposes. First, it would afford DFAT a clear leadership role in coordinating policy and capability across all arms of international policy. And second, it would elevate diplomacy as the government’s primary foreign policy tool.

DFAT would integrate PMC’s National Security and International Policy Division and adopt a role akin to the White House National Security Council, directly advising the prime minister and the national security committee of cabinet. As former research director at the Perth USAsia Centre Jeffrey Wilson has suggested, this also would help evolve DFAT’s identity beyond being a diplomatic service, allowing it to take up the mantle of leading international policy across government.

Genuinely commit to more flexible staffing

To take on this role, it would be even more important that DFAT attract and retain the best people. The Department must recognise that it plays in a more competitive labour market where the skills and experiences of diplomacy are no longer so exclusive. This is a challenge common to other foreign ministries. “The State Department”, according to Uzra Zeya and Jon Finer, authors of a special report by the Council for Foreign Relations released in November 2020, “risks losing the ‘war for talent,’ not only to the private sector but increasingly to other government agencies, due to inflexible career tracks, self-defeating hiring constraints, and a lack of commitment to training and professional development.”

A full commitment to flexibility, in both working style and career development, will be good for DFAT’s people and policy. To capture and keep the right skills to meet the array of challenges facing Australia, attitudes and incentives must shift. The Department must accept the post-Covid reality of virtual and remote work and move away from privileging a single-track DFAT career towards better valuing diverse experiences. A freer flow of people between government and the private sector should be normalised.

Staff should be encouraged to take career breaks to study and work elsewhere by making leave without pay a right rather than a rare privilege. Allowing those based in Australia to work more easily from state and territory capitals, as Austrade does, would also open up a broader talent pool and ensure diplomats represent a wider geographic spread. A more radical idea would be to create a “diplomatic reserve”, allowing security-cleared specialists and experienced officers to be flexibly called up for special assignments. This could help generate a surge capacity to respond to crises, for example, without shifting so many full-time policymakers from their usual roles (as happened during DFAT’s Covid response).

Blow up the cable system

DFAT’s primary conduit for sharing information between overseas posts and government in Australia remains the “cable”, a platform that, as its name suggests, was designed around 20th century technology. For those ignorant this arcane system, imagine sending a fax when you could use WhatsApp.

The cable system diminishes DFAT’s influence, making it, in the words of Liberal MP and former diplomat Dave Sharma, “completely out of sync with the working habits and preferences of today’s governing class”. In my time at DFAT, I saw at least three attempts to redesign cables. All fell short because they started with the status quo.

A system with no fealty to the past is needed. Starting from first principles, a new platform should utilise design thinking, prioritising the experience of its users: time-poor decision-makers in need of accessible, concise, and tailored analysis and advice.

The 2022 federal budget was handed down on Tuesday night, and it appeared mostly bad news for Australian foreign policy. Amid all the talk of an international order deteriorating before our very eyes, government will reduce spending on diplomacy and overseas aid by as much as 19 per cent in the years to 2026.

This decline will be in spite of the welcome resumption of indexation for Official Development Assistance, which will provide a slight lift to baseline development funding, and a number of new temporary and targeted measures to support development and infrastructure in the Pacific. Yet Australia’s overall diplomacy appears the loser, with funding for “Foreign Affairs and Trade Operations” falling from more than $1.27 billion in 2022–23 to closer to $1.15 billion in 2025–26.  

As has been well covered in The Interpreter and elsewhere over the years, funding for the Department of Foreign Affairs and Trade has flatlined dramatically over the past three decades. By some metrics DFAT is smaller in 2022 in absolute terms than it was 15 years ago, with a smaller diplomatic network than other similar economies.

The hollowing out of DFAT doesn’t bode well for how Australia navigates a rapidly deteriorating global security environment, which the government often points out is the worst Australia has faced since the Second World War.

But look closely and maybe there’s a silver lining to DFAT’s budgetary woes. Where there are challenges, there is opportunity.

Australia has a historic opportunity to think differently and strategically about how the nation develops and practises foreign policy in a rapidly changing world. How Australia builds a 21st century foreign affairs department “fit-for-purpose” to use the favoured phrase of the day. How Australia can invest in and enhance its diplomacy in a world where every relationship is important, and interests are under pressure from many directions, not only in a security sense, but in trade and influence, from the environment to questions of cultural appeal. All this in an age increasingly characterised by the blurring of foreign and domestic policy.

After all, DFAT’s problems go beyond a lack of funding. More money certainly helps, but funding alone isn’t the long-term solution to the way foreign policy is developed or performed or the quick fix to enhance Australia’s international influence that pundits and practitioners alike often think it is. DFAT may be underappreciated but reform of the department could involve reimagining the way Australia protects and promotes its interests and values for the better.

With a federal election looming, a returned or newly formed government should seize the opportunity to undertake a review of DFAT before committing significant new funds to the department. This should not be done in isolation. The Australian National University’s Rory Medcalf has called for a national interest strategy, which sets out how the Australian government integrates and balances security issues with prosperity and social cohesion. As the next government forms at a time of rapid global change this is a commendable approach. It could sit alongside a new Foreign Policy White Paper, bringing more cohesion between Australian government strategies.

So yes, the latest federal budget wasn’t great for DFAT, although no one really expected differently. But instead of the familiar round of recriminations and calls for more funding, there is an opportunity to take stock and think about how Australia can better use all levers of national power and statecraft to protect and promote its interests, and the foreign policy and diplomatic apparatus needed to do so.