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DFAT turns 30: Foreign Affairs and Trade still stronger together

DFAT is the only mega department to have retained almost all of its 1987 functions intact.

Bob Hawke with Mikeal Gorbachev in Moscow in 1987 (Photo: DFAT)
Bob Hawke with Mikeal Gorbachev in Moscow in 1987 (Photo: DFAT)
Published 3 Aug 2017 

While debate still simmers on the merits of the Prime Minister's plan to establish a Department of Home Affairs, another mega-department celebrated a noteworthy anniversary last week. Staff and former staff of the Department of Foreign Affairs and Trade (DFAT) gathered on 24 July to mark three decades since it was established as part of the Hawke Government's sweeping changes to Commonwealth administration in 1987 (the speech given last week by DFAT Secretary Frances Adamson is here).

In that 1987 shakeup, the number of Commonwealth Departments was cut from 28 to 18 and the Cabinet reduced to 16. The changes were overwhelmingly driven by a desire to improve the coherence, coordination and effectiveness of government.

In contrast with the well-telegraphed Home Affairs announcement, planning for the 1987 changes was kept under wraps in the Prime Minister's Department, where they were worked up in detail with next to no outside consultation. With as many affected parties likely to oppose as to support the changes, they were presented as a done deal by Prime Minister Bob Hawke, with the announcement complemented by a new Administrative Arrangements Order outlining the changes to functions across the system.

The shock was palpable and tensions were high in the aftermath as staff in the affected Departments organised themselves around new combinations of functions and colleagues amid the inevitable jockeying for position and influence. Perhaps more than other new portfolios (such as Transport and Communications or Primary Industries and Energy), DFAT brought together two Departments with strong but different cultures and a history of contested turf.

Yet the logic of combining foreign and security policy with the trade and economic elements of Australia's international interests was compelling. It soon became apparent that, by connecting the dots, both the trade and foreign policy functions were able to operate with more punch together than had been possible apart. With this in mind, it is perhaps not surprising that, 30 years on, DFAT is the only mega-department to have retained almost all of its 1987 functions intact, bolstered more recently by the re-inclusion of the development function from AusAid. While the logic of a smaller Cabinet supported by non-Cabinet Ministers within the mega portfolios has survived, other departments have been pulled apart and re-combined in various ways to meet changing contexts and priorities

One of the reasons DFAT pulled together effectively almost from the outset was there was already plenty of momentum for what would prove to be a highly energetic and creative period for Australian economic diplomacy. The cracking pace of our economic reforms of the 1980s (broadly supported across the political spectrum) opened Australia to the global economy. It was also the right time for more vigorous pursuit of engagement in our own region. Deepening trade and investment links based on obvious economic complementarities presented a practical way of drawing closer to our neighbours, supporting regional growth and prosperity, and reducing the risk of instability that could be exploited by competing external powers.

Determined efforts from Foreign Minister Gareth Evans led to the formation of APEC in 1989, and Prime Minister Paul Keating pulled off its elevation to Heads-of-Government-level annual meetings. While built around an economic agenda and terminology that carefully preserved the delicacy of including Taiwan and Hong Kong along with Beijing, APEC became an effective force for critical deepening of constructive economic engagement between the US and China. Early ambitions for APEC to spearhead unilateral tariff reforms proved a bridge too far, but practical trade facilitation and encouragement for economic policy reform have paid dividends.

Further afield, the Uruguay Round of trade negotiations launched in 1986 offered a long-awaited opportunity to tackle the persistent bias against agriculture in the General Agreement on Tariffs and Trade rules. The inspired move to create the Cairns Group of fair trading agricultural exporting countries from a cross-regional collection of developing and developed countries boosted Australia's influence in negotiations that had previously been dominated by the US and the European Communities. Once they were operating inside DFAT, our trade negotiators had access to the full range of Australia's diplomatic network to reach target capitals and were able to forge a key role for Australia in the decisions that led finally to disciplines on agricultural support and protection in the new World Trade Organisation (WTO).

If all that sounds heady, it was, especially in comparison with the erosion of support for trade as a driver of prosperity that we have seen in the last decade, since the global financial crisis. The 'Washington consensus', embedded in the mandates of the post WW2 Bretton Woods institutions, has lost both its gloss and, in significant measure, its legitimacy. A flurry of enthusiasm for global cooperation to shore things up was mustered (again with strong Australian leadership) when the G20 was elevated to leaders' level in the global financial crisis, but that effort too is now flagging.

The 'continuation clause' embedded in the WTO envisaged further rounds of liberalising global trade deals but the Doha Round has now been adrift for more than a decade. In this context Australia, initially reluctantly, accepted that sufficiently trade-enhancing regional and bilateral deals, while less beneficial, were worthwhile. We have now notched up nine such agreements and more in the works, including still a prospect of the TPP without the US.

This work is undoubtedly harder today than it was in the 1980s and 1990s. We might take heart from the results of Lowy Institute polling that shows Australians remain relatively positive about the merits of globalisation, with some 78% saying it is 'mostly good' for our country. More than heart will be needed, however, to rekindle the sense of common purpose that could underpin a recovery of economic cooperation at the global level. American commitment has usually been seen as an essential precondition. 

In today's edgier and less predictable world, Australia needs its international capabilities to be coordinated and harnessed effectively, not least in support of our economic interests. The decision taken in 1987 to pull together the strands of Australia's international policy development and execution in DFAT seems to have stood the test of time. With more testing times ahead, that is just as well.

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