The Commonwealth Government currently spends some $1.4 billion per year on its diplomacy functions, which are the traditional responsibility of national governments. This is essentially the cost of doing business with the world.
Funding for the Department of Foreign Affairs and Trade has generally been stable in real terms for more than a decade, reflecting a mature network and no major changes to its functions.
Nonetheless, pressures are growing on the foreign affairs function reflecting the increasingly globalised nature of the world and the complexity of the relationships that result. This includes increasing trade and investment volumes, a growing relevance of free trade agreements and increasing numbers of Australians travelling abroad.
Providing consular services is a core function of the Department. In 2012-13 a total of 8.8 million Australians travelled abroad with the Department providing consular assistance to 11,900 Australians who encountered difficulty overseas.
The Commission notes that the Department is currently reviewing its Consular Strategy. A mechanism to control demand for consular services is to introduce cost recovery arrangements that extend beyond existing consular and notarial fees. The United Kingdom, for example, charges an ‘attendance fee’ of £130 per hour for consular assistance provided (including travel time if performed away from the consular office). Australia should consider imposing a similar cost recovery arrangement.
Opportunities also exist to cease or scale back funding for public diplomacy activities such as the Australia Network and the International Relations Grants Program. Ostensibly, these activities are intended to support Australia’s international goals, but the relationship between the funded activities and these goals is not clear.
The Australia Network is broadcast to more than 46 countries in the Asia-Pacific region. It seeks to promote a positive and accurate image of Australia and build regional, cross-cultural understanding. The ABC has been awarded successive contracts to deliver this service including the most recent contract in September 2012, valued at $223 million for 10 years. However, the Australia Network is an expensive option for meeting such diplomatic objectives given its limited outreach to a small audience. The Commission recommends that the funding directed toward the Australia Network would be better directed to other areas or returned to the Budget.
The Commission considers that there are a number of other options to improve the efficiency and effectiveness of Australia’s diplomacy and consular activities. These include ending future involvements in international expositions; re-examining the need for embassies in high-cost locations; reviewing overseas conditions and allowances; greater use of arrangements to share resources overseas with like-minded countries; and regularly reviewing Australia’s memberships of international organisations.
Australia is a member of a large number of international organisations. Membership and other contributions exceed $1 billion per year, but the continuing value of these organisations is not always scrutinised. Australia should consider withdrawing from organisations that are of only peripheral strategic interest, such as the European Bank for Reconstruction and Development and the International Criminal Tribunal for the Former Yugoslavia. It should not pursue joining the African Development Bank or the International Fund for Agricultural Development.
Passport sales are a major source of revenue, but their production is also a major cost. While significant parts of the passport production have been outsourced, the current funding model is not effective in ensuring that there is a continuing improvement in efficiency, with costs escalating by nearly 20 per cent at the most recent review in 2012-13. Once the current Passport Redevelopment Project has delivered new systems, options for outsourcing the process of producing and issuing passports should be considered.
In line with the Commission’s recommendations on industry assistance in Section 8.1, residual functions of Austrade, Tourism Australia and EFIC would be incorporated into the Department of Foreign Affairs and Trade.
Recommendation 36: Resourcing diplomacy and consular activities
International diplomacy is a core responsibility of national governments. The Commission recommends steps be taken to improve the cost efficiency and effectiveness of the operations of the Department of Foreign Affairs and Trade and portfolio agencies including by:
- ensuring the planned review of diplomatic resourcing be undertaken by an independent reviewer rather than the Department, with the review re-assessing the need for embassies in high-cost locations and making greater use of arrangements to share resources overseas with like-minded countries;
- ending future involvement in international expositions, introducing fees for consular services, reviewing overseas conditions and allowances, rationalising Australia's memberships of international organisations and considering further outsourcing of passport production; and
- ceasing funding for the Australia Network and scaling back the International Relations Grants Program.