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Part 5: The department's response

The Department of Foreign Affairs and Trade welcomes the report of the Capability Review and the opportunity it presents to improve our capability to meet current and future challenges.

The report provides a high-level assessment of the department's strategy, leadership and delivery capabilities and helpful insights into where we could strengthen these capabilities to position us better as a government agency to meet the challenges of the next decade. It acknowledges that the environment
in which DFAT operates is constantly changing in unexpected ways, that domestic and international issues are becoming increasingly entwined, and that a growing number of agencies have a stake in the work of the overseas network. These factors, combined with continuing tight budget constraints, are defining
characteristics of the department's operating environment. We recognise that the landscape in which we work is shifting and that to remain relevant and effective in advancing the interests of the government and people of Australia, the department must remain flexible and open to change.

The report confirms DFAT's reputation as a strong department that fulfils its principal functions most effectively. I also welcome its recognition of the department's key strengths, including policy advocacy, the value of the overseas network and, most importantly, our people. At the heart of our achievements
is a highly-skilled, committed and motivated workforce in Australia and overseas that is responsive to the needs of the government and the Australian community. We will continue to make a substantial investment in our staff but recognise that there are some associated workforce issues that require attention.
We are also adopting a more strategic approach to human resources management, including utilising professional HR expertise to strengthen workforce planning capabilities, and are assessing the department's structures and work practices through an earlier internal review. These are all areas where more
work needs to be done.

The report states that the department could play a larger role in policy formulation and debates across the government's policy agenda in Canberra, and engage more with the wider public service. The department clearly has an important role to play in aiding the understanding of the government and agencies
of the international environment, and in contributing to policy debates with an international dimension or implications. We will examine options for increasing our engagement in this area. We are strengthening our links across the public service and with external stakeholders, including through an increase
in staff secondments to a wider range of agencies and non-government organisations, such as think tanks, and enhanced cross-agency information exchange. These measures will help foster a more outward-looking perspective, build a broader network of contacts within the APS, and further embed a culture
of collaboration.

The report raised issues around corporate leadership including the sharing of leadership responsibility among the Senior Executive Service, the escalation and prioritisation of decision-making and related implications for risk management. Given the diversity and global reach of our operations, effective
leadership is critical to success, particularly in leading change and articulating strategies and future directions for staff and external stakeholders. The report's findings in this area will be examined carefully to identify what practical steps can be taken to strengthen corporate leadership capabilities.

The department will consider carefully other high-level findings in the report covering articulation of the department's mission, strategic planning and prioritisation, policy making, knowledge management, risk management, governance and stakeholder engagement. We are delivering improvements progressively
in some of these areas, for example, in ICT where planned system upgrades will improve access to information for staff, enhance the exchange of information between agencies, and deliver productivity benefits. At the same time, we need to capture and use our accumulated knowledge and information more
effectively. We also need to reduce our aversion to risk to create more opportunities for innovation in the policy and administrative spheres, and tackle some of the cultural issues that come from operating in the same way for many years. Business planning is another area that requires attention. A more
coherent framework is needed that supports business planning, prioritisation and resourcing decisions across the breadth of the department's operations.

The department thanks the members of the Senior Review Team, Mr Allan Gyngell AO, Ms Helen Williams AO and Mr Ben Rimmer, for their collaborative and constructive approach to the conduct of the review. The extensive experience, knowledge, management and policy expertise the group brought to the review
contributed significantly to its value.

The report provides valuable insights into where DFAT needs to improve its capabilities to enhance the department's contribution to the government's long-term agenda and the public we serve. We look forward to working with the APSC in addressing key review findings in an open, measured and constructive
way. Our action plan will be the focus of that work.

Peter Varghese AO
Secretary
Department of Foreign Affairs and Trade