The recent report by the Lowy Institute’s Blue Ribbon Panel on Australia’s Diplomatic Deficit Reinvesting in our instruments of international policy, paints a very disturbing picture of the state of Australian diplomacy and of the Department of Foreign Affairs and Trade (DFAT).

According to the Lowy report, “Australia is ill‐equipped to secure fundamental objectives internationally that have a direct bearing on all of us, let alone to implement the ambitious international agenda set by the Prime Minister, which includes election to the UN Security Council, establishing an Asia‐Pacific Community, and re‐invigorating nuclear non‐proliferation and disarmament negotiations.”

Australia has fewer diplomatic missions than all but a few OECD countries. Near bankrupt Iceland has more overseas posts and wider international representation than does Australia. Our country is under‐represented in regions of growing importance to our interests, including the emerging centres of power in China and India. It is clear that we do not have enough missions or adequately trained diplomats to further Australia’s interests in trade, intelligence gathering, representational activities and in fulfilling the constant demands of distressed Australian travellers requiring consular assistance.

While the decline captured in the Lowy report has occurred over time, the Rudd Government must assume its own considerable share of responsibility. Despite his much‐lauded foreign policy expertise Mr Rudd has consistently denied DFAT the funds it needs to support the nation’s very professional but financially strapped Foreign Service.

In policy statements the Prime Minister promises a great deal. He has argued, for example, that “given the vast continent we occupy, the small population we have and our unique geo‐strategic circumstances, our diplomacy must be the best in the world.” But far from being “the best in the world” the Lowy report underscores that DFAT is stretched to breaking point and suffering from a severe deficit of resources.

The 2008‐09 Budget for Defence was in excess of $22 billion. In comparison, DFAT’s was less than $1.2 billion. The Rudd Budget failed completely to satisfy the fiscal needs of his own expanded demands on the activities of DFAT. Further measures introduced have effectively restrained our Foreign Service from meeting its ongoing commitments, let alone achieving the raft of additional expectations set out in the Department’s ambitious policy statement.

The geopolitical fallout from the 2008‐09 financial melt‐down is only just beginning to become visible. Assuming that Australia cannot remain immune from whatever may be coming, it will need to preserve, and indeed build on, its capacity to respond. Australia will need to develop new and more innovative ways to advance and protect its national interests, and diplomatic agility and expertise are likely to be as important as military capabilities.

The Lowy report makes a compelling case for the Government to commit itself to an urgent renewal of Australia’s Foreign Service. Mr Rudd loudly proclaimed the principle of “creative middle power diplomacy’ and the need to ensure Australia’s voice was heard “across the various councils of the world”; but his miserly constraints on DFAT funding disavow this commitment.

The Prime Minister needs to stop the rot. In the forthcoming May Budget, his government needs to increase the funding for DFAT by at least $20‐25 million a year and stop the frivolous spending initiatives such as the appointment of a resident ambassador to the Holy See.

This is an important report which deserves to be taken seriously by the Rudd Government. Considering the financial constraints it is under, DFAT does its work with great professionalism. But its good work has been seriously impeded by a shortage of resources and a serious decline in overseas representation. It is very difficult to see how this is consistent with Mr Rudd’s belief that Australia should have an activist foreign policy agenda. By responding to the self evident need for a substantial improvement in funding for the Department of Foreign Affairs and Trade the government might well offer the opportunity for Australian diplomacy to be “the best in the world.”