Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Parliamentary Joint Committee on Foreign Affairs, Defence and Trade
23/02/2012
Australia's overseas representation

THURSBY, Mr Alex, CEO, Asia Pacific, Europe and America, ANZ Banking Group Limited

JOHNSTON, Mr Michael, Head of Government and Regulatory Affairs, ANZ Banking Group Limited

Subcommittee met at 13:30

CHAIR ( Mr Champion ): I declare open this public hearing into Australia's overseas representation. This is the third hearing of the inquiry that is being conducted by the Foreign Affairs Subcommittee of the Joint Standing Committee on Foreign Affairs, Defence and Trade, which will look at the work and structure of Australia's international diplomatic network.

Today the committee will receive evidence from two of Australia's major banks, the ANZ Bank and the Commonwealth Bank, which has significant interests in Indonesia and China. It has been suggested that Australia's diplomatic footprint in Indonesia and China should be expanded. The committee will seek the view of the banks and also their opinion of the performance of Australia's diplomats in those countries.

The committee will also hear from the Committee for Melbourne, which has interests in promoting education to overseas students. Professor John Langmore has provided views on the funding of DFAT and has proposed that AusAID create a mediation support unit. The committee will also take evidence from the United Macedonian Diaspora, which has commented on the relationship between DFAT and its stakeholders and has suggested the opening of an embassy in the Republic of Macedonia.

This is the public hearing will be followed by a hearing in Canberra on Monday, when the Australia Africa Mining Industry Group and the Australian Industry Group will provide evidence.

Before commencing the hearing I refer any members of the media who may be observing the need to report fairly and accurately the proceedings of the committee as required by the Senate order concerning the broadcast of Senate and committee proceedings.

On behalf of the committee I welcome the ANZ Bank. You will have before you a document which provide some procedural advice to witnesses. I will pause to allow used to have a quick look at that information. Before proceeding to questions, do you wish to make a short opening statement to the committee?

Mr Thursby : Thank you, Chair, we would. Just to give a little bit of insight as to where ANZ is first and then give some context of our immediate dealings with DFAT and our views of them. Firstly, as many of you know, ANZ has a super-regional strategy. That super-regional strategy is actually now becoming quite significant in terms of the size and scope of the bank. Since 2007 we have increased our revenues from $700 million to approximately $2.5 billion last year. We now make profits of $230 million to $739 million last year. We have capital of about $7½ billion. We have liabilities to customers—customer deposits—of $72 billion and $34 billion in loans. It is a very different structure of a balance sheet to what the Australian banks have, where we have much more customer liabilities than we do loans.

Mr RUDDOCK: So you are talking about the Asia-Pacific?

Mr Thursby : And Europe and America—

Mr RUDDOCK: As distinct from the ANZ as a whole?

Mr Thursby : The whole ANZ, yes. Clearly, it is beginning to significantly affect the bank. We have recently been rated now the fifth corporate bank by our customers by the Greenwich survey and we are obviously the No. 1 bank in the Pacific. These are massive inroads into these markets for any bank. We have established businesses of what we call franchise in the Pacific, Indonesia, Vietnam, Singapore, Hong Kong and Taiwan, and we have growing businesses in China and India. We have strong representation single-branch network businesses in Japan, Korea, Frankfurt, New York and London. We have 2.3 million customers with a substantial institutional banking division or corporate banking and an emerging commercial bank business and we also have an affluent and emerging affluent retail proposition which is quite significant.

What is very interesting is that our intra-Asia connectivity and trade flows are becoming more important for Australia. Last year some $600 million of revenue was generated in Australia by our customers from those areas investing in or doing trade with Australia. That has doubled in the last two years and has a significant positive effect on Australia.

Strategically, we think this is Asia's century. We think there is enormous opportunity for our country to take advantage of this. Europe and America are not our primary markets and we see little delta expansion on either a macro basis or a micro basis. Sixty per cent of global growth now comes from Asia. This is a significant change from before. In this decade we expect China to become the biggest economy in the world and over the decades it will continue to become the most important economy other than the US in the world. It is not just about China, though; it is also about the emergence of Indonesia, Vietnam and India, who are establishing substantial domestic economies. Also, we should not forget the significance of Korea, Japan, Hong Kong and Singapore as still being critically important within the region. We believe that much of the future of the Australian economy relies on corporations like ANZ becoming transnational. This will be good for Australia, its people and, of course, the shareholders and customers.

Australia as a country is extraordinarily well regarded in Asia. The Australian brand is a significant differentiator for us doing business.

Mr RUDDOCK: Differentiator from whom?

Mr Thursby : Versus the United Kingdom, continental Europe and North America. To be more candid about it, we are not seen as a former colonial power; we are seen in a very different way. Physical proximity, natural resources and the appeal of Australia for travel and education for many Asians differentiates us. The banking industry is held in high regard, particularly after the 2008 financial crisis, and the shapes of our banks are very similar to those of the Asian banks that have evolved and emerged over the last 10 years.

If I may turn to DFAT, it is our belief as an institution, and my personal belief, that DFAT is a huge competitive advantage for Australia. I have worked many years with government departments during my career, including foreign services of other countries such as the United Kingdom, France, the United States et cetera, and the quality of DFAT is second to none. Their support for commercial enterprises both inward and outward is, frankly, outstanding. The way that the government has set up both foreign affairs and trade as one entity is very different to how many other countries separate those two factors. We believe in them being together because they go together.

We all know that for much of Australia's history mining and agriculture have been the major exports. Instinctively, DFAT has focused on trade in the past years. But, as our economy builds around services and creative industries including financial services, it understands its role changes from those who stimulate trade for those who stimulate investment. It has become about influencing governments, regulators and policymakers to allow investment to be made safely and calmly. We believe that, while free trade is important, the flow of free investment is even more critical to support trade. Solid bilateral relationships built by DFAT people on the ground as well as their skills in negotiating FTAs and cross-border investments will, we believe, in the future become critical to allow Australia's offshore investment to grow.

We have worked with DFAT as a partnership and we have found that they have moved very quickly in how they do business. ANZ appreciates the assistance that DFAT has provided in lobbying for licences in places like India, in knowledge about countries, in passing commercial information and in resolving disputes. In return, it is important that we continue to provide that information that we see in the marketplace, support DFAT at events that promote both trade and investment flows—trade missions—and help build the Australia brand overseas.

To help business take advantage of opportunities in Asia, DFAT needs a greater presence in the region, not just in China but in emerging economies such as Indonesia, Vietnam and possibly one day in Myanmar. As well as additional resources, consideration should be given to reallocation of resources to align Australia's diplomatic representation with our economic and strategic interests as a country. To be a little bit more candid about it: maybe less in Europe and North America and more in the Asia-Pacific region.

CHAIR: Thank you, Mr Thursby. We do appreciate the evidence you have given. The benefit for trade is something the committee is turning its mind to. Do you see that emerging influencing of regulators, the knowledge of regulation and investment flows and the like as an expanding role for public diplomacy as well, not just influencing governments but the people beneath them so that, rather than being hostile to foreign investment, they see it as a benefit to the country?

Mr Thursby : Yes. I have worked some 25 years in Asia—20 years within Asia and 25 years on Asia—with two institutions, including the ANZ. What I have noticed is DFAT's lobbying and analysis of situations which say, 'You can open your doors. This will be beneficial for these reasons,' and that Australia, which is an open economy in terms of receiving investment, is seen positively for investment coming into Australia. I think what is quite remarkable is that Australia, certainly in my tenure at ANZ, has seen many of the countries on the other side see Australia as a good place to invest. That has helped in releasing our investment into their countries. We are seen in a very different way, as I touched upon—that is, as a country where politicians, public service and corporations want to see Australian corporations come in. If anything, in places like Indonesia there is a view that maybe we are not as aggressive as we should be versus our European and American peers. In fact, they would like to see more come in.

CHAIR: Can you give us an idea of our peers' activities so we can make some comparison?

Mr Thursby : If you look at North America into China, there are now at least 25 North American corporations that have turnovers in excess of $2 billion per annum from just their China operation. This is a standard. Dividends which flow back to North America when taxation allows are substantive, and that is just one country. The Europeans in places like Indonesia have been substantive investors, not only to tackle the domestic market but also to use them as export centres, particularly in chemicals and other areas like that. So we are as a western country, if you wish to call it that, substantively behind our peer countries. What is interesting is that some of the emerging Asian countries that have now turned into fully developed economies are much more aggressive. The Koreans and the Japanese are obvious areas, but not the only areas. Honk Kong and Singapore are aggressively investing in the region.

Dr STONE: I was familiar with your entree into the Cambodian market. That was a very interesting experience for you I am sure, not to mention for the embassy based there. To what extent do you find that the locally engaged staff in our diplomatic posts are helpful with perhaps in-country knowledge and better language, or do you find that unless you are dealing with Australian based staff there is a loss of usefulness?

Mr Thursby : Predominantly the leaders of the diplomatic missions are the specific people we deal with at my level. I have found them to include local staff a lot in the discussions and local staff are involved, no question, in lobbying at lower levels and in searching out who is the right person to talk to, where that is not clear. The day-to-day lobbying behind the scenes is still very much done at the senior level. If someone goes in to see the central bank governor, it will probably be the ambassador and the equivalent most senior person representing the trade area. There is a level with which the most senior person has to lobby. If that person happens to be an Australian then clearly they are going to be at the primary end of it. I have at all times seen the inclusiveness to use local staff for a number of issues, but not at that most senior level.

Dr STONE: So you do not see that we could overcome our absence in many places where we should be—China or elsewhere in Asia, Africa, or you suggest Latin America—and that, given the costs of all of those places, we could enlarge our footprint and still do a decent job with more locally engaged staff, who would be at a lower level.

Mr Thursby : This is a complex situation because obviously the diplomatic missions are representing the country. Every country in the world goes through the same issue of whether it could have at the most senior level a national of another country representing it as the ambassador or the high commissioner. I do not think that is likely. You are going to have a form of expatriate there in these areas. What I would say is that those people work very hard and are actually a lot more effective on a commercial element than possibly people from other diplomatic corps. That is the big thing that I see as very different. For the British, who I was highly involved with, the commercial side of the ambassador's role is a lot stronger. They are much more committed to it and they are much more effective.

Dr STONE: The Australians compared to the British?

Mr Thursby : Yes. Much more.

Mr RUDDOCK: You are saying the British are?

Mr Thursby : No. I am saying the Australians.

Dr STONE: How do we compare with, say, the New Zealanders or Canadians or the United States?

Mr Thursby : I think we are as effective as the New Zealanders. I have no experience of dealing with the New Zealanders. The issue, I think, is not around the diplomatic corps. The issue of expanding into Asia is more to do with Australian corporations' strategy, their boldness and their understanding of what opportunities are required, not only for growth but maybe for survival. I think that is much more of an issue.

CHAIR: We have been trying to ascertain if there is a link between diplomatic representation and companies taking up those opportunities. Are we missing opportunities at the moment?

Mr Thursby : I think we are missing opportunities, but it is a boardroom issue, not a DFAT issue.

Dr STONE: In Cambodia, for example, did the embassy there assist?

Mr Thursby : Yes. Greatly. In India, we would not have got that licence without both the ambassadors—the current ambassador and the predecessor—actively pursuing in very difficult circumstances of multiple tiered relationships. They were a huge help. I personally did probably 12 visits over a two-year span. I think the ambassadors did probably twice-that-plus to help. They were tenacious and value added. To get a corporation to do this really needs change in the boardroom.

Mr RUDDOCK: We are looking for objective information that would enable us to make recommendations on what the government might consider doing in relation to foreign affairs representation. We are looking at it across the board, at all of the various Commonwealth agencies. Has our lack of representation inhibited your activities abroad in a meaningful way that we should be aware of? That is the first question. If you are looking at prioritising where we might need to be more active, are you able to quantify in any meaningful way how you would come to a view that activity ought to occur in a particular place? We are getting a lot of representations. You will see we have Macedonians later in the day. You will get Europeans. If Michael Danby was here, he would be talking about Ukraine. You get requests out of Africa and issues in relation to the Pacific. Then you get to China, particularly consular representation. So we are getting a lot of special pleading. I am asking myself all of the time: is there an objective way of assessing where these needs ought to be addressed and what is the priority?

Mr Thursby : It is a very good question. The first response I would suggest is to answer this strategic question: where do you feel Australia can activate investment and further trade? In my view that is quite clearly Asia. The second question I would ask is: what contribution over the next 50 years will various regions and various countries make towards global growth and the economy as a whole? Our view is that is quite clearly Asia. The third question is: what things do you have to protect in terms of the existing trade flows that you already have? I would again say that is potentially Asia and the Pacific, albeit that it is not anywhere near as significant, but there is an impact. The objective test that I think you could use is to first of all understand that macro-effect.

In terms of micro-effect and deciding whether to put one guy here or two guys there or no guys there, I think it is analysis of the macro relative to that country. Do you see Australia exporting lots of coal, lots of agricultural items historically and in the future to Russia or do you see Australia exporting lots of coal, financial services and agricultural products to China? Once you ask yourself that question, I think you will get the objective answers you need.

Mr RUDDOCK: Some of the priorities that have been suggested to us, which you might care to comment on, are Indonesia, say eastern Java—

Mr Thursby : I think Java as a whole and Indonesia as a whole is a massive opportunity for Australian enterprises.

Mr RUDDOCK: The more western provinces of China, as distinct from the coastal cities?

Mr Thursby : Yes, Chongqing and Chengdu are significant cities that are within the policy. The policy of China is that Chongqing and Chengdu are the cities that will capture the growth of western China. China needs to grow those areas substantively because the economic gap between the eastern seaboard and western China has widened considerably over the last 15 or 20 years. They realise that they need to bring western China into the high-development models and Chongqing is the designated city to do that. If you look at Chinese policy, while you would think centralised policy does that, in fact it is the city governments that drive that development. Thus you see the development of Shanghai, Guangzhou and Shenzhen, Tianjin and of course Beijing.

Mr RUDDOCK: Central Asia?

Mr Thursby : Central Asia is generally resources the other way. We are not looking at Central Asia. We think places closer to home are appropriate. I am not an expert on Central Asia—Kazakhstan, Uzbekistan et cetera. We looked at Kazakhstan. It is predominately an exporter of energy so our representation one day might be one branch working on servicing clients.

Mr RUDDOCK: If you are looking at India, is it the same spread? Ought we look at more representation in Hyderabad?

Mr Thursby : Yes, and the simple reason I say that has to do with a lot of the economic activity. If you just look at India as it stands today, why are Bombay, Delhi and Bangalore more developed economically than Calcutta, or Kolkata? The simple reason is that the local governments drove that. So you have to have liaison with the local governments, who are actually the people who get you the licences, or assist you in getting the licences. They free up land and buildings if need be. They process so much. People look at India and China, particularly China, and say they are centralised states. In terms of economic development, they are incredibly decentralised. So we need that liaison in those important cities. One has to say you cannot cover everything, but I think that in somewhere like India multiple representation would be beneficial—and definitely in China.

Mr RUDDOCK: Would you like to rank them?

Mr Thursby : As I said, I think that for the good of Australian corporations one should not be looking just at China.

Mr RUDDOCK: We have got ambit claims; that is the point I am making.

Mr Thursby : Yes. I think the issue is that, if you look at the numbers today, it is a trade flow. The next step for Australia, which is important in my view for development of Australian corporations, is investment flow. That has to be on a far broader perspective than just China.

CHAIR: It potentially requires a greater effort too.

Mr Thursby : Yes. I question whether you go into France.

Mr LAURIE FERGUSON: I have two points. On the way through you gave scenarios where the countries we are dealing with should see that it is in their interests as well to open up their markets to you, and we have had cooperation by DFAT and that. Have you had any situations where the home nation did not quite see it that way and there was a lot of political resistance to any of your initiatives? If so, in those cases could DFAT have dealt with it differently? Have there been any areas where you have been part of a situation where there was conflict over this?

Mr Thursby : No. The process of lobbying differs from case to case. The process of lobbying in Malaysia would be different from the process of lobbying in India. I have found DFAT to be able to do more than understand; they actually set out individual strategies for individual markets to do that lobbying. Sometimes you have to be very patient. It took us 2½ years to get our licence in India, but the resilience was amazing and the approach was very good. So I have seen no cases to suggest that they could have done things better. Not all these environments are like Hong Kong, which is opening, but they are opening up. You must remember that as an institution we left India; the funny thing is that I was on the other side of the business. But the issue going forward is that there has been change in India which allowed us to get that, and DFAT played a big role in pitching, if you wish to call it that, that differing position.

Mr LAURIE FERGUSON: The other point is that you referred to the level at which you deal with people. I am just wondering: as a corporation, what kind of resources are you putting into this kind of effort, and to what degree do you have liaison in Australia with DFAT about where you are going on this?

Mr Thursby : About 30 per cent of my time is spent on activating new markets, talking to central bank governors, talking to ministers and talking to senior ministry officials in other countries. Included in that, I go to Canberra at least two to three times a year—probably a little bit more.

Mr Johnston : Yes.

Mr Thursby : We have activation of a team here who run that relationship.

Mr LAURIE FERGUSON: How large is that team?

Mr Thursby : The corporate affairs team?

Mr Johnston : It is about three or four people, not all solely dedicated to DFAT.

Mr Thursby : Part of the remit of our country managers in each country is to open up relationships with various areas, but they can only get to certain levels. What DFAT does because of its Australian government relationship with, obviously, the host government is to open up doors that we cannot.

Mr RUDDOCK: Where would you close missions—not just Europe generally?

Mr Thursby : It is not for me to say, I do not know what the size of the missions are. At a macro level, the next 50 years is Asia-Pacific's century—the next 100 years. The growth of the world will be reliant on the Asia-Pacific and, to an extent, North America. It is going to be sustainable growth in our view. It has shown to be so in the last 15 or 20 years, and that will continue. You do not see me entering Latin America right now, put it that way.

Mr RUDDOCK: If Greece survives in Europe and it holds together, you might close all the missions and just have one in Brussels, mightn't you?

CHAIR: I think that is another queue to go to!

Mr Thursby : I think that Europe has an interesting five years in front of it.

Mr DANBY: I am sorry I was late and missed out in your presentation. I understand the main thrust of your comments about Asia, and I think that most of the committee would agree with them, but you would not say all of Europe? For example, Poland is an outstanding booming economic success story. Maybe we should be shifting resources from France or London—

CHAIR: Just for Mr Ruddock please mention Ukraine!

Mr DANBY: to within continents where there is activity. It seems to me that a lot of our diplomatic representation is based on where the British Empire was two centuries ago and Anglo-Saxon sensibilities, but not necessarily focused on where potential and trade is within continents as much as between continents.

Mr Thursby : I would agree with that last statement in terms of the new businesses and where they are evolving. The intra-Asia trade and investment is now bigger than the Asia-US trade line, for instance.

I am sure there are places in emerging Europe that are potentially activated for trade. I think Australian corporations generally are conservative and have not looked at Eastern Europe as being an investment cycle. The reasons we do not are that we believe that Australia is intrinsically part of Asia and has a very important strategic role to play within Asia on a commercial, political and people level, and therefore we build our business around that. We do not see that intrinsic linkage with Poland for our business.

Mr DANBY: There are businesses that do.

Mr Thursby : I am sure there are.

Mr DANBY: And there are major investors and financials who have connections with Poland, Germany and even Russia. To some extent you have to look at where the migration comes from and historical patterns also, because they can be very revealing.

Mr Thursby : I am not clear as to what other corporations do in those countries. We are probably clear about what other corporations do in Asia, because that is our business.

Mr DANBY: You are not in Poland, for instance?

Mr Thursby : No, and have no wish to be for the moment.

Mr JENKINS: You played a dead bat to the Latin America ball: I am just interested in which is the cart and which is the horse? Are we not into Latin America commercially because we are not into Latin America diplomatic missions? If you look at our representation in Brazil, based on the population and the size of the economy, I am appalled. I do not know whether that is a reflection of the lack of interest and whether we need the diplomatic representation to drag the interest in, or if it is just a reflection of the real world at the moment.

Mr Thursby : I think that the answer to the question is mainly to try to explain our strategy to you. There is a reason for us to be in Latin America around our resources concentration, both of direct resources and resource services.

We have prioritised. There is only so much we can do, and when we look at the prize in Asia for that type of business versus all the other types of business we want to do there is no reason for us to pull resources out of Asia into Latin America. Now, in five to 10 years time that may be a different situation. In building an international, transnational business and changing the behaviour and the culture, the mechanics are quite enormous. Our approach is that Asia will be our significant operation because of what I said earlier. We may spray further afield at a later stage. Latin America is a long way away physically. It is a very competitive marketplace in a number of areas. For instance, in mining services there is some very smart technology that is coming out of Latin America, particularly Brazil. The strong connectivity of Italy and to a certain extent Spain, particularly with that part of the world, makes them preferred over us, whereas we are preferred in Asia. So, just from a business point of view, that is the way we see our business.

The area that is interesting is Africa. I think Africa is appreciably changing. Again, it is an area where I think the Australian brand can grow. It is an area where there is a lot that Australia can offer with its expertise, particularly in the mining sector, and our mining corporations have been the frontrunners in investing in there and running the risks that are associated. So Africa would possibly be for us the second stage after we build our Asia business to a really substantive level. So if you asked me where to go in the future I would think more around Africa than Latin America.

Mr JENKINS: This is going to get me into strife: with the performance of desk jockeys in the RG Casey building and the reliance on the physical representation and not using to the full extent those that are back at home base, whether it is through e-diplomacy or whatever, can we have a greater impact by using the people that are literally A based in a better way in the way they project to overseas?

Mr Thursby : I think you need some people based. Purely and simply, if you were planning a military intervention then you would have people who are strategically thinking about things and who see the full picture, and you need people out in the field who are building up those relationships day to day. I have found that the strategic side of DFAT, if you assume that is in Canberra, has been very useful and is incredible about bringing information together, transferring it et cetera, particularly in terms of the connection with our Minister for Trade delegations. The Minister for Trade gets briefed by people in Canberra. The ministers for trade—both the current minister and the prior one—were very interested in what we were doing and were good lobbyists on a commercial basis. Even the Prime Minister has on occasions helped us, and also the Treasurer. So I think you do need that linkage—that story that has to be given to those people in order to make sure that they are validated with what they are going to say. The worst thing would be for a Prime Minister or Minister for Trade to make an inappropriate lobby that should have been checked out with more thoroughness. That would only embarrass the country.

Mr RUDDOCK: I have two other questions on different matters. I have never put the first before, but the mention of Africa just encouraged me. Transparency International has a lot to say about the nature of the regimes that you are often dealing with.

Mr Thursby : Yes.

Mr RUDDOCK: We now have some Australian companies that are being prosecuted. I think we are going to be very much more proactive than we have been for a long time in relation to possible corruption, bribing and so on.

Mr Thursby : Yes.

Mr RUDDOCK: Do you think that those sorts of issues, which are going to loom larger given the prosecutions, are likely to impact where you would want to be devoting resources to expanding commercial activity?

Mr Thursby : If I can make this statement, we are very clear that we frown hugely on corruption, both at a policy level and on anyone who attempts to get involved in those types of things. If you take certain countries, there is bribery still occurring, and some of them are our near neighbours. I think it is important, actually, that you have something like DFAT as an avenue in which to help lobby, together with yourselves, in a way that can be effective. That would stop certain types of corporations going to what they would say was the last resort.

Mr RUDDOCK: Do you think it might justify expansion rather than contraction?

Mr Thursby : Yes, you get a cleaner lobby. In fact, what you want to stop is the dirty lobby. People blame the receivers. There are the givers as well who should not participate in that at all. Some people, for commercial gains, maybe go to that level which we believe is totally unacceptable. Advice that DFAT can make to a corporation that is new in a market about how to position themselves and what things you do not do is also there. You cannot say that it is a lot of paperwork. It is someone who is in the domain, who understands the domain, and can give that advice to the country managers or the business leaders.

Mr RUDDOCK: That is something we have not given attention to.

CHAIR: Presumably there is a consular side to that as well for business.

Mr Thursby : Yes, there is.

CHAIR: If someone gets in trouble then they are reliant on the consul.

Mr RUDDOCK: We were talking about e-diplomacy and one of the aspects of this inquiry relates to that. I have often heard that, if you became smarter, you do not need as many people. Do you see e-diplomacy as providing opportunities for contracting?

Mr Thursby : Enhancing. I am not really sure. In the end people are people and you build relationships and you build influence through relationships. I am not so sure you build them over a telephone line or a videoconference in the long run. You need people on the ground. It can enhance it and it can quicken the pace. After you have had your initial dialogue and you have met someone and known someone, you can possibly have a videoconferencing, which we do commercially. But in the end you still have to have regular face-to-face dialogue.

CHAIR: What about with foreign publics. Is that where it is influencing the general environment rather than the online?

Mr Johnston : Absolutely. That kind of public diplomacy is very important for building awareness of Australia's national interests in countries overseas, particularly in Asia, and providing an understanding of what we are doing, that we are not a threat and that our entry to the market or presence is beneficial. E-diplomacy is one way to do that.

CHAIR: Does a bank use those tools in Indonesia and places like that? There are huge Facebook users and that type of thing.

Mr Thursby : Our lobbying is still done.

CHAIR: Just with customers.

Mr Thursby : We talk to customers through lines, but we also see customers.

CHAIR: I have seen your branches in Indonesia and I am just wondering. There are large user groups of these technologies in these countries, and I am just wondering if it is used as a marketing tool.

Mr Thursby : Yes, it is, but we still need branches, not thousand of branches but 20 or 30 in the right places to help build the brand, and you still need to talk to customers. Customers sometimes want to eyeball you face to face, particularly if you have half a million dollars of their money.

Mr RUDDOCK: You agree with Dennis Richardson that perhaps we ought to be expanding our footprint rather than our electronic activity, if you had to make choices.

Mr Thursby : Yes, I probably would at this stage. Optimisation is always an issue for everyone. Everyone tries to optimise resources focused on specific areas of growth where you see opportunity. That is in dialogue with the commercial enterprises as you know which commercial enterprise. As I said, at the moment, the issue is more around the boardrooms of Australia wanting to expand beyond the bounds of the Australia.

CHAIR: Is there a role for DFAT to make boardrooms aware?

Mr Thursby : Potentially, yes.

CHAIR: Is that something we are not doing on the domestic side?

Mr Thursby : I think you have the skills sets within DFAT to give plausible arguments. What I see is that the ambassadors are used a lot, certainly with us, but they tend to see the people who they are dealing with. There is very much room, if they have the ability to do that; there is more room for that. Maybe DFAT's role could actually be enhanced around promoting not only trade but investment flows and why countries represent opportunities. You have an amazing amount of knowledge in those people. The businesses do not have those people. That is why a lot of organisations grab the people who come out of DFAT.

CHAIR: Thank you for your evidence. If there are any matters where we might need additional information the secretary will write to you. The secretary will also provide you with a copy of the transcript of your evidence to which any necessary corrections can be made.