Intelligence community reforms

Cat Barker, Foreign Affairs, Defence and Security

Key issue
The 2017 Independent Intelligence Review recommended several significant reforms to Australia’s intelligence community and the bodies that oversee it. The reforms are aimed at keeping pace with the continually evolving intelligence environment and represent some of the biggest changes to Australia’s intelligence arrangements in decades.
Some of the key recommendations were implemented in the 45th Parliament. Further legislative reforms are likely to be brought before the 46th Parliament.

The Inquiry into the Australian Intelligence Agencies completed in 2004 recommended that in addition to standing review mechanisms, the Australian Intelligence Community (AIC) should be subject to ‘periodic external review every five to seven years’. The 2017 Independent Intelligence Review, conducted by Michael L’Estrange and Stephen Merchant, with Sir Iain Lobban acting as an adviser, was the second such review to be completed since the 2004 inquiry. The 2017 Review recommended several significant reforms to the AIC and the bodies that oversee it.

The 2017 Review outlined some of the challenges posed by the current and anticipated strategic environment:

The current international environment is one in which powerful forces of change are re-shaping concepts of security, recalibrating interactions among states and people as well as between individual states and their citizens, and enhancing the asymmetrical capabilities of non-state actors …

…

This pace of change has made the context in which Australia protects and advances its security interests more complex, less predictable and more volatile than in the past. In our view, that pace of change is set to intensify with the major influences on Australia’s national security outlook over the coming decade coalescing around three key focal points: fundamental changes in the international system, extremism with global reach and the security and societal consequences of accelerating technological change.

The reviewers considered that Australia’s intelligence agencies are performing well. In light of ‘imposing challenges’ that they expect to intensify over the next decade, their recommendations were aimed at ‘strengthening integration across Australia’s national intelligence enterprise’ to transform ‘highly capable agencies into a world-class intelligence community’. They also assessed that the clear dividing lines set out in the Hope Royal Commissions of the 1970s and 1980s, and maintained since—‘between foreign and security intelligence, intelligence and law enforcement, intelligence collection and assessment, and intelligence assessment and policy formulation’—have enduring relevance. However, they also considered that Australia’s future security environment will require ‘greater levels of collaboration across traditional dividing lines and more cross-over points’.

The reviewers made 23 recommendations relating to structural arrangements, capability and resourcing, legislation, and oversight. They also judged that looking ahead, the AIC construct would become increasingly artificial, and that a more useful frame of reference would be the National Intelligence Community (NIC), which they proposed include the:

six agencies that comprised the AIC:

Australian Security Intelligence Organisation (ASIO)
Australian Signals Directorate (ASD)
Australian Secret Intelligence Service (ASIS)
Australian Geospatial-Intelligence Organisation (AGO)
Defence Intelligence Organisation (DIO) and
Office of National Assessments (ONA, now the Office of National Intelligence (ONI))

Australian Criminal Intelligence Commission (ACIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) and
relevant parts of the Australian Federal Police (AFP) and the Department of Immigration and Border Protection (DIBP, now the Department of Home Affairs (DoHA)).

The 2017 Review also recommended that the jurisdiction of the two key oversight bodies for the intelligence community—the Parliamentary Joint Committee on Intelligence and Security (PJCIS) and the Inspector-General of Intelligence and Security (IGIS)—be expanded to include all ten agencies in the NIC (but limited to the intelligence functions of the AFP, the ACIC and the DIBP).

Reforms undertaken in the 45th Parliament

One of the 2017 Review’s most significant recommendations was the expansion of ONA into the ONI, led by a Director-General who would be the head of the NIC and the Prime Minister’s principal adviser on intelligence community issues. The reviewers noted that Australia was ‘now alone among its Five Eyes partners in not having a single point of co-ordination for its intelligence community’ (pointing to the Office of the Director of National Intelligence in the US, the Deputy National Security Adviser in the UK, and moves towards greater coordination in Canada and New Zealand). They found that ONA was ‘neither oriented to, nor structured for, the modern leadership role and co-ordination responsibilities that Australian intelligence in the twenty-first century requires’.

The 2017 Review recommended that ONI have a leadership and coordination role across the NIC, including advising the Government on intelligence collection and assessment priorities and the appointment of senior NIC office-holders, and the evaluation of NIC agencies. This reform was implemented with additional funding provided in the Mid-Year Economic and Fiscal Outlook 2017–18 (MYEFO)andthe passage of legislation in 2018.

The reviewers also recommended that the ASD, then part of the Department of Defence, be made a separate statutory agency. This recommendation was made on the basis of the breadth of ASD’s roles, responsibilities and interactions with agencies and organisations outside the Defence portfolio, and the need for ASD to recruit and retain specialist expertise. The reform was implemented through the passage of legislation in 2018. The Intelligence Services Amendment (Establishment of the Australian Signals Directorate) Act 2018 also implemented the reviewers’ recommendation that ASD be given ‘a formal legislative mandate which reflects its role as the national information and cyber security authority, including functions to combat cyber crime and to provide advice to the private sector on cyber security matters’. The Australian Cyber Security Centre became part of the ASD, as recommended by the reviewers, in July 2018.

ASD has taken on a more public role since becoming a separate agency. The Director-General has made two key public speeches (in October 2018 and March 2019). ASD undertook a well-publicised recruitment drive, which it promoted through, amongst other means, the March 2019 speech (which included declassified details of two recent operations) and its new Twitter account.

Additional funding was provided in 2018 to implement the recommendations to expand the jurisdiction of the IGIS and to increase its staffing from 17 to 55 full-time equivalent staff.

The MYEFO 2017–18 and the 2018–19 Budget also included funding to implement recommendations in the 2017 Review to:

establish a Joint Capability Fund to finance NIC cross-agency projects
establish a ‘24/7 cyber incident monitoring and response capability’ in the Australian Cyber Security Centre and
provide additional secondments from ASIO to the Australian Government Security Vetting Agency with the aim of reducing processing times for high level security clearances.

Issues for the 46th Parliament

Expanded role for the IGIS

Funding has been provided for the recommended expansion of the IGIS, and the agency has been preparing to oversee the intelligence activities of the additional four agencies (ACIC, AUSTRAC, AFP and DoHA). However, amendments will be required to the Inspector-General of Intelligence and Security Act 1986 to bring these agencies within the IGIS’s oversight remit.

Expanded role for the PJCIS

Amendments would also be required to the Intelligence Services Act 2001 to bring the intelligence activities of these agencies within the oversight remit of the PJCIS. In addition to expanding the PJCIS’s jurisdiction to include all NIC agencies, the 2017 Review recommended that the:

PJCIS be given the ability to request that the IGIS conduct an inquiry into the legality and propriety of particular operational activities of any of the NIC agencies and report to the PJCIS, the Prime Minister and the responsible minister
PJCIS be empowered to initiate its own inquiries into existing and proposed counter-terrorism and national security laws, and to review any such laws due to expire
PJCIS be empowered to request briefings from the Independent National Security Legislation Monitor (INSLM) and
IGIS and the Director-General of ONI be required to provide regular briefings to the PJCIS.

Alternative changes to the PJCIS were proposed in:

Labor’s Parliamentary Joint Committee on Intelligence and Security Amendment Bill 2015 (restored to the notice paper in the 45th Parliament), which would amend the composition, functions and powers of the PJCIS, including by allowing it to conduct own-motion inquiries into matters relating to one or more intelligence agencies after consultation with the responsible minister (while retaining the existing restrictions preventing the PJCIS from inquiring into operational matters) and
the Centre Alliance’s Intelligence Services Amendment (Enhanced Parliamentary Oversight of Intelligence Agencies) Bill 2018, which would expand the functions of the PJCIS to include reviewing the activities of intelligence agencies, subject to certain exclusions.

Amendments to the legal framework governing the NIC

The 2017 Review included recommendations for some specific amendments to the Intelligence Services Act (under which ASIS, AGO and ASD operate), including in relation to the regime for ministerial authorisation of certain activities, provisions that govern how the agencies cooperate with other agencies in Australia and overseas, and authorisations for ASIS staff members and agents to use weapons or undertake certain training.

It also recommended that a comprehensive review be undertaken of the Acts governing Australia’s intelligence community. Funding for such a review was provided in the 2018–19 Budget. The review, which is being led by Dennis Richardson and supported by a secretariat in the Attorney-General’s Department, commenced in May 2018. It is considering:

legislation relating to the AIC agencies and the intelligence activities of AUSTRAC, ACIC, AFP and DoHA
the appropriateness of maintaining the current distinction between foreign and security intelligence and ‘legislative distinctions and restrictions relating to intelligence collection onshore and offshore’
whether Australia should follow the UK and New Zealand in adopting a common legislative framework for the agencies
whether certain improvements could be made to the legislative framework for the NIC and
any specific proposals for reform.

The scope of the review includes:

core legislation relating to the six AIC agencies
elements of core legislation relating to the other four NIC agencies to the extent that it relates to the performance of intelligence functions
legislation containing NIC agency investigative powers
the adequacy of national security information handling provisions and
legislation related to oversight of the NIC, such as that governing the IGIS and the INSLM.

A classified report is due to be provided to the Government by the end of 2019, followed by an unclassified version of the report. The 46th Parliament is likely to consider amendments brought forward as a result of the review.