1. Introduction

1.1
During the reporting period for this review, there were six intelligence agencies in Australia that comprised the Australian Intelligence Community (AIC):
Australian Geospatial-Intelligence Organisation (AGO),
Australian Security Intelligence Organisation (ASIO),
Australian Secret Intelligence Service (ASIS),
Australian Signals Directorate (ASD),
Defence Intelligence Organisation (DIO), and
Office of National Assessments (ONA).
1.2
Collectively, AGO, ASD and DIO are referred to as the Defence Intelligence Agencies (DIAs). During the reporting period, these three agencies were part of the Strategic Policy and Intelligence Group in the Department of Defence.1
1.3
The AIC operates within a strict oversight and accountability framework, which balances the need for public accountability and information with the need for agency operations and other sensitive information held within agencies to remain classified to protect Australia’s national security and its interests.
1.4
Within this oversight framework, the intelligence agencies have limited public reporting responsibilities because of the need to protect certain information about the agencies’ work. ASIO is currently the only intelligence agency that produces an unclassified annual report to the Parliament.2
1.5
Notwithstanding the need to keep certain information confidential, there are several levels of oversight to ensure that intelligence agencies are held accountable to the Australian Government, to the Parliament and through it to the Australian public. This includes:
oversight by the responsible Minister and the Attorney-General,
the Inspector-General of Intelligence and Security (IGIS), who provides independent assurance that the AIC agencies conduct their activities within the law, behave with propriety and comply with ministerial guidelines and directives, and act consistently with human rights,3 and
parliamentary oversight, including oversight of administration and expenditure by the Parliamentary Joint Committee on Intelligence and Security (the Committee).

Role of the Committee

1.6
The Committee was established pursuant to section 28 of the Intelligence Services Act 2001 (IS Act). Its functions include an obligation to review the administration and expenditure of each of the intelligence agencies, including their annual financial statements.4
1.7
This important oversight role is carried out in circumstances where the transparency and public accountability of the intelligence agencies must be balanced with the need to protect national security.
1.8
The Committee is privy to detailed, largely classified, information about the administration and expenditure of agencies. Each agency provides information on its administration and expenditure to the Committee in the form of classified written submissions, by appearing to give evidence in private (classified) hearings, and by providing private briefings to the Committee, at its request. Much of the evidence received by the Committee must remain confidential, due to its classified nature.
1.9
The Committee has only a limited role in these reviews in advising what level of resources is appropriate for each agency to protect Australians from risks to national security. Similarly, the Committee has no role in determining what the national security priorities should be, nor how these priorities may be met with existing resources.
1.10
Rather, the Committee has responsibility to analyse the evidence put before it and report to the Parliament (and through it, to the Australian community) on any changes to administration and expenditure, or any other issues which the Committee identifies throughout the course of the inquiry, that may affect the agency’s ability to continue to meet its objectives.

Conduct of the inquiry

1.11
The Committee commenced its review on 6 September 2017.
1.12
Submissions were sought and received from the six intelligence agencies, the Auditor-General for Australia and the IGIS. A list of submissions is at Appendix A.
1.13
The majority of submissions received were classified by the respective agencies. Accordingly, these submissions have not been authorised for publication and are not publicly available. Unclassified excerpts from these submissions are used in this report.
1.14
Unclassified submissions from ASIO and the IGIS are available on the Committee’s website. Unclassified overview statements or summaries from ONA, ASIS and the Department of Defence are also available.
1.15
ASIO additionally provided the Committee with Appendix H to its classified Annual Report 2016–17 concerning authorisations for telecommunications data pursuant to paragraphs 94(2A)(c)–(j) of the Australian Security Intelligence Organisation Act 1979 (ASIO Act).
1.16
Private (classified) hearings were held on 28 March 2018, 10 May 2018, 28 June 2018 and 16 August 2018 with representatives of the six intelligence agencies and the IGIS. Appendix B lists the witnesses who appeared before the Committee. Transcripts of these hearings are classified and not publicly available. However, unclassified aspects of these transcripts are referred to in this report.
1.17
This report is divided into three chapters. Chapter 2 discusses administration of the intelligence agencies and any issues that arose during the course of the inquiry. Chapter 3 discusses the expenditure and financial position of the intelligence agencies and any identified areas of concern.

The security environment in 2016-17

1.18
In its submission, ASIO provided an update on the security environment in Australia in 2016-17 and the outlook for the years ahead.
1.19
The key security challenges identified by ASIO were:
terrorism,
violent protest and communal violence,
espionage and foreign interference, and
border integrity.5

Terrorism

1.20
ASIO reported that the threat from terrorism in Australia remained elevated. The national terrorism threat level remained at PROBABLE throughout 2016-17, meaning:
credible intelligence, assessed to represent a plausible scenario, indicates an intention and capability to conduct a terrorist attack in Australia.6
1.21
ASIO stated that the three disrupted plot attacks in December 2016, November 2017 and July 2017 provide ‘a stark reminder of the threat Australia faces and the need to be prepared for attacks spanning a range of tactics and capabilities’. ASIO observed that the most likely form of terrorism in Australia was an attack by an individual or small group.7
1.22
Globally, Islamic State was the main driver of terrorist attacks and the reporting period saw the first instances of Islamic State affiliates being involved in successful attacks in Western countries. ASIO noted that the tone of Islamic State propaganda had changed, with supporters ‘encouraged to fight the West in their home countries’.8
1.23
Al-Qa’ida remained an ongoing threat and in 2016–17, continued to rebuild. ASIO reported that the group was stronger than it had been for over a decade and that through its network of affiliates, had increased its support and influence in the Middle East, Africa and South Asia.9

Violent protest and communal violence

1.24
ASIO noted that Australia continues to experience low levels of communal violence, with occasional confrontational behaviour between extreme left-wing and anti-Islam/extreme right-wing actors, or in response to high-level international visits.10

Espionage and foreign interference

1.25
ASIO reported that the ‘threat from espionage and foreign interference to Australian interests is extensive, unrelenting and increasingly sophisticated’.11
1.26
ASIO observed:
In addition to traditional espionage efforts to penetrate Australian governments, foreign intelligence services are clandestinely targeting a range of other Australian interests, including our intellectual property, science and technology, and commercially sensitive information. Foreign intelligence services are also using a wider range of techniques to obtain intelligence and clandestinely interfere in Australia’s affairs. There has been a greater focus on covert influence operations, in addition to the traditional methods of human-enabled collection, technical collection and exploitation of the internet and information technology.12
1.27
ASIO also identified the increasing threat posed by cyber espionage, which it described as ‘persistent and sophisticated and not limited by geography’:
Cyber methods enable foreign intelligence services to target Australian individuals and organisations regardless of the physical location of the perpetrators. Increasingly, foreign states have acquired or are in the process of acquiring cyber espionage capabilities designed to satisfy strategic, operational and commercial intelligence requirements. The number of cyber security incidents either detected or reported represents a fraction of the total threat Australia faces.13

Border integrity

1.28
ASIO noted that ‘while demand from potential illegal immigrants has fallen, it is not universally or permanently suppressed’ and ‘planned and actual illegal maritime ventures to Australia will remain an enduring challenge over the next decade’.14

Changes to the Australian Intelligence Community

1.29
While outside the period of this review, the Committee recognises that the Australian Intelligence Community (AIC) is undergoing a period of significant change that will not only impact these agencies but will also affect the Committee’s ongoing oversight role.
1.30
These changes include implementation of the outcomes of the 2017 Independent Intelligence Review and creation of the Department of Home Affairs, which are briefly described below. The Committee will examine the impact of these changes in future reviews.

2017 Independent Intelligence Review

1.31
On 18 July 2017, the then Prime Minster released the unclassified report of the 2017 Independent Intelligence Review, undertaken by Mr Michael L’Estrange AO and Mr Stephen Merchant PSM.
1.32
The Independent Review made 23 recommendations to ‘provide a pathway to take those areas of individual agency excellence to an even higher level of collective performance through strengthening integration across Australia’s national intelligence enterprise’.15
1.33
The Review’s recommendations included:
establishing an Office of National Intelligence, subsuming ONA, to direct coordination of the National Intelligence Community,16
creating ASD as a statutory authority within the Defence portfolio, with ASD taking formal responsibility for the Australia Cyber Security Centre (ACSC),17
additional resources to increase the number of ONA analysts and ASIO staff seconded to the Australian Government Security Vetting Agency (AGSVA),
legislative review to ensure modern and adaptable frameworks for intelligence operations, and
increasing oversight and review responsibilities for the Inspector-General of Intelligence and Security and this Committee, and additional funding for IGIS staffing.18
1.34
While the outcomes of the Independent Review will be implemented outside the reporting period for this inquiry, several intelligence agencies noted in their submissions work that had been undertaken to implement the recommendations.

Department of Home Affairs

1.35
During his press conference on 18 July 2017, the then Prime Minister also announced the establishment of a Home Affairs portfolio, which commenced on 20 December 2017. The Home Affairs and Integrity Agencies Legislation Amendment Act 2018 received Royal Assent on 9 May 2018.

  • 1
    Department of Defence, Submission 6, p. [1].
  • 2
    ASIO, Submission 5, p. 7.
  • 3
    IGIS, Submission 4, p. 3.
  • 4
    See section 29 of the Intelligence Services Act 2001 (IS Act).
  • 5
    ASIO, Submission 5, pp. 3-5.
  • 6
    ASIO, Submission 5, p. 3.
  • 7
    ASIO, Submission 5, p. 3.
  • 8
    ASIO, Submission 5, p. 3.
  • 9
    ASIO, Submission 5, p. 3.
  • 10
    ASIO, Submission 5, p. 4.
  • 11
    ASIO, Submission 5, p. 4.
  • 12
    ASIO, Submission 5, p. 4.
  • 13
    ASIO, Submission 5, p. 4.
  • 14
    ASIO, Submission 5, p. 5.
  • 15
    Commonwealth of Australia, 2017 Independent Intelligence Review, 2017, p. 5.
  • 16
    Legislation to establish the Office of National Intelligence was introduced in the House of Representatives on 28 June 2018 and referred to this Committee for review.
  • 17
    The Intelligence Services Amendment (Establishment of the Australian Signals Directorate) Act 2018 received Royal Assent on 11 April 2018.
  • 18
    Commonwealth of Australia, 2017 Independent Intelligence Review, 2017, pp. 13-22.

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