1.1
During the reporting period for this inquiry, 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
During the reporting period, AGO, ASD and DIO—referred to collectively as the Defence Intelligence Agencies (DIAs)—were part of the Strategic Policy and Intelligence Group in the Department of Defence. From 1 July 2018, following the passage of the Intelligence Services Amendment (Establishing the Australian Signals Directorate) Act 2018, ASD became a statutory agency that is administratively separate from the Department of Defence.
1.3
From 20 December 2018, following the passage of the Office of National Intelligence Act 2018, ONA was renamed and continued—with expanded functions including leadership of the national intelligence community—as the Office of National Intelligence (ONI).
1.4
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.
1.5
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 the only intelligence agency that produces an unclassified annual report to the Australian Parliament.
1.6
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 Australian Parliament and to the Australian public. This includes:
oversight by the responsible Minister for each agency and the Attorney-General;
oversight by the Inspector-General of Intelligence and Security (IGIS), an independent statutory officer who provides assurance that each agency acts legally and with propriety, complies with ministerial guidelines and directives, and acts consistently with human rights; and
parliamentary oversight, including oversight of administration and expenditure by the Parliamentary Joint Committee on Intelligence and Security (PJCIS).
Role of the Committee
1.7
The Committee is 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.
1.8
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.
1.9
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.
1.10
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. The Committee also has no role in reviewing particular operations conducted by agencies, sources of information available to agencies, aspects of the activities of agencies that do not affect Australian persons, or individual complaints about the activities of the agencies.
1.11
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 the administrative arrangements and expenditure of each agency, and any changes to these activities that may affect an agency’s ability to continue to meet its objectives. Within these parameters, the Committee is able to self-initiate inquiries and set its own terms of reference.
Conduct of the inquiry
1.12
The Committee commenced its inquiry on 18 October 2018.
1.13
Submission 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.
1.14
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. However, unclassified excerpts from these submissions are used in this report.
1.15
Unclassified submissions from ASIO and the IGIS are available on the Committee’s website. Unclassified overview statements or summaries from ONI, ASIS and the Department of Defence are also available.
1.16
ASIO additionally provided the Committee with the classified Appendix H to its Annual Report 2017-18 concerning authorisations for telecommunications data pursuant to paragraphs 94(2A)(c)-(j) of the Australian Security Intelligence Organisation Act 1979 (the ASIO Act). It is a function of the Committee to review matters related to the retained data activities of ASIO that are included in this part of ASIO’s annual report, for the sole purpose of assessing and making recommendations on the overall operation and effectiveness of the mandatory data retention regime. Unlike its other functions, the Committee is authorised to review particular ASIO operations for the purpose of performing this function.
1.17
The Committee generally schedules classified hearings with each agency during joint parliamentary sitting weeks in February and March each year, enabling its report to be finalised by mid-year (subject to delays outside the Committee’s control). In this instance, due to a smaller-than-usual number of parliamentary sitting weeks prior to the May 2019 election, the Committee elected to write to each agency with a series of written questions based on their classified submissions. For ASIO, questions were also included in relation to its access to retained data. Detailed classified responses were received from each agency and accepted by the Committee as classified submissions.
1.18
The 46th Parliament commenced on 2 July 2019 and the Committee readopted its review of administration and expenditure (2017–2018) shortly thereafter. It resolved, pursuant to schedule 1, clause 8 of the IS Act to make use of evidence collected prior to the dissolution of the Parliament for the federal election.
1.19
Private (classified) hearings were held on 13 September 2019 with representatives of the six intelligence agencies and the IGIS appearing. 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.
1.20
This report is divided into three chapters:
the remainder of Chapter 1 summarises ASIO’s overview of the security environment in 2017-18 and changes to the intelligence community;
Chapter 2 discusses administration of the intelligence agencies and any related issues that were identified during the course of the inquiry; and
expenditure and financial position of the intelligence agencies and any identified areas of concern.
The security environment in 2017–18
1.21
In its submission, ASIO provided an update to the Committee on the security environment in Australia during 2017–18 and the outlook for the years ahead.
1.22
The key security challenges identified by ASIO were:
violent protest and communal violence;
espionage and foreign interference; and
Terrorism
1.23
ASIO reported that the national terrorism threat level remained at PROBABLE throughout 2017–18, meaning:
… credible intelligence, assessed to represent a plausible scenario, indicates an intention and capability to conduct a terrorist attack in Australia.
1.24
The threat assessment has been set at this level since 12 September 2014. ASIO advised in their submission that, since the threat level was elevated, ‘there have been 15 major disruption operations of imminent attack planning and seven terrorist attacks targeting people in Australia’.
1.25
ASIO reported that the ‘principal source’ of the terrorist threat to Australia remained Sunni Islamist extremism, primarily emanating from individuals and small groups who are directed, inspired or encouraged by overseas terrorist groups. However, ASIO emphasised that the threat of terrorist attacks is not isolated to Islamist extremists, and that individuals motivated by other ideologies—such as extreme left-wing or right-wing ideology—may consider conducting a terrorist act.
1.26
ASIO noted a trend in the West to targeting people over other targeting options, such as infrastructure. It added that the most likely form of terrorism in Australia remained an attack by an individual or small group using simple attack methodologies; although the possibility of more complex attacks could not be ruled out.
1.27
ASIO considered that the ‘legacy’ of Islamic State of Iraq and the Levant (ISIL) would ‘continue to adversely affect both the global and the Australian security environments for years to come’. It noted that the collapse of ISIL’s so-called caliphate and its loss of territory in Iraq and Syria had resulted in the dispersal of many foreign fighters. While many of these fighters and their families had been detained in Syria and Iraq, ASIO remained concerned about a ‘significant, but unknown, number of foreign fighters’ who could not be accounted for.
1.28
ASIO expected a ‘very small number’ of Australian fighters or supporters of Islamist group in Syria and Iraq to return to Australia (voluntarily or through deportation). Whether these individuals would present an ongoing terrorist threat to Australia would depend on their ideology and willingness to engage in violence onshore to support that ideology.
Violent protest and communal violence
1.29
ASIO noted that most Australian protests ‘comply with regulations and conclude without significant incident’. However, confrontational behaviour occasionally resulted from hostility between extreme left-wing and right-wing proponents at protests, and disruptive tactics that are occasionally employed may result in incidental acts of violence. ASIO noted that minimal violence was observed at protests between left-wing and right-wing proponents during 2017–18.
1.30
ASIO advised that Australia continued to experience low levels of communal violence, although incidents do occur occasionally.
Espionage and foreign interference
1.31
ASIO reported that Australia continued to be a target of espionage and foreign interference. ASIO identified that:
Australia’s position as a major commodity supplier, scientific and technological innovator and potential joint venture partner makes it a target of foreign states seeking to gain an advantage. Our military modernisation program—including niche research and development and advanced allied design capabilities—is also of interest to a wide range of foreign intelligence services seeking to obtain or compromise sensitive technologies.
1.32
The activities identified by ASIO included:
foreign powers clandestinely seeking to shape the opinions of members of the Australian public, media organisations and government officials to advance their country’s own political objectives; and
covert influence operations targeting ethnic and religious communities designed to diminish their criticism of foreign governments.
1.33
ASIO noted that covert influence activities and acts of foreign interference ‘represent a threat to Australia’s sovereignty and the integrity of Australia’s national institutions’ and ‘impinge on community and individual freedoms’. It described espionage and foreign interference as ‘insidious threats’, from which the harm may not manifest itself until many years, or even decades, after the activity has occurred.
1.34
ASIO highlighted the changing nature of the threat to critical infrastructure, with foreign investment able to ‘provide a measure of access and control over organisations and assets in Australia which may not otherwise be obtainable’.
1.35
ASIO noted that it had ‘regularly’ observed cyber espionage activity targeting Australia, and that cyber threats had continued to evolve with changes in technology. It also noted that the number of countries pursuing cyber espionage programs was expected to increase, ‘as these programs can offer significant intelligence returns with relatively low cost and plausible deniability’.
1.36
With respect to the National Security Legislation Amendment (Espionage and Foreign Interference) Act 2018 and the Foreign Influence Transparency Scheme Act 2018, which were enacted by the Australian Parliament in 2018, ASIO noted:
These laws provide valuable new tools to help combat espionage and foreign interference, offer a significant public deterrent and make it more difficult for our adversaries to conduct interference or espionage in Australia.
Border integrity
1.37
ASIO reported that Australia ‘remains an attractive target for terrorist groups’ and that the ‘collapse of ISIL’s so-called caliphate has created an increased movement of potential terrorists across the globe’. ASIO considered that Australia’s border integrity and security formed a ‘critical part of Australia’s defences against the terrorist threat’.
Changes to the Australian Intelligence Community
1.38
A number of significant changes affecting the administration of the AIC agencies took place during the reporting period.
1.39
On 18 July 2017, the unclassified report of the 2017 Independent Intelligence Review was released. The Independent Review, undertaken by Mr Michael L’Estrange AO and Mr Stephen Merchant PSM, made 23 recommendations intended 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’. The following changes took place as a result of the review during the reporting period:
ASD was established as a statutory agency within the Defence portfolio, administratively separate from the Department of Defence. Formal responsibility for the Australian Cyber Security Centre (ACSC) was transferred to ASD.
ONI was established, subsuming ONA and taking on a leadership role across the ‘National Intelligence Community’ (NIC). The NIC includes the six AIC agencies, the Australian Criminal Intelligence Commission (ACIC) and other ‘agencies with an intelligence role or function’.
On 30 May 2018, the Attorney-General announced that Mr Dennis Richardson AO had been appointed to conduct a comprehensive review of the legal framework governing the NIC (known as the Richardson Review). A classified report on the review is expected to be provided to the Government by the end of 2019, followed by an unclassified version.
The Office of the IGIS received additional funding in February 2018 to increase its staffing level from 17 to 55 (full-time equivalent) and for the secure fit out of new premises. At the time of writing, legislation to expand the IGIS’s (and the Committee’s) oversight to the additional agencies in the NIC had not yet been presented to the Parliament.
1.40
The Home Affairs portfolio was also established during the reporting period. The new portfolio was supported by legislative changes in the Home Affairs and Integrity Agencies Legislation Amendment Act 2018, which received Royal Assent on 9 May 2018. Under these arrangements, ASIO moved from the Attorney-General’s portfolio to the Home Affairs portfolio. The Attorney-General maintained an oversight role, including as the issuer of ASIO warrants. Portfolio responsibility for the IGIS and the Independent National Security Legislation Monitor (INSLM) was moved from the Prime Minister to the Attorney-General.