1.1
The Foreign Influence Transparency Scheme Bill 2017 (the Bill) and the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017 (the Espionage and Foreign Interference Bill) were introduced to the House of Representatives on 7 December 2017 by the Prime Minister, the Hon. Malcom Turnbull MP.
1.2
In his second reading speech, the Prime Minister advised the Parliament that both bills are ‘designed to reinforce the strengths of our open democratic systems while shoring up its vulnerabilities’. Currently, he declared, our agencies ‘lack the legislative tools they [need] to act [and] … our system as a whole has not grasped the nature and magnitude of the threat’.
1.3
In regards to the scale of threat, the Prime Minister quoted the Director‑General of the Australian Security Intelligence Organisation (ASIO) who stated that the threat from espionage and foreign interference in Australia is ‘unprecedented’.
The current environment
1.4
ASIO advised the Committee that espionage and foreign interference activity against Australian interests is ‘occurring at an unprecedented scale’. More specifically, ASIO advised:
This isn’t something that we think might happen or could happen; it is happening now against Australian interests in Australia and … abroad. … Foreign actors from a range of countries seek access to privileged and/or classified information on Australia’s alliances and partnerships, our position on international diplomatic, economic and military issues, our energy and mineral resources and our innovations in science and technology.
1.5
The Director‑General of Security explained that in the current environment, there is,
… a more diverse range of hostile foreign intelligence services working against us than we’ve had in the past. … Many of these hostile foreign intelligence services have significantly increased the resources that are dedicated to foreign intelligence collection, and they have also greatly improved the spectrum and sophistication of their activities.
1.6
In evidence to other inquiries of this Committee, ASIO has described the threat from espionage and foreign interference as ‘extensive, unrelenting and increasingly sophisticated’. During this inquiry, ASIO stated that though the harm from such activities may not be immediately apparent or overt, the consequences are far-reaching and serious. Such consequences include:
undermining Australia’s national security and sovereignty;
damaging Australia’s international reputation and relationships;
degrading Australia’s diplomatic and trade relations;
inflicting substantial economic damage, and
compromising nationally vital assets and critical infrastructure.
1.7
ASIO have outlined that, 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.
1.8
Foreign intelligence services are increasingly using a wider range of techniques or ‘vectors’ to obtain intelligence and clandestinely interfere in Australia’s affairs. ASIO advised that the contemporary environment is unlike that of previous decades. The situation now is that Australia’s adversaries are ‘much more blurred’, and Australia faces a raft of different countries that are seeking to interfere and exert influence in Australia.
1.9
The Director‑General of Security explained that in the ‘information age’, espionage activity in Australia is not limited to its ‘classical form’ where a foreign spy recruits an official for access to classified information. As a result of the features of globalisation, which has seen ‘unimagined movement of money, … people [and] … information’, espionage now includes ‘more complex cyber‑intrusion that’s conducted typically from overseas to enable the theft of sensitive technologies’. Such intrusion is ‘comparatively cheap, … instantaneous and, most importantly, it’s very difficult to detect and to attribute’.
1.10
ASIO confirmed that it operates a threat level system in relation to foreign interference and espionage to measure the scale of the threat. However, unlike terrorism, that system is not an over-arching threat level system but rather operates on a country‑by‑country basis. For some countries, ASIO described the threat as ‘extreme’ indicating that foreign interference and espionage activities are occurring within Australia.
1.11
These activities include targeting and attempting to recruit officials and persons of influence. ASIO described the range of situations where this targeting and recruitment is occurring:
These [officials] have undertaken activities in conscious collaboration with foreign intelligence officers in order to advance the national security interests of those foreign countries by seeking access to and obtaining privileged information and classified information in relation to Australia’s views on a whole raft of issues. … They do this on many occasions for money, so there’s a transactional relationship where a person is cultivated and recruited and, in return for money and finance, they provide privileged information which then goes back to that particular foreign intelligence service and is then used as part of, I suppose, that particular service’s overall assessment of Australia’s capabilities, vulnerabilities and weaknesses so that they can target the country—they can target politicians, business officials or intelligence officers—to get an advantage for them to our detriment.
1.12
Beyond foreign interference and espionage, ASIO stated 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. ASIO expanded on the extent of covert influence operations in its 2016-17 Annual Report:
We identified foreign powers clandestinely seeking to shape the opinions of members of the Australian public, media organisations and government officials in order to advance their country’s own political objectives. Ethnic and religious communities in Australia were also the subject of covert influence operations designed to diminish their criticism of foreign governments.
1.13
Such activities are undertaken covertly to obscure the role of foreign governments. ASIO advised that covert influence activities represent ‘a threat to our sovereignty, the integrity of our national institutions and the exercise of our citizens’ rights’.
1.14
The extent of espionage, foreign interference and covert influence being undertaken in Australia was discussed in numerous submissions to this inquiry. A number of submissions to the Committee’s inquiry into the Espionage and Foreign Interference Bill 2017 also referenced covert and clandestine activities targeting Australia’s national interests.
Government response to the threat
1.15
In his second reading speech the Prime Minister referred to a classified report, prepared by the Department of the Prime Minister and Cabinet, which contained advice from ASIO of ‘significant investigative breakthroughs and delivered a series of very grave warnings’. In response to these discoveries, collectively, this Bill and the Espionage and Foreign Interference Bill are intended to ‘counter the threat of foreign states exerting improper influence over our system of government and our political landscape’.
1.16
The two bills form part of the Government’s Counter Foreign Interference Strategy. The Strategy has four pillars: sunlight, enforcement, deterrence and capability.
1.17
The Foreign Influence Transparency Scheme is directed at the first of those pillars. The Prime Minister stated the intent of introducing the registration requirements under the Bill:
If a person or entity engages with the Australian political landscape on behalf of a foreign state or principal then they must register accordingly. This will give the Australian public and decision-makers proper visibility when foreign states or individuals may be seeking to influence Australia’s political processes and public debates. … Registration requirements are carefully structured so that the closer you get to the heart of Australian politics, the more likely it is that you must register. … This is not about shutting down legitimate debate, but rather enabling it.
1.18
The Prime Minister also commented that ‘sunlight is the most reliable disinfectant but it will not be sufficient on its own’. He indicated consequently the Scheme will work in tandem with the proposed offences contained in the Espionage and Foreign Interference Bill. These new offences are intended to comprise the second and third pillars: enforcement and deterrence.
1.19
At a public hearing, the Director‑General of Security advised the Committee that ASIO ‘strongly supports’ the Espionage and Foreign Interference Bill, and ‘supports’ measures to increase the transparency surrounding foreign influence in Australia. The Director‑General stated that the reforms will provide ‘integral and urgently required tools to help combat the unprecedented scale of espionage and foreign interference activities currently being conducted against us’.
1.20
The Attorney‑General’s Department (the Department) sought to contrast ‘foreign interference’—to which the Espionage and Foreign Interference Bill is addressed—and ‘foreign influence’—to which this Bill is addressed—as distinct concepts. ASIO advised the Committee that the two terms are ‘interrelated’, and ‘intertwined to the point where you can have one leading to the other’.
1.21
This report presents the Committee’s review of the Foreign Influence Transparency Scheme Bill. The Committee’s review of the Espionage and Foreign Interference Bill is provided in a separate report, tabled on 7 June 2018.