Last week brought what are likely to be two seismic changes to Australia’s security and intelligence community. While the Independent Intelligence Review has been broadly welcomed, reaction to the establishment of a super ministry has been much more mixed even, it seems, within Cabinet.
The recently-released 2017 Independent Intelligence Review was prepared by two respected 'insiders', Michael L’Estrange and Steve Merchant, advised by Sir Iain Lobban - former Director of the UK’s Government Communications Headquarters (GCHQ), so it cannot really be regarded as truly independent - but then it would have been a difficult review to undertake for anyone who did not have a longstanding and intimate knowledge of the Australian Intelligence Community (AIC). Michael L’Estrange’s career background has been with the Department of Foreign Affairs and Trade (DFAT), while Steve Merchant’s has been with the Department of Defence.
The AIC comprises six agencies, three of which are Defence agencies: the Australian Signals Directorate (ASD); Defence Intelligence Organisation (DIO); and Australian Geospatial-Intelligence Organisation (AGO). The other three agencies – the Office of National Assessments (ONA), Australian Security Intelligence Organisation (ASIO), and Australian Secret Intelligence Service (ASIS) - come under three other departments: the Department of Prime Minister and Cabinet (PM&C); Attorney General’s Department (AGD); and DFAT, respectively.
Given the expansion of Australian intelligence coverage since 9/11, the Review also covered four agencies for whom intelligence is now an important part of business: the Australian Federal Police (AFP); the Department of Immigration and Border Protection (DIBP); the Australian Criminal Intelligence Commission (ACIC); and the Australian Transaction Reports and Analysis Centre (AUSTRAC). This broader, six-plus-four collection of agencies is referred to as the National Intelligence Community (NIC).
There are about 7000 staff spread across the 10 NIC agencies with an annual budget approaching $2 billion. The three Defence agencies absorb the bulk of this funding.
The L’Estrange/Merchant Review took seven months and involved 150 significant meetings, discussions with all 'Five Eyes' partners, consideration of 34 submissions, and interviews with 21 'interlocutors' who included many former agency heads.
While the Review found Australia’s intelligence agencies are 'highly capable and held in high regard by their international partner agencies', it also concluded that 'as a result of transforming geopolitical, economic, societal and technological changes, the intelligence community is faced with challenges that will intensify over the coming decade'.
It makes 23 recommendations - many of which contain sub-recommendations - that span four priority areas: the co-ordinating structures of the AIC; new funding mechanisms to address capability issues; streamlining of legislative arrangements; and measures to reinforce public trust in the agencies.
Its first recommendation is to establish an Office of National Intelligence (ONI) as a statutory authority within the Prime Minister’s portfolio, subsuming ONA (a statutory agency is one authorised to enact legislation on behalf of the state). This will be headed by a DG of departmental Secretary rank whose central coordinating role would be an expanded and updated version of what the DG ONA was expected to do when ONA was established back in 1977; a role reinforced by the Flood Inquiry in 2004.
In reality, the DG ONA has had little power over the heads of Defence agencies whose main priority is meeting Defence needs. The DG ONI, however, will now advise the appointment of senior NIC office-holders. This will provide him or her with more leverage - but the most effective way for the DG to influence agencies and their parent departments would be to have some control over the NIC budget.
The Review recommends that the ASD Director be upgraded to DG level 'reporting directly to the Minister for Defence' (that can happen now, depending on the interest of the Minister). The general upgrading of ASD’s responsibilities is, however, a recognition that cybersecurity challenges need more national resources, particularly cybercrime and cyberespionage that are continually evolving and seem to be beyond the capacity of international agencies to counter effectively.
The Turnbull Government has accepted the Review's recommendations. which also include making the ASD into a statutory agency within the Defence portfolio.
The Review did not address the issue of giving the AIC agencies - which were established during the Cold War to concentrate on either internal or external issues - a broader remit to allow them to operate both internally, ie within Australia, and externally. Today of course there is an electronic blurring of national boundaries and many security challenges, such as terrorism and transnational crime, can be both internal and external challenges at the same time. This means modern intelligence needs to be more agile and less constrained by national boundaries and jurisdictions, and that security countermeasures need to be coordinated internationally. Allowing agencies to access each other’s databases is probably not the answer as it creates potentially highly-damaging, multi-agency 'leak' and espionage vulnerabilities - as demonstrated by the Manning and Snowden cases.
The Turnbull government also announced it would establish a Home Affairs portfolio of immigration, border protection, domestic security and law enforcement agencies. Similar to the Home Office in the UK, this will be a central department providing strategic planning, coordination and other support to a 'federation' of security and law enforcement agencies, including ASIO, the AFP, the Australian Border Force (ABF), ACIC, AUSTRAC and presumably the Office of Transport Security (OTS). It obviously seeks to avoid replicating the flawed US Department of Homeland Security model.
Immigration minister Peter Dutton was named Minister for the newly-created mega-portfolio. The Home Affairs announcement seems to have come out of left-field and clearly favours Dutton at the expense of the Attorney General George Brandis. Department of Immigration and Border Protection Secretary Mike Pezzullo will presumably become the Departmental Secretary of Home Affairs. The Immigration side of the DIBP and some functions of the AG’s Department are likely to be absorbed into Home Affairs.
The AG will lose his supervisory powers over ASIO, the AFP, ACIC and AUSTRAC, but will continue to authorise warrants for ASIO’s interception and other covert operations. Brandis will effectively revert to the role of Chief Law Officer. The role of the Justice Minister, Michael Keenan, who until now reported to the AG on matters relating to the AFP and other Commonwealth law enforcement agencies, is not altogether clear at this stage, but it looks like as if Dutton will have very wide powers within the national security community. It may be useful for the AFP to have its Minister inside Cabinet (Keenan is a junior Minister), but ASIO would probably not be happy about the loss of direct access to the AG except on warrant matters.
The Home Affairs changes will happen because the Turnbull Government will make it so. There has, however, been no expert review recommending the changes, no support from the NIC for structural change (other than from Immigration), while many past reviews have recommended against the establishment of a Homeland Security/Home Office-type arrangement. The government has not argued the case for change, and certainly not demonstrated that anything is broken and needs repair. It has been reported that neither Foreign Minister Julie Bishop nor Defence Minister Christopher Payne were present at the meeting of the National Security Committee when these changes were considered.
According to my sources, the Government is split on the Home Affairs issue, with Brandis, Bishop and Keenan opposed to the change, and Dutton and Finance Minister Mathias Cormann strongly in favour. Our politicians and national security bureaucrats live in interesting times!