1.1
Unlike previous Administration and Expenditure review reports, this report will cover two reporting periods —2018-2019 and 2019-2020. These periods constitute reviews No. 18 and 19.
1.2
As the review period encompasses a period of significant transition for the intelligence community in Australia, after the establishment of the National Intelligence Community (NIC) during 2018, much of the focus of the Committee in this report is on the agencies’ transition, flexibility and resilience to challenges from this transition.
1.3
Under the Intelligence Services Act 2001 (the IS Act), the Committee’s first function under section 29 is to review the administration and expenditure of six intelligence agencies in Australia that traditionally 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 Intelligence (ONI).
1.4
During the reporting period, AGO 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. However, as a result of an independent review of the Defence Intelligence Enterprise, the two DIAs are now established under the Defence Intelligence Group (DIG), under the Chief of Defence Intelligence, as of 1 September 2020.
1.5
Even though the establishment of the DIG falls outside the reporting period for these reviews, representatives of the DIAs appearing at the hearings for this review period in April 2021 represented the DIG and will do so for future reviews.
1.6
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. The two reporting periods for this report reflect the first two full years of operation for ASD as a separate entity.
1.7
From 20 December 2018, following the passage of the Office of National Intelligence Act 2018, the Office of National Assessments (ONA) was renamed and continued—with expanded functions including leadership and enterprise management of the NIC—as the Office of National Intelligence (ONI).
1.8
ASIS continued to operate under the IS Act during the reporting period without major change.
1.9
ASIO continued to operate under the Australian Security Intelligence Organisation Act 1979 during the period. However, with the creation of the Home Affairs portfolio on 20 December 2017, ministerial and portfolio responsibility for that aspect of national security transferred from the Attorney-General to the Minister for Home Affairs, directly affecting ASIO’s policy and accountability model.
1.10
The NIC, and within it the traditional AIC agencies, 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.
1.11
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 and ASD are the only intelligence agencies that produce and present an unclassified annual report to the Australian Parliament.
1.12
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
1.13
The Committee is established pursuant to section 28 of the IS Act. Its functions include an obligation to review the administration and expenditure of each of the intelligence agencies, including their annual financial statements.
1.14
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.
1.15
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 giving 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.
1.16
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.
1.17
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 inquiries
1.18
The Committee commenced Review No. 18 in December 2019.
1.19
Submissions were received from the relevant agencies and classified hearings were to be held in late February 2020, however as the hearings were held on parliamentary sitting days, proceedings were interrupted by divisions and the hearings were to be deferred until a later date.
1.20
With the emergence of the COVID-19 pandemic, most parliamentary and Committee proceedings were delayed, and in June 2020 the Committee made a statement on the review website outlining that due to an inability to conduct the remainder of the hearings and finalise consideration of the No. 18 evidence, the review would be finalised and considered in conjunction with the No. 19 review.
1.21
The Committee commenced Review No. 19 in September 2020.
1.22
Submission were sought and received from the six intelligence agencies, the Auditor-General for Australia and the IGIS. A list of submissions for both reviews is at Appendix A.
1.23
In addition to the normal administration and expenditure information provided by agencies, the Committee requested that agencies provide specific extra commentary on the following areas of focus:
the impact of COVID-19 on agencies’ administration and expenditure;
recruitment and retention, including positive vetting processes across the National Intelligence Community;
the implications of a constantly evolving threat environment to agencies’ administrative practices and expenditure; and
the health of agencies’ cyber security, including cyber resilience.
1.24
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 or summaries from these submissions are used in this report.
1.25
Unclassified submissions from ASIO and the IGIS for review No. 18 are available on the Committee’s website. Unclassified overview statements or summaries from ONI, ASD and the Department of Defence are also available.
1.26
For Review No. 19 ASIO did not provide the Committee with an unclassified version of its submission, and its classified submission lacked a proportion of the detail provided in previous review submissions, instead relying on the information within the publically available Annual Report for the agency. This caused challenges for the Committee in being able to analyse information consistently for ASIO, as the requested information for the review is different to that required to be reported under the Public Governance, Performance and Accountability Act 2013 (PGPA Act). Relevant comment on these challenges and lack of relevant data is highlighted at the applicable sections of this report.
1.27
ONI and the Department of Defence provided unclassified overview statements for Review No. 19.
1.28
ASIO additionally provided the Committee with the classified Appendix to its Annual Report 2018–19 and Annual Report 2019-2020 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.
1.29
Private (classified) hearings examining evidence for Review no. 18 were held on 26 and 27 February 2020, but were interrupted as mentioned above. Classified hearings for both Reviews Nos. 18 & 19 were held on 14 and 15 April 2021 with representatives of the six intelligence agencies and the ANAO and 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 at relevant sections of this report.
1.30
This report is divided into four chapters:
the remainder of Chapter 1 summarises ASIO’s overview of the security environment between 2018–2020 and continued evolution of the NIC;
Chapter 2 discusses administration of the intelligence agencies and any related issues that were identified during the course of the inquiry;
Chapter 3 discusses the expenditure and financial position of the intelligence agencies and any identified areas of concern; and
Chapter 4 discusses the areas of focus identified by the Committee for the Review No. 19, specific observations regarding the COVID-19 pandemic and its impacts on the agencies, as well as a statement from the Committee regarding the future direction of Administration and Expenditure Reviews.
The security environment during 2018-2020
1.31
In its submissions and in its publically available annual report and the Director-General’s annual threat assessment, ASIO provides an update to the Committee (and the Australian public) on the current security and threat environment in Australia and the outlook for the years ahead.
1.32
The key security challenges identified by ASIO during the two years were:
violent protest and communal violence;
espionage and foreign interference; and
1.33
These key security challenges have remained somewhat unchanged over recent years, with some shifting internal and external factors, as outlined below.
Terrorism
1.34
ASIO reported that the national terrorism threat level remained at PROBABLE throughout the two reporting periods, meaning:
…credible intelligence, assessed to represent a plausible scenario, indicates an intention and capability to conduct a terrorist attack in Australia.
1.35
ASIO reported during the 2018-2019 period that the ‘principal source’ or ‘primary threat’ of terrorist acts to Australia remained Sunni Islamist extremism, primarily emanating from individuals and small groups who are directed, inspired or encouraged by overseas terrorist groups. However, for the security environment overview for the 2019-2020 period, ASIO placed increased emphasis on other violent ideologies – such as extreme right ideologies – as being of increasing concern.
1.36
ASIO noted that targeting preferences by terrorist actors are towards ‘soft targets’, such as crowds of 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 and creative attacks are possible.
1.37
The appeal of an attack on a government or other authority is still high, but the reality of the types of attacks mentioned above and the impacts of COVID-19 have affected the activities of Islamic extremists, as well as other extremist threats. Propaganda regarding methods of attack, or as a catalyst for action was a concern during the 2018-2019 period, however the realities of the pandemic have led to extremists ‘…seeking to exploit social and economic dislocation, and their extremist ideology has been spreading more quickly and widely as Australians spend more time online engaging with like-minded individuals’.
1.38
Additionally, ASIO said the release of Islamic extremist prisoners from Australian prisons in coming years has the potential to reignite Al-Qa’ida sympathies and discourse within those elements of society with ideological resonance to their beliefs and/or actions.
Right-wing extremism and nationalist and isolationist narratives
1.39
The identification of the impact of right-wing extremism on Australia’s security environment has increased in ASIO’s reporting to the Committee over the period of the reviews.
1.40
ASIO stated that the 2019 attack in Christchurch brought into stark contrast the violent impact of this ideology and associated action, and this event continues to be drawn on as inspiration by violent right-wing extremists worldwide.
1.41
ASIO identified that investigations and advice on both right and left-wing extremists is a focus for the organisation, however investigations of extreme right-wing groups, individuals and emerging ideologies has increased. As of June 2020 individuals identified with right-wing extremist ideologies constituted approximately a third of all onshore counter-terrorism investigations for ASIO, with only an increase expected.
1.42
ASIO said the global rise in nationalist and isolationist narratives has led to a normalisation of aspects of extreme right-wing ideology and will only continue to challenge domestic security as a result. This is reflected somewhat in the shifting narrative around how ASIO will refer to violent threats going forward from 2021 – as ideologically motivated violent extremism and religiously motivated violent extremism. The Committee expects to report more on this in its Review No. 20 report.
Violent protest and communal violence
1.43
ASIO noted that whilst communal violence and violent protest is rare in Australia, communal tensions is most often expressed in peaceful protest designed to draw public attention to a specific issue.
1.44
Some large-scale protests over the two reporting periods led to disruptive tactics or counter-protests, but the incidence of premeditated violent protest (where ASIO would become involved) was rare. Only one protest in January 2019 at St Kilda Beach was identified, where right-wing extremists protesting African crime gangs scuffled with a left-wing extremist counter-protest.
Espionage and foreign interference
1.45
ASIO stated that Australia is a target of ongoing and persistent attempts at espionage and foreign interference:
The threat to Australia from foreign states seeking to obtain strategic advantage at the expense of Australia and its interests cannot be understated. The intent goes beyond collecting intelligence or using Australia as a potential ‘back door’ into its allies and partners, and goes to engineering fundamental shifts in Australia’s position in the world. There are more foreign intelligence officers and their proxies operating in Australia now than at the height of the Cold War, and many of them have the requisite level of capability, the intent and the persistence to cause significant harm to Australia’s national security.
1.46
The desire for foreign actors to target Australia was identified:
Australia’s place in the global economy and its integration into global supply chains and services mean that espionage and foreign interference now has an impact on a greater number of, and more diverse, parts of the Australian community than it did in the past, and the range of vectors through which it is pursued has expanded.
1.47
ASIO stated that Australian communities are also targets:
Foreign governments continue to attempt to interfere in Australia’s culturally and linguistically diverse communities. Some foreign governments seek to control or suppress opposition or dissent which they perceive as a threat. Such interference has included threats of harm to individuals and/or families, both in Australia and abroad. Alternatively, foreign governments use community members to monitor, direct and influence the activities of these communities in Australia.
1.48
ASIO noted that cyber espionage activities are prevalent across all levels of government, universities, academia, and Defence and corporate information networks, with the growth in working from home during COVID-19 creating an increased targeting ground for cyber espionage and potential recruitment of Australians.
1.49
ASIO identified the continued targeting of Australian government employees, political figures, academia, commercial interests and individuals to enable foreign interference tactics within Australia, with similar targeting of critical infrastructure assets, data and emerging technology.
1.50
Additionally, in March of 2021, the Director-General Security identified in media statements that espionage and foreign interference would soon be the predominant threat to Australia’s national security:
…as you look out to 2025, espionage and foreign interference will supplant terrorism as this country’s principal security concern…Threat to life is a priority. And the current ‘probable’ threat level of terrorism means people would lose their lives. Despite that, we think espionage and foreign interference will supplant terrorism…the level of activity coming at us and against us will be relentless.
Border integrity
1.51
ASIO stated that border integrity is still a focus, but that during the 2019-20 period irregular maritime arrivals were suppressed, both by reduced prospect of residency, as well as the impact of COVID-19.
Continued evolution of the National Intelligence Community
1.52
While these reviews continue to look at the six agencies that traditionally made up the AIC, the formal expansion and recognition of the NIC has changed the way that the intelligence agencies reviewed by the Committee are operating.
1.53
Many of the agencies reported to the Committee of the changes and improvements coming from the changes resulting from the 2017 Independent Intelligence Review and the creation of ONI and the Department of Home Affairs.
1.54
The Enterprise Management function for ONI continues to be formed and take effect, which will be reflected somewhat in the following chapters.