1.1
The National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017 (the Bill) and the Foreign Influence Transparency Scheme Bill 2017 (the Foreign Influence Transparency Scheme 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 Security, 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 Australian interests 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, Mr Duncan Lewis, 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
In addition to traditional espionage efforts to penetrate Australian governments, ASIO has outlined that 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 conduct interference 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 cyberintrusion 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
In comparison to espionage, the Director-General of Security described foreign interference as ‘a far broader field of activity’ that
grows with the imagination and ambition of foreign powers, ranging from a foreign power using local Australians to observe and harass its diaspora community here in our country through to the recruitment and co-opting of influential and powerful Australian voices to lobby our decision-makers.
… When looking at events such as the reported [attempted] assassination in the United Kingdom a week or two ago, which the Prime Minister has rightly described as a heinous attack, we should not consider ourselves immune from such extreme acts.
1.13
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.
1.14
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’.
1.15
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 Foreign Influence Transparency Scheme Bill also referenced covert and clandestine activities targeting Australia’s national interests.
Government response to the threat
1.16
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 Foreign Influence Transparency Scheme Bill are intended to ‘counter the threat of foreign states exerting improper influence over our system of government and our political landscape’.
1.17
The two Bills form part of the Government’s Counter Foreign Interference Strategy. The Strategy has four pillars: sunlight, enforcement, deterrence and capability:
[O]ur rejection of covert, coercive or corrupting behaviour leads naturally to a counter-foreign-interference strategy that is built upon the four pillars of sunlight, enforcement, deterrence and capability.
It means that if you use inducements or threats to manipulate a political process or public debate then we will unleash the full force of powerful new laws and defend our values and democratic institutions.
And it means that foreign actors who would do us harm are now on notice: we will not tolerate covert, coercive or corrupting behaviour in our country.
1.18
The Espionage and Foreign Interference Bill is directed at the second and third of those pillars: ‘enforcement’ and ‘deterrence’. The Prime Minister noted that the Bill will work in tandem with the Foreign Influence Transparency Scheme, which is directed at the first of pillar, ‘sunlight’.
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
Significantly, the Attorney‑General’s Department (the Department) sought to contrast ‘foreign interference’—to which the Bill is directed—and ‘foreign influence’—to which the Foreign Influence Transparency Scheme is addressed—as distinct concepts. ASIO however 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 Espionage and Foreign Interference Bill. The Committee’s review of the Foreign Influence Transparency Scheme Bill is provided in a separate report.
1.22
The Director-General of Security, in strongly supporting the Espionage and Foreign Interference Bill, advised the Committee that, ‘the current criminal offences are inadequate to deal with the foreign intelligence threat that we now face’ and described existing offences as ‘outdated and deficient’ and ‘inadequate or unworkable’. As a result, ASIO assessed that the ‘net effect is that our nation’s freedom of decision‑making and core interests are not adequately protected by the rule of law’.
1.23
The Director-General also advised the Committee of the anticipated deterrent effect of the Espionage and Foreign Interference Bill, stating:
There’s a pressing requirement to deter hostile foreign spies who are conducting espionage and foreign interference against Australian interests as we sit here today. The proposed laws would, in my view, make Australia a much harder target for foreign intelligence services. It would be demonstrably more difficult to operate here. … Facing no realistic prospect of criminal investigation and prosecution for their activities against us, our foreign adversaries are currently shielded from the significant disincentive of public exposure and punishment, and they are taking advantage of this gap. … Criminal prosecutions for espionage, foreign interference, secrecy, sabotage and economic espionage offences that are tested in our courts and reported in our media will send a very powerful message to those orchestrating such activity against us.
1.24
Many participants in the inquiry supported strengthened measures to deal with the threat posed by increased espionage and foreign interference activities in Australia. Submitters also called for caution to ensure that innocuous or beneficial conduct is not caught up in the proposed new offences, and that sections of the Australian community are not adversely affected.
Committee comment
1.25
During its inquiry, the Committee has received compelling evidence that Australia is facing an unprecedented threat from espionage and foreign interference. The Committee has also received evidence that current laws are not adequate to deal with this threat. Unchecked, espionage has the potential to significantly reduce Australia’s long-term security, and foreign interference could undermine our democracy and threaten the rights and freedoms of our people.
1.26
The Committee therefore accepts that there is a pressing need to strengthen and modernise current espionage and foreign interference laws.
1.27
The Committee understands that prosecution for criminal offences is not the only means available to authorities to deal with espionage and foreign interference activity. It is, however, important to have criminal laws that are sufficiently robust to deter the full range of activity that foreign actors may seek to employ.
1.28
The Committee supports the intent of the Bill to achieve these goals and, subject to the other recommendations in this report, the Committee supports its passage through the Parliament.
1.29
The Committee recommends that, following implementation of the recommendations in this report, the National Security Legislation Amendment (Espionage and Foreign Interference) Bill 2017 be passed.
1.30
Having accepted that it is necessary to strengthen espionage and foreign interference laws in response to the current threat environment, the Committee has considered the common principles to be applied to its analysis of the laws directed at meeting this threat. In summary, the Committee considers that laws need to be effective at achieving their stated aims, at the same time as minimising any limitations on human rights.
1.31
To be effective, the laws need to be workable from the perspective of law enforcement and prosecutors—that is, they must be enforceable.
1.32
In relation to minimising limitations on human rights, the Australian Human Rights Commission has previously advised the Committee that it is permissible for a legislative measure to limit human rights where the measure is expressed in clear and unambiguous terms, is directed to a legitimate aim, is necessary to achieve that aim, and is proportionate.
1.33
Taking these considerations together, and having accepted the legitimacy of the aims of the Bill, the Committee has sought to ensure through its review that each of the measures in the Bill is:
clear and unambiguous in its terms,
proportional and appropriately targeted to the threat, and