Home Affairs and intelligence review

Are Prime Minister Malcolm Turnbull's changes to Australia's intelligence and national security arrangements necessary and genuinely transformational, as he claims? Or are they essentially an exercise in political management aimed at burnishing Turnbull's national security credentials and ensuring the continuing loyalty of his key conservative ally and current Immigration Minister Peter Dutton?

Critics assert the latter and fear that the creation of a mega-Department of Home Affairs will reduce contestability, efficiency and oversight. In short, the whole exercise is a waste of time, energy and precious resources. If the national security machinery isn't broken, what's the case for change?

Much of this criticism is exaggerated or misconceived. Let's start with the politics. There is no doubt that Turnbull's need to shore up his right flank and mute conservative criticism of his leadership played a major part in his choice of Peter Dutton to head up the new super department.

But this is more a case of Turnbull seeking to optimise the political benefits of a decision that was primarily driven by a manifest need to improve the coordination, oversight, funding and strategic management of the sprawling intelligence and national security apparatus and bring it fully into the modern era.

The Independent Intelligence Review makes this abundantly clear. It argues that while the expanded, ten-agency intelligence community has performed well, it needs to move to 'an even higher level of collective performance'. This requires new coordinating structures, funding mechanisms to address capability gaps and measures to streamline legislative arrangements and strengthen trust between the intelligence agencies and the Australian community.

Much of the public commentary has missed the key point that the rationale for reform of Australia's intelligence system, articulated by the review, applies equally to the wider national security architecture. It is a powerful argument for centralising core national security strategy, policy and operations in one department.

Turnbull's decision reflects international trends and brings Australia into line with the US and UK, our principal partners in the Five Eyes intelligence community. The US, UK, Canada and New Zealand all have a single point of intelligence coordination and are grappling with the same complex security threats that confront Australia. Among the most challenging are the political and strategic disruption caused by the fragmentation of the Western-led international order; the exploitation of the internet and social media by hostile states, terrorist groups and criminal organisations with global reach; an upsurge in violent extremism and espionage; and the increased vulnerability of critical infrastructure, including financial systems, to cyber-attack.

Staying on top of these rapidly evolving and interconnected threats requires constant improvement, adaptation and reform.

Yes, the system isn't broken. And it's clearly far better joined up than before 9/11 ushered in the national security era. But asserting that no change is necessary flies in the face of best practice risk management, which is to anticipate threats, structure for them and build resilience. Such an assertion ignores recognised deficiencies in the current architecture and practices that Turnbull wants to remedy. These were strikingly evident in the less-than-whole-of-government response to the Lindt Café siege and the distinctly unjoined up evaluation of foreign threats to critical infrastructure, intellectual property and our democratic institutions in recent years.

There is a logic to having key security agencies such as ASIO, the Australian Federal Police and the Australian Border Force under one departmental roof. It promises better policy and operational alignment on complex issues like returning foreign fighters and a more strategic approach to national security.

On the intelligence side of the house, the big winner is the Office of National Assessments (ONA), which will have its analytical capabilities doubled and be subsumed into a more effective intelligence coordinating body, the Office of National Intelligence (ONI). This change should ensure that performance benchmarks are met, improve the capacity for independent national assessments and entrench much-needed contestability within the intelligence process.

Far from being weakened, oversight and accountability of the intelligence and national security community (which is already high) will be further strengthened by the expanded remits of the independent Inspector General of Intelligence and Security and the Parliamentary Joint Committee on Intelligence and Security.

Another welcome improvement is the long overdue attention given to developing strategic priorities for investment and resource allocation. Excluding defence, spending on intelligence and national security has more than doubled since 2001 to $7 billion. Making sure that this money is spent wisely, across the enterprise, will be a task that falls to Dutton's new department and ONI.

As to the argument that the Home Affairs idea should have been subject to extensive consultation within government, why would you risk leaving its fate to be determined by ministers and agency heads predisposed to rejecting any change that could threaten their power and influence?

Turnbull is not the first prime minister to reshape the bureaucracy according to his preferences, nor will he be the last. Ultimately, Turnbull will have to live with the consequences of his decision, but it is one he is entitled to make.

However, he now confronts a problem of his own making. By announcing the super department at the same press conference as the findings of the intelligence review, Turnbull ensured media focus on the politics around Dutton's appointment rather than the review itself.

This worked against serious analysis of the important and well-argued recommendations of the intelligence review by opening up an obvious avenue of attack for Labor, the Greens and the minor parties in the Senate: that the Home Affairs decision was all about Turnbull's political interests rather than the national interest.

The current national security system has evolved incrementally, with bipartisan support, over 70 years, punctuated by two major periods of change: the establishment of the foundational architecture in the post-war decade and the watershed 1977 Hope Royal Commission, which led to the creation of ONA to coordinate the intelligence community and provide integrated national intelligence assessments.

If Turnbull's mooted changes receive parliamentary endorsement, he can rightly argue that they represent the most significant change to Australia's national intelligence and domestic security arrangements since Hope. His challenge is to make them work.

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.

Intelligence

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.

Home Affairs
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!

The new report on the current state and working of the Australian Intelligence Community (AIC) was prepared by two very knowledgeable, able and experienced people in Michael L’Estrange and Stephen Merchant, after wide consultation.

So it must be very satisfying for those currently working in the Community that the reviewers concluded (see the report’s executive summary) that:

the Australian intelligence agencies are highly capable and staffed by skilled officers of great integrity. They have performed strongly…have a strong culture of accountability…feature world-class tradecraft and very high levels of professionalism. They are held in high regard by their international partner agencies'.

Given such high praise, one might have expected the reviewers to leave things in the Community as they are. But times change, institutions grow, needs and threats vary both in fact and perception, and consequently the authors of the report have recommended changes in a number of areas, including the coordination of the Community as a whole, and the area of cyber-security in particular. This post concentrates on the coordination question.

The report recommends that Australia follow the US and UK examples in establishing a single 'focal point' for the AIC. (For some years now the US has had a 'Director of National Intelligence', after decades of having the Director of Central Intelligence (the head of the CIA) as the most senior figure in its intelligence community.) This will be done in Australia by turning the position of Director-General ONA into that of Director-General ONI. The new DGONI will be equivalent in rank to a Departmental Head, head of the National Intelligence Community, and principal adviser to the Prime Minister on matters to do with it. He will have significant planning and coordination responsibilities and will continue to be in charge - through a senior deputy - of assessment work. There will be an increase in assessment staff of 'at least 50%' over ONA’s current levels. I assume this will be partly to enable the ONI to carry out more of the outreach work connected with assessment which the report wants to see occur. It is not clear what additional resources the new ONI will be given to carry out the increased coordination and evaluation work envisaged.

In fact, both of those functions were envisaged in the legislation establishing ONA, enacted 40 years ago in 1977, after the seminal report by Justice Hope into the AIC. Sub-paras 1A and 1B of Article 5 of that Act, on coordination and evaluation of the work of the Community, specifically provide for the sort of functions which the current report wants to see extended. And in my time as Director-General ONA did carry them out to some extent. If the authors of the report are correct, and there is more that should be done, why hasn’t it been done?

I have been away from Government work for some time now but I think one possible reason for the perceived deficiency is revealed in the report’s recommendation that ONA’s analytical strength be increased by at least 50% under the new dispensation. There’s no doubt that even one dedicated analyst with the appropriate knowledge, background and judgement can produce a surprising amount of work, and make a difference; but there’s also no doubt that ONA’s staffing levels have been, and I believe still are, very tight indeed. The report refers to them as 'stretched'. At one stage during my time we were able to get agreement to the creation of a third Deputy Director-General position (which did not last) specifically for AIC coordination work.  But the senior officer filling that position, though extremely able, had to carry it out without any back-up support at all. So if the proposed increase from ONA’s current numbers is, as stated, for assessment work, I wonder how the new managerial load can be undertaken.

Two other factors are relevant. One is that although the Hope Report, and the consequent ONA Act, clearly envisaged that the DGONA would in one aspect be at the head of the AIC, in another aspect he has been the head of one of the agencies constituting it. This combination of roles could lead to somewhat unexpected outcomes. For example, at one stage during my time as Director-General the then Government decided to conduct a review of the working of the AIC. On one reading of the role of the DGONA I should have done it; but on the basis of another reading the view was taken that that would amount to the AIC reviewing itself, and as a result the review was carried out under the supervision of the very able Dennis Richardson, then in the Department of Prime Minister and Cabinet. The new DGONI is to be clearly designated as head of the NIC, with defined and far-reaching oversight roles. But some awkwardness could occur in his 'assessment of the assessment function'.

The virtual Intelligence Community

Another very important aspect of the situation was, and remains, that while we may talk about the Australian, or National, Intelligence Community, in a way it is only a 'virtual' community. The agencies making it up report to different Cabinet Ministers, each with their own budgets to compile and defend. They dispose of very different amounts of funds and resources, with the agencies within the Defence portfolio dwarfing the others in this regard. This is by no means an issue unique to Australia.  In my time at ONA, American colleagues would describe the situation they faced in exactly the same terms. But it is an issue that has to be acknowledged and taken into account in considering the extent to which it is realistic to think of and plan for the AIC/NIC as a distinct entity, as the report proposes be done under its'Intelligence Capability Investment Plan'.

(The report authors address the funding issue in their proposal for a Joint Capability Fund to be established, funded from Efficiency Dividend savings within the Community, and run by the DGONI.  Of course it remains to be seen how substantial that will be.)

The existence of these features of the Community does not however mean that the various agencies within it can’t work together well. Good personal relations are crucial in a 'virtual' Community, and in my time as DGONA, 20  years ago, it seemed to me that they existed, with very good cooperation and inter-action between the heads of the various agencies - Generals Baker and Hartley at the Defence Intelligence Organisation, for example, and David Sadleir at ASIO, backed up by Departmental Secretaries like Tony Ayers at Defence. There were also a number of bodies that operated effectively to enable and further this cooperation, some formal, like the Secretaries’ Committee on Intelligence and Security, and some less formal, created by the agencies themselves. I personally was very grateful for the work of excellent colleagues within ONA itself in this regard.

And we were also fortunate that Prime Minister Hawke, in particular, appreciated and used the work of ONA and the other agencies. An example was during the First Gulf War, when Australia had forces including warships committed, and there were briefings from ONA and DIO at Parliament House early every morning for the Prime Minister and other Ministers concerned.

So it’s encouraging for former as well as current members of the AIC to see the positive conclusions about its current state drawn by the authors of the report. As I’ve indicated, their recommendations for changes, at least in regard to the coordination and integration aspects, do not break entirely new ground, but hopefully will enable functions contemplated from the outset by Justice Hope to be carried out at a higher level and in more effective ways. For this to be realised, availability of adequate resources, particularly personnel resources, will be important, as will the willingness of Ministers and Departments to allow part of their budgets and major procurement plans to be fitted in to a 'National Intelligence' framework.

Most of the early commentary on Malcolm Turnbull’s changes to Australia’s security and intelligence arrangements focused on his decision to bring together the principal domestic security agencies – ASIO, the AFP, the Australian Border Force, the Australian Criminal Intelligence Commission and others – in a new Home Affairs portfolio. That was natural: for journalists, there was an entertaining sub-text to the story in political tensions within the Liberal Party.

Like any large change to the machinery of government, the new arrangements will be difficult to implement and will generate unanticipated problems in the transition. But the Prime Minister has confirmed that the existing agencies will retain their current structures and statutory independence, so the overall impact will probably not be as great as either supporters or detractors now claim.  The decision to have the first law officer – the Attorney-General – continue to issue warrants and ministerial authorisations for ASIO and other intelligence operations rectifies a nagging conflict of interest in the current system under which the Attorney-General has been both authoriser and responsible minister.

Less focus has been given to the 2017 Independent Intelligence Review, conducted by Michael L’Estrange, a former secretary of DFAT, and Stephen Merchant, a retired intelligence officer of vast experience, which was released at the same time. This is a pity, because if fully implemented, its recommendations will amount to the largest changes to Australia’s foreign intelligence and security agencies since the foundational Royal Commissions conducted by Justice Robert Hope in the 1970s and ‘80s.

The L’Estrange/Merchant review concluded that the Australian intelligence agencies were working well but that the changing security outlook, and the increasingly blurred lines between intelligence collection and assessment, foreign and domestic intelligence, and intelligence and law enforcement, imposed new demands on, and required structural changes in, the national intelligence community.

The new Office of National Intelligence

The review recommended the establishment of a new Office of National Intelligence to replace the existing Office of National Assessments, which sits at the centre of the national intelligence enterprise under the Prime Minister. 

ONI would retain ONA’s responsibilities for strategic, political and economic assessments but its existing statutory responsibilities for coordinating and evaluating Australia’s broader foreign intelligence activities would be expanded and much better resourced. Its remit would be extended to cover the intelligence functions of other agencies like the Australian Federal Police and Border Force.

The Director-General of ONI would be designated as the formal head of the National Intelligence Community, accountable to the Prime Minister and the National Security Committee of Cabinet for its performance. Critically in Canberra power terms, DG ONI’s capacity to wrangle the other larger agencies like ASD and ASIS would be boosted. He or she would be appointed at departmental secretary level and hold the budgetary purse strings for some new programs.

The review’s other major structural recommendation was that the Australian Signals Directorate (ASD) in the Department of Defence should become a statutory agency within the Defence portfolio. In a sign of the growing centrality of cyber issues, ASD would also incorporate the Australian Cyber Security Centre with its broader public and private sector cyber security responsibilities.

In his statement, the Prime Minister said that the government accepted the recommendations of the review ‘as a sound basis to reform Australia’s intelligence arrangements’, which leaves lots of room for adjustment in the detailed implementation processes he foreshadowed.

Three crucial questions

How should we judge the recommendations of the Intelligence Review? Against three criteria I suggest.

Will they result in higher quality, more useful intelligence which helps policymakers deliver better security, economic and foreign policy outcomes for Australia?

I think so.

Will they preserve the critical distinction between intelligence and policy, so that the products of intelligence collection and assessment aren’t distorted by policy and politics? 

Probably, but there are dangers here.

Finally, are any risks mitigated by strong oversight of the intelligence process? 

Here the answer is yes, provided the review’s recommendations are fully implemented.

The better quality, better targeted, intelligence should come from improved priority-setting and coordinating arrangements, and from the substantial additional resources the review recommends. These include better data management and ICT connectivity, a joint fund to support shared new capabilities and a 50% increase in the number of ONA analysts.

In the unclassified public version of the report, some delicately written language alludes to the need to ensure that the immediate demands of areas such as counter-terrorism don’t drain resources from ‘important long-term intelligence priorities’ (meaning, one assumes, our larger regional neighbours).

On my second criterion, maintaining the clear distinction between intelligence and policy, there are risks. The review glides a little too easily over some quite basic tensions between the principle of independence, which it fully endorses, and pressures for greater policy relevance. Its authors note the ‘indispensable requirement’ for ‘intelligence assessments to be independent of policy-making’, but also emphasise the need to ‘further accentuate’ the ‘connection between high-quality intelligence assessments and policy-making needs’.

The reconciliation of these two valid but sometimes conflicting requirements will, I suspect, require tougher trade-offs than the reviewers acknowledge, particularly by a Director-General in much closer proximity to the Prime Minister as his ‘principal adviser on intelligence community issues’. 

I worked three times in ONA over a period of 30 years and the great strength of the organisation – noted again by L’Estrange and Merchant – lies in its strong culture of intellectual independence and internal contestability.  Its small size, flat structure and the room it occasionally finds for passionate eccentrics who know their subject matter deeply, help sustain that culture. 

A great deal will depend on whether the ONI preserves and builds on this asset or overwhelms it in a new culture of operational responsiveness.

On my third criterion, robust oversight of the intelligence agencies, the indications are reassuring. The review recommends a significant increase in the staffing of the office of the Inspector-General of Intelligence and Security (IGIS), who has the powers of a standing Royal Commissioner over the agencies, and a broadening of her remit to include the intelligence functions of new agencies. The Prime Minister announced that the office of the IGIS will be moved into the Attorney-General’s portfolio. The review also recommends an increase in the oversight role of the Parliamentary Joint Committee on Intelligence and Security (PJCIS). It baulks at giving the PJCIS direct oversight of intelligence operations, but the stronger connections it proposes between the IGIS and the Committee will be helpful.

We won’t be able to make final judgements about any of these issues until we see the precise terms of proposed legislative changes, the details of the resources the government is prepared to invest, and the character of the people it appoints to the new positions. Structural changes without the resources to back them up will be more dangerous than beneficial. 

Australia’s intelligence structures have drawn on strong historic links with Britain and the United States, but they have unique indigenous characteristics. These were established by Justice Hope, a former judge of the NSW Court of Appeal and President of the NSW Council of Civil Liberties. They include a focus on the national interest, a sharp demarcation between the roles of intelligence and policy-making, clear accountability, and strong democratic oversight. L’Estrange and Merchant aptly describe this as an ‘indispensable legacy’. 

As the government works through the details of the Review’s important and necessary changes, it needs to reflect as deeply on the strengths of Australia’s own intelligence traditions as it does on any British or American models.

Prime Minister Malcolm Turnbull announced major changes to the Australian Intelligence Community on 18 July. In the cauldron that typifies politics in Canberra, it was inevitable these changes would be interpreted by political commentators through the lens of political power plays within the Government. So we have been treated to countless stories about ministerial winners and losers, shoring up political alliances, dangerous concentrations of power, and accusations that the Government has not convincingly demonstrated the need for the creation of a new Department of Home Affairs.

In taking up the 'If it ain't broke, don't fix it' refrain, many commentators have ignored the essential thrust of the Government's announcement, which was more along the lines of 'It ain't broke, but that don't mean we can't make it better'.

Too often, governments are only stirred to improve national security or law enforcement capabilities after some catastrophic failure. Disaster-driven reform is the norm. In this tranche of intelligence reforms, the Government has sought proactively to make further improvements to an intelligence and law enforcement community, which it acknowledges was already working well, to ensure that this community is even better placed to address the range of threats the country faces now and will face in the future. 

An increasingly important attribute of a successful intelligence community in our rapidly moving technological age is the ability to share systems, data and operational capabilities across the entire spectrum of agencies in a seamless, efficient and cost-effective manner. Inter-service rivalries, cultural differences and territorialism are the enemies of intelligence cooperation. Over the years, inter-agency cooperation has advanced in leaps and bounds, driven mainly by the exigencies of counter-terrorism. But there are always more benefits to be achieved through ever-increasing cooperation and rationalisation. The Turnbull intelligence reforms seek to reorganise the intelligence and law enforcement communities to achieve even greater operational effectiveness.

The Government has exercised its right to arrange portfolios in ways that it thinks best. It matters little to the effective operation of Australia's highly professional intelligence and law enforcement community whether they answer to an Attorney-General or a Minister for Home Affairs. We would expect them to perform equally well for both. What does matter in this totally inter-connected world is that the capabilities of our agencies are harnessed to provide even higher levels of protection for Australians and Australia's interests. For example, recognition of the integral role of the Australian Federal Police across all areas of security and closer alignment with the Australian Border Force are timely.

The real practical significance of the reforms lies not in the Turnbull Government's new portfolio arrangements but in its acceptance of the 23 major recommendations of the 2017 Independent Intelligence Review, conducted by Michael L'Estrange and Stephen Merchant. This comprehensive and incisive report seems almost to have been overlooked in the initial press coverage of the Prime Minister's announcement, yet it objectively identifies areas where a well-performing community can do even better.

The proposal to create a new Office of National Intelligence that combines the Government's existing strategic assessment capability (the Office of National Assessments) with a new function of management and coordination of the whole (and expanded) Australian Intelligence Community is a welcome step. The closest parallel to the new ONI would appear to be the US Directorate of National Intelligence, set up after 9/11.

The new Director-General of ONI, accountable to the Prime Minister but with statutory independence, would be the official Head of the Intelligence Community, with responsibility for advising on intelligence priorities, resource allocation, priority setting and evaluation of the intelligence community's efforts. D-G ONI should be a driver for unifying and-improving technological capabilities across the community as well as ensuring ever more effective data and capability sharing. 

In recent years, the Australian Signals Directorate (ASD) has suffered serious staffing shortages as it tries to meet the increasing demands of both national intelligence and military intelligence requirements. Its Defence-based salary structure has seen it lose staff to the better paid private sector. The Government has accepted the recommendation that ASD become a statutory agency within the Defence portfolio – on a par with ASIO and ASIS. ASD is one of Australia's intelligence jewels, but it needs greater flexibility in the age of digital disruption. It needs geeks, not bureaucrats. At the same time, it must maintain its close working support for the operational arms of our defence establishment. Its new statutory status in the Defence portfolio should help achieve these goals.

The Australian Cyber Security Centre (ACSC) was set up to help protect government information and assist industry and ordinary Australians to defend themselves from cyber attack. As an inter-departmental consortium it has only slowly developed its role. A key need is to develop its outreach into the private sector. The new arrangements should ensure that the ACSC becomes a dynamic element of the Government's overall cyber security strategy – absolutely essential in this new age of cyber threats. The appointment of a Cyber Security 'Tsar' to manage the ACSC is long overdue. 

The report covers a wide ground including the need for innovation and new intelligence tools and a rational, community-wide approach to their acquisition and joint use. It expands the Australian Intelligence Community from its original six members (ASIS, ASIO, the Australian Geospatial Organisation, ASD, ONA and DIO) to include the intelligence elements of the Department of Immigration and Border Protection, the Australian Federal Police, the Australian Border Force, the Australian Criminal Intelligence Commission, the Office of Transport Security and AUSTRAC. This brings the principal agencies that both produce and use intelligence together into a stronger cooperative relationship

The Government's announcement did not mention the fate of a number of security-related elements currently within the Attorney-General's Department. Logic suggests the Computer Emergency Response Team (CERT), Emergency Management Australia, the recently established Critical Infrastructure Centre, and the machinery for countering violent extremism could also be brought into the new Home Affairs structure

Some sections of the public will always be deeply suspicious of the secret intelligence function. These reforms, however, ought not to offend them. 

In terms of oversight, the report recommends a wider role for the Parliamentary Joint Committee on Intelligence and Security and enhancement of the Inspector-General of Intelligence and Security. And in establishing the Home Affairs portfolio, the Government also announced it would strengthen accountability by bringing key oversight bodies - the IGIS, the Independent National Security Legislation Monitor and the Commonwealth Ombudsman - under the authority of the Attorney-General, the first law officer in the land.

Most importantly, civil libertarians should take heart that the new arrangements in no way weaken the 'ecosystem of safeguards' against illegality or impropriety by the necessarily secret intelligence agencies – a system originally devised by Justice Hope in the 1970s and which has been progressively strengthened since then.

There will be some quibbles as to the workability of some proposals (for example, the requirement for the Attorney-General to sign ASIO warrants). Some commentators will continue to debate the changes as political manoeuvring, rather than as carefully considered structural reforms designed to meet the demands of security and the safety of citizens into the third decade of the 21st century.

This is a Federal Government reform. A significant test will be the extent to which the new Home Affairs structure will lead to enhanced cooperation with State Government agencies, particularly State police forces. Federal-State cooperation is the key to countering terrorism and serious organised crime.

As a former intelligence agency head, I welcome the reforms. In the end, the ultimate issue will not be the politics of allocation of agencies to a new portfolio, but the increased effectiveness of the Australian Intelligence Community through the early implementation of these reforms. 

One last thought. Organisational reforms do not change existing organisational cultures per se, and certainly not in a hurry. That takes leadership. Australia has the law enforcement and intelligence leaders to meet that challenge.

The long-awaited release of the unclassified version of the 2017 Intelligence Review is now at hand. Released by Prime Minister Malcolm Turnbull at the same time as he announced the creation of a Department of Home Affairs, the rationale and details of the review unfortunately are now part of the background noise. But this review proposes a number of significant and consequential reforms that deserve close attention. It shows how much times have changed, and reflects how many arms of government are now involved in the intelligence business. This review was necessary and its recommendations are pertinent and strong.

In The Secret Cold War, my colleague Dr Rhys Crawley and I wrote about the extraordinary reforms recommended by Justice Robert Marsden Hope and subsequently implemented across the Australian Intelligence Community (AIC). The two royal commissions over which he presided and the protective security review, which followed the February 1978 Hilton Hotel bombing, set the stage for a robust set of intelligence arrangements that stood the test of time.

Indeed, when Hope conducted his reviews, the AIC consisted of five organisations: the Australian Signals Directorate (ASD), established in 1947; the Defence Intelligence Organisation (DIO), also founded in 1947; the Australian Security Intelligence Organisation (ASIO), established in 1949; the Australian Secret Intelligence Service (ASIS), established in 1952; and the Office of National Assessments (ONA), created after the first Hope royal commission in 1977. A sixth was added subsequently and is known now as the Australian Geo-spatial Intelligence Organisation (AGO).

As a consequence, by the time of the 9/11 terrorist attacks, when other ‘five eyes’ nations undertook some organisational soul-searching, the AIC stood largely unchallenged.

To be sure, the Intelligence Services Act 2001 set about a more robust legal framework for ministerial accountability for respective portfolios in the post 9/11 era. But beyond that, the tried and tested organisational structure of Hope’s era stood the test of time.

Subsequent reviews by Philip Flood in 2004 and by Rufus Black and Robert Cornall in 2011 prompted minor changes and largely confirmed the appropriateness of the framework established following Hope’s recommendations. 

In the years since the 2004 and 2011 reviews, the functions of the AIC have expanded. Since then, there has been considerable change. The face of Islamic extremism has morphed and spread abroad and at home. The rise of cyber security challenges has affected not just militaries but government and industry. The prospect of great power conflict has returned to being surprisingly plausible, and the function of defending the nation has spread beyond the defence force to include a range of additional government agencies, including the Australian Border Force. It is not surprising, therefore, that change in the intelligence arrangements would be coming.

Mindful that circumstances change, both the 2004 and 2011 reviews recommended further periodic reviews. This 2017 review, undertaken by former senior public servants experienced in national security and intelligence matters, Michael L'Estrange and Stephen Merchant, along with Britain’s Sir Ian Lobban, presents an examination as consequential as those of Hope, particularly in terms of the scope and magnitude of the issues addressed and the changes proposed.

The review includes a range of specific recommendations that can be grouped as six noteworthy areas of reform.

First is the creation of an Office of National Intelligence. This is a sensible and graduated move that would subsume ONA and provide a greater central mechanism for the national coordination of intelligence affairs. The new name is also more clearly recognisable as the peak intelligence body for the nation.

Second is the better resourcing and management of intelligence capabilities through the establishment of a joint intelligence capability management function. This also is a reasonable step given the need to coordinate intelligence equipment acquisition, holistically manage IT infrastructure and better guarantee the highest of security measures.

Third is the establishment of the Australian Signals Directorate as a statutory body within the Department of Defence. This will place the head of ASD on a par with the heads of the two other statutory intelligence bodies, ASIO and ASIS. This is something that has been talked about for years by insiders and is widely recognised as a reasonable step to take.

Fourth is a bolstering of the profile and placement of the Australian Cyber Security Centre. This is an unsurprising step, given the high profile of cyber affairs this year.

Fifth is an expansion of the Inspector-General of Intelligence and Security’s remit to cover agencies with intelligence collection and reporting functions not previously counted as part of the six agencies in the Australian Intelligence Community. The expansion of the IGIS’s remit from six to ten organisations will generate the requirement for additional resources and these are accounted for. This is an important step to render the newer intelligence organisations (which have until now operated largely unrestrained by IGIS inspections) subject to oversight by the IGIS.

Sixth is a slightly expanded, operationally oriented role for the Parliamentary Joint Committee on Intelligence and Security to request briefings and initiate inquiries. This is akin to the expanded powers of the counterpart parliamentary committee in the United Kingdom.

Overall, these recommendations are sound. The intelligence review is well considered, timely and reasonable. L’Estrange, Merchant and Lobban deserve to be congratulated for a job very well done.

It is unfortunate, however, that the reviews findings were not declared in isolation of the Home Affairs proposal. By announcing the results of the intelligence review and the new Home Affairs arrangements together, the important reforms outlined risk being lost in the background noise. The new Home Affairs governance arrangements lack the same level of intellectual rigour applied by the intelligence reviewers.

Photo: Flickr/MomentsforZen

After almost two decades of consideration during which the case for it has always failed to convince government ministers, the Australian Government has decided to go ahead with the creation of a new 'super department' to oversee Australia’s domestic security and intelligence system.

The decision to go ahead with the controversial plan was taken by Prime Minister Malcolm Turnbull in what he described as 'a captain’s call', against the strong objections of some of his ministers and unresolved doubts among security agency heads (expressed privately) and counter-terrorism experts.

Turnbull said that he had decided to set aside the doubts and criticisms about the creation of an Australian-style Home Affairs department because he judged that it offered the best means of ensuring that Australia’s counter-terrorism capabilities stayed ahead of the complex and changing nature of the threat to Australian security.

'This is my decision,'Turnbull said. 'The challenges posed by the threat of terrorism grow all the time. This is a decision driven by operational logic, in response to that threat.'

Turnbull made it clear that he had taken upon himself the responsibility for the decision and responsibility for its ultimate success or failure. He said the security environment was evolving rapidly and becoming more complex and Australia needed 'machinery that evolves' to deal with these changes.

The PM described the new department as being similar to the UK’s Home Office, quite different to the United States’ often-criticised Department of Homeland Security. He said it would be 'a federation, if you will, of border and security agencies'.

Turnbull did not spell out specifically how the new super-department would be more capable of evolving to keep ahead of the changing threat, except to say that having all aspects of domestic counter-terrorism and security under the supervision of a single minister would result in more effective communication and co-operation within the domestic security architecture.

He suggested that this was a matter of logic, rejecting the view of critics that it risked creating a more cumbersome bureaucracy which could put at risk what many experts see as a system which currently operates effectively and has made Australia’s domestic security record among the best in the world.

During the government’s consideration of the shake-up and consolidation of the domestic security agencies in a new Home Affairs Department – a process which is expected not to be completed until well into 2018 – some ministers were concerned that the actual process of creating the next department would be disruptive to the major agencies.

At least one minister warned that if there was a major terror incident while the re-organisation was taking place the government could pay a high political price, especially as there were respected voices that would say that the changes were unnecessary.

Interestingly, shortly after the Prime Minister’s announcement, the government released the final report of the Independent Intelligence Review, conducted by Michael L’Estrange and Stephen Merchant.

The Review does not specifically call for a super-department of the kind Turnbull has announced – he says it was not within the Review’s remit to consider the organisation and co-ordination of domestic security and criminal intelligence agencies.

But the Review does say that the experience of the US and British governments showed that there needed to be better arrangements for building synergies among and between intelligence and security agencies.

We consider there are important conclusions Australia can draw from the recent experiences of our most important intelligence partners. All our Five Eyes partners have a single point of co-ordination for their intelligence communities. Australia’s co-ordination arrangements are not as clear.

The United States and the United Kingdom, in particular, have taken practical steps to build synergies among their agencies in response to the demands of twenty-first century intelligence. Australia is doing the same in particular areas but it needs to do much more.

The new Home Affairs department structure to be introduced in Australia will:

• Bring together the border and domestic security agencies and include the Australian Security Intelligence Organisation, the Australian Federal Police, the Australian Border Force, the Australian Criminal Intelligence Commission, the financial intelligence agency AUSTRAC and the Office of Transport Security.
   
• Be headed by a new Home Affairs minister who will have two other ministers reporting on security and immigration.
   
• Retain the role of the Attorney General in the issuing of warrants and ministerial authorisations related to intelligence operations.

The new minister for Home Affairs will be the current minister for Immigration, Peter Dutton.

The appointment of Dutton has given an element of domestic political intrigue to the Prime Minister’s announcement.

Political analysts say that the reason for the decision to create the new Home Affairs department as a super-ministry has more to do with the Prime Minister’s security than the public’s safety and that its prime purpose was to assuage Dutton’s ambitions to take Turnbull’s job.

Amid on-going internal conflict within the government over its policies and consistently poor opinion polls, Dutton is seen as the most likely contender to replace Turnbull in the event of a leadership challenge.

Given that the idea of creating a super domestic security department has floated around since as far as 2001 (when it was first proposed by the then Labor Party leader Kim Beazley) and that Turnbull was only able to offer a vague policy justification for his decision to finally go ahead with it, the idea that it was politically inspired to keep Dutton’s ambitions in check has gained strong currency among commentators.

Turnbull, however, flatly rejected the suggestion.

'This was not a political decision,' Turnbull told a media conference outside his office in Canberra.

'It is about the public’s safety, not politics.'