In accordance with its broad Terms of Reference, the Review

• Looked back to assess the intelligence agencies’ performance as they have grown rapidly to meet the expanding security challenges of the 9/11 decade
• Looked forward to the new and additional security threats in the cyber world and the challenges posed by the evolution of a multi-polar world and the economic rise of our region, and
• Asked what the Australian Intelligence Community will need to do to meet these challenges in an age of growing demands and abundant information but constrained resources.

In undertaking this task, the Review inquired into the detailed operations of Australia’s intelligence agencies and the way they work with each other, with the agencies in the broader National Security Community and with their international partners.

As a result, the Review Report contains a great deal of sensitive and secret information from many sources. That material is so intricately woven into all aspects of the classified Report it is not possible to simply delete it and publish what remains.

Instead, we have summarised the essential thrust of the Report’s conclusions in this Chapter, omitting the parts which must be kept secret and the detailed recommendations which go to the heart of the intelligence agencies’ capabilities, activities and working relationships.

The growing security challenges of the 9/11 decade

The terrorist attacks in the United States on 11 September 2001 marked the beginning of a new era of security challenges for Australia. The threat of terrorism has been the gravest challenge, with more than 100 Australians killed in attacks overseas.

When these terrorist attacks reached our neighbourhood, we realised we had to step up our effort even more. We increased our homeland security and joined with Indonesia and other partners to degrade the regional threat. Further afield, including twice in Afghanistan, we have supported the United States and other partners in their efforts to disrupt the wider global jihadist network.

Failed and fragile states closer to our shores also demanded attention. At the same time, our maritime borders were being compromised by people smugglers and proliferators of weapons of mass destruction were of increasing concern.

While the intelligence agencies’ attention was largely focused on those issues, espionage and foreign interference had not gone away and disruptive cyber activity was growing rapidly.

How the Intelligence Community responded to Australia’s new security environment

To play its part in meeting these challenges, the Australian Intelligence Community had to transform itself in a few short years from its primary task during the post-Cold War period of contributing to policy development to the dual role it has today. Now, intelligence agencies not only inform policy, they also support substantial security and military operations at home and abroad.

The principal features of that transformation were new laws and expanded powers, a rapid growth in human and financial resources and a new national security architecture.

The anti-terrorism laws which created terrorism offences and expanded the powers of intelligence and law enforcement agencies were forged through a vigorous national debate that ultimately led to bipartisan support in the Parliament. The result of that process of political negotiation is that the Review did not hear any substantial criticism of the balance in our anti-terrorism laws between the security of the community and individual privacy and other civil rights.

The most substantial growth in resources came in the areas of security intelligence and foreign human intelligence, which had been substantially scaled back in the post-Cold War environment.

Overall, the combined budgets of the intelligence agencies grew by $753 million from 2000 – 2010 at a compound annual growth rate of 14.6% a year to a total of $1.07 billion.

Australia’s return on this intelligence investment has been impressive. As a nation, we now possess a new range of well tested intelligence capabilities. Those capabilities have made Australia and Australians far safer than they would otherwise have been and have also made significant contributions to the global security effort.

There have been many notable outcomes, which demonstrate the value of this capability to Australia, as illustrated by the following examples:

• Counter-terrorism: The Australian Intelligence Community has helped keep the Australian homeland safe from terrorist attacks for a decade despite a series of major plots. Those disrupted plots resulted in 38 prosecutions and 22 convictions. Other potential plots have not been allowed to develop thanks to more than 80 foreign nationals being prevented from coming to Australia on security grounds and more than 50 Australians being denied the opportunity to travel to train for, support or participate in, terrorist activities.
• Support to military operations: In addition to its contributions to force protection, intelligence has been integral to ADF operations
• Disrupting people smuggling: The combined efforts of the intelligence agencies (cooperating with law enforcement agencies) have significantly reduced the number of irregular maritime arrivals who would otherwise have arrived in Australia over the last few years
• Counter-proliferation: A significant number of people who might have been involved with the proliferation of weapons of mass destruction have been denied entry to Australia through the combined efforts of ASIO, the Department of Foreign Affairs and Trade and the Defence Intelligence Organisation in screening visa applicants. In addition, DIO export assessments have contributed to the whole-of-government effort which has prevented materials that might have been used in the manufacture of weapons from reaching their intended destination
• Counter-espionage: Agencies, principally ASIO, have continued to focus on the enduring challenge posed by espionage directed against Australia and its interests. This focus has included the development of responses to counter increasingly sophisticated espionage techniques, such as the use of the internet for espionage purposes, and
• Countering cyber threats: Since its establishment in 2010, the Cyber Security Operations Centre has identified a significant number of cyber security incidents, involving a wide range of threat sources, seeking to exploit Australian public and private sector computer networks for sensitive information. In conjunction with government and industry partners, the CSOC has provided advice and assistance to mitigate these threats.

Australia’s relationship with its international partners, especially long standing allies, has been central to building this important national capability and achieving these outcomes.

As a result of Australia’s joint operations with our allies throughout the 9/11 decade, Australia’s intelligence relationships are at a very high point.

For Australia these close relationships have provided an enormous dividend. We are able to access a great deal of the intelligence acquired by our partners through their considerable investment in intelligence capability. Access to partners’ intelligence is a huge multiplier to the capabilities and effectiveness of our intelligence agencies.

To build and maintain the intelligence capability we need, it is critical that Australia continues to invest in these relationships, working closely with our partners and contributing our share of the combined international intelligence effort.

However, Australia’s middle power interests increasingly require our intelligence agencies to obtain global coverage by strengthening or developing other key intelligence relationships outside the allied community.

A new era for intelligence: meeting the challenges of a middle power with global interests in a multi-polar, cyber world

Looking to the future, we are of the opinion that we are entering a new era for intelligence. Important geopolitical and technological changes, which have been underway for some time, have now reached a point of maturity that they demand more attention and capability.

The rise of countries in our region has been referred to as the dawning of the Asian Century. In particular, the economic growth of those countries has made them emerging world powers with increasing importance and impact.

The internet has maintained its extraordinary growth, expanding the cyber world to all corners of the globe and deep into daily life. The world has become dependent on it.

Australia’s own globalisation has continued so that today we are a middle power with global interests.

All of these changes are taking place in what has now become an age of information abundance. There is a rising ocean of open source information and yet, at the same time, covert intelligence is increasingly difficult to obtain.

While recognising that terrorism, espionage, proliferation and people smuggling remain clear and present dangers, we need to build a stronger national capability to meet the challenges of the multi-polar and cyber worlds.

We also have to meet the government’s expectation that, when issues affecting Australians arise beyond our region, often suddenly, the intelligence community can provide prompt insight to inform decisions.

Multi-polar world

Navigating our international relationships will be one of Australia’s greatest strategic challenges in the coming decades. The Australian Intelligence Community will be called upon to support government policy and decision making in a rapidly changing, multi-polar world.

Cyber threats

There is trouble in cyberspace.

Government networks have been penetrated by cyber intrusions. Australian strategic commercial interests have already been subject to cyber exploitation and we are still seeing only a portion of the hostile cyber activity.

The United States and China have both publicly acknowledged the importance of cyber war fighting capability, state-supported hacking is becoming a national capability in some countries and organised crime is colonising the cyber domain.

Australia needs to consolidate and expand its capabilities to counter the cyber threat through the CSOC in the Defence Signals Directorate. DSD, along with its intelligence and policy agency partners, needs to continue to build its capability to:

• Protect Australian government systems and systems of national significance
• Assist other agencies to meet high end threats, and
• Support the development of government and private sector capability to meet the high volume of cyber threats they will need to manage.

It is important to remember that, while DSD is in the vanguard of modern cyber applications, the world as a whole is still at what has been called the T-model Ford stage of the internet.^[16]

Middle power needs

While we need to significantly increase our focus on our region and cyber space, they are not the only areas requiring more attention.

As a middle power with substantial commercial interests and citizens spread around the globe, we need a cost effective capability to see further afield to identify and understand potentially volatile areas that could affect us.

War fighting capability

Australia also needs to keep its war fighting capability on a sound footing. We still live in a dangerous world. There are rising powers and simmering tensions in our region. Our neighbourhood has vulnerable states that may again need our assistance. To help, we will need military capabilities that are increasingly more dependent on intelligence, ranging from the information required to operate smart weapons through to the surveillance and understanding of the human terrain that makes tactical operations far safer and more effective.

In the course of the last decade, Australia has built the impressive intelligence capability required for modern conflicts. It is vital we retain and build that capability, not only because it does much to secure the effectiveness of military operations but also because it expands policy makers’ options as to how they will respond.

Meeting the new security challenges in a time of constrained resources

The central challenge for the Australian Intelligence Community is to meet both our existing and expanding security challenges in an era of constrained resources.

Some have proposed that the community would be more effective and efficient if its structure were to change. They argue that maintaining the distinction between domestic security and foreign intelligence is artificial and hinders effectiveness in a globalised Information Age.

The original logic for the distinction between domestic security and foreign intelligence counters this argument. The higher obligations we have towards our own citizens are best safeguarded by ensuring all members of an intelligence agency who deal with our domestic sphere operate according to a single regulatory regime and with one consistent set of operational practices and culture. At the same time, our foreign intelligence agencies need ways of working that are founded on a broader licence to operate effectively and require different skills and training.

Our view is that this original logic is sound. The possible compromise of the protections this distinction affords to Australians could not be justified by any of the potential efficiency gains that might come from dismantling it.^[17]

There are other opportunities to increase the efficiency and effectiveness of the AIC that should enable it to meet the security and intelligence challenges of this new era.

Improved priority setting, mission integration and intelligence distribution

Priority setting would be assisted by a more analytic approach that is better aligned with the government’s all hazards approach to national security. Sharper, better defined priorities will aid resource allocations and provide a greater return on our intelligence effort.

The return on intelligence effort is also enhanced by how well intelligence missions are integrated. Fusion centres have been an important step towards greater integration. The lessons from these successful mission integration efforts need to be widely applied.

In relation to the distribution of intelligence, it is important for agencies to continue to regularly and rigorously assess the utility of their intelligence products to ensure they are tailored to meet the needs of senior decision makers and that the substantial effort that goes into them is therefore well invested.

More efficient and rigorous performance evaluation

There is considerable reliance on self-assessment and some duplication in the current evaluation process.

A cleaner process is needed, involving collectors being evaluated by assessors or operational users, assessors being evaluated by their customers and the performance of the agencies as a whole being evaluated from outside the intelligence community.

Outside input to support innovation

Constant innovation will be required in the years ahead to meet the rising demands facing the community.

The perspectives of people outside the community who understand the challenges facing intelligence agencies are a source of innovation. While AIC agencies already have processes in place to obtain external information and advice, these sources of independent opinion are likely to become increasingly valuable, given the world of abundant information and the complex global environment in which the AIC is operating.

New strategies for managing intelligence collection in the age of abundant information

The AIC needs a clear strategy to manage the vast and constantly expanding volume of:

• Electronic information, and
• The more accessible human information now available thanks to the greater ease of travel and its lower cost.

All of the intelligence agencies should:

• Ensure that their staff are skilled in the use of open source information and have easy but secure access to open source terminals and tools, and
• Invest in developing those open source tools and techniques so we can do an even better job of efficiently generating insights out of the rising ocean of data.

For all the value of open source reporting, it has its limits. Just as in an earlier age, intelligence agencies’ reliance on signals intelligence led to the degradation of human intelligence to the point of vulnerability, we have to be careful that the amount of information freely available in cyberspace does not tempt us to fall into the same trap.

One way to avoid or at least minimise this vulnerability is to ensure our diplomatic service is able to meet the growing demand for insightful reporting about the many countries and issues which are now of interest to Australia.

Finally, while modern technologies facilitate the collection of more useful open source information, those technologies are making covert human intelligence gathering more challenging. Careful planning and investment will be needed to avoid these challenges severely constraining covert efforts.

Continuing to enhance working relationships in the community

There has been a major transformation in how well the Australian Intelligence Community is working together.

Their working relationships are particularly strong at the leadership level and can be further enhanced through joint senior management and leadership training. At lower levels, where some issues remain, it is important that the practices which have helped with improved collaboration, including rotations through other agencies and secondments, continue to expand.

At the institutional level, the community should continue to review the various fusion arrangements it has established to ensure the lessons learnt are shared. As these arrangements grow, care will need to be taken to disband some of them as well when those fusion centres or other cooperative arrangements have completed their task or met their objectives.

Continuing to deepen the quality of working relationships with the wider national security community

The intelligence agencies play an important role supporting the operations of some other agencies in the expanded National Security Community, which includes law enforcement agencies, the Department of Foreign Affairs and Trade, the Department of Immigration and Citizenship and the Australian Customs and Border Protection Service.

While these operational relationships are working well, the intelligence agencies should continue with their efforts to improve the way they work with the broader National Security Community.

Some care needs to be taken that the broad thrust to develop a larger National Security Community does not lead to collaborative arrangements and meetings whose size and complexity compromises any gain in effectiveness or efficiency they might have been intended to achieve.

Continuing to safeguard liberty and privacy in a time of heightened security

In a free society, it always important to keep the safeguards of our liberty, privacy and other human rights under review to maintain the balance we have struck as a nation between these individual rights and our security as a community.

The Review believes the legal framework that enshrines that balance is sound and does not need any adjustment at present^[18], while recognising that periodic amendments will be needed to ensure the purpose and intention of the legislation keeps pace with changes in the nature of the threat and a rapidly evolving, technical operating environment.

This balance is not just protected by law and the regulatory and oversight regimes that regulate and monitor agency conduct. It is also protected by the culture of each agency and the intelligence community as a whole.

Maintaining the culture that sustains the balance between security and liberty, especially after a period of dramatic AIC growth, will require continued attention.

The intelligence community presently has to deal with the non-state actors who live largely outside existing legal and ethical frameworks.

Australia should take an active role in international discussions about the evolution of those ethical and legal frameworks and their effect on intelligence agencies and the way they should operate.

In addition to those challenges, the international community will face new questions that will arise about the appropriate and justifiable use of technologies like unmanned aerial vehicles and the possible outcomes of cyber attacks (including the potential for disproportionate harm to civilian populations).

For all that intelligence has done and can do, there are real limits on intelligence in a free society in a complex world. There will be closed societies whose futures will surprise us and there will be small extremist cells and even lone actors who will be very difficult to detect or stop.

What will matter on those occasions is that we have a robust society and an agile national security community as ready to respond to those events as they have responded to challenges of the past decade.

Conclusion

In summary, the overall conclusions reached by the Review are:

• The intelligence community has grown substantially over the last ten years in response to increasing demand, mainly in relation to terrorism, fighting wars and countering espionage (including cyber attacks), proliferation of weapons of mass destruction and people smuggling
• The investment made in building up the intelligence agencies has been justified and rewarded with more capability and increased performance
• That capability and performance has enabled Australia’s agencies to make an effective contribution as a member of the international intelligence partnerships and their relationships with those partners are at a very high point which some interviewees described as ‘the strongest they have ever been’
• The investment made in the intelligence agencies has resulted in improved capability and performance in Australia but it also gains Australia access to intelligence from international partners (through its contribution to common intelligence objectives) which Australia could never acquire by itself
• The intelligence agencies are working well together. They understand the need to cooperate and are paying close attention to developing fusion centres and other cooperative working arrangements (such as the Counter-Terrorism Control Centre) which have been developed over the last few years and will continue to evolve in future
• The intelligence agencies are also beginning to work more effectively with the other members of the recently expanded National Security Community. This evolution will take time – as is the case with any requirement for a significant shift in corporate behaviour – and it should be focused on those areas of common activity where closer cooperation can produce better results. The Review did not detect any lack of willingness to further develop these cooperative working arrangements
• The principal new challenges for the next five years or so will be to better align the AIC’s priorities with the new geo-political and technological realities facing Australia as a middle power with global interests.

We believe that this periodic review has been very useful for both government – in assessing the intelligence agencies’ current performance and future challenges – and for the agencies themselves by providing a formal opportunity for them to assess their current situation.