When our intelligence chiefs look at the external challenges facing Australia they generally nominate the three “C’s”—China, counter-terrorism and cyberspace—as their primary focus.

While counter-terrorism remains a top priority, China’s rise, including its growing espionage and influence operations in Australia, are drawing ever more attention and resources across the whole of our national intelligence community.

The China challenge together with the continuing sharp focus on counter-terrorism and the new emphasis on the rapidly evolving realm of cyberspace, have all helped drive the biggest overhaul of the Australian intelligence community in over 40 years.

The establishment of the Office of National Intelligence (ONI)—it officially came into being on 20 December 2018—coincided with the coalition government’s decision to create a powerful Home Affairs portfolio. Home Affairs has now brought Australia’s domestic security agencies, including ASIO, under a single minister. Taken together the changes amount to the biggest shake-up of our intelligence community since Justice Hope’s landmark Royal Commission in 1977.

As Australia’s peak intelligence agency, ONI sits at the top of the national intelligence community. Its core mandate is to report and assess “international matters that are of political, strategic or economic significance to Australia.” ONI’s evolution from the former Office of National Assessments (ONA) was the key recommendation of the 2017 Intelligence Review commissioned by Malcolm Turnbull and conducted by two former top public servants Michael L’Estrange and Stephen Merchant.

As Prime Minister Turnbull had expressed unhappiness about ONA’s product—notably it’s assessments on China—and the lack of timeliness and relevance of its reports for government policy-makers. He was also concerned about the differing assessments he was getting from individual intelligence agencies and the inability of the loosely-federated Australian intelligence community to speak with one voice.

L’Estrange and Merchant found that while the individual intelligence agencies were performing well with high levels of professionalism, there was a need for much stronger top-level co-ordination of our intelligence agencies similar to the model adopted by Australia’s two closest Five Eyes intelligence partners, the UK and the US.

The Review argued that Australia’s intelligence organisations were facing “imposing challenges” which would intensify over the coming decade and that “the Western ascendancy in international institutions and values that characterised the second half of the twentieth century is eroding.”

In 2019 the strains on the “rules-based global order” are manifest. Key assumptions that informed recent government strategic policy documents have been called into question including the 2016 defence white paper’s confident assertion that the US will remain the pre-eminent global military power indefinitely. There is now a consensus among the leaders of our intelligence agencies that Australia’s strategic outlook is more uncertain than at any time since 1942.

The global effort to defeat Islamist terrorism commencing in 2001 and the long wars in Iraq and Afghanistan transformed the make-up, operations, and foreign liaison arrangements of our spy agencies. For almost twenty years the Australian intelligence community, led by ASIO, have had a relentless focus on counter-terrorism, with enormous resources being deployed in collecting operational intelligence at home and abroad.

The foreign intelligence collection agencies, led by the Australian Signals Directorate (ASD) and the Australian Secret Intelligence Service (ASIS), have been heavily engaged in supporting military deployments in Iraq and Afghanistan, tracking and eliminating terrorist cells, disrupting people-smuggling syndicates and assisting border protection operations.

These collection priorities have placed a heavy emphasis on tactical, actionable intelligence such as locating an Islamic State munitions site for an RAAF strike mission in northern Iraq or tracking a people-smuggling kingpin across the Indonesian archipelago. The combination of the different skillsets of the various agencies, now applied in a far more deliberate fashion, has been effective in blunting the threat of a major terrorist attack in Australia.

The years since September 11, 2001 have seen successive governments pour billions of dollars into the intelligence community with key organisations doubling, trebling or, as in ASIO’s case, nearly quadrupling staff numbers. Together with commensurate budget increases this has led to a greatly expanded geographical reach and a sharp upgrade in technical capabilities across all intelligence agencies.

Digial concerns
The continuing technological revolution particularly in the digital realm is also changing in the way our agencies co-operate. Joint intelligence centres have emerged in key areas such as cyber security and counter-espionage drawing on expertise from right across the intelligence community as well as the private sector. The sheer breadth of the cyber challenge means that agencies like ASD are having to undertake a cultural shift away from the cloak of secrecy that has always hidden them from public view.

Coming to grips with issues such as big data, biometrics and surveillance technology, encryption, artificial intelligence, and cyber security has had a significant impact on the way the national intelligence community goes about its business, influencing the culture and practice of intelligence at the tactical and operational level right through to strategic assessment. For the collection agencies, including ASIS which remains heavily reliant on gathering intelligence from human sources (HUMINT), crucial investments are now being made in data analytics.

The end of the US’s long-held strategic predominance in East Asia and the arrival of China as a genuinely global power are now dictating an important shift in collection agency priorities from the all-consuming focus on counter-terrorism of recent years. For agencies like ASIO this means a swing back to more traditional counter-espionage work. For assessment agencies, led by ONI, non-traditional security threats such as climate change and cross-border people flows are drawing greater attention.

The tension between the service of the current intelligence needs of government as against the requirement to provide comprehensive assessments on issues of strategic significance, such as the rise of China, has been an enduring issue for the intelligence community. Many senior intelligence sources testify to the primacy of “the urgent over the important” when it comes to preparation of broad scale national assessments relevant to Australia’s long-term national security.

ONI is led by Nick Warner who, as Director-General National Intelligence, is also charged with the overall co-ordination of a national intelligence community consisting of more than 7,000 people and an overall annual budget topping $2 billion.

Warner’s new position is equivalent to a departmental secretary and he sits on the Secretaries Committee on National Security (SCONS) which advises Cabinet’s National Security Committee. He also has two newly-created deputy secretaries responsible for Assessments (Andrew Shearer, a former international adviser to PM’s Howard and Abbott) and Enterprise Management (former ASD head, Paul Taloni) respectively.

ONI will eventually have 300 staff—double the size of the former ONA. Its analytical arm is expanding to over 100 area specialists and its Open Source Centre which collects and sifts publicly available information from around the world will have 40 people. The government’s expectation is that the expanded intelligence assessment function will promote greater contestability of views, including more active engagement with external experts in think tanks and universities, to inform ONI’s product.

Critics of the new ONI architecture argue that the centrality of the intelligence assessment process—so integral to the culture of the old ONA—is now likely to take a back seat to the enterprise management mission in the new organisation. They also question the rationale for this hugely enlarged coordination function as an unnecessary encumbrance for an intelligence community that is already more intertwined and collegiate than at any time in its history.

ONI now oversees a greatly expanded intelligence community officially known as the National Intelligence Community (NIC). The original six agencies: the Australian Geospatial-Intelligence Organisation (AGO), ASD, ASIO, ASIS, the Defence Intelligence Organisation (DIO) and ONA/ONI have now been joined by the intelligence functions of the Australian Federal Police (AFP), the Department of Home Affairs—principally the Australian Border Force and the Office of Transport Security—together with the Australian Criminal Intelligence Commission (ACIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC), Australia’s financial intelligence agency.

Bringing AUSTRAC and the ACIC into the intelligence fold is long overdue with the cost of organised crime to Australia now running at an estimated $36 billion a year. All of these newcomers to the NIC are located within the Home Affairs portfolio.
Besides its core task of providing government with national intelligence assessments, the greatly enlarged ONI will also determine the priorities for Australian intelligence collection, drive more efficient budget spending and evaluate the performance of all NIC agencies. It will direct capability investment planning for the NIC including collaborative efforts in areas such as data

analytics and ICT connectivity. That’s the vision but a big question mark remains over how much financial authority Warner will have to influence the spending and investment priorities of individual agencies.

The seamless integration of our intelligence agencies into a genuinely national enterprise could also be threatened by the behemoth that is the new Home Affairs portfolio with its 23,500 staff and a departmental budget topping $3 billion budget. Malcolm Turnbull’s July 2017 announcement of the creation of Home Affairs blindsided many in the intelligence world as well as coming as a surprise to the authors of the 2017 Intelligence Review.

Around 40 per cent of the enlarged NIC now falls under the Home Affairs umbrella including ASIO. Its creation challenges Justice Hope’s considered view that intelligence analysis and assessment should not rest in the hands of policy departments. Home Affairs has policy and program responsibility for counter-terrorism, cyber security policy, counter-foreign interference and critical infrastructure protection. It also has 500 staff working full-time on intelligence matters.

The greatly enlarged domain headed by the Secretary of the Department of Home Affairs Michael Pezzullo, intersects in a number of key areas with Warner’s new coordination role as Australia’s intelligence supremo. The effectiveness of the new intelligence community architecture led by ONI will depend much on harmonious working relations between the Secretary of Home Affairs and the Director-General National Intelligence.

For nearly two decades our intelligence agencies have been stretched by a very high operational tempo and increasing demands from government. The current intelligence provided has been critical both to Australia’s counter-terrorism response and to our far-flung military operations. Whether policy makers have been getting the kind of strategic intelligence assessments they need for longer-term decisions affecting Australia’s security remains a matter of debate within the intelligence realm.

Policy investment
The national security community have exerted a powerful sway over policy makers convincing ministers year after year of the case for ever more resources for intelligence and security agencies. Our intelligence agencies have rapidly grown in overall numbers and continued to receive extraordinarily generous funding streams which are the envy of other arms of the Australian government.

The Department of Foreign Affairs, traditionally a vital source of intelligence for government, has been progressively diminished and its diplomatic footprint in areas of vital strategic interest to Australia steadily reduced. The case for further investment on intelligence gathering rather than rebuilding our diplomatic service is worth examining.

The two major structural changes to the NIC-the creation of the ONI and the establishment of Home Affairs will take time to bed down. Former ONA chief Allan Gyngell has noted that a key issue is whether these reforms will preserve the fundamental distinction between intelligence assessment and policy “so that intelligence products are not distorted by policy and politics.”
Forty years ago Justice Hope stressed the requirement for Australia to have its own intelligence assessment and collection capabilities and the necessity to constantly re-assess the benefits to Australia from intelligence partnerships with other countries against the costs. “Australia’s intelligence interests do not, and cannot, coincide with those of any other country,’’ Hope warned.

If our intelligence chiefs are right the coming decades will see the emergence of a broader array of national security threats. As we enter a new age of anxiety national strategic policy making will demand not just good intelligence and adroit diplomacy but a greater level of self-reliance and a more hard-headed appreciation of Australia’s national interest.

Note: This article is adapted from a longer essay, “Spies, China and megabytes: Inside the overhaul of Australia’s intelligence agencies,” Australian Foreign Affairs, Issue 4, Nov 2018

This article first appeared in the March 2019 edition of ADM.

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