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Report of the Inquiry Into Australian Intelligence Agencies

Report of the Inquiry Into Australian Intelligence Agencies

07 2004 REPORT BY PHILIP FLOOD AO PHILIP FLOOD REPORT BY 07 2004 07 2004 REPORT OF THE INQUIRY INTO INQUIRY REPORT OF THE lligence agencies 07 2004 inte 07 2004 australian

july 2004 20 July 2004

The Hon. MP Prime Minister Parliament House ACT 2600

Dear Prime Minister,

I am enclosing the report of my Inquiry into Intelligence Agencies which you requested on 4 March 2004.

I have received full cooperation from Ministers in your Government, from the heads and members of all intelligence agencies, from Departments and from the Chief and members of the . I have also consulted with former Prime Ministers, Ministers from previous Governments and a wide range of other people with knowledge of the intelligence community. A high quality Secretariat has given me invaluable assistance. While grateful for the cooperation of all I am solely responsible for the contents of this report.

An unclassified version of my report is also enclosed.

Yours sincerely,

Philip Flood © Commonwealth of 2004

ISBN 0 646 43736 4

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the , available from the Department of Communications, Information Technology and the Arts. Requests and enquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Intellectual Property Branch, Department of Communications, Information Technology and the Arts, GPO Box 2154, Canberra ACT 2601, or posted at http://www.dcita.gov.au/cca.

Printed by Goanna Print Designed by RTM Design v contents contents Office of National AssessmentsDefence Intelligence OrganisationDefence Signals DirectorateDefence Imagery and Geospatial OrganisationAustralian Secret Intelligence ServiceCross Community Issues 139 98 116 146 134 152 A. LETTER OF 4 MARCH 2004 PRIME MINISTER’S SECRETARIATB. THE INQUIRYC. PERSONS INTERVIEWED BY THE INQUIRY SUBMISSIONS RECEIVED BY D. 186 ABBREVIATIONS AND E. ACRONYMS 189 193 194 188 Annexes 8. FINDINGS AND RECOMMENDATIONS 163 1. INTRODUCTION NEEDS INTELLIGENCE 2. AUSTRALIA’S LESSONS3. RECENT INTELLIGENCE INTELLIGENCE COMMUNITY OF THE AUSTRALIAN 4. OVERSIGHT 51 OF THE CURRENT OF FUNCTIONS5. SUITABILITY OF ASSESSMENTS6. CONTESTABILITY 69 OF THE AGENCIES7. RESOURCING AND EFFECTIVENESS 9 17 97 1 84 1 chapter 1 chapter 1 the effectiveness of the intelligence community’s current oversight and to such matters as the setting of accountability mechanisms as they relate of appropriate resources, and the priorities, the assigning to the priorities delivery of high-quality the government and independent intelligence advice to labour among the intelligence the suitability of the current division of them agencies and communication between provision to government the maintenance of contestability in the of intelligence assessments intelligence agencies and the adequacy of current resourcing of in particular ONA. The Prime Minister indicated that the Inquiry should focus on Australia’s foreign Inquiry should focus on Australia’s Minister indicated that the The Prime intelligence agencies—the Office of National Assessments (ONA), the Australian Secret Intelligence Service (ASIS), the Organisation (DIO), the Defence Signals Directorate (DSD), and the Defence Imagery and Geospatial open to Minister also indicated that it would be Organisation (DIGO). The Prime the Inquiry to consider linkages between these organisations and the Australian Security Intelligence Organisation (ASIO). The Inquiry did consider such linkages but it did not inquire into ASIO per se because that would not have been justified and intelligence this reason, domestic security by the terms of reference. For arrangements are not the focus of this report. introduction announced MP, the Hon John Howard Minister, the Prime On 4 March 2004, agencies. The announcement followed intelligence this Inquiry into Australia’s Joint of the inquiry of the Parliamentary the release on 1 March of the report into intelligence on ’s of mass ASIS and DSD Committee on ASIO, seeking to limit this Inquiry, Minister requested, without destruction. The Prime that it should provide advice on: , are Office of National Assessments Act 1977 Australia’s Intelligence Agencies Australia’s ASSESSMENTS (ONA) OFFICE OF NATIONAL Its Minister. direct to the Prime ONA is an autonomous body which reports two functions, specified in the reporting and assessment on matters of international political, strategic and reporting and assessment on matters monitoring of Australia’s economic significance to Australia, and international intelligence activities. (DIO) DEFENCE INTELLIGENCE ORGANISATION DIO provides all-source at the national level to the planning and conduct of Australian support Defence decision-making and DIO also maintains a range of intelligence operations. Defence Force Australian Defence Force. databases for use by Defence and the SECRET INTELLIGENCE SERVICE (ASIS) AUSTRALIAN Its primary intelligence collection agency. overseas human ASIS is Australia’s not readily available by other function is to obtain and distribute intelligence, and activities of individuals and means, about the capabilities, intentions security, organisations outside Australia, in so far as they affect Australia’s foreign relations or national economic well-being. (DSD) DEFENCE SIGNALS DIRECTORATE The two principal functions of DSD are the collection, production and dissemination of , and the provision of information security products and services to the government and the Australian Defence Force. The Prime Minister’sThe Prime report by 30 June. that the Inquiry should letter indicated the Inquiry, came before the of material that the substantial amount In view of of the for an extension to the timeframe Minister acceded to a request Prime until 31 July. Inquiry, Minister’sPrime The full text of the setting out the terms of announcement is included as Annex A. reference for the Inquiry

report of the inquiry into australian intelligence agencies 2 introduction 3 Australian defines ‘security’ as the protection DEFENCE IMAGERY AND GEOSPATIAL ORGANISATION (DIGO) ORGANISATION AND GEOSPATIAL IMAGERY DEFENCE distribution of role of acquisition, production and DIGO has the primary of Australian intelligence and data in support imagery and geospatial-based DIGO is also the lead and government decision-makers. Defence Force imagery and geospatial standards. Defence agency for (ASIO) SECURITY INTELLIGENCE ORGANISATION AUSTRALIAN gather information and security service. Its main role is to ASIO is Australia’s about that will enable it to warn the government produce intelligence The security. that might endanger Australia’s activities or situations Security Intelligence Organisation Act 1979 Security Intelligence Organisation Act from , sabotage, of Australia and its people (including overseas) of communal violence, attacks politically motivated violence, the promotion acts of foreign interference. The functions defence system, and on Australia’s and protective security of ASIO include providing security assessments in Australia. advice and collecting foreign intelligence Approach to Terms of Reference Approach to Terms systemic issues identified in the terms of The Inquiry focused particularly on the future operation of the intelligence agencies. reference and on ways to improve the examination of the pre-warIn parallel, the Inquiry undertook a thorough the full basis and nature of the intelligence intelligence on Iraq in order to establish in the lead-up to the launch of action assessment provided to government was to identify any lessons from the on 19 March 2003. An important objective issues relating to the effectiveness Iraq experience bearing on the wider systemic and performance of the Australian intelligence community (AIC). In addition, in order to provide a broader framework of reference for the investigation of systemic issues, the Inquiry made a thorough examination of to the intelligence provided to government concerning Jemaah Islamiyah (JI) prior the Bali bombings on 12 October 2002 and of the intelligence provided in advance of the despatch of Australian and police to the a number of the matters raised by the Inquiry examined in July 2003. Further, Minister of 18 March 2004. Lieutenant Colonel Collins in his letter to the Prime Some of Lieutenant Colonel Collins’ concerns (for instance relating to his career in the ) are not relevant to the subject matter of this Inquiry. Previous Inquiries Previous intelligence agencies. Just as our Australia has a unique framework of from Britain and the , constitution benefits from influences agencies have intelligence some of the roles and structures of Australia’s into a uniquely Australian model been borrowed, but they have developed over the past sixty years. and processes of the AIC resulted The current structure, responsibilities Commissions a series of major inquiries: two Royal from, or were refined by, the 1970s and 1980s, a major inquiry into conducted by the late Justice Hope in the Australian Secret Intelligence Service by Justice Samuels and Mr Michael by Mr Sandy Codd in the early 1990s as well as two major reviews undertaken was Hollway and Mr Dennis Richardson early in the same decade. This Inquiry informed greatly by the outcomes of these earlier reviews. A public invitation requesting any person who wished to make a submission to a submission wished to make any person who requesting A public invitation on Australian newspapers published in leading was given by notices the Inquiry from the intelligence were also requested directly 13 March 2004. Submissions a very wide federal authorities. The Inquiry interviewed agencies and many with all persons who knowledge of the AIC, and also met range of people with addition, the Inquiry had a message In by the Inquiry. to be interviewed asked wished to do so to of the AIC inviting any individual who conveyed to all A number did so. comment to the Inquiry. contact or make from the by a Secretariat of six persons drawn The Inquiry was assisted Minister and the Prime Affairs and Trade, Foreign Departments of Defence, B). As a whole the (details at Annex Cabinet and the Australian Defence Force all agencies, commissioned additional team examined relevant records from of the Secretariat members Two of staff. research and interviewed a large number with relevant authorities. for discussions and Washington visited London persons interviewed by the Inquiry are set Details of submissions received and out in Annexes C and D.

report of the inquiry into australian intelligence agencies 4 introduction 5 intelligence gained through contact between people (human intelligence or ‘humint’) Australia needs its own independent and robust intelligence assessment own independent and robust intelligence Australia needs its and collection capability. formulation. should be separate from policy Intelligence assessment intelligence functions should be separate from Intelligence collection should collection of human and signals intelligence assessment, and the by different agencies. be undertaken as the principal assessment agency The Office of National Assessments, statutory independence. for foreign intelligence, should enjoy international developments on a continuing basis, In addition to assessing, review the activities under should keep of major importance to Australia, ONA that are engaged in by Australia. connected with international intelligence collection and responsibility of ASIO, In respect of security intelligence, the . ASIO also needs assessment should be separate from from other parts of the world. access to intelligence available in and of Departments, Ministers, and subject to them the Secretaries guidance to and monitoring should be actively involved in providing the intelligence community. in accordance with the All intelligence activities should be conducted laws of Australia. The Nature of Intelligence a number of Intelligence is covertly obtained information. While it may take characteristic of intelligence information is that it is obtained forms, the key without the authority of the government or group who ‘owns’ the information. intelligence consists of three main disciplines: Broadly, The essential philosophy underlying the Australian agencies engaged agencies engaged the Australian philosophy underlying The essential Hope by Justice was most fully articulated intelligence in international and Howard Governments. Keating by the Hawke, and has been accepted In very brief summary: intelligence obtained by on electronic communications communications on electronic obtained by eavesdropping intelligence or ‘sigint’)(signals intelligence or ‘imint’). by photography ( and intelligence obtained Each of the three intelligence specialties is complex and consists of internal specialties is complex and Each of the three intelligence sub-disciplines, will suffice for the present purpose. but these broad definitions are collected have by which these types of intelligence While the methods ‘humint’ over the decades, the categories changed substantially and ‘sigint’ are to Satellite imagery is a more recent addition II. World barely changed since of the development of satellite photography growing out the intelligence family, in the 1960s. each of these three collection functions In the Australian intelligence system, in the Australian Secret by a separate organisation: humint is undertaken Signals Directorate; and imagery Intelligence Service; sigint in the Defence Organisation. in the Defence Imagery and Geospatial the process of using intelligence, Intelligence or assessment is of an issue or occurrence. In the and other information, to form a picture assessment agencies are the Australian system, the foreign intelligence the Defence Intelligence Organisation. Office of National Assessments and others who do analysis is that their What distinguishes these agencies from from all sources—covert intelligence analysts have access to information sources and overt sources. and often vital, to assessment, it While intelligence information is important, used by intelligence assessment is normally not the main source of information television, radio and the — agencies. Open sources—newspapers, embassies, high commissions and and diplomatic reporting from Australian consular offices provides the greater part of the information available to the Australian Government. Information from open and diplomatic sources is significantly less expensive sources also contain much of the to collect than is covert intelligence. Public reasons of principle and by government analysts. For information required key open and diplomatic sources should be exploited fully before practicality, information is sought from secret intelligence. Intelligence agencies are therefore the information collectors of last resort. But some information cannot be obtained from open sources or diplomatic reporting.

report of the inquiry into australian intelligence agencies 6 introduction 7 , . , with which —disrupting the plans , minimising casualties and improving the , minimising casualties and improving active tool of government , notably of terrorist plans, but also of potential conflicts, uprisings , notably of terrorist plans, but also of environment for operational success trade and defence policy support for an active and ambitious foreign, a vital ingredient in defence procurement and preparedness a vital ingredient in defence procurement support for military operations the intentions of others (eg can provide vital clues about plans) and the ambitions of adversaries (eg negotiating positions in political or trade disputes) and beyond these vital roles of intelligence in providing information, modern intelligence can be a more foreign actors and contributing of adversaries, influencing the policies of key to modern . and coups environment understanding of the regional and international will need to grapple Australian decision-makers and intentions of potential adversaries knowledge of the military capabilities warning The ways in which intelligence can serve government are wide-rangingThe ways in which intelligence can serve Intelligence can, are clear. and fluid. Some enduring features, however, in conjunction with other sources, provide: What intelligence can do Even the most democratic and open countries hold some information very hold some information open countries most democratic and Even the dangerous non-stateclose, and to understanding are typically closed actors methods. through overt collection that influences is only one of a range of factors all its value, intelligence For decisive factor. of governments, and it is rarely the the policy decisions intelligence as a factor sometimes ascribe an importance to Commentators can considerations, that fails to recognise the range of broader in decision-making long-standing political and economic objectives, such as strategic issues, that might legal considerations or other interests alliance relationships, determine policy. In so far as it seeks to forecast the future, assessment based on intelligence based on intelligence the future, assessment it seeks to forecast In so far as seeks to so when it This is particularly be precise or definitive. will seldom years. Greater precision developments and trends in future understand complex function—highlighting in relation to intelligence’s warning is sometimes possible (eg a terrorist attack). But specific event in the near term future the possibility of a will rarely provide will be hard to achieve. Intelligence even in this field, precision and incomplete. of a topic. More often it is fragmentary comprehensive coverage plans for the intelligence failures—the failure to detect The history of major in 1990, invade Kuwait attack in 2001, Iraq’s intention to Centre Trade World the failure to much earlier, in 1989 or, of the Berlin Wall the imminent collapse forces in the Dardanelles in 1915 or Japanese anticipate the strength of Turkish who Harbour—provide a cautionary lesson for any policy-maker plans for Pearl or that it can provide guarantees. believes intelligence is always accurate

report of the inquiry into australian intelligence agencies 8 9 chapter 2 chapter 2 lia’s intelligence needs austra make and the challenges Australia faces strategic circumstances Australia’s Situated in a government machinery. intelligence a vital part of the national to an increasingly uncertain global potentially volatile region, and subject intelligence is arguably greater now need for good environment, Australia’s II. The Australian Government must be able War than at any time since World on national opportunities. With to anticipate emerging threats and capitalise deeply with our region and beyond, a foreign and defence policy that engages intentions of regional and global players. it should be well informed about the possible support to the men and Australia must be able to give the greatest national interests. of Australia’s women deployed on operations in pursuit Government needs to exploit fully every at its disposal to the Finally, from the threat of . help protect Australia and intelligence is a critical element of the government’s independent High-quality, the limitations on intelligence armoury to meet these challenges. Despite qualities which define good described in Chapter 1, there are nonetheless expensive should expect. Australia’s intelligence and which the government focused on the government’sintelligence collection assets must be highest must be as comprehensive as possible, priorities: coverage of those priorities Intelligence assessments must be soundly and reporting accurate and timely. based, analytical and predictive. They must weigh carefully the often flawed and incomplete information available, place it into a broad context, consider its implications for Australia and seek to create new knowledge from it. Government needs rounded assessments drawing on intelligence and diplomatic reports as well as publicly available material, informed by the experience and judgment of the intelligence analyst. Good intelligence And most importantly, assessments come to a judgment to aid decision-making. while intelligence priorities should be driven by policy needs, intelligence judgments must be uninfluenced by policy or political considerations. Australia’s intelligence needs are dynamic, reflecting rapid global intelligence needs are dynamic, Australia’s was a feature of the last decade, transformation. Just as economic globalisation of security threats, particularly from non- this decade has seen the globalisation technological change has been diffusing power and state actors. Fast-paced and play roles in world politics. Political empowering individuals and groups to focus of previous security and prosperity—the military threats to Australia’s decades—have been supplanted by the new threats of global terrorism and transnational crime, with an increased focus on the proliferation of weapons of mass destruction. of targets underline the emergence The numerous recent attacks on Western security in the first Islamic extremist terrorism as the major threat to Australia’s The level The threat is serious and enduring. century. decade of the twenty-first rooted of organisation and support for Islamic terrorist networks, and the deeply socioeconomic factors that underpin them, suggest that they will be a major feature of the security environment for at least a generation. Changing Global Needs Intelligence is of greatest value where it informs decisions—from the strategic decisions—from where it informs is of greatest value Intelligence by operational tactics employed to the ministers in government choices facing justifies the considerable expenditure It is this value that in war. decision-making its covert activities. Intelligence assists on intelligence, and and actions of foreign It gives insights into the thinking on defence capabilities. miscalculations actors, which help avoid governments and non-government high-quality and objective as a nation. Forthright, we take and guide the actions the foundations of existing policy. intelligence can challenge history to help on the foundation of a strong intelligence Australia has built on liberal political Our intelligence culture draws it meet these challenges. II. War intelligence in World traditions, as well as the legacy of Western in Australia has been focused Consistent with these traditions, intelligence those of other national interests. Unlike outward and on threats to genuinely focus on internal political intelligence agencies do not cultures, Australia’s Further, the government of the day. dissent, or engage in operations to support culture. With the intelligence legality and propriety characterise Australia’s as the 1983 on the exception of some rare but notable mistakes—such operate within strict limits defined by law, Sheraton Hotel—Australian agencies and firmly under political guidance.

report of the inquiry into australian intelligence agencies 10 australia’s intelligence needs 11 This terrorist phenomenon is new in scale, method and ambition. Al Qaida and and ambition. new in scale, method phenomenon is This terrorist capability to willingness and the both the have demonstrated similar networks no concern for the loss on civilian targets, and display inflict massive casualties chemical, biological have an active interest in obtaining of innocent life. They the groups of the last century, the terrorist Unlike or radiological weapons. In the embodied by Al Qaida is uncompromising. extremist Muslim terrorism with you, we are are not trying to negotiate “We words of one spokesman, characterised by loosely It is adaptive and amorphous, trying to destroy you”. and is without cells operate semi-autonomously, groups within which linked or territory. settled structure, methodology previous forms of terrorism barely touched Australia is an avowed target. Where Muslim terrorism has declared its aim Australia, this new form of extremist interests. Global in scale, it to inflict damage on Australians and Australian region, Jemaah Islamiyah has emerged is closer than ever before. In our own as a serious threat. Intelligence is the front line of the government’s campaign against terrorism. plans. It can help us understand terrorist It is vital in seeking warning of terrorist them. groups, as well as the context that sustains in a number of other less dramatic, but Changing global dynamics have resulted intelligence. With a strong governmental nonetheless important, demands on part in countering intelligence plays an important focus on border security, task, not least because of the illegal immigration networks. It is a substantial and unauthorised— phenomenal increase in people movements—authorised some 8.4 million passenger arrivals over recent decades. There are on average of which some five million each year, through Australian international airports (14,000 each day) are not Australian citizens. issues are also of pressing concern to Australia. Scientific advances Proliferation and economic globalisation have increased the availability of materials and technology related to weapons of mass destruction. There is increasing evidence of WMD proliferation to and from state and non-state actors in the population, is particularly region. Australia, with a highly urbanised Asia-Pacific intelligence at risk. The clandestine character of WMD proliferation makes support, particularly to warn of threats, critical. Enduring Regional Imperatives Enduring Regional displace the continuing and challenges do not however These new global threats in the Asia-Pacific more traditional security interests importance of Australia’s of threat, as well as a vital source region. Our region remains the most likely remain the focus Asia and the South Pacific determinant of our prosperity. intelligence these areas that Australia’s of our intelligence efforts, and it is in performance needs to be strongest. Australia needs to be a global leader in On South East Asia and the South Pacific, in law and order in nations in our immediate intelligence. Instability or a breakdown for Australia. Australia needs neighbourhood would have profound consequences most comprehensive intelligence to give warning if threats to the highest quality, on the region, and to prepare for worst case stability worsen, to inform our policies High-qualityoutcomes if those policies do not succeed. intelligence will also be and advantage of the economic to take essential if Australia and Australians are in the region. other opportunities generated by developments Asia should be exceptionally good. This intelligence on North East Australia’s export markets for Australia. With key region has a high and rising significance trade, conflict in North Asia would accounting for up to 35 per cent of Australia’s peninsula is a The Korean economy. have serious consequences for Australia’s Straits would have profound Conflict across the Taiwan regional flashpoint. key consequences. Australia needs warning of any such threats, and information more generally on the shifting economic, political and strategic enhance our trade dynamics within the region to help drive our diplomacy, and ensure defence preparedness. policy, Intelligence on South Asia should be very good. Growth in this region represents a great opportunity for Australia, and relationships with South Asia and between determinants of Asian security. South Asia and North East Asia will be key Nuclear brinkmanship and the activities of extremist elements in South Asia Non-traditional threats are more difficult to prosecute. Often well-defined, difficult to prosecute. threats are more Non-traditional slow-changing networks been replaced with targets have and predictable are responding adaptive and elusive. Intelligence agencies which are complex, increasingly engaged in whole-of- and are and training, with new doctrine feature of the intelligence campaign teams, a key government and international against non-state targets.

report of the inquiry into australian intelligence agencies 12 australia’s intelligence needs 13 OP ANODE Solomon Islands OP CRANBERRY Sea/Air Approaches Northern Australia & East Timor OP MISTRAL Southern Ocean OP CITADEL/OP SPIRE OP CITADEL/OP OP RELEX II Border Protection Middle East OP CATALYST/OP SLIPPER OP CATALYST/OP Sinai OP PALADIN OP POMELO Israel/Lebanon OP MAZURKA Ethiopia/Eritrea Changes in the Operating Environment Changes in the changes to the environment in The past five years have brought significant among these these demands. Key which the intelligence agencies are meeting for support to military operations. Since has been the greatly increased demand 1999, the operational tempo of the Australian in the deployment to East Timor to , Iraq, the With deployments markedly. has risen Defence Force ADF has been on major operations almost Solomon Islands and elsewhere, the continuously for the past five years. CURRENT ADF OPERATIONS are of great concern. Intelligence on the rich economic opportunities and opportunities on the rich economic concern. Intelligence are of great policy to inform government this region is needed threats in globally significant interests in the region. and further Australian performance in national interests, strong intelligence Beyond these direct alliance considerations. region is also driven by intelligence the Asia-Pacific intelligence is based on mutual benefit, and Australia’s on its near region. expertise partners value Australia’s These deployments require intensive intelligence support, including the support, including intensive intelligence require These deployments at There are heavy demands to theatre. of staff and equipment assignment guide operational headquarters for information to strategic and operational tempo has required Overall, the heightened operational and policy decisions. to maintain the flow on the part of the intelligence agencies a substantial effort information to decision-makers. of timely and authoritative affect the intelligence is also changing in ways that The nature of war-fighting effects based operations and network New concepts such as community. analysis and tailored result in requirements for more detailed centric warfare will will force even in a shortened time frame. The changes intelligence products and intelligence communities, as closer cooperation between the operations detailed understanding of the seek a more commanders and decision-makers will drive demands for intelligence of operational environment. This, in turn, greater detail, reliability and timeliness. community has been technology, Another dynamic affecting the intelligence the for is enabling, a two-edged sword for intelligence agencies. Technology that are instantaneous, diverse first time, individual access to communications can impose great difficulties and costs and robustly encrypted. New technology hand, access to our own and allied on intelligence collection. On the other new levels of reach. But keeping technology innovations gives our agencies up with technology is a costly business. in which the increased public focus has shaped the environment Finally, debate on intelligence has been driven intelligence community operates. Public choosing to draw on intelligence to explain governments in part by Western or staff A series of high-profile incidents involving intelligence agencies policy. Where that publicity reveals details of has contributed to its greater exposure. intelligence successes, sources or methods, it has a potentially serious impact on intelligence capability. These environmental changes have made intelligence both more relevant Our agencies are dealing with information that is more and more challenging. forces frequently urgent and operational. Not only are they supporting Australian deployed into dangerous operational theatres, they must also be alert to the possibility of attacks on civilians at home and abroad. Access to intelligence meet these To public interest and expectations greater. and is getting harder, challenges, effective partnerships and adequate resources are critical.

report of the inquiry into australian intelligence agencies 14 australia’s intelligence needs 15 “It would be naïve to imagine that overseas governments will always tell us to imagine that overseas governments “It would be naïve they take is quite The position about a particular matter. everything they know face up to it realistically.” natural and we should Resources Applied to Australian Intelligence The adequacy of resources across the foreign intelligence community is a the considerable requirements levied on Australian issue for this Inquiry: key intelligence agencies require substantial resources. The government has recognised the increasing need for intelligence in the new security environment four with a doubling of the Australian intelligence community budget over the past Intelligence partnerships are fundamental to meeting Australia’s intelligence are fundamental to meeting Australia’s Intelligence partnerships partnerships, it is critical the enormous value of these needs. But in recognising partnerships. Justice Hope’s philosophy on intelligence not to lose sight of In 1977, he wrote: should maintain a strong but necessarily dictates that Australia Realism should collect intelligence to We selective indigenous intelligence effort. issues of most importance to us. maintain independent sources on those an independent capacity across But in analysis, Australia needs to maintain the government needs advice. the whole spectrum of issues on which intelligence sourced from others. Australia must be able to critically assess advantage of intelligence partnerships also involves taking full Realism elements in our national interest. Key where the balance of benefit is clearly Overall, they favour. relationships work strongly in Australia’s of Australia’s the US intelligence budget is around represent a significant force multiplier: times respectively is $A4 billion, 100 times and eight $A50 billion, and the UK’s that of Australia’s. and intelligence disciplines, While levels of sharing vary among countries shared with Australia is high. overall the amount of foreign intelligence traditional has strengthened Global cooperation on counter-terrorism a range of others. has initiated or reinvigorated partnerships and, importantly, intelligence issues with Australia’s Chapter 7 highlights a number of key partnerships, including the need to broaden and strengthen relationships with countries other than the US and UK. Australia’s Intelligence Partnerships Partnerships Intelligence Australia’s Australia’s intelligence needs are many and enormously varied. The agencies intelligence needs are many and enormously varied. The agencies Australia’s of the Australian intelligence community must be able to respond to the detailed deployed operational intelligence requirements of the Australian Defence Force or ASIO in Police on military operations and to those of the Australian Federal a terrorism investigation, while also informing government policy on regional of all their part, decision-makers political, economic and strategic issues. For kinds need to understand what intelligence can provide, set clear direction, this and be demanding and critical to ensure greatest value. More than ever in the intelligence needs, and uncertain and dangerous environment, Australia’s intelligence agencies, must coincide. resources and capabilities of Australia’s Conclusion years. In 2000–01, a total of $332 million was spent on both foreign and security on both foreign million was spent a total of $332 years. In 2000–01, has the increase ASIO, in 2004–05. Excluding rising to $659 million intelligence, in 2004–05. $269 million in 2000–01 to $506 million been 88 per cent, from and Technology part of the budget of the Defence Science In addition a small The above figures omit the intelligence community. Organisation assists than the other by the Australian Defence Force expenditure on intelligence agencies. working within the defence intelligence costs of ADF personnel past five years. also increased substantially in the Staff resources have increased by in the intelligence community have Numbers of personnel Excluding ASIO, in June 2000 to 3,324 in June 2004. 44 per cent, from 2,301 period, an 2,494 over the same four-year the increase has been from 1,696 to ADF personnel posted to the intelligence increase of 47 per cent. In addition to 900 intelligence staff working agencies, the ADF also maintains approximately in both joint and single service roles. comes from diplomatic reporting. Another vital input to intelligence assessment covertly collected material, it has many While diplomatic reporting cannot replace and its collection does not entail the same benefits: it is cheaper than intelligence, of analysis and interpretation by risks. It also often carries the added value successive governments, the As a result of budget reductions over diplomatic staff. (and the amount of information they number of Australian diplomatic staff overseas with a 38 per cent drop between declining, are able to report to Canberra) has been primarily with the intelligence 1990 and 2003. While this Inquiry is concerned resources it is apparent that the reduction in Australian diplomatic community, of the intelligence assessment agencies. is a constraint on optimising the output

report of the inquiry into australian intelligence agencies 16 17 chapter 3 chapter 3 the analysis by DIO and ONA of Iraq’s weapons of mass destruction the analysis by DIO and ONA of Iraq’s capability prior to the 2003 conflict threat constituted by Jemaah the analysis by DIO and ONA of the terrorist October 2002 Islamiyah in the period leading up to Islands from January 2000 the analysis by DIO and ONA of the Solomon the Solomon Assistance Mission to to the deployment of the Regional Islands in July 2003. These issues were selected because of their intrinsic importance and the level of These issues were selected because a balance between military and non-military public interest in them, and to provide those beyond. region and in Australia’s intelligence issues and between issues the Inquiry examined relevant papers, these case studies, undertake To and assessed intelligence, both from including substantial volumes of raw also interviewed a large number of the Australian and other sources. The Inquiry individuals involved in producing intelligence assessments on these issues key with at the time, as well as customers of those assessments. This chapter deals lessons that flow from each of these case studies in turn, drawing out the key the analysis. In addition, this part of the report deals with some issues raised Collins concerning Indonesia and East Timor. by Lieutenant Colonel Lance The classified version of the report deals with these matters in greater detail. recent intelligence lessons agencies, the the effectiveness of the Australian intelligence As one measure of in which government placed high reliance Inquiry considered three recent cases on intelligence. They are: Iraq has its roots in the beginnings of civilization. Over 4,500 years, a the beginnings of civilization. Over 4,500 Iraq has its roots in Mesopotamia, the territory that rose and fell across succession of city-states and Euphrates basin first by domination of the Tigris is now Iraq. Successive Assyrians, marked Akkadians, then the Babylonians and the Sumerians and this , proud Mesopotamian culture. From the ebb and flow of and Akkadians emerged: from the Sumerians foundations of civilization cuneiform, and agriculture but a first form of writing, came not only the and jewellery design; from Babylon lingering influence on sculpture, painting while Nebuchadnezzar’semerged the legal code of Hammurabi, greatness city of Babylon with its legendary was proclaimed by the majesty of the the Great, the passage of hanging gardens. by Alexander by the Sassanians out of Persia, Empire, conquest expeditions of the Roman century all followed. But and sacking by the Mongols in the mid-thirteenth in the seventh Arabian Peninsula it was the emergence of Islam from the influence on modern Iraq. century AD that has had the most lasting I following the War end of World The history of modern Iraq began at the had ruled Mesopotamia for Ottoman Empire, which defeat of the Turkish Nations established a mandate which of four hundred years. The League In turn, Britain established the passed control of Mesopotamia to Britain. ibn Hussain as the King of Iraq in 1921. Three Faisal Hashemite Prince which full independence was granted decades of monarchy followed, during within the Iraqi state was fragile from birth, existing in 1932. However, powers that ignored the tribal artificial boundaries imposed by the European people the Since the seventh century, and religious frictions among Arabs. had absorbed the language and culture of the Arabs. But, while most Iraqis are Muslims, it is by language, more so than religion, that they are united. Due to the great religious schism that occurred in Islam at the end of the seventh century—severing Islam into Sunni and Shia—Iraqis are a people And with the inclusion of the socially and politically. separated theologically, the Iraqi melting pot in 1921, an ethnic divide was also thrown into in Kurds the complex equation of governing Iraq. It is this fragility of the Iraqi state that underlay two decades of turmoil and its descent into a totalitarian state. In 1958, the king was assassinated and An Historical Perspective An Historical IRAQ’S WEAPONS OF MASS DESTRUCTION CAPABILITY DESTRUCTION OF MASS WEAPONS IRAQ’S

report of the inquiry into australian intelligence agencies 18 recent intelligence lessons 19 the monarchy overthrown in a military coup, and a decade of power a military coup, and overthrown in the monarchy emerging Arab between military governments and the struggles followed and over the power, was in Party By 1968, the Ba’ath Party. Socialist Ba’ath Along with the its rule over the Iraqi state. next ten years it consolidated the 1970s, industrialisation that occurred through economic reform and country by the of the oil boom, the control of the driven by the largesse into the By 1978, all decisions had passed became absolute. Party Ba’ath 1979, he became Saddam Hussein, and in hands of the Vice President, in recent decades brutal regime Hussein’s The history of Saddam President. and the capabilities to the greatness of Iraq’s past, stands in stark contrast Mesopotamian myth and the images of ancient of its people. Resurrecting in September 1980. By the end of the Arab nationalism, Saddam invaded Iran war Iraq had emerged as a central, if unpredictable, costly eight-year bitter, with in the malevolent force to reckon actor in Middle Eastern affairs, and a wider international community. Four key factors formed the backdrop to the Iraq conflict. Saddam Hussein’s factors formed the backdrop to the Iraq conflict. Saddam key Four relating Security Council Resolutions egregious breaches of United Nations of use of those weapons, the to weapons of mass destruction, his history and anti-Iranian terrorism for Palestinian brutal nature of his regime and his support Iraqi people, the Middle East region combined to form a potent threat to the This chapter deals primarily with issues related and the international community. to weapons of mass destruction. part of the international community’sA key reaction to Iraq’s was a Iraq’s development and use of WMD focus on its WMD programmes. In fact, was an important factor in galvanising international action against their spread. to The Australia Group, now a grouping of 38 countries, was formed in 1985 strengthen export licencing measures in response to the finding of a UN special investigatory mission that chemical weapons (CW) had been used in the Iran- And Iraq’s CW programme gave impetus to the negotiations in the . the UN Conference on Disarmament that resulted in the conclusion in 1992 of but it was Convention. These measures were important, Chemical Weapons and subsequent defeat that led to stronger action by Iraq’s of Kuwait the international community. Backdrop to the Conflict more than 20,000 munitions 1.5 tonnes of bulk chemical warfare agent UN Security Council Resolution 687, passed in April 1991, required that Iraq, 1991, required that passed in April 687, Council Resolution UN Security removal, or the destruction, accept condition, “unconditionally as a ceasefire and related stocks of its chemical and biological weapons rendering harmless” than 150 kilometres, all ballistic missiles with a range greater and activities, and (UNSCOM) under United Nations Special Commission and related equipment, The resolution also Energy Agency (IAEA) supervision. and International Atomic and types of all a declaration on locations, amounts required Iraq to submit agree to on-siteitems specified and ongoing inspections, and authorised with these mandatory to ensure that Iraq complied monitoring arrangements its WMD after the processes to dismantle disarmament obligations programmes had been completed. revealed extensive WMD The subsequent UN disarmament process the shock discovery that Iraq’s programmes and stocks in Iraq, including intelligence advanced than Western nuclear programme was very much more programme hidden from weapons (BW) agencies had believed, and a biological Saddam withdrew his cooperation and inspectors until 1995. At the point that the IAEA was satisfied that its activities inspections ceased in December 1998, no indication that Iraq possesses nuclear weapons or any had “revealed nuclear material, or that Iraq has meaningful amounts of -usable the production of such material”. On retained any practical capability… for reported that, from its inception, chemical and biological weapons, UNSCOM that Iraq had acknowledged that it had Iraqi compliance had been limited and purpose of retaining substantial decided to limit its disclosures for the the “veryprohibited weapons. Notwithstanding obstacles” placed considerable had been achieved in UNSCOM assessed that a great deal in UNSCOM’s way, portions” of Iraq’s WMD capability. removing or rendering harmless “substantial the impact of Iraq’s incomplete But despite the years of extensive work, disclosures, unilateral destruction and concerted concealment practices had Iraq’s statements with respect fully, made it impossible for UNSCOM “to verify, their to the nature and magnitude of its proscribed weapons programmes and accounting for all of the Significant discrepancies in current disposition”. programmes covered by UNSCOM’s mandate thus remained. While accurate totals are difficult to establish, according to UNSCOM reporting these included:

report of the inquiry into australian intelligence agencies 20 recent intelligence lessons 21 more than 80 tonnes of chemical precursors 80 tonnes of chemical more than media. warfare growth kilograms of biological nearly 2,000 It is important to note that the ‘discrepancies’ listed by UNSCOM did not listed by UNSCOM did that the ‘discrepancies’ It is important to note were discrepancies residual capability or stockpile. They represent a known In some cases, had not been satisfactorily resolved. in accounting which were provided used to calculate the discrepancies the baseline figures be independently verified. by Iraq and could not Council judged UN panel appointed by the Security In March 1999, a senior the bulk of Iraq’s elements still have to be resolved, that “although important The panel recommended an proscribed weapons have been eliminated”. to replace the disarmament process ongoing monitoring and verification system or resumption of WMD activities, with the aim of preventing any continuation issues remaining from UNSCOM’s and to investigate outstanding disarmament endorsed by the Security Council in work. This approach was essentially 1284 and the establishment Resolution December 1999 with the adoption of Commission (UNMOVIC), and Inspection Verification of the UN Monitoring, into Iraq until November 2002, nearly but Iraq did not allow inspectors back three years later. during the period from the end Access to information on Iraq fell dramatically allied intelligence provided indications that of 1998 to November 2002, although and may have been seeking to rebuild Iraq was pursuing proscribed activities Council unanimously In November 2002, the UN Security a WMD capability. finding Iraq in material breach 1441) endorsed a further resolution (Resolution and calling on it to meet its obligations. of previous Security Council resolutions resolutions; deplored Iraq’s failure to provide 1441 recalled previous Resolution disclosure”, its obstruction of inspections “an accurate, full, final and complete that and failure to cooperate fully with UNSCOM and IAEA inspectors; decided Iraq “has been and remains in material breach of its obligations”; called for another “accurate, full and complete declaration of all aspects of its programmes to develop chemical, biological, and nuclear weapons, ballistic missiles, and other delivery systems…”; and decided that failure to comply would constitute further material breach and that Iraq was to provide immediate the and unfettered access to any and all facilities, records and people. Finally, face resolution recalled that “the Council has repeatedly warned Iraq that it will serious consequences as a result of its continued violations of its obligations”. This was the backdrop to the assessments made by Australia’s intelligence This was the backdrop to the assessments made by Australia’s history of WMD use, his past and continuing Saddam’s agencies. In particular, efforts to deceive and obstruct inspection processes, and his perceived underpinnings of ONA and DIO assessments. strategic ambitions, were key The Intelligence Context Only after Resolution 1441 had been passed did Iraq agree to the resumption of agree to the resumption passed did Iraq 1441 had been Resolution Only after the inspection deceive and stall sought to obstruct, but once again inspections, 2003, to the UN Security Council in January reporting process. UNMOVIC, 1441: not to which Iraq was in breach of Resolution outlined the extent inadequate new information in its declaration; providing any noteworthy scientists; blocking of stalling of interviews with cooperation with inspectors; outstanding questions and failure to answer significant flights; about its WMD-related activities. Studies (IISS) released the International Institute for Strategic In September 2002, drawing on assessment of Iraq’s WMD capacities, a comprehensive technical with UNSCOM and IAEA in Iraq. This technical experts with long experience and some stocks of both CW and BW, concluded that Iraq probably retained production on short notice CW and BW that Iraq was capable of resuming both facilities. The IISS described the (weeks or months) using existing civilian objective of the Iraqi regime. retention of WMD capacities as the core time are also well documented. Those US and UK assessments on Iraq at this that Iraq had continued its WMD and that were publicly released concluded and that it possessed and had proscribed-range ballistic missile programmes and voiced concern about Iraq’s ongoing begun renewed production of CBW, 11. While these US and UK views were support for terrorism after September that prior to the it is noteworthy stronger than many others, including Australia’s, March 2003, the only government in military action against Iraq on 19 ’s on, and did not have, biological and the world that claimed Iraq was not working systems was the Government of Saddam chemical weapons or prohibited missile their public statements that Iraq’s Hussein. Although many made clear in to be proved, the unanimous passage of continued possession of WMD was yet concern, even amongst those 1441 shows the strength of international Resolution and countries which opposed military action in early 2003. Statements by French Iraq German leaders and foreign ministers, for example, consistently called upon to disarm, as had those by the Clinton administration.

report of the inquiry into australian intelligence agencies 22 recent intelligence lessons 23 Also important to an understanding of the context in which ONA and DIO made in which ONA of the context to an understanding Also important these amongst factors. Key of environmental were a number their assessments of WMD-related of the Iraq target, the inherent ambiguity were the complexity of the information limited quantity and variable quality information, and the assessment community. available to the intelligence large part from the Iraq as an intelligence target stems in The complexity of skilled in , regime—one which was character of Saddam’s ruthlessly capability that was a counter-intelligence and intimidation, supporting strategy to systematic and brutal part of a much broader, effective, forming of close central or dissent in Iraq. It had a culture suppress any itself was common. Communications control, and deception within the regime a heavy reliance on human intelligence. security was very good, and there was or opposition group human-sourceCriticisms of excessive reliance on defector intelligence need to be balanced against reporting and of false and misleading sources and the mistrust, confusion and the difficulty of developing alternative regime. Added to this mix is the peculiar mindset fear engendered by Saddam’s to value a level of strategic ambiguity about its Iraq, which seemed of Saddam’s and its WMD in particular. capabilities and intentions in , Iraqi leadership added even more The character of decision-making in the issue. The assessment of leadership complexity to assessment of the WMD inherently difficult. It is substantially any predictive activity, intentions is, like be the case in Iraq—the leadership’s more difficult if—as was later seen to a reasonable assumption that—in late logic or calculations are flawed. It was of invasion of Iraq clearly on the cards— 2002 and early 2003, with the prospect in regime survival should have outweighed any other interest interest Saddam’s inspections of his country). The fact that (including any wish to avoid intrusive the bitter end suggested strongly that he Saddam chose to resist inspections to them). had WMD to protect (and perhaps that he hoped to avoid defeat by using why did he not ultimately comply with the inspection If he did not have WMD, regime, in order to ensure the survival of his regime? With hindsight, it is clear that Saddam placed great value on avoiding capitulation on the WMD issue. But the difficulty in assessing that at the time of the situation has been own calculation is underlined by the fact that Saddam’s his sons He has ended up without power and in custody, proven clearly wrong. dead, his standing destroyed—clearly not the outcome that he wished to a war. achieve by his continued resistance to intrusive inspections in the face of By any measure, his was a miscalculation of massive proportions. Many factors proportions. of massive his was a miscalculation By any measure, have been game in itself may complexity of the at play—and the were clearly his behaviour history, of his downfall. Measured against his one of the causes and made the task March 2003 was extraordinary, in the lead-up to 19 own more complex and difficult. Thus Saddam’s of assessment even intelligence a significant part in the flaws in allied miscalculation played WMD. judgments on Iraq’s and demanding factors, WMD is an inherently difficult Even without those information which to be made on the basis of target, requiring judgments fact that many to a range of interpretations. The is nearly always open with WMD have legitimate uses and are components and facilities associated difficulties. During the illustrates these therefore characterised as ‘dual-use’ and 1998, intelligence agencies had a range period of inspections between 1991 and reliable sources to supplement of information from often publicly available of inspectors, following the covertly acquired intelligence. However, In the absence of such significantly. the volume of available material reduced limited covert collection against Iraqi corroborating material, and with relatively programmes became very much more WMD targets, judgments on Iraq’s WMD inexact—precision Intelligence assessment is almost always difficult to make. to discover what others seek to conceal. is difficult in an endeavour which seeks difficulties were acute. these In the case of Iraq’s WMD, of the intelligence on which analysts Adding to the problem was the thinness of hard current difficult calls. There was little by way were expected to make the range of WMD capability issues, intelligence available to analysts across to deceive inspectors was clearer. although the intelligence on Iraq’s efforts was equivocal or of uncertain Much of the information that was available activity, A good deal of it was either reporting of dual-use acquisition validity. inherently difficult to interpret, or human intelligence of uncertain sourcing The weakness of the intelligence picture on Iraq was in part and reliability. due to inadequate collection. Australian agencies had the added complication of an almost complete reliance on foreign-sourced collection and, on occasion, foreign assessments. focus on its nearer region meant there was limited Australia’s Additionally, in analytical capacity in relation to Iraq and, while there was better capability of relation to WMD issues, it was still limited when compared to the capacity US and UK counterparts. And it is in practical terms more difficult for analysts

report of the inquiry into australian intelligence agencies 24 recent intelligence lessons 25 The Australian Assessments The Australian to judge failed with the rest of the international community, along ONA and DIO, And both agencies’ and nature of Iraq’s WMD programmes. accurately the extent intent and capacity to use WMD against US assessments about Saddam’s allowed their territory to be used by the forces, or against those countries who US in the event of a US-led Nevertheless, ONA’s invasion, were not borne out. judgments on Iraq’s WMD capabilities were relatively cautious. key and DIO’s the available information, conclusions from They drew the most likely qualification. The obverse and generally presented them with appropriate aspirations and capability—would conclusion—that Iraq did not have WMD to substantiate. have been a much more difficult conclusion failures in intelligence assessments. A number of factors contributed to these of the control—the complexity and DIO’s In part they are factors outside ONA’s source material described above. But the target and the paucity of intelligence weaknesses in both assessment Inquiry also found a number of systemic agencies which played a role. to challenge preconceptions or The first of these was a failure rigorously intentions. It is natural that analysts assumptions about the Iraqi regime’s and contextual understanding. approach an issue with a set of expectations Analysts are valued for their background in the subject matter under assessment. assessors’ preconceptions had a clear logic—they were In the case of Iraq WMD, Iraq’s history and perceived strategic imperatives. based on UNSCOM reporting, WMD But on an issue with such potentially serious policy implications as Iraq’s the capabilities and the threat posed by Saddam, more rigorous challenging of While assumptions underlying their assessments should have been carried out. and individual analysts almost certainly travelled the ground in their own minds, managers challenged the bases for particular judgments, there is little evidence that systematic and contestable challenging was applied in a sustained way to analysts’ starting assumptions. to query and challenge foreign-sourcedto query and is little when there material, especially than helpful were less source descriptions input. In general, or no alternative of standard phrases. to be selected from a small group for analysts, tending material from Iraqi this context that most if not all of the It is noteworthy in by Australian as such, and was treated was clearly marked opposition groups scepticism. assessors with appropriate There is also little evidence of a consistent and rigorous culture of challenge rigorous culture of a consistent and little evidence of There is also evidence collectors, and limited reports from on intelligence to and engagement reasons for the lack of material. There are a number of of dialogue on assessed to which some raw of sources, including the limited extent rigorous questioning case. But the lack of a dynamic dialogue judgments in this key material influenced is of concern. of a healthy assessment process, on sources, one indicator from the text of their assessments clear always make The agencies did not a particular of specific information supporting the strength and range about the likely to the judgments of the analyst conclusion, as opposed clarity can allow of the Iraqi regime. This lack of behaviour and intentions certainty to judgments. readers to infer inappropriate levels of of sufficient integration between Another contributing factor was the lack and domestic considerations and the assessments of Iraq’s global, regional While dialogue and sharing of drafts did its WMD capabilities and aspirations. did not reflect an place both within and across agencies, the assessments take issues. The content and style of effective synthesis of technical and geopolitical suggest that the process relevant staff, the assessments, and discussions with disciplines was less substantive than it of consultation and clearance across presented there were many assessments which might have been. Specifically, which synthesised technical fragments of the WMD picture, but few with judgments about the regime’s conclusions about possible Iraqi capabilities interaction between technical and strategic game plan. Such meaningful likely the conclusions drawn and geographic specialists might have tempered helped to challenge assumptions. of analysis of the implications or One impact of this appears to be the lack assessments. What is the significance of facts in many of the Australian What significance of a small number of hidden missiles, mostly in poor condition? 1.5 tonnes of chemical kind of military effect could have been achieved with, say, agents? On some occasions DIO assessments clearly stated that any Iraqi WMD capability would have a limited battlefield effect. But broader analysis on the strategic utility of Iraq possessing limited WMD capabilities was largely absent. The lack of a National Assessment coordinated by ONA, or a formal Intelligence was regrettable. Both of these vehicles provide the Estimate from DIO, opportunity to generate both discussion and recording of a wider range of Iraq and WMD-related the two joint reports produced by ONA and issues. While

report of the inquiry into australian intelligence agencies 26 recent intelligence lessons 27 DIO did go some way to assisting a coordinated national approach, these were national approach, a coordinated some way to assisting DIO did go to Iraq, holistic approach a take which did not (2 and 3 1/2 pages) short pieces regional and domestic and imperatives, the broader its strategic environment strategic its likely WMD decisions were being made, context in which its documents One or both of these WMD. capacity of its likely objectives, and the interests on which there areas relevant to Australia’s might also have covered for Australia assessment: the strategic cost implications was little intelligence strategic costs and action against Iraq, the likely of contributing to military of military action on the Iraq, and the impact issues involved in post-Saddam and Australians. safety of Australia Inquiry acknowledges that it is doubtful In outlining these systemic issues, the the fundamental judgments about the that better process would have changed At best it may have led to more qualified judgments, and existence of WMD. While the scenarios. less likely the presentation to government of alternative, for the integrity and quality of future principles outlined above remain critical assessments, the Inquiry’s conclusion is that, based on the available and DIO assessments represented intelligence and other information, ONA reasonable and relatively cautious conclusions. Inquiry found some instances of In addition to these broader issues, the presentation and an occasional lack inconsistency in assessments, unclear the quality of the product. And there of precision in language which affected individual pieces of intelligence did were a small number of cases in which But in a large body of reporting produced not support the assessments drawn. relatively minor issues which do not under pressured conditions, these are represent serious flaws or systemic problems. of performance with in such a review Against all of the criticisms one can make the full benefit of hindsight, it is critical not to lose sight of what the assessment agencies got right and did well—and there is much to commend in their efforts. UK It is significant that, using similar but not all of the material available to the Australian assessments on Iraq’s capabilities were on the whole and the US, There more cautious, and seem closer to the facts as we know them so far. was not, as some have charged, a blind adherence to US and UK assessments. assessment community on The bulk of conclusions drawn by Australia’s individual pieces of intelligence were sound, and there is evidence of our agencies applying healthy scepticism to the intelligence received on a number The comments made so far apply, with small variations, to both ONA and DIO. The comments made so far apply, and although their focus, style Both agencies’ major judgments were similar, and audiences varied, the differences were, in most cases, not significant. of the timeline for nuclear issues of new production of CBW, On the key continuing and of Saddam’s weapons, of efforts to maintain WMD capability, the agencies’ assessments were in essence the same, desire to have WMD, and remained so. Their reporting on aluminium tubes, uranium from Africa, production facilities was also essentially the same. and mobile BW Divergence Between the Assessments of specific issues, in some instances maintaining a different or more cautious a different or more maintaining issues, in some instances of specific of sourcing is true on the issues by allies. This face of firm conclusions line in the threat posed by production capabilities, the mobile BW uranium from Niger, aerial vehicles, and via unmanned to deliver CBW smallpox, Iraqi capability in the US. strikes Iraq, and the September 11 terrorist links between Al Qaida, a topic as potentially place, in of There was also a proper worst case scenarios, for reporting to cover WMD, threatening as Iraqi assessments context in which the intelligence particularly in the policy to focus on the It was right for our assessment agencies were being made. to highlight the might face should they be deployed—and challenges troops worst of a potential adversary’s primary duty is to support capabilities. DIO’s operations. In the case of Defence Force the safety and success of Australian intelligence community had the institutional memory of having the Iraq’s WMD, nuclear) capabilities at the time of the underestimated Iraq’s WMD (especially first . on the Inquiry has found no evidence of politicisation of the assessments Finally, received no indication that any analyst or Iraq, either overt or perceived. The Inquiry or implied pressure to come to a particular manager was the subject of either direct While agencies to bolster the case for war. judgment on Iraq for policy reasons, or policy environment, both their processes and their analysts are conscious of the case, its legislation, promote independence and their cultures and, in ONA’s of assessment. The Inquiry’s conclusion that, on the basis of the available conclusions, is consistent with likely information, ONA and DIO drew the most no evidence of politicisation. and supports the finding that there was

report of the inquiry into australian intelligence agencies 28 recent intelligence lessons 29 ONA/DIO Resources between the two agencies as levels, and types of expertise, differed Resource audiences. What was common between a result of their different mandates and staff the two agencies was the professionalism, dedication and hard work of all engaged in reporting on Iraq. The Inquiry is conscious, in making the observations above, that the assessments staff were working extended hours ways over long periods and operating under significant time pressures. In some the the critique issued above, with the benefit of 20/20 hindsight, is unfair—and Inquiry stresses its finding that, overall, the efforts of analysts were praiseworthy. mid–2002, ONA had one to two WMD analysts working either partly or From and two Middle East analysts spending most of their time mostly on Iraq WMD, Office immediately on more general Iraq issues, until the creation of a Watch The only significant point of divergence relates to the key issue of possession issue of to the key divergence relates point of The only significant 2003, although came late in January and of WMD, or stocks WMD, of actual caused by imprecise changes in ONA assessments there were some implicit a comprehensive December 2002. Neither agency issued language from late judgment on key period in which they stated that their assessment over this the substance of the or that it remained the same. But this issue had changed, and February captured in ONA reports in late January divergence is explicitly judgment strengthened ONA’s that Iraq must have WMD. 2003 which assessed of Iraq’s reporting pool of intelligence and UNMOVIC was based on a growing conclusion is clearly and its rationale for coming to this deception activities, did not with access to the same information, DIO, spelt out in its reporting. while reasonably argued, has not been judgment, draw this conclusion. ONA’s caution has been justified. Iraq, and DIO’s borne out by what has been found in judgment to suggest that ONA’s That said, the Inquiry has seen no evidence was influenced by policy or political considerations. much of what separated ONA and Beyond this specific point of divergence, different styles that typify ONA and DIO DIO reporting on Iraq represents the high level with emphasis on key product. ONA reporting was broad and and evidence behind them. DIO judgments rather than the detailed reasoning the military implications of its conclusions, reporting more consistently drew out give context for its analysis of individual and restated its baseline judgments to pieces of intelligence. Public Presentation of Intelligence Presentation Public of intelligence is a complex and challenging The question of the public presentation against protection of intelligence one, requiring the balancing of public interest sources, methods and international relationships. This issue is dealt with more fully in Chapter 7, but is germane to two particular issues in relation to Iraq. The first of these is the production, on 13 September 2003, of an unclassified compilation of Iraq WMD material. At the request of the Department of Foreign intelligence community input to and ONA coordinated Affairs and Trade, views published an unclassified document representing the agencies’ common which could be drawn on in public statements by ministers. A review of the material contained in the compilation found that intelligence assessments made up only about one-third of the document, the balance being drawn from prior to 19 March 2003. The two relevant branch heads also dedicated a good heads also dedicated two relevant branch March 2003. The prior to 19 had None of the analysts reporting. of their time to Iraq-related percentage some although one senior has in WMD, specific technical background better resourced on Iraq. As a larger organisation, DIO was nuclear background. a task force in and before the creation of up to the war, In the period leading on Iraq, and eight-nine WMD analysts working six-ten March 2003, DIO had assessment. Again on broader Iraq and Middle East country analysts working analytical DIO’s agency, size and the military focus of the reflecting the different WMD analysts stronger technical skills—all of DIO’s effort was based on and/or experience, some relevant technical qualifications working on Iraq had with UNSCOM. including several with experience working to be adequate at the time, both While ONA seniors judged the resources constraints imposed by time and resource analysts and branch heads talk of the sources. They also speculate that a higher pressures on their ability to challenge analysts and their managers more time level of resourcing might have enabled assessments. This may or may not have to stand back and consider alternative resources would have added a level of been borne out—but additional analyst stages, and given ONA more depth on the internal contestability at the drafting analysts working on case, with more people on the task, WMD topic. In DIO’s analytical resources would have been Iraq also felt stretched. While additional and scientific by technical backed welcome, the pool of analytical skills knowledge is shallow.

report of the inquiry into australian intelligence agencies 30 recent intelligence lessons 31 Consultations by members of the Inquiry secretariat with UK and US officials Consultations by members of the Inquiry April 2004 indicated that neither government during and Washington in London of ‘lessonshad then completed its consideration learned’ in relation to Butler inquiry in the UK on The Lord intelligence on Iraqi WMD programmes. on the Intelligence Capabilities of the WMD intelligence, and the Commission are expected to play of Mass Destruction, Weapons United States Regarding lessons. It would be inappropriate for this Inquiry a major role in identifying key to comment publicly on the views of US and UK officials prior to the conclusion of their own inquiries. Lessons from the UK and the US Lessons UNSCOM/IAEA reporting and other material of historical fact or public record. historical fact or public other material of reporting and UNSCOM/IAEA and from previous reporting, judgments differed of the intelligence Only one There is no evidence of political influence of degree only. that one in a matter fact there is a clear material in the compilation, and in over this or any other the only and Trade, Affairs by the Department of Foreign record that comments to accuracy of in the draft compilation, were restricted policy agency engaged on the intelligence judgments. facts with no bearing ONA was to the clearing of political speeches. The second issue relates Minister for accuracy by the Prime to check the five major speeches asked were delivered on information. Those speeches of references to intelligence May 2003. ONA restricted its comment 14, 18 and 20 March, and 14 4 February, to intelligence. It did not comment to the accuracy of the statements referring intelligence, nor on the conclusions drawn on the significance attached to such from that intelligence. It is the Inquiry’s view that it is not reasonable to expect the manner in which the government an to comment on material those drawing on the chooses to use such intelligence. Conversely, by the intelligence agency so that there should be clear about the role played speech as a whole, or all the conclusions is no room for the inference that the agency’sdrawn from intelligence, have the intelligence imprimatur. Greater rigour must be applied to the evaluation of sources. Analysts must, be applied to the evaluation of sources. Greater rigour must of sources. collectors, actively assess the reliability in collaboration with must intelligence gaps is needed. Analysts More rigour in identifying gaps to collectors, rather than consciously identify and then articulate been collected. accepting without challenge what has to allied collection and assessment, Similar levels of rigour need to be applied challenge to sources and/or both in terms of access to material and Australia has limited technical or judgments, including in areas where regional expertise. remedial action agencies should take Where such technical limitations exist, expertise. and recruit or develop appropriate technical assessments be avoided. Previous Incremental ‘creeps’ of judgment must highlighted. should be restated and any changes language of assessments to ensure Greater attention must be paid to the to previous assessments are that judgments are consistent, that variations does not inadvertently alter key properly identified and that loose language or open to interpretation. assessments, or leave them unclear Operational Lessons from the ADF Operational Lessons Operations in Iraq involved all elements of the Australian intelligence system, from strategic agencies to deployed tactical intelligence elements. Although intelligence system was not comprehensively tested in this coalition Australia’s environment, particularly in the critical area of operational decision support, ONA and DIO have both conducted internal reviews of their respective both conducted internal reviews of ONA and DIO have both that their Notwithstanding conclusions by performances on Iraq. have identified areas measured and careful, both agencies assessments were the areas of collection can be improved, primarily in in which their performance Specific themes are: and analysis of information. on the role of the users of intelligence. The Inquiry also received some comment both to give strategic customers This related primarily to the need for senior-level direction to the analytic effort, and to engage closely with the intelligence Customers with a greater understanding of the strengths and community. weaknesses of the system will be better able to drive its performance. Lessons from the Australian intelligence community intelligence from the Australian Lessons

report of the inquiry into australian intelligence agencies 32 recent intelligence lessons 33 intelligence provided a key contribution to the success of Australian operations, of Australian to the success contribution provided a key intelligence outside taking place well of an operation met the demands and successfully region of expertise. Australia’s integration for this success were the comprehensive The two primary reasons and the deployment staff with their US counterparts, of Australian intelligence This was capabilities to support ADF commanders. of indigenous intelligence which and Falconer, Defence review of Operations Bastille reflected in the formal sensors support (staff, of 24/7 availability of intelligence noted the “importance The review levels of command and decision making”. and analysis) to all to US resources is integration with, and connectivity recorded that “intimate comprehensive intelligence picture”. also vital to the formation of a timely and near region, and the outside Australia’s The deployment to an operational area placed fundamental limitations on the level speed and complexity of operations, that could be provided by Australian of detailed operational intelligence support support therefore assumed agencies. Planning for operational intelligence reliance on access to US-sourced information to support the planning and conduct of operations. the headquarters of US Central Early integration of ADF personnel into was critical to support this Command and its component headquarters Australian It was complemented by the deployment of relatively large strategy. Australian force elements, intelligence components within the deployed agencies. This approach could not including liaison elements from national solution: its success was due to the deep as a ‘just-in-time’ have worked and effective intelligence-sharing relationships between the US and Australia both peace and conflict. established over many years, during material and analysis, Australian Despite heavy reliance on access to US forces were not totally dependent on the US system. Indeed, the Australian intelligence support architecture in the Middle East was designed to ensure that Australian commanders received independent analysis. The deployment of liaison officers from Australian agencies and the ability to access secure Australian intelligence links provided an important contribution to the capability areas of operational intelligence support that will in the Middle East and are key continue to be developed and used. In addition to supporting the deployed commanders, the deployment of robust Australian intelligence capabilities was also valuable on two further counts. an active contribution to the coalition It allowed Australian forces to make There has been a failure of intelligence on Iraq WMD. Intelligence was thin, Intelligence was of intelligence on Iraq WMD. There has been a failure intelligence failure Australia shared in the allied ambiguous and incomplete. with ONA more exposed and DIO question of WMD stockpiles, on the key other judgments have subject. But many of the agencies’ more cautious on the produced by ONA and DIO on Iraq WMD proved correct. Overall, assessments operations reflected reasonably the limited up to the commencement of combat sources with appropriate caution. available information and used intelligence which might have been achieved The lack of comprehensive assessment, or an Intelligence Estimate to support by production of a National Assessment regrettable. Such comprehensive ADF deployment considerations, was complex and fragmented picture. reporting may have helped to clarify a of Iraq’s WMD in terms of the threat The limited analysis of the significance utility of the assessments. that Iraq posed also impacted on the consistent until late January judgments were largely The two agencies’ key while DIO continued have WMD, 2003, when ONA assessed that Iraq must issue was inconclusive. But differences to assess that the intelligence on the led to an implicit lesser use of detail and qualification, in style, including ONA’s points of Iraq’s 2002. On the key difference in assessments from late December and the significance of its concealment and deception possession of WMD, with fewer qualifications and greater activities, ONA judgments were expressed certainty than those of DIO. On the critical issue of independence, the Inquiry’s investigations showed that, despite a heavy reliance on foreign-sourced intelligence collection, both agencies had formulated assessments independent of those of the US and the UK, in several notable cases choosing not to endorse allied judgments. The Inquiry found no evidence to suggest policy or political influence on assessments on Iraq WMD. There was insufficient challenge both to assumptions and sources in the agencies’ assessments on Iraq, and both ONA and DIO need to institutionalise work practices and training to remedy this. Conclusion intelligence effort, complementing the broader Australian commitment to the Australian commitment the broader effort, complementing intelligence reporting from the and accurate it also enabled timely Importantly, coalition. the into intelligence briefs for Middle East to be integrated Defence leaders. Committee and senior

report of the inquiry into australian intelligence agencies 34 recent intelligence lessons 35 Indonesia is a predominantly Islamic country—by population, the world’s Indonesia is a predominantly Islamic and radical Islamist organisations biggest. While Islam is important in politics have never come close to taking have a long history in Indonesia, they or otherwise. The historical spread control of government, democratically uneven, and Islamic ideas and of the faith through the archipelago was practices have co-existed with and were affected by traditional, particularly As a result, the Islam practised living. Javanese, belief systems and ways of its own particular character and is, by the vast majority of Indonesians has essentially moderate. currently, Indonesian politics have also stamped some unique Post-independence marks on Islam as it is practised in the archipelago. Nationalist and Islamist influences on the development of independence strains of thinking were key politics in Indonesia, reflecting basic differences of view about the place state. Symbolising the radical element of the of Islam in the post-colonial Islamist instinct was the Darul Islam movement, which emerged with the waning of Dutch rule in the 1940s and which advocated the establishment of an Islamic state, more or less broadly drawn, governed by Islamic law. Subsequent repression of Islam as a political force under the Suharto regime further influenced Islamic thinking in Indonesia and served to radicalise a number of Muslim leaders. Background to Jemaah Islamiyah In the same way that September 11 galvanised US public and government September 11 galvanised US public In the same way that later have had the bombings in Bali just over a year attention to terrorism, threat and what on the way Australia views the terrorist an enormous impact of Australians and our way of life. it means for the safety agencies external intelligence examines how Australia’s The following study a terrorist network Islamiyah (JI) and its emergence as understood Jemaah foreign intelligence to Australia. The focus is on Australia’s posing a direct threat and how ONA and DIO, the national assessment agencies agencies, in particular in Bali. Since these issue in the years leading up to the attacks they dealt with the this study does parliamentary inquiry, matters are being considered by a separate advisories, the threat levels set by ASIO not address in detail the text of travel domestic security service, except in the period or the response by Australia’s JI being built by Australian agencies. in so far as they affected the picture of JEMAAH ISLAMIYAH JEMAAH It was among conservative Muslims repressed during Suharto’s New Order during Suharto’s repressed conservative Muslims It was among today’speriod that many of leaders have radical Islamic organisations and come to be networks, the group which has other radical their origins. Like of the Darul Islam Islamiyah emerged from the remnants known as Jemaah caliphate JI’s political aim is to create a regional rebellions of the 1950s. Muslim Indonesia and neighbouring majority or Islamic state spanning (or The establishment of an Islamic community countries or regions. to this end. Through their is seen as a preliminary step ‘jemaah Islamiyah’) a number Afghanistan jihad experience in the 1980s, involvement in the aims the globalist anti-Western members of JI became aligned with of key Al Qaida. represented by groups like before a major security operation Little was known of JI, under that name, in December 2001 resulted by Singapore security authorities undertaken of planning large-scalein the arrest of 13 individuals suspected terrorist and interests in Singapore against US and other Western strikes called Jemaah Islamiyah. In addition of being members of an organisation suspected of having plotted in Bali, JI is now to the October 2002 strikes attacks in Indonesia and the or carried out a number of prior terror Marriott hotel bombing in Jakarta Philippines and of responsibility for the officially listed by the United Nations, Bali, JI was in August 2003. Following organisation. and proscribed by Australia, as a terrorist The Intelligence Context community faced an In Jemaah Islamiyah, the Australian intelligence hugely important to Australia and intelligence target which was at once the subjects traditionally covered of a nature fundamentally different from by external intelligence agencies. The terrorism target is inherently difficult. It requires a range of new analytical approaches and methodologies, many of which are closer to police investigation and domestic security intelligence service techniques than analysis customary to foreign intelligence to the deductive, interest-based also poses new challenges for foreign intelligence assessment. Terrorism collectors due to the covert and nebulous nature of operational terrorist cells Al Qaida and JI. such as those which characterise groups like

report of the inquiry into australian intelligence agencies 36 recent intelligence lessons 37 The Australian Assessments The Australian Assessments foreign intelligence agencies Before the Bali bombings, Australia’s the nature of radical Islam in South underestimated in some important ways extremists posed a threat to East Asia and the extent to which regional as more information became Australia. Australian assessments evolved better that the generally moderate available and as analysts understood mean that terrorists could not thrive character of Islam in Indonesia did not to a greater or lesser degree, in the Indonesian environment. Nevertheless, before the Bali bombings foreign intelligence analysts in the period Australia’s ideas and and global jihadist underestimated the extent to which anti-Western Middle East militancy had penetrated radical groups in South East Asia. The foreign intelligence community’s assessment performance on JI falls into several main parts, chronologically defined: before the 11 September 2001 terrorist attacks on the US; the period between September 11 and the Bali bombings; and after October 2002. In reporting before 2001 on Islamic extremism in Indonesia and the broader region, ONA and DIO focused primarily on what extremist groups and their activities might mean for internal security and politics in Indonesia and other on what they might mean for South East Asian countries and, secondarily, In any case, contemporary expectations about what intelligence can provide what intelligence about contemporary expectations In any case, the often misunderstands terrorist events early warning of specific by way of seldom provides intelligence assessment. Intelligence nature of much foreign assessors is evidence. Information received by intelligence directly actionable a great deal of various analytical conclusions. Nevertheless, often amenable to agencies intelligence collectors and all relevant by Australia’s effort is being put threat information capturing the kind of specific, detailed of government into priority for the a terrorist attack. This will be an ongoing which may help avert that The Inquiry has seen nothing to indicate community. Australian intelligence warning of the intelligence agencies had specific intelligence any of Australia’s the findings of the Inspector-General of attack in Bali. This is consistent with Intelligence and Security’s report on the Bali terrorist attack. are their counterparts elsewhere, foreign intelligence agencies, like Australia’s of them to provide early specific caught between very high public expectations inherent difficulties of terrorism as an information of terrorist plans, and the intelligence target. This tension remains. South East Asian Islamic terrorists had established cells in the region, South East Asian Islamic terrorists had East, and had planned terror attacks had links to Al Qaida and the Middle targets. against Western in the region were capable of staging significant terrorist attacks— Terrorists they had available weapons and explosives and people trained to use them. The regional environment was such that Islamic radicalism would continue to flourish in South East Asia. ONA’s concerns firmed over time. By the second half of 2002, just before the ONA’s was Bali bombings and at a time when some others were less concerned, ONA high judging consistently that the danger from terrorists in South East Asia was and persistent. regional security. While ONA did examine possible links between Middle possible links between ONA did examine While regional security. judged September 11, it extremists before and regional Eastern militants groups limited of the Indonesian Islamic militant that the domestic focus case, its analysis of global international terrorists. In DIO’s their usefulness to forward in isolation security issue generally went terrorism as an emerging Islamic extremism in South East Asia. from its reporting on of global terrorism Australian agencies’ understanding September 11 changed on terrorism as ONA and DIO sharpened their focus in fundamental ways. factor in regional system and as a destabilising a threat to the international for the region, and of Still, the full import of the attacks politics and security. evenly recognised across the foreign Islamic terrorism for Australia, was not period at In the immediate post-September intelligence analysis community. were focused on regional least, Australian foreign intelligence assessments terrorism. The development of contributions to the global fight against ambitions and agendas beyond their indigenous terrorist organisations with of the agencies at this point. local settings was not a sustained focus by Singaporean authorities in December A series of arrests of terrorist suspects targets in Singapore, Western 2001 and the uncovering of plans to attack point for ONA’s High Commission, was a tipping including Australia’s ONA was quick to recognise the understanding of regional terrorism. vigorous analysis to the JI network significance for Australia and applied as revealed by the arrests. judgments were that: key this point on, ONA’s From

report of the inquiry into australian intelligence agencies 38 recent intelligence lessons 39 The primary focus of regional extremist groups was domestic and their The primary focus of regional extremist agendas and targets generally were local. direction, regional militant groups, JI in In any case, without outside help and the capability to launch mass-scale probably lacked terrorist attacks. particular, and extra-regional terrorists Any current links between regional extremists experiences in Afghanistan rather than were based on individual shared jihad being relationships of co-conspirators in terrorist activity. its capability to Westerners, Therefore, while JI posed some threat respects an incidental threat was limited. Indonesia remained in most environment for Australians. Up until October 2002, DIO continued to take a limited view of Islamic to take Up until October 2002, DIO continued in terms of its impact on Indonesian extremism in Indonesia, analysing it mainly was DIO analysts saw little in incoming intelligence reporting that stability. extremist activities such as had inconsistent with domestically focused characterised Indonesian communal politics for some time. While DIO’s judgments evolved and strengthened over time, and began to distinguish JI from other radical groups in the region, DIO continued to underestimate the potential scale of any possible terrorist attack. The pattern of response to regional terrorism from other parts of the foreign to September 2001, Prior intelligence community followed a similar chronology. foreign there was a low level of consciousness generally in Australia’s security and to intelligence system of terrorism as a real threat to Australia’s the lives of Australian citizens at home and abroad. September 11 was a turning DIO assessments on the whole were slower to recognise the full significance recognise the full were slower to on the whole DIO assessments home-grown with and their commonalities extremists East Asia’s of South track records. other militants with established terrorist Middle Eastern and resources to its did prompt DIO to assign additional The Singapore arrests Asia. Nevertheless, links to terrorism in South East coverage of transnational cell members remained that several JI leaders and some while acknowledging was by nature the region, and that terrorist planning at large, probably in and limited capability the group’s judgment about DIO’s difficult to detect, by the residual the threat posed to Australians intent led it to underestimate JI presence in Indonesia. October 2002, DIO continued to judge that: Through the period September 2001 to point. In the aftermath of the attacks, Australia’s foreign intelligence effort foreign intelligence attacks, Australia’s aftermath of the point. In the more Significantly stepped up significantly. terrorist target was against the in what was now seen were given to counter-terrorism attention and resources a new global and extensive campaign to address as the start of an extended target has been a top since Bali, the regional terrorist threat. And certainly, from government. matched by significant new resources priority for all agencies, foreign intelligence agencies, focused on Australia’s While this Inquiry is understanding ASIO’s to note the development of it is important contextually it is ASIO that carries threat. In the Australian system of the regional terrorist including to Australian levels of threat to Australia, responsibility for assessing of the potentially understanding interests abroad. In general terms, ASIO’s in the region developed more quickly serious nature of the threat of terrorism some assessment agencies. For than was the case for the foreign intelligence links between some individuals and years, ASIO had been concerned about elsewhere. Almost immediately after groups in Australia and terrorist groups ASIO raised States, on 28 September, the in the United Indonesia. It viewed as the threat level for Australian interests in to ‘high’ reference to Australia in first specific public significant ’s the fact that Australian civilians could November 2001, drawing attention to to information flowing from be targeted. On JI, ASIO responded immediately the Singapore arrests. Australian foreign intelligence assessments The causes for the early weaknesses in judge the quality of the assessments, To of JI and regional terrorism were many. in which analysts were working. it is important to understand the context long standing tenet of Australia’s At issue here was a fundamental and many years, at the core of Australia’s understanding of Indonesia. For assessments of its largest neighbour had been a view of Islam in Indonesia for as something unique. Indonesian Islamic radicals were seen as significant their impact within Indonesia, on the country’s politics and its stability and unity; security interests were important, but they were indirect. the links to Australia’s The known history of JI provided little compelling cause for analysts to unsettle these longstanding conclusions. While radical in rhetoric and with an ideology intolerant of compromise, JI had no significant record of striking at foreigners or foreign interests in the region. At least until the Singapore arrests, outward signs suggested that the activities and agendas of regional extremist groups

report of the inquiry into australian intelligence agencies 40 recent intelligence lessons 41 Australian intelligence agencies should have known more before December 2001 about JI as a group developing terrorist capabilities and intentions. issue, especially from December 2001 onwards, ONA assessments on this key The failure to appreciate the serious evolved more quickly than those of DIO. Conclusion remained domestically focused, concentrated typically on local communal concentrated domestically focused, remained low-levelviolence and vigilantism. religious in South east Asia the most notable terrorist operations Until 12 October 2002, Philippines Ambassador the attempted of the were not major events: 17; the Christmas Eve 2000, which killed three and injured in Jakarta in August and the Metro Manila which killed 15 and injured 94; 2000 attacks in Indonesia, 2000. Of these, only 14 and injured 70, on 30 December bombings, which killed was aimed at a on the life of the Philippines Ambassador the failed attempt seemingly connected even then the target was regional and foreign target, and separatism and extremism. own with domestic with Manila’s it is not surprising that Australian In the absence of definitive intelligence, convincing that JI or any other local group foreign intelligence analysts needed Australia. Decades of accumulated represented a serious direct danger to of Islam in South East Asia proved knowledge of Indonesia and of the politics understanding the evolution of Australia’s in this important case to be a drag on radical, militant terrorism within the region’s of the emergence of anti-Western and extremist groups. underestimated the threat posed to Western the extent that Australian analysts To they were not alone. Many commentators interests by regional Islamic extremists, also clearly misread the situation, focusing with deep South East Asian knowledge radicalism in Indonesia and the broader too much on what distinguished Islamic regions of the world. region from the terrorism bred in other and those elsewhere in the Indonesian observers and security authorities, the nature and scale of the threat region, also took some time to recognise posed by regional Islamic extremists. of our foreign intelligence agencies to Viewed against this background, the failure the recognise early the threat posed by JI is understandable. Just as importantly, alacrity with which ONA was able to question fundamental assumptions, reassess and shift a longstanding tenet of its Indonesia assessment was commendable. nature of the threat posed by JI was widespread outside Australia’s intelligence outside Australia’s JI was widespread the threat posed by nature of a regional fundamentally Indeed it was and in Indonesia itself. agencies, intelligence failure. including agency, nothing to indicate that any Australian The Inquiry has seen of the attack in Bali. This is had any specific intelligence warning ASIO, Intelligence and findings of the Inspector-General of consistent with the Security’s attack. report on the Bali terrorist security cooperation the value of Australia’s This case study demonstrates The emergence of region, in particular with Singapore. with countries in the underlines the need to build more Islamic terrorism in the region anti-Western agencies’ understanding of Islam and depth into Australian foreign intelligence regional politics and local radicalism. the interaction of Islamic extremism with foreign intelligence community has Australia’s 12 October 2002, Following to the regional threat of terrorism. responded with vigour and determination with the Indonesian police, has done Police, the Australian Federal In particular, those responsible for the Bali bombings. outstanding work in helping to identify significant increases in resources across These efforts have been supported by of JI’s rise demonstrates the crucial importance the intelligence community. being alert to shifts in the regional Australian foreign intelligence agencies of new threats. security environment and the emergence

report of the inquiry into australian intelligence agencies 42 recent intelligence lessons 43 The ethnic violence on Guadalcanal had its roots in an historical enmity on Guadalcanal had its roots in an historical The ethnic violence and and Malaitan peoples, land issues between the Guadalcanal as the on Guadalcanal. Through the 1990s, development disparities of the entrepreneurial Malaitans took advantage more assertive and widely, in Honiara, and on Guadalcanal more opportunities available leaders Deft politics by community grew. Guadalcanalese resentment late 1998, in However, discontent from boiling over. the simmering kept began to rise. An armed militant group, the tensions inter-ethnic forerunner of the Isatambu Army (GRA)—the Guadalcanal Revolutionary campaign against Malaitans and Movement (IFM)—began a violent Freedom to 20,000 Malaitans were driven from for compensation. In the violence, up the deployment of a Multinational their homes. Despite negotiations and inaction led to the formation of Monitoring Group, government Police (MEF), in January 2000. Force another militant group, the Malaitan Eagle had effectively lost control of By the beginning of 2000, the government the capital and Guadalcanalese Guadalcanal, with Malaitans controlling Throughout the first half of 2000, militants controlling the countryside. and rising communal tensions the social, economic and political decline Solomon supported by the Malaitan-dominated Royal continued. The MEF, in its campaign against the GRA/IFM. (RSIP) was ruthless Islands Police to negotiate with the militant Despite further attempts by the Government was operating freely within the groups, by the end of May 2000 the MEF Malaitan society in Honiara, pressed Honiara environs and, aided by dominant aided by the On 5 June, the MEF, its demand for compensation more openly. Minister Ulufa’alu Prime and Lapli placed Governor-General Force, RSIP Field under house arrest and took control of the central government. As a result of MEF pressure, Manasseh Sogavare was appointed Prime Minister on 30 June 2000. A ceasefire between the MEF and the IFM Agreement on Peace on 2 August 2000 and the signing of the Monitoring 15 October led to the deployment of the International Peace 2001 Agreement on 7 February The signing of the Marau Peace Team. violence on Guadalcanal. resulted in the cessation of inter-ethnic Background to intervention Background to SOLOMON ISLANDS SOLOMON After considerable international pressure, general elections were held elections were pressure, general international After considerable Minister. was elected Prime and Sir Allan Kemakeza in December 2001 command structure within communal loyalties eroded the However, in Honiara, in rural undisciplined armed gangs emerged militant groups, and election, the downward Malaita. Despite Kemakeza’s Guadalcanal and on months. The Islands continued over the next 18 spiral of the Solomon as the only means saw outside intervention Solomon Islands Government in May 2003, of violence and intimidation. Finally, to break the cycle Australia to lead an armed formally approached Minister Kemakeza Prime the Solomon Islands restore law and order and to assist intervention force to 2003, the Regional In July Government to re-establish control of the country. to the Solomon Islands. Assistance Mission (RAMSI) deployed a rise in tensions in the Solomon Islands. But although analysts captured well a rise in tensions in the Solomon Islands. the decline in governance and society, there was no clear assessment that an there was no clear the decline in governance and society, coup was likely. MEF-led until mid-2001, ONA assessment was Throughout the second half of 2000 and 2000 coup and its aftermath, particularly characterised by a focus on the June Meeting and the ability of the Sogavare Peace the conduct of the Townsville Accord. While ONA Peace Government to implement its outcome, the Townsville prospects for the Solomon Islands, the events continued to assess the long-term focus, particularly in late 2000. taking place gave reporting a more short-term the second half of 2001, there was a noticeable shift in the nature of ONA From assessment with the language and tone becoming more negative. Throughout of calls 2002, assessments placed an increasing emphasis on the likelihood for ADF intervention. This was stated most clearly in the National Assessment produced in July 2002. ONA Assessment January 2000 until July 2003. The Inquiry reviewed assessments from situation in the Solomon assessments of the Throughout this period, ONA’s They also highlighted the potential, Islands painted a consistently bleak picture. to be called upon the Australian Defence Force for across the South Pacific, forces, possibly in or evacuation to provide peacemaking, April through to late May 2000, ONA noted simultaneous contingencies. From

report of the inquiry into australian intelligence agencies 44 recent intelligence lessons 45 DIO Assessment Throughout the period to ONA’s. DIO assessment covered similar ground Solomon Islands reversing its reviewed, DIO saw little prospect of the specific incidents in detail and related downward spiral. Its reporting covered up to the June in the period leading them to the threat to Australians. However, assessment of the Solomon Islands, 2000 coup, despite a consistently negative of that clearly highlighted the likelihood DIO did not portray the scene in a way this was an an operational planning perspective, evacuation. From an ADF-led 2000, in product from late May important gap in assessment. Most notably, as unlikely. the prospect of a coup was dismissed in regard to a single issue is not that an incorrect judgment was made The key from January 2000 demonstrated that event. The broader range of assessments a deteriorating situation. But these DIO was actively and accurately reporting effectively to serve its prime customer, events highlight the fact that if DIO is to ensure that its reporting maintains an appropriate then it needs the ADF, reporting in the first half of 2000 was degree of operational relevance. DIO to operational planners. not optimal in providing timely warning DIO was consistent and balanced in its July 2000, as with ONA, From assessments maintained the theme that there would be assessments. DIO’s no reversal of the downward trend in the Solomon Islands, with the collapse of basic services continuing and law and order remaining virtually non-existent. throughout this period DIO reporting continued to focus its Importantly, of calls for ADF intervention because of sudden assessment on the likelihood changes in the security situation. While DIO at times assessed an increased of circumstances arising that would require an ADF evacuation, it likelihood a consistently assessed that any breakdown would be well signposted, and that These changing assessments reflected evacuation would be unlikely. short-notice a clear effort to track the shifting security circumstances over an extended period. Reporting from this point also became more focused on the transnational focused on the also became more from this point Reporting Islands of the Solomon posed by a collapse terrorist threat criminal and was a impact for Australia. Once again, there Government and the for armed intervention. focus on the prospect of calls correspondingly increased reviewed, ONA of assessment that the Inquiry has Throughout the period the Solomon Islands. broad perspective on events in retained an appropriately balanced and dispassionate. Its assessments were The review of assessments from the two agencies since January 2000 The review of assessments from the the product was more robust in highlighted a number of features. In general, the post-June 2000 period than in the lead-up to the June 2000 coup. Pre-June generally failed to provide assessments 2000 reporting was not inaccurate, but that did much more than monitor events. Neither organisation predicted the coup, although both had recognised the potential for such an action and either or simply highlighted the threat. In the case dismissed its immediate likelihood setting aside the specific question of whether the coup should have of DIO, been predicted, the reporting did not engage operational planners in the practical way that DIO product ideally should. It must also be highlighted that reporting in the period preceding the coup the was influenced by competing demands that limited the available effort for Solomon Islands. This was due not only to the on going focus on East Timor May 2000. in on the coup in effort specifically, but, for the South Pacific Analysis of Assessments DIO’s longer term assessments were supported by more focused reports that by more focused were supported term assessments longer DIO’s represented or not activities in terms of whether cast specific events frequently This was particularly to Australians or other expatriates. any heightened threat Team Monitoring the deployment of the International Peace the case following detailed coverage DIO reporting frequently provided more in November 2000. in a broader context. that specific events were placed than ONA and ensured at the IPMT and specific threats or incidents directed This reporting covered of demonstrations extant threat assessment, or the impact any impact on the particularly unrest on the wider expatriate community, or other incidents of periods of unrest. simply provided forewarning of expected on Guadalcanal, or in their assessment of the situation While both ONA and DIO were consistent and appropriate difference in the nature after June 2000, there was a noticeable Whereas ONA was focused on the broader political of assessment from DIO. DIO reporting consistently provided and social implications of the events, of events Australians, the likelihood a more detailed focus on the threat to and the provision of intelligence triggering the employment of the ADF, eventual conduct of any ADF operations. products to support the planning and while broader strategic assessments This operational focus was maintained wider context of any operations in the that ensured an understanding of the Solomon Islands were retained.

report of the inquiry into australian intelligence agencies 46 recent intelligence lessons 47 The Inquiry became aware of the concerns of Lieutenant Colonel Lance Collins The Inquiry became aware of the concerns of Lieutenant Colonel Lance about the operation of the Defence Intelligence Organisation. Some of the matters he raised are addressed elsewhere in this report. Here we focus on issues concerning Indonesia and East Timor. The Inquiry made several attempts to interview Lieutenant Colonel Collins. Lieutenant Colonel Collins declined to be interviewed because neither the was in a position to agree to his condition that expenses nor the Army, Inquiry, for his senior and junior counsel be met. The Inquiry was prepared for Lieutenant Colonel Collins to be accompanied by lawyers—though it is LIEUTENANT COLONEL LANCE COLLINS AND DIO LANCE COLLINS AND LIEUTENANT COLONEL From June 2000 until mid-2003, ONA and DIO reporting of the collapse of and DIO reporting mid-2003, ONA June 2000 until From included accurate. Reporting was reliable and in the Solomon Islands authority and, from the early stages, assessed assessments both current and long-term These assessments were made outcome. was a likely that outside intervention Australia could not of a government policy position that against the backdrop countries. It is notable that problems of the South Pacific presume to fix the in the Solomon to paint a grim picture of the situation the agencies continued policy background. Islands against this of the looming characterised by a consistent assessment ONA reporting was to transnational Islands, and its increasing vulnerability collapse of the Solomon While DIO was similar in its long-term crime and socioeconomic breakdown. Islands becoming a dysfunctional state, view of the probability of the Solomon calls for ADF intervention. it correctly focused on possible eventual product from the two observation in reviewing Solomon Islands A key of what seemed to be a valuable assessment agencies was the appearance of reporting of the two organisations, balance in the respective focus and level particularly post-June In this regard the Solomon Islands case study 2000. of definitive reporting boundaries serves as an example where the absence of effort. did not appear to create undue duplication on the breakdown of law and order and Overall, reporting from ONA and DIO the Solomon Islands stands in a positive the demise of effective government in from mid-2001, assessments clearly showed in the reporting light. Particularly robust, independent to make the ability of the assessment agencies near region. assessments on issues in Australia’s that “a pro-Jakarta in DIO, lobby exists Report of Investigation—Redress of Grievance submitted of Investigation—Redress Report which distorts intelligence estimates to the extent those estimates are heavily which distorts intelligence estimates words DIO reports what the driven by Government policy… in other Government wants to hear.” produced by DIO (and at all assessments on Indonesia The Inquiry looked by ONA) from 1998 to May 2004. The Inquiry found no evidence of pro-Jakarta or pro-Indonesian assessments. The present situation in ONA and DIO is that there is no evidence of any pressure on either organisation, or pressure within either organisation, to produce pro-Indonesian assessments or to tone down any criticism of it Indonesia. It is clear that analysts are free to call the situation as they see interests. and that their assessments reflect a robust approach to Australia’s the Inquiry notes that it found In view of recent media comments about DIO, Lewincamp, Mr Frank no evidence whatsoever that the current Director of DIO, noted that no other person appearing before the Inquiry asked to be so Inquiry asked before the no other person appearing noted that his lawyers. meet any costs for was not able to the Inquiry accompanied—but Collins was advised the Inquiry that Lieutenant Colonel The Chief of Army of attending the Canberra at Army expense for the purpose authorised to visit for accompanying was not able to meet any expenses Inquiry but the Army Colonel Collins advised exchanges, lawyers for Lieutenant counsel. After several was Nevertheless the Inquiry would not attend the Inquiry. on 16 June that he those in his letter of issues of concern to him, including able to address many Minister. Prime 18 March 2004 to the assessments on Collins has asserted that intelligence Lieutenant Colonel Organisation in 1998 and 1999 were of the Defence Intelligence East Timor perception of a pro-Indonesianinfluenced by DIO’s Australian Government of Defence. This matter was policy and by direction from the Department Mr Blick, of Intelligence and Security, investigated by the then Inspector-General assertion did not stand up to objective who concluded in May 2003 that this bias Mr Blick was unable to find evidence of a systemic or institutional scrutiny. that “the overall picture throughout the in DIO assessments. He commented analyse what was going on and come period is of conscientious attempts to might lead.” to rational conclusions about where that the conclusion of Martin The Inquiry received no evidence to support RANR, in the Toohey by Lieutenant Colonel Lance Collins

report of the inquiry into australian intelligence agencies 48 recent intelligence lessons 49 has exerted pressure of any kind on his analysts to reach particular conclusions to reach particular kind on his analysts pressure of any has exerted be presumed government might to report what the expected analysts or that he is evident that while Mr Lewincamp it the contrary, On hear. to have wanted to he encourages analysts through vigorous internal debate, tests analysts’ views to reach conclusions to express different and robust opinions, to think freely, prudent risks in take policy and to be prepared to irrespective of government their assessments. officer or senior officers Collins has alleged that a DIO senior Lieutenant Colonel access by Australian for a short period in December 1999, deliberately withheld, to a classified intelligence database. as part of INTERFET, forces in East Timor, Mr Blick, investigated and Security, The then Inspector-General of Intelligence that there was no policy decision to this matter and concluded in May 2003 of the Department of Defence, Mr RC withdraw such access. The Secretary General PJ Cosgrove, advised Smith, and the Chief of the Defence Force, and temporary loss of access to one publicly on 21 April 2004 that the brief systems resulted from technical database on one of the communications decision. General Cosgrove has also problems and not from a deliberate policy were not reliant for intelligence Timor pointed out that Australian forces in East including DIO product, was sent solely on that database and that intelligence, forces. Since the current Inspector- via a number of channels to Australian this matter Mr Carnell, is looking again at General of Intelligence and Security, any separate investigation. the Inquiry did not make Estimate of the situation in East Timor The Inquiry has examined the Intelligence Theatre on 8 July 1998 and forwarded completed by Headquarters Australian that the contact officer was Lieutenant to DIO at that time. The Estimate stated that this is a significant (31-page) work Colonel Collins. There can be no doubt that this intelligence estimate raised of analysis. There can also be no doubt difficulties for DIO and the Department of Defence because it discussed matters which were well beyond and outside the scope of an intelligence assessment. The estimate included, for example, comments on domestic Australian political developments, including a state election, disparaging and by Coalition Governments, comments on policies pursued both by Labor such and comments on matters far removed from the subject of East Timor as Wik/native title and greenhouse gases. There is nothing improper about querying existing policy—indeed, in all organisations this should be welcomed an intelligence and encouraged, and there should be more of it. However, estimate intended to guide those preparing forces for combat is hardly the place for combat is those preparing forces intended to guide estimate Service the Australian Public or Defence Force Across the Australian to do so. though some policy, agreed procedure on how to query there is not a single, and forthright is a procedures, but the most direct departments do specify and or the and oral submission to senior officers combination of written in an intelligence estimate. In short, rather than comment responsible minister, of much by the inclusion in the estimate was weakened the valuable material to an intelligence estimate. that was not relevant potential scenarios element the estimate envisaged four In its concluding core Unrest and ABRI of Dialogue heading to Further Breakdown for East Timor—(A) by Indonesia, (C) Agreed limited autonomy and (B) Autonomy imposed Reaction, outcome and (A) as the most likely (D) Independence. The estimate assessed Although in the event the estimate did not prove to be a (D) as the least likely. transpired, the core of the estimate fully accurate prediction of what actually that the estimate was not was a very useful assessment. It is unfortunate made it more useful to DIO and to the prepared in a way which would have unfortunate that there was not a more Australian Theatre. It is also Colonel Collins at the time which might substantial exchange with Lieutenant in a form which would have made have led to his assessment being prepared and DIO correctly and promptly it more valuable. The Defence Department Australian Theatre their concerns with pointed out in writing to Headquarters Headquarters Australian Theatre the estimate but it is not apparent whether to Lieutenant Colonel Collins. made these concerns abundantly clear

report of the inquiry into australian intelligence agencies 50 51 chapter 4 lian chapter 4 lligence community oversight of the austra that all elements of government Our liberal, democratic society demands to be confident that government are accountable. Australians are entitled under the authority of ministers, law, institutions are operating according to efficiency and effectiveness. and that they offer value for money, Indeed, these obligations are, if anything, Intelligence agencies are no exception. than other branches of government. higher in relation to intelligence agencies acts that privacy and to undertake With the capacity to infringe on citizens’ Australians are entitled to expect without specific legislation might be unlawful, properly scrutinised and held to account. that intelligence collection agencies are is the need for parts of the Complicating the requirement for accountability It is not possible to disclose publicly intelligence function to remain secret. without alerting intelligence the sources and methods of intelligence of the agencies would limit their targets. Disclosure of the technical capabilities the identities of some members usefulness. And it is not possible to disclose including counter- them to danger, of intelligence agencies without exposing intelligence attack. The system of accountability and oversight of intelligence agencies therefore differs from other parts of government. Purpose-specific institutions and systems are needed to deal with the tension between accountability and But the need for secrecy should be no bar to a robust, effective and secrecy. Where possible, intelligence occasionally intrusive system of accountability. of agencies should be subject to the same scrutiny mechanisms as other parts should government. Where that is not possible, special systems and institutions vital be in place to ensure a form of accountability that protects the viability of agency capabilities. inte and the establishment of the National Intelligence Services Act 2001 Security Division within the Department of the Prime Minister and Cabinet are of the Prime Security Division within the Department machinery have reforms. But many other parts of the intelligence oversight key was established by Justice remained unchanged—much of the architecture inquiries. Hope, and other elements predate his is the oversight mechanism key At the highest level of government, the (NSC), and the Secretaries Committee National Security Committee of Cabinet National Security Committee, chaired on National Security that serves it. The The sets policy and decides the agencies’ budgets. Minister, by the Prime the Committee considers the each year, NSC has a particular role in oversight: based on advice from the Department performance of the intelligence agencies, Minister and Cabinet. In turn, the Department’s advice draws of the Prime performance of the foreign intelligence heavily on an overview report on the agencies prepared by ONA. In addition to this annual exercise, the Committee considers a range of high level issues on intelligence throughout the year, as part of its broader governance of national security policy. In recent years, there has been a significant increase in the Committee’s work have become pressing programme, as defence issues and counter-terrorism national concerns. The Committee has met at least monthly on average, and there have been periods when it has met on a daily basis. As a result, the Minister and the group of responsible ministers are now much more Prime focused on intelligence, and have developed a vigorous engagement with decisions intelligence issues. One benefit from this has been that ministers take A system that balances oversight requirements and the need to avoid disclosure oversight requirements and the A system that balances governments. The been developed over successive in sensitive areas has of much of the work high degree of oversight, while keeping system provides a it has public elements, out of the public domain. While the intelligence agencies group of ministers and works principally through a select the system necessarily the support of officials. parliamentarians, with intelligence community details the substantial change in the Much of this report is increasingly on focus of the intelligence community in recent years. The is greater; and of public interest in intelligence activities terrorism; the level has increased by nearly 90 per cent since the funding available to the agencies and accountability mechanisms September 11. In some areas, the oversight have also changed—the passage applying to the foreign intelligence community of the Current Accountability Arrangements Accountability Current

report of the inquiry into australian intelligence agencies 52 oversight of the australian intelligence community 53 on intelligence and security matters in a more timely manner than would have timely manner than matters in a more and security on intelligence on counter- the heavy workload On the negative side, previously. been possible immediate but important issues has driven out some less terrorism and defence have not been reports of the intelligence agencies the annual work. In particular, past two years, a National Security Committee for the considered by the situation that is regrettable. related to of National Security Committee activity With this expansion focus for the has come a more concentrated intelligence and security in view and Cabinet. This is particularly so Minister Prime Department of the of the strong whole-of-government of the recent reforms. character of many Minister of the Prime only a small handful of staff in the Department However, role matters. This Department has a key and Cabinet are involved in intelligence government, and a modest reinforcement to play in piloting policy in all areas of matters would be warranted. of its resources and focus on intelligence mechanism applying accountability other branches of government, the key Like to ministers: ONA to the Prime to intelligence agencies is their relationship to the Minister for Defence; and ASIS to the DIO and DIGO Minister; DSD, oversee individually and collectively, Affairs. Ministers, Minister for Foreign and, in many cases, ministerial agencies’ activities, approve their budgets The sense of accountability to approval is required for individual operations. culture of the intelligence agencies. There ministers is deeply embedded in the is no hint in Australia of the semi-detachment from governmental structures and intelligence systems. lines of authority that is a feature of some Assessments Affairs & Trade Dept. of Foreign Office of National provides the first legislative basis Foreign Minister Foreign Defence Imagery Australian Secret & Geospatial Org. Intelligence Service PRIME MINISTER Organisation & Security Group Defence Minister Defence Intelligence Defence Intelligence Intelligence Services Act 2001 Directorate Defence Signals Intelligence Org. Attorney General Australian Security The limitation on some public forms of accountability places a special The limitation on some public forms to the proper functioning of intelligence responsibility on ministers to be alert will assist, fundamentally it is agencies. While other forms of accountability over agencies—on whom much of ministers—with their high level of control scrutinise carefully operational proposals the responsibility will fall. They should broadly on the national interest, should that come to them and, while focusing issues engaged in the work of the consider as well the privacy and probity for exhaustive day-to-dayagencies. They will not have the time investigation should be alert to signs of sub-optimalof the agencies but they and their staff burden This places a heavy efficiency. practice, both in terms of propriety and with other tasks. on ministers, who are inevitably busy reforms in recent years, the accountability framework for most Following ONA and DSD, intelligence agencies has been provided by legislation. ASIS, their ASIO all have legislation that authorises their functions, and circumscribes activities. The for the work of ASIS and DSD. The legislation clarifies the functions of the for the work of ASIS and DSD. and may not, do. In agencies and indicates publicly what the agencies may, legislation renders legal activities that would the DSD and ASIO, relation to ASIS, otherwise not be so. AUSTRALIAN INTELLIGENCE AGENCIES: INTELLIGENCE RESPONSIBILITIES MINISTERIAL AUSTRALIAN

report of the inquiry into australian intelligence agencies 54 oversight of the australian intelligence community 55 Overall, the Intelligence Services Act has been a major step forward in a major step forward Act has been Intelligence Services Overall, the In this and is working well. for ASIS and DSD arrangements accountability ASIS and DSD of a legislative framework for DIGO—like context, the absence the individual liberties that has the potential to infringe on a collection agency attention. deficiency in the system that requires of Australians—is a responsibility, Cabinet oversight and ministerial In addition to legislation, developed reflecting and accountability have been specific forms of oversight of intelligence agencies. the particular needs ASIS and Joint Committee on ASIO, is the Parliamentary amongst these Prime report to the parliament the intelligence agencies unable to DSD (PJCAAD). With a crucial some system of scrutiny by parliamentarians forms in the normal way, part of the oversight system. Joint Committee on Parliamentary The forerunner of the PJCAAD was the Government. The expansion of under the Hawke established in 1988 ASIO, to embrace ASIS and DSD represents the mandate of the Committee in 2001 of the agencies. The activities of the a major step forward in the accountability parliamentary insight into the intelligence Committee have provided a significant the as well as opportunities for the agencies to benefit from community, in the case of Iraq Further, perspectives of experienced parliamentarians. independent scrutiny of a particular issue the Committee provided WMD, without jeopardising the confidentiality of considerable community concern, required for the work of the agencies. reference extend only limits: its terms of The Committee’s mandate has two key agencies, not policy and operational to the budget and administration of the ONA and ASIS and DSD only—not DIGO, activities; and its coverage is of ASIO, reflects the complementary The limitation to budget and administration DIO. role that the Committee serves vis-a-vis the Inspector-General of Intelligence and Security: the Committee focuses on budget and administration, while including of the the Inspector-General deals with the legality and propriety, operational activity of the agencies. ASIS and DSD reflects The limitation of the Committee’s mandate to ASIO, the legislation that a range of historical and policy issues. In relation to DIGO, In established the Committee was prepared before DIGO came into existence. the principal argument has been that, as assessment relation to ONA and DIO, agencies, they do not engage in the sensitive activities that warrant additional Office of National Assessments Act (section 5(1)(d)) provides that ONA should keep under review “activities keep (section 5(1)(d)) provides that ONA should 1977 and bring to the government’sconnected with international intelligence” notice or… coordination, of those activities”. “any inadequacies in the nature, extent is the production of an annual this function way in which ONA undertakes A key This report report devoted to the performance of the intelligence community. examines the performance of collection and assessment agencies and draws broad conclusions about the adequacy of their activities. While, overall, this reporting mechanism is of benefit to government, there resources as ONA’s are features of this arrangement that are not optimal. First, have been stretched, the effort devoted to its intelligence oversight function has suffered. An oversight role for the complex and sensitive foreign intelligence programme of around $500 million per year warrants more than the scant resources that ONA has been able to devote to it in recent years. Second, coordination role, as set out in legislation, are unclear. the terms of ONA’s parliamentary scrutiny over and above that provided by the relevant Senate by the relevant and above that provided scrutiny over parliamentary for reasons set those distinctions, While recognising Committee. Legislation compelling reasons chapter the Inquiry does not find them out in full later in this intelligence agencies. the parliamentary scrutiny of some for continuing to limit for the intelligence mechanism designed specifically Another accountability and Security (IGIS). of Intelligence community is the Inspector-General a standing Royal backing (powers akin to those of With strong legislative assurance helps to provide independent Commission), the Inspector-General ministerial direction, and with under with propriety, that agencies act legally, regard to human rights. they are broadest in relation to ASIO, The Inspector-General’s functions vary: other collection agencies (ASIS and DSD) almost as wide in relation to the two can conduct an The Inspector-General and more limited for ONA and DIO. for a minister responsible Minister, Prime inquiry in response to a request by the direction from in relation to some agencies, without any specific an agency or, inquiries in Inspector-General can make ministers. In certain circumstances, the authority includes complete response to a complaint. The Inspector-General’s powers to require evidence. The Inspector- access to agency records and strong in parliament, on the work of the an annual public report, tabled General makes and number of complaints received. office, including details on the nature to the foreign intelligence community, A further important mechanism, unique The is the oversight role performed by ONA.

report of the inquiry into australian intelligence agencies 56 oversight of the australian intelligence community 57 Inquiry’s Arrangements in Relation to Accountability Findings in the Australian intelligence community Overall, the accountability arrangements is vigorous The National Security Committee of Cabinet are working effectively. well in practice. The Act has worked and engaged. The Intelligence Services Joint Committee (by reviewing administration and expenditure) and Parliamentary Security (by reviewing operations and of Intelligence and the Inspector-General the oversight of the And of scrutiny. activities) provide complementary forms ONA provides insights into the effectiveness intelligence community exercised by draw for their own management. of the agencies, on which ministers can in current arrangements that a number of deficiencies There are, however, warrant attention. the purview of the it is anomalous that DIGO does not come under First, of intelligence, it has the capability Intelligence Services Act. As a collector its actions could breach to impinge on the privacy of Australians and, possibly, DIGO’s ASIS and DSD, Australian laws. It is therefore appropriate that, like mandate be set out in legislation, so that the community can have confidence it is appropriate that about what its functions do, and do not, involve. Similarly, in the same Joint Committee DIGO come within the purview of the Parliamentary way that ASIS and DSD do. should be expanded Joint Committee the mandate of the Parliamentary Further, This reform would widen the as well as DIGO. to encompass ONA and DIO, scope of parliamentary oversight to provide comprehensive coverage of Third, there is no set mechanism in the Australian intelligence community to assist intelligence community in the Australian is no set mechanism Third, there presents its own performance assessing And, finally, efforts. coordination ONA’s of its role in reporting on and can undermine the credibility complexities for ONA warrant other intelligence agencies. These shortcomings the performance of of reforms is proposed later in this chapter. attention, and a set annual audits of the Office undertakes the Australian National Audit Finally, These are similar to audits of other of ONA, ASIO and ASIS. financial statements audits of the Department of It conducts agencies generally. federal government and DIGO. DIO of DSD, consider the financial operations Defence which broadly of programmes occasional performance audits undertakes The Audit Office also normally as part of broader cross-relevant to the intelligence agencies, government work on security issues. Australia’s intelligence agencies. In turn, that would enhance confidence would enhance confidence In turn, that intelligence agencies. Australia’s agencies of intelligence that the full range and the public in the parliament extension of the senior group of parliamentarians. The is accountable to a of the will contribute to the better understanding Committee’s mandate and the broader community. agencies in the parliament scrutiny of ONA and parliamentary ASIS and DSD, As is the case for ASIO, matters. It should to budgetary and administrative DIO should only extend for government. of the assessments that they produce not include the content disclosed in Senate that officials provide to ministers is not Just as the advice should the judgments of assessment agencies Committee hearings, Legislation Opening assessments to scrutiny not be subject to parliamentary scrutiny. to provide the instinct amongst assessors by parliament would also weaken is vital for good assessment. However, forthright advice for government, which produce their assessments is an area the processes by which ONA and DIO scrutiny. which could be open to parliamentary Joint become subject to the Parliamentary In recommending that DIO and ONA it that some of the factors which make Committee, the Inquiry is conscious to be subject to the Committee are not ASIS and DSD appropriate for ASIO, acts agencies, they do not undertake relevant to DIO and ONA. As assessment be illegal. Nor do ONA and DIO impinge that might, without specific legislation, the functioning of Australia’s on the privacy of Australian citizens. However, public interest and scrutiny than it intelligence agencies is a matter of greater is now strong in relation to assessment has been in the past; and that interest In these circumstances, it is appropriate agencies as well as collection agencies. public should enjoy greater confidence that the parliament and, through it, the as in particular, ONA Moreover, in the activities of the assessment agencies. intelligence structure, and which has an the agency at the peak of the foreign are. oversight role, should be subject to scrutiny in the way that other agencies The Inquiry is also conscious that the budget of ONA is already available for public scrutiny in a way that the budgets of the collection agencies are not, so and for that reason the argument for parliamentary oversight of ONA is not pressing as it is for agencies whose budgets are not disclosed. While scrutiny a degree of redundancy in Joint Committee may involve by the Parliamentary terms of oversight, that redundancy will be of benefit if it contributes to public confidence in the intelligence system.

report of the inquiry into australian intelligence agencies 58 oversight of the australian intelligence community 59 RECOMMENDATION: ASIS and DSD Committee on ASIO, Joint of the Parliamentary The mandate intelligence agencies—that is, extended to all of Australia’s (PJCAAD) should be ONA,it should cover also as it at present covers DIO and DIGO on the same basis committee as parliament may consider renaming the The ASIS and DSD. ASIO, (PJCIS). Committee on Intelligence and Security Joint the Parliamentary Security of Intelligence and the Inspector-General The Inquiry found that of the agencies. function in the system of accountability performs an important is the power to the roles of the Inspector-General Most valuable among penetrating character into the conduct of the agencies. The investigate deeply accountability systems. Australia’s of those powers is a strong feature of is not of the Inspector-General the Inquiry found that the power However, recent addition it is anomalous that the most sufficiently broad. In particular, governing is not covered in the legislation DIGO, to the intelligence community, activities. Although an informal arrangement has been the Inspector-General’s formal coverage to monitor DIGO, settled that allows the Inspector-General of ASIS and DSD) should be provided of DIGO (comparable to the coverage by legislation. the Inquiry recommends that the Inspector-General should have Further, and DIO without ministerial referral. the authority to initiate inquiries into ONA needs the approval of the appropriate minister the Inspector-General Currently, agencies. While it is fully understood before undertaking inquiries into these the capacity to infringe the liberties that assessment agencies do not have agencies do, it is still appropriate for of individuals in the way that collection There is to have authority in relation to ONA and DIO. the Inspector-General of the assessment agencies, and significant public interest in the activities recent cases have highlighted the questions that can arise about the propriety of the assessment agencies’ activities, particularly from within their own ranks. It would be difficult for these questions to be dealt with by the normal public is service processes, in view of the sensitivity and security issues involved. It to therefore appropriate for a mechanism to be in place for the Inspector-General his initiate his own inquiries into the work of DIO and ONA, on a similar basis to role in relation to the collection agencies. The mandate of the Inspector-General activities; to the propriety and legality of ONA and DIO’s relate should, however, and should not extend to judgments about the accuracy of their assessments. RECOMMENDATIONS: formalised DIGO should be accountabilities of and ministerial The functions Act 2001. Similarly, to the Intelligence Services in legislation by amendments Act 1986 should be amended of Intelligence and Security the Inspector-General that which applies to of DIGO on a basis comparable with to include scrutiny DSD and ASIS. and Security should of Intelligence Inspector-General The mandate of the own discretion into IGIS to initiate inquiries at his or her be extended to allow consistent with ONA and DIO without ministerial referral, matters relating to ASIS and DSD. in respect of ASIO, the IGIS jurisdiction their individual agencies. ONA In the Australian system, ministers direct identifying areas of improvement is responsible for coordination, and for responsibility is an important one. ONA’s in the intelligence community. cannot be expected to exercise Ministers, with other heavy responsibilities, deep understanding agencies: ONA’s comprehensive daily oversight of their provides a useful tool to assist ministers. of the foreign intelligence community scarcity of resources, ONA’s a range of reasons, but not least for For optimally in recent years. In Chapter 7 coordination role has not been fulfilled of funding for ONA. That is principally the Inquiry recommends an expansion but additional resourcing is also required to strengthen its role in assessments, its oversight role. to ensure that ONA properly acquits and its coordination mandate oversight role also needs to be clearer, ONA’s the ONA Act is obscure and does The wording of section 5(1)(d) of stronger. and reporting on the responsibility for monitoring not clearly articulate ONA’s strong the Act does not provide ONA with the agencies’ performance. Further, that it needs. Given the complex character mandate for community coordination role that ONA needs to play in supporting of the coordination task and the key the management of the intelligence community by ministers, a stronger coordination mandate is required. RECOMMENDATION: The Office of National Assessments Act 1977 should also be amended to community coordination role in section 5(1)(d). strengthen ONA’s ONA also needs additional government machinery to assist it in its coordination role. The current mechanism by which the Director-General of ONA can consult issues affecting the intelligence community is an with colleagues on key

report of the inquiry into australian intelligence agencies 60 oversight of the australian intelligence community 61 informal meeting known as the Heads of Intelligence Agencies Meeting (HIAM). Agencies Meeting the Heads of Intelligence known as informal meeting heads, contact among agency informal has a role in maintaining While HIAM of ONA is to is needed if the Director-General a more formal mechanism and and coordination role in a more thorough his monitoring undertake professional way. committee, which proposes the establishment of a formal The Inquiry therefore Committee (FICC). Intelligence Coordination the Foreign could be known as the heads of of ONA, the FICC would include Chaired by the Director-General and representation Police, and the Australian Federal the intelligence agencies Foreign Minister and Cabinet, Defence and of the Prime from the Departments Affairs and Trade. of ONA function of the FICC would be to assist the Director-General The key function. The Committee should monitoring and reporting in his coordinating, capability also consider cross-community issues including intelligence policy, has also identified a wide range of development and resources. The Inquiry in Chapter 8, that the FICC specific issues, listed in the recommendations to assist in the better coordination should address at an early opportunity community. and management of the intelligence report to the Secretaries Committee on The FICC would, where appropriate, National Security Committee of Cabinet. National Security and through it to the and not replace, existing Its work on resource issues would complement, coordination of which would continue budget and policy processes, overall and Cabinet. The Committee Minister to rest with the Department of the Prime functions of HIAM, which would some of the more formal would undertake revert to meeting in an informal way. RECOMMENDATION: (FICC) should be established Intelligence Coordination Committee A Foreign of ONA comprising the heads under the chairmanship of the Director-General DIGO and the AFP and Deputy Secretary-level DSD, DIO, ASIS, of ASIO, Minister and Cabinet, representation from the Departments of the Prime The FICC should assist the Director- Affairs and Trade. Defence, and Foreign monitoring and reporting General of ONA in undertaking his role in coordinating, and should on the performance of the Australian foreign intelligence community, capability consider cross-community issues including intelligence policy, development and resources. The FICC should report to the National Security Committee through the Secretaries’ Committee on National Security. ONA’s coordination role should be complemented by a less intensive, but still by a less should be complemented coordination role ONA’s and Cabinet Minister Prime Department of the involvement by the engaged, have the detailed management. While ONA will in intelligence community Minister of the Prime the Department community, knowledge of the intelligence a particular and take have primacy in advising ministers, and Cabinet should Minister and of the Prime The Department funding. interest in issues of matters, as ONA, with its deep background in intelligence Cabinet should see require decisions by issues of community management a resource to use when issues that deserve should also have a role in highlighting government. But ONA the Department’s action, and on which ONA will require further government In short, the relationship between the two support to pilot through the system. management should be complementary institutions on intelligence community Minister and Cabinet should draw Prime and symbiotic—the Department of the should use the Department’s knowledge base, and ONA authority in on ONA’s reforms. government to pursue key role reporting at present is ONA’s A weakness in the system of performance well as that of the rest of the community. in assessing its own performance, as wider performance reporting systems in This arrangement is out of step with performance, and guide to ONA’s government, provides at best a questionable self-reporting role role in reporting on other agencies. ONA’s ONA’s weakens Minister and Cabinet of the Prime should be abolished. Instead, the Department analysis of ONA’s responsibility for undertaking a short, focused should take own and timed to coincide with ONA’s performance designed for ministers, report on the broader intelligence community. RECOMMENDATION: Minister and Cabinet should undertake an The Department of the Prime current role in reviewing performance, replacing ONA’s annual review of ONA’s its own performance. intelligence warrants Beyond all these standing measures, an evolving field like the occasional external examination. Such an examination can assist in managing intelligence agencies by bringing fresh perspectives and assurance that systems are modern and effective. As a supplement to the full suite of accountability arrangements set out above, ministers may wish to consider the merits of an outside review every five to seven years.

report of the inquiry into australian intelligence agencies 62 oversight of the australian intelligence community 63 Priority Setting Arrangements Priority intelligence system. mechanism is vital for a healthy A strong priority setting is properly ensures that the intelligence community Effective priority setting ministers. It gives judged to be priorities by Australian focused on matters information they the clearest identification of what collectors of intelligence risky covert It ensures that expensive and potentially are expected to collect. is genuinely needed. And an except where it collection is not undertaken into an agreed set of targets the effective priorities system helps to sort disparate needs of various parts of government. would have value in any system While a rigorous priority setting system important for intelligence. Given of information collection, it is particularly sensitivities potentially involved, the civil liberties issues and international covert collectors should target. ministers should agree on what it is that level intelligence priorities are set by the In the Australian system, the highest which considers national requirements National Security Committee of Cabinet, The Committee also adjusts these as a group at around 18-month intervals. require. Overall, the Cabinet-approved priorities in the interim, as developments community. source of guidance for the intelligence priorities serve as a key work goes on to ensure that Below this high-level consideration, considerable level what information they are collection agencies understand at a detailed of officials, chaired by ONA, spells out expected to collect. A monthly meeting collectors are expected to deliver on requirements in detail and indicates which particular requirements. In addition, these meetings settle a list of mandatory topics for the month, on which all collectors are expected to gather intelligence, wherever possible. This provides an additional element of flexibility and allows requirements to be met. intelligence short-term Beyond these formal priority setting processes, the collectors and their clients have developed a range of informal means by which they exchange information the on their needs. The Inquiry heard from a number of intelligence agencies high value that they place on these informal means of guiding collection effort. RECOMMENDATION: review every to periodic external should be subject community The intelligence five to seven years. Overall, the national priority setting process is working well. It engages setting process is national priority Overall, the of the weight a clear indication and gives collectors appropriately, ministers and linkages collection objectives. The distinctions to be placed on different and those providing delivering high-level guidance, between the processes to devote to the Ministers have limited time finer detail are appropriate. of intelligence and it is appropriate that the details priority setting process, of informal feedback with by officials. The processes requirements are dealt to be working well. part of the system, and they too seem and tasking are a vital National if the be made to the system, however, An improvement would priorities more of Cabinet were to consider intelligence Security Committee the system would benefit As set out in detail later in this chapter, frequently. into the reporting and resource allocation from working to an annual cycle, to fit annually). Setting priorities annually will mechanisms (both of which are done in intelligence collection, which the also allow the identification of shortcomings to inform the development of priorities for reporting processes should highlight, the coming year. of a link to the absence is strong, While the national priority setting process weakness. A separate system which set the priorities for Defence clients is a clients has fallen into disuse and, intelligence priorities specifically for Defence to the national priority system. The effect when it operated, it contained no link Defence priorities is that ministers do not of maintaining separate national and weight to be given to issues in the have the opportunity to judge the relative the absence priorities. Further, Defence priorities and those in the national priorities system means that individual of an integrated Defence and national between Defence and national priority collectors are left to decide what takes priorities setting system is to ensure priorities. An important function of the into the difficult position of deciding that collectors themselves are not forced between the needs of different clients. remedy this, the Inquiry recommends that the national and Defence priority To systems be integrated. The integrated priorities system should generally follow the style (in terms of categories and level of detail) established for the national priorities system. The succinct and focused style of the national priority system Effort is a considerable advantage of the current system, and should not be lost. should be made to avoid it becoming cluttered with unnecessary detail and and jargon. The integrated priorities system should be prepared jointly by ONA Minister and Cabinet, Defence, in consultation with the Department of the Prime

report of the inquiry into australian intelligence agencies 64 oversight of the australian intelligence community 65 With more than $500 million invested each year in foreign intelligence, the With more than $500 million invested effort of the agencies is appropriately government needs to be sure that the by which agency budgets are directed. This section analyses the mechanisms performance reporting and budgeting, settled, and the relationship between actual resources While this chapter deals with systems, the priority setting. devoted to each intelligence agency are dealt with in Chapter 7. management in the intelligence community is considered in two Resource ways—agencies’ financial allocations are settled as part of the normal budget process; and a separate report provides ministers with a comprehensive picture of the funding being applied across the intelligence community. the budgets of ONA and ASIS (as well as ASIO) are settled by Each year, DSD and DIGO ministers as part of the budget process. The allocations for DIO, form part of the Defence budget, although specific issues relating to these Assigning Resources to Priorities for consideration on an annual basis by the Foreign Intelligence Coordination basis by the Foreign on an annual for consideration the National Security and Committee on National the Secretaries Committee, of Cabinet. Security Committee RECOMMENDATION: the national Minister and Cabinet should ensure the Prime The Department of by Cabinet annually. systems are integrated, and approved and defence priorities that collection set, continuous analysis of the success Once priorities are of their role, targets is also important. As part against key agencies are having gaps in coverage, should identify areas where there are intelligence analysts to ensure Further, agencies are aware of those gaps. and ensure that collection the intelligence community at a that the collection effort is managed across Intelligence Coordination Foreign senior level, there is a role for the proposed agencies are producing against priorities, Committee in analysing what collection under review the success of should keep and what gaps are left. The committee and ensure that government targets, key collectors in producing intelligence on management strategy. collection needs are met by a community-wide RECOMMENDATION: Intelligence Coordination Committee should develop and The Foreign collection management strategy. implement a community-wide a) advise the National Security Committee annually on the performance of the foreign intelligence community b) advise the National Security Committee on the appropriate priorities for the agencies, based on advice from ONA agencies are occasionally considered at the National Security Committee Security Committee at the National are occasionally considered agencies Committee. Review and the Expenditure of Cabinet processes also budget setting measures, current Beyond these regular operating across the intelligence community as a group, give recognition to has in recent years Security Committee of Cabinet portfolios. The National budgets of the agencies (the resource report) examining the considered a report to scrutinise budgets across and giving ministers the opportunity together, portfolio boundaries. way that the well—the effective have worked Overall, these arrangements for greater intelligence were used to respond to the need budget mechanisms for In response to the substantial need support since 2001 is noteworthy. the September 11 and Bali attacks, greater intelligence resources following for with targeted packages of resources government responded flexibly, they could add to government. agencies, tailored to the additional value to use the resource report that there is scope The Inquiry found, however, needs of the agencies, and to make better to advise ministers on the budget to be made within and across recommendations on savings and efficiencies Minister and role for the Department of the Prime agencies. There is a key the resource report as a mechanism Cabinet, with the help of ONA, to develop in resource allocation (including from one to give ministers options for changes could flow through to the formal budget intelligence agency to another), which also focus on the capital projects being process. The resource report should Department of Defence, and provide by intelligence agencies in the undertaken improvements relate to the wider advice to ministers on how these capability intelligence effort. RECOMMENDATION: should take an enhanced role Minister and Cabinet The Department of the Prime using ONA’s in assisting Ministers manage the foreign intelligence community, knowledge of the community as a resource. The Department of the Prime Minister and Cabinet should:

report of the inquiry into australian intelligence agencies 66 oversight of the australian intelligence community 67 c) undertake the central role for advising the National Security Committee Security Committee for advising the National the central role c) undertake community. foreign intelligence needs of the on the resource report on the performance of the agencies’ annual reports and ONA’s by the National Security Australian intelligence community considered the Department of the Prime Committee of Cabinet with advice from Minister and Cabinet any gaps identified in the performance review of national priorities (reflecting with proposals for changes in agency reporting) and the report on resources, projects budgets and treatment of capital investment consideration of the report agency budget bids, reflecting ministers’ on resources The Inquiry found that while the budget, priority setting and annual reporting while the budget, priority setting The Inquiry found that the three processes well, the absence of strong links among processes all work is to have a strong practice in financial management is a weakness. Optimal and planning and processes for reporting on past activities, connection between place in the intelligence activities. The systems currently in budgeting for future provide this strong connection. community do not for performance reporting, Inquiry recommends a new cycle remedy this, the To to fit the broader budgeting that is integrated, and designed priority setting and the Inquiry proposes cycle. Specifically, government reporting and budgetary the following cycle: SEPTEMBER–OCTOBER NOVEMBER–DECEMBER JANUARY–FEBRUARY Minister and Cabinet, of the Prime This cycle should be led by the Department of with the assistance of ONA and, for the resource elements, the Department Minister and Cabinet and Administration. The Department of the Prime Finance should also ensure that the performance reporting process feeds into the priority setting process; and that both the performance reporting and the priority setting processes feed into the resource report and budget processes. Minister and Cabinet has a vital role to play the Department of the Prime Further, time in ensuring that these processes are in line with a realistic appraisal of the that ministers can devote to intelligence community management. to inform the individual budget processes of each agency. to inform the individual budget processes a) The annual reports of agencies and ONA’s report on the agencies’ ONA’s a) The annual reports of agencies and considered by the National Security performance should be produced and Committee promptly. of intelligence gaps b) Annual reports, in particular the identification process, which should be therein, should inform the priorities setting undertaken annually. processes should inform the c) Both the reporting and priority setting of the resource report. National Security Committee’s consideration each year in sufficient time d) The resource report should be considered Parallel to the systems for reporting on and resourcing foreign intelligence, there foreign intelligence, on and resourcing for reporting to the systems Parallel be practical There would security intelligence. system in place for is a similar relating to ASIO reporting and resource issues benefit in Cabinet considering foreign intelligence. it considers those issues relating to at the same time as systems, and ensure better governance between the two That would promote intelligence issues between the foreign and security that complementary with in parallel. communities are dealt RECOMMENDATIONS: that the foreign Minister and Cabinet should ensure the Prime The Department of intelligence community’s setting and resource allocation priority reporting, mechanisms are aligned. Specifically: The Department of the Prime Minister and Cabinet should ensure that ASIO’s The Department of the Prime is undertaken in parallel with the process performance and resource reporting for the foreign intelligence community. outlined in the previous recommendation

report of the inquiry into australian intelligence agencies 68 69 chapter 5 chapter 5 ility of the current division The clarity of the role played by each agency in the Australian intelligence The clarity of the role played by each is one of the together with the minimal duplication of capability, community, has five agencies focused on strengths of the Australian system. Australia DSD and DIGO), agencies (ASIS, foreign intelligence. There are three collection security Australia’s and DIO). ASIO, and two with an assessment role (ONA well incorporates both collection and assessment, as intelligence agency, as policy formulation and advice. community works effectively and In general, the Inquiry found that the While many factors contribute to this, it is aided by minimal cooperatively. successive governments’ lack of duplication of functions. It also reflects insistence on broader whole-of-tolerance for bureaucratic infighting and government approaches. between the agencies, canvasses some This chapter describes areas of overlap how the foreign intelligence agencies options for structural change, and outlines and with other closely interact with their security intelligence counterpart, ASIO, related agencies. The inclusion of sections on AIC support to the Australian and interaction on counter- Police, and the Australian Federal Defence Force terrorism, illustrates the significant broadening in all agencies’ mandates. The Inquiry sought a wide range of views, both from within government and from external commentators, on the continuing validity of the current division of labour among the intelligence agencies. Many commented on issues related function, particularly on the effectiveness of its support for the ADF. to DIO’s suitab of functions among agencies Clarity of Roles Within the realm of foreign intelligence, the separation between collection and Within the realm of foreign intelligence, The collection agencies do not produce assessment agencies is clearly defined. between analysis (necessary to make assessments, and although the boundary can be blurred at the edges, the sense of the collection) and assessment boundary have been resolved to date periodic issues which arise around this with no substantial uncertainties. the customer community for retaining The Inquiry found strong support among and assessment activities. At both a clear separation between collection clarity between unassessed intelligence ministerial and senior official level, the opinion of an assessor was highly valued. and that which was the judgment or to institutionalise integrity The distinction is also an important mechanism in which collection agencies are not of assessment, by creating a structure to the material they collect. responsible for assigning value or significance separation, the Inquiry’sNotwithstanding the value of this clear case study into Iraq found that there was a need for greater and more dynamic interaction to between collectors and assessors, and more information from collectors assist the assessment community to attribute appropriate weight to human- source reporting. Separation Between Collection and Assessment Separation Between Collection Some saw a need for greater co-ordination of counter-terrorism related co-ordination a need for greater Some saw of counter-terrorism agency related to raised any major concerns Almost none, however, functions. of responsibilities had a proposal for a major reallocation roles, and only one ONA and DIO. apart from some rationalisation between among the agencies, of a post 2001 by and large, in meeting the demands The agencies’ success, tempo testifies and the greatly heightened ADF operational security environment and increasing the existing architecture. But new roles to the soundness of interfaces and about greater challenges in managing demands have brought demands, and the Each agency is evolving to meet the new relationships. the structure of the AIC. for fundamental change to Inquiry found no requirement

report of the inquiry into australian intelligence agencies 70 suitability of the current division of functions among agencies 71 The Assessment Agencies The area of greatest overlap within the community exists between the two The Inquiry received a broad range of assessment agencies, ONA and DIO. inputs on this issue, and considered many arguments for and against the continuation of the current level of overlap. With the group of three foreign collectors, there is little overlap and no foreign collectors, there is little With the group of three or lack This clarity, about the division of labour. significant disagreement between important factor supporting collaboration of overlap, is also an expertise, each little or no duplication of function or the agencies—with cooperation to achieve an optimal outcome. values the others’ areas where there remain a small number of Within this environment, approaches and where collaborative are less clear, the agency boundaries advances have duplication or conflict. Technological are essential to avoid other members of the common ground between ASIS and created an area of a project to examine the DIGO and DSD have recently commenced community. fusion, with imagery and geospatial benefits of signals and imagery intelligence analysts to address common analysts working alongside signals intelligence intelligence problems. of any of the collection agencies. The Inquiry found no case for the merging as the two ‘technical’ and DIGO, There are periodic suggestions that DSD The similarity between the two agencies Defence agencies, might be combined. integration ignores some major is limited, and the argument supporting skill sets needed to prosecute the differences, including the very different arrangements which argue strongly sigint and imagery tasks, and partnership for continued separation. there have also been of this Inquiry, Although somewhat outside the scope as two domestically and the AFP, suggestions from time to time that ASIO The Inquiry sees no compelling argument focused organisations, should merge. and DSD critical factors against it. Like in favour of such a decision, and strong intelligence and law enforcement are the similarity is superficial. Security DIGO, two distinct functions with separate methodologies, networks of relationships and constituencies. The Collection Agencies The Collection The justification for overlap lies primarily in the value of contestability, which value of contestability, lies primarily in the for overlap The justification the extent of Inquiry finds that 6. In essence, the in detail in Chapter is covered and DIO is not the by an area of overlap between ONA contestability provided of global to achieve the desired result. In an environment most effective way critical role in where intelligence is playing an increasingly asymmetric threat, and where the ADF is its people and its interests from attack, securing Australia, a dollar spent wastefully operational tempo for decades, maintaining its highest more collection or more thoughtful not spent on, say, on overlap is a dollar of intelligence analysts— the small pool more importantly, assessment. Even to meet the new resource as all agencies expand an increasingly scarce used optimally. government demands—is not being to a widely expressed concern about The second significant factor relates to meet the needs of a more operationally whether DIO is appropriately focused There was a perception among those active Australian Defence Force. to lift the analytic successful campaign interviewed by the Inquiry that DIO’s quality of the agency’s output had resulted in too great a focus on the , at the expense of its Defence customer set, including those outside customers. and operational Australian Defence Force ASIS Joint Committee on ASIO, the Parliamentary In its report into Iraq WMD, and suggested may be under-resourced, and DSD noted its concern that ONA commensurate with the demands being that either ONA be resourced at a level between the two assessment agencies placed upon it, or that a clearer division on military and strategic issues, and ONA be instituted, with DIO concentrating looking at economic and political matters. impossible to effect. A review of The latter suggestion would be virtually reports lend themselves easily to such ONA and DIO reporting shows that few categorisation—economic and political matters are often also strategic, and it military issues often have political ramifications. But more fundamentally, value ONA’s role as the peak intelligence assessment agency. overlooks ONA’s lies in its capacity to consider and integrate all relevant factors into a single were its mandate to be assessment. Its role would be significantly weakened expertise ONA should, nonetheless, draw on DIO’s restricted in such a way. where it deals with defence issues. The Inquiry found that the committee’s first option, that of resourcing ONA will produce a better result. Chapter 7 sets out a proposed new adequately,

report of the inquiry into australian intelligence agencies 72 suitability of the current division of functions among agencies 73 AIC Support to the Australian Defence Force AIC Support to the Australian since 1999 Australian Defence Force The increased operational tempo of the the support to operations. For has tested the effectiveness of intelligence concerned with, the overall picture is strategic-level agencies the Inquiry is involvement in UN- since Australia’s good, with significant progress made following East Timor’s independence ballot. endorsed operations in East Timor direct support requirements The agencies responded well to the increasing of the ADF and have made good use of the opportunities presented by ADF Afghanistan, Iraq and the Solomon participation in operations in East Timor, Islands to develop and expand their capabilities. It is important to note, of course, that the extent to which the agencies’ efforts can be assessed is shaped by the ADF since that by the nature of the four major operations undertaken and the Solomon Islands time. The two operations led by Australia in East Timor not combat, operations. Where Australia participated were peacekeeping, in combat operations, the overall intelligence system for the operation was leaving critical components of the defence planned and managed by the US, intelligence system untested in that environment. structure for ONA, with close to a doubling of resources, giving greater depth resources, giving greater to a doubling of for ONA, with close structure such as counter- global issues near region and priority capacity on the to ONA’s and an enhanced to exploit open source material, terrorism, greater capacity role. community management be recommends in Chapter 7 that its mandate case, the Inquiry In DIO’s on producing assessments on foreign modified to focus DIO and advice in and on intelligence assessment, plans and strategic intent, support of ADF operations. areas of overlap focus, there will inevitably remain Despite this narrower be significantly reduced. although these should DIO, between ONA and managing this overlap is designed The recommendation in Chapter 6 on remains while eliminating waste. to extract maximum value out of what at the strategic assessment end of Corresponding to the overlap with ONA roles of DIO and business, there is a similar lack of clarity between the DIO’s centre, the Joint Operations Intelligence Defence’s operational-level intelligence The Inquiry support to the ADF. Centre, in the delivery of military intelligence a business indicate either end of DIO’s believes that the boundary issues at functions. major need for some rebalancing among DIO’s Much of the comment the Inquiry received on AIC support to the ADF focused AIC support to the received on comment the Inquiry Much of the One of the of operations. agencies in support played by collection on the role agencies has been the employed by the collection most effective mechanisms Liaison officers officers with operational headquarters. deployment of liaison their home agencies, electronic reach-back access into typically deploy with reporting and from the full range of strategic-level enabling them to draw deployments such as Afghanistan and out-of-area For database information. provide a critical link to allied collectors. Iraq, liaison officers the protection of provided an important input to Deployed liaison officers the deployed intelligence operations. They also assisted Australian forces during assessment of operations in Iraq. staffs to develop and maintain an independent these deployments, collection agencies Building on the lessons learnt during particularly in the way they integrate can continue to improve their support, their efforts to supporting the deployed with the military headquarters and direct integration into Effective participation in exercises and earlier commander. improve their support to operations. the planning process will help agencies operations is the ‘high deployment of liaison officers during end’ of the Forward provide services But both DSD and DIGO collection agencies’ support to the ADF. case, this comes ADF needs. In DSD’s or products on a routine basis that serve ADF and allied assets. Its regular in the form of sigint support to operational feeds while aimed primarily at strategic-level customers, formal reporting, into DIO all-source broad ADF planning needs. assessments which support such of direct utility to the ADF, DIGO produces a range of regular products areas, contingency support packages, as digital mapping support of offshore three-dimensional products visualisation packages, and graphical and animated to support operational planning and activities. The assessment agencies’ relationship with the ADF is of a different nature. ONA product is of utility to the ADF only at the strategic level. DIO, Appropriately, units, by contrast, has as its primary customer ADF operational commanders and for whom it produces a range of products including formal assessments, military capability studies, country studies, and formal briefing products and services. It also maintains databases on foreign military equipment, capabilities and facilities to service both Australian requirements and partnership arrangements. and the three Service chiefs, who aside the Chief of the Defence Force Leaving might be described as strategic customers in a peacetime context, the Inquiry

report of the inquiry into australian intelligence agencies 74 suitability of the current division of functions among agencies 75 AIC Support to the Australian the Australian Federal AIC Support to increasing steadily over the AFP and the AIC has been The relationship between trafficking and people in relation to international drug the past decade, primarily the AFP and agencies expect this Both and now counter-terrorism. smuggling, upward trend to continue. The AFP Commissioner’s some attendance at Agencies Meeting has been a useful elements of the Heads of Intelligence but needs to be extended to full mechanism to support closer interaction, for cooperative efforts. Chapter 4 membership to exploit fully the opportunities of HIAM be replaced with a new recommends that the substantive elements and that the AFP Commissioner Intelligence Coordination Committee, Foreign should be a full member of that committee. on the foreign intelligence agencies, While this report is focused primarily the AFP and ASIO characterise their it is important to note here that both relationship as ‘never closer’. during The close cooperation, which intensified was consolidated further by the preparations for the Sydney Olympics, While acknowledging the challenges Australian response to the Bali bombings. that exist in the two agencies, both inherent in the different roles and cultures and effective cooperation. leadership teams are committed to open between the AFP and the intelligence Despite the strengthening relationships of agencies, there remain some significant challenges in balancing the needs the intelligence and law enforcement communities. The first of these relates to use of intelligence for prosecutions. This issue brings the different roles of the law enforcement and intelligence communities into stark focus, where the latter’sis dependent on protecting its success sources, methods and capabilities from public knowledge in order to guarantee continued access, and the former’s success depends on revealing information of appropriate security clearances, restrictions to secure a prosecution. Lack on release of intelligence to overseas counterparts and problems in providing found ADF operational commanders had questions about DIO’s role in about DIO’s had questions operational commanders found ADF its focus a good job, but saw DIO was doing them. Most believed supporting their needs as not operational level. While few described being at the strategic, a criticism, but rather this was usually not voiced as being met by DIO product, component the Iraq conflict was an important work during as a fact. DIO’s acclaim. on Iraq, and has received wide of advice to government for AFP officers, better and earlier consultation with intelligence agencies, for AFP officers, better and earlier consultation Interaction on Counter-Terrorism five foreign intelligence agencies The primary focus of this Inquiry is the them. This is a complex story, and the governance systems that support defence, foreign, Defence Force, involving intelligence that feeds the Australian years ago, and our trade objectives. Five immigration and security policy, on terrorism, which then had a relatively the story would have barely touched assessment priorities system. low rating in the national foreign intelligence for the with terrorism the top target dramatically, the scene has changed Today, is not at the centre of the work of this Counter-terrorism intelligence community. institution, counter-terrorism key Australia’s whose remit extends to ASIO, Inquiry, only in so far as it is necessary to analyse the work of the other agencies. in the wider Australian community on the terrorist threat given the focus However, and the substantial new resources devoted to it by government in recent times, it is appropriate to offer a level of examination of those new arrangements. and greater efforts to develop plausible cover. and greater efforts to develop plausible optimised which is not connectivity, The second challenge relates to electronic core of the AIC. This issue is covered in to support interaction outside the inner between the agencies in chapter 7. the discussion of electronic connectivity aspects of transnational crime elevated The AFP is also seeking to have certain to increase the provision of intelligence in priority with the collection agencies on issues such as international drug trafficking. plausible cover for intelligence have also limited the utility of AIC-derived have also limited cover for intelligence plausible in some cases. intelligence will be with the use of intelligence for prosecutions Issues associated (Criminal passage of the National Security Information ameliorated with the passed, the parliament. This legislation, if Bill, currently before Proceedings) some AIC-derivedwill allow the use of without being subject to public material offences. While this proceedings relating to serious criminal disclosure in court is undertaking a number overcoming the problem, the AFP will go some way to from the strategic steps to ensure better use of intelligence of complementary intelligence training focus on internal security processes, agencies, including

report of the inquiry into australian intelligence agencies 76 suitability of the current division of functions among agencies 77 The Counter-Terrorism Information Oversight Committee (CTIOC), which Information Oversight Committee (CTIOC), The Counter-Terrorism exchanges information and identifies gaps in intelligence collection and develops requirements. The high priority of counter-terrorism has given rise to considerable change given rise to considerable has priority of counter-terrorism The high in the Security Division The creation of a National institutions. in government recognised that the Minister and Cabinet in mid–2003 Prime Department of the and culture of public places new demands on the structures threat of terrorism support to the Prime division provides advice, briefing and administration. This and operations, security issues including defence policy Minister on national and certain border protection counter-terrorism, intelligence, non-proliferation, across Australian issues. In doing so, it coordinates criminal law enforcement and territories. and, as appropriate, with the states government agencies has the priority necessarily given to counter-terrorism Within ASIO itself in 1998 35–40 per cent of focus. Whereas fundamentally affected ASIO’s the figure is now well resources were devoted to counter-terrorism, ASIO’s over 70 per cent. establishment earlier this year of the A further major development was the which provides located within ASIO, National Threat Assessment Centre (NTAC), well resourced, with The centre is a 24-hour threat assessment capability. preparing threat assessments, plus around 40 analysts directly involved in of agencies, and works It brings together staff from a range support staff. assessments, used collectors. NTAC in close coordination with intelligence travel advisories, in preparing Affairs and Trade by the Department of Foreign alert level, national counter-terrorism also form a basis for determining the decision-making about security. and inform a wide range of government has been adopted since 2001, mostly A range of other institutional changes aimed at building cross-agency cooperation. The Joint Counter-Terrorism in September 2002, and is aimed Intelligence Coordination Unit was established national capabilities, notably collectors, particularly at ensuring that all relevant investigations and operations. The are supporting significant counter-terrorist established in the Department position of Ambassador for Counter-Terrorism, provides a focal point for coordinating Australia’s Affairs and Trade, of Foreign and contribution to, regional and international counter-terrorism advocacy for, activities at a diplomatic level. committees have also been formed: A number of counter-terrorism The Terrorist Threat Coordination Group (TTCG), which discusses current which discusses Group (TTCG), Threat Coordination The Terrorist other threat requirements, and threat intelligence specific threat intelligence, issues. intelligence coordination which convenes after Assessment meeting, Advisory Threat The Travel and issues relating to travel advisories to discuss meetings of the TTCG coordination issues. ASIO-DFAT Together the changes represent a substantial amount of new structure and activity represent a substantial amount the changes Together $3.1 billion over seven the Government has committed in government. Indeed, since undertaken fund these and the range of other measures years to 2007–08 to security. to the increased threats to national September 11 to respond and probably premature, for this Inquiry In the time available it is not possible, and effectiveness of these changes a complete appraisal of the range to make is that the however, What is clear, in funding and organisational architecture. have been implemented since machinery of government reforms that a substantial effort to deal with September 11 and the Bali tragedy represent of the response is appropriate and there the increased terrorist threat. The scale structures and institutions that have been are no clearly missing elements in the feature of the changes is that they have developed. Another clear and positive been adopted on a whole-of-government and level—the structures will require, will promote, cooperation between agencies. new structures has, to some extent, This range of institutional changes and The Inquiry received some suggestions that this developed in an ad hoc way. overlap and ineffective use of resources. had resulted in unnecessary levels of be a case for rationalisation once the new The Inquiry found that while there may for that to happen now is not compelling. architecture is fully operational, the case addressed by the new counter-terrorism The serious character of the issues being in the system is justified if redundancy architecture is such that a level of built-in it can lead to terrorists being identified and Australian lives being saved. Another issue raised with the Inquiry was the volume and character of the A number of those interviewed intelligence product on counter-terrorism. the amount of days in particular, told the Inquiry that, in the early post-Bali intelligence material circulating in the system, including to very senior levels, was extremely difficult to manage. There was a tendency—a natural one—for very threat information, almost irrespective of its provenance, to be passed to senior levels of government. One particular example saw a task force engaged,

report of the inquiry into australian intelligence agencies 78 suitability of the current division of functions among agencies 79 with very senior officials actively working on it and ministers involved, in and ministers involved, working on it senior officials actively with very telephone call. anonymous single, uncorroborated, to no more than a response are now in place to better institutions and processes The Inquiry heard that of to ensure that appropriate levels and quickly, assess threat information every piece of threat generated. They also ensure that not response activity are to the not those of highly dubious provenance—goes information—particularly highest levels of government. amount of terrorist- improvements, there is still a large Notwithstanding these to digest. Like reporting that policy agencies need related intelligence the policy agencies need to establish itself, the intelligence community this increased volume of material mechanisms to enable them to manage that In relation to assessment agencies, it is already accepted effectively. of this sort to ASIO first, so that some DSD and ASIS will provide information on the significance of place (and a proper judgment level of analysis takes to a wider range of readers. the information made) before it is released the ADF in particular to threat information, DIO has an important role in alerting a vital tool to assist the ADF to and its Military Threat Assessments are to its members. At the same time, the understand, and respond to, threats by DIO—particularly when it is reporting and analysis of terrorist information account of the produced—needs to take specific threat information that is being for the assessment of threats to Australia specific responsibility that ASIO has it is important that the provision particular, and to Australian interests abroad. In is avoided wherever possible. This is of different threat advice to government and where a divergence from the an area where close consultation is vital, the place only after should take conclusions in an ASIO Threat Assessment agencies. most complete discussion between the ONA has no role to report on specific threat information, focusing instead on strategic-level assessment of the terrorist threat. That is wise, and has served the government well. In other parts of this report, the Inquiry makes recommendations that would increase the size, capability and stature of ONA. While this Inquiry would in no way encourage ONA to engage in assessing individual threat information—a role that should be preserved for ASIO—the Inquiry does encourage ONA to engage deeply on the terrorist issue, and a little sense to make analyse it at all appropriate levels. It would make peak intelligence body, significant effort to reinforce ONA as Australia’s and . It is done at Telecommunications (Interception) Act 1979 Telecommunications Australian Security Intelligence Organisation Act 1979 Australian Security Intelligence to obtain, correlate and evaluate intelligence relevant to security to communicate such intelligence only for purposes relevant to security, to persons appropriate for these purposes to advise relevant ministers and Australian Government authorities on security. The ASIO Act defines ASIO’s functions as: The ASIO Act defines ASIO’s ASIS and ASIO have in common that they are both covert human intelligence ASIS and ASIO have in common that substantial differences between the two collectors. But this similarity belies the and ASIS’s work relates to foreign intelligence, agencies. Most fundamentally, intelligence is the to security intelligence (see box). And while human ASIO’s a fraction of its humint collection is only vast majority of ASIS’s work, ASIO’s work—it is an integrated collection, assessment and a policy agency. ASIS/ASIO ASIO fulfils a critical role in the provision of support to the foreign intelligence role in the provision of support to the ASIO fulfils a critical is carried out under foreign intelligence within Australia Its collection of community. the section 27A and B of ASIO Support to Foreign Intelligence to Foreign ASIO Support of the section 11A, B or C Minister for Defence on Affairs or the request of either the Minister for Foreign and DSD report this material as they do from any ASIS behalf of ASIS and DSD. established and work effectively. other source. These relationships are well to the foreign agencies is generally in The provision of other intelligence relevant threat assessments from the NTAC. the form of formal ASIO product, including reporting passed to it through its liaison ASIO also distributes foreign intelligence reports has increased significantly in relationships. The number of these liaison reporting has been of increasing value to recent years. This body of formal ASIO of September 11 and the Bali bombings. ONA and DIO since the terrorist attacks and have it work only marginally on the key near-term threat that government near-term on the key it work only marginally and have in the be deeply involved on. ONA should are focused and the community of its goals to be terrorism, and should set as one assessment of foreign in that field. a global centre of excellence

report of the inquiry into australian intelligence agencies 80 suitability of the current division of functions among agencies 81 Security is defined as the protection of the Australian people, as well as people, as of the Australian defined as the protection Security is sabotage, and territory governments from espionage, the Australian, state within and outside foreign interference or terrorism, both subversion, acts of also encompasses meeting Australia’s Australia. This definition harmful acts. any foreign country in relation to such responsibilities to in Australia at ASIO is to collect foreign intelligence Another function of for Defence. Affairs or the Minister Minister for Foreign the request of the The Inquiry commends the efforts of the leaderships of both organisations The Inquiry commends the efforts of the leaderships of both organisations is a key part of its mandate. ASIO can collect foreign intelligence in Australia part of its mandate. ASIO can collect foreign intelligence is a key to work more closely together, and encourages further efforts in this direction, to work more closely together, particularly where it will reinforce good relations at the working level. Management in both agencies should look for opportunities for joint training and to continue to impart the message to their staff that cooperation of staff, between them is an important part of each agency’s mission. at the request of the Minister for Defence or the Minister for Foreign Affairs. or the Minister for Foreign at the request of the Minister for Defence of the two agencies’ roles, the Inquiry Because of the similarity in some parts the two organisations. Overwhelmingly, heard views on the merits of combining disposition of to the Inquiry strongly preferred the current those who spoke for that conclusion: the fundamental responsibilities. There is a range of reasons against Australians and non- differences between intelligence collection within which the two agencies Australians; the very different legal frameworks from foreign counter-espionage must operate; the merits in separating between the Australian division intelligence collection; and the similarity intelligence partners, which assists liaison. of labour and that of our key There are inevitable boundary issues between two organisations with different, level but in some areas close, responsibilities. Overall, the Inquiry found that the great. of overlapping activity between ASIS and ASIO leading to tension was not Fundamental to understanding the relationship between ASIO and ASIS is the the relationship between to understanding Fundamental Act role. As the ASIO intelligence’, which underlies ASIO’s definition of ‘security is to protect Australia, its people and property responsibility ASIO’s clear, makes within or outside Australia. ‘Security against threats to their security from intelligence’—ASIO’s for ‘domestic intelligence’ is therefore not a synonym intelligence, not by geography. role is limited only by its function of security overseas. ASIS’s operational activities are not solely undertaken Similarly, often in cooperation with ASIO, Collection of foreign intelligence in Australia, Effective communication is one of the hallmarks of the Australian intelligence is one of the hallmarks of the Effective communication the personal of the community, The cooperative nature community. lack of dispute between agency seniors, and the relative relationships between by many of those presented as highlights of the community the agencies were are noted and considered These characteristics with the Inquiry. who spoke few criticisms of the communities. There were enviable by allied intelligence between agencies. the community and the communication relationships within is an There Inquiry. were borne out by the findings of the These observations Heads of of interagency forums, with the longstanding extensive network inception centre. Created soon after ONA’s Intelligence Agencies Meeting at the the HIAM was designed as an informal by the first Director-General of ONA, of the intelligence role of cooperative oversight meeting to facilitate ONA’s secretaries from the In addition to the agency heads, deputy community. are members, and the and Defence Affairs and Trade Departments of Foreign of HIAM by invitation since 2000. Over the AFP Commissioner has attended part more formal, with an agenda and work past few years it has become somewhat this as a unifying and useful forum, not programme. Nearly all involved describe also as a mechanism for resolving intra- only for facilitating communication, but cooperation. community difficulties and furthering that the business of HIAM be transferred Chapter 4 outlines a recommendation Intelligence Coordination Committee, to a more formal committee, the Foreign as an informal meeting between but the Inquiry sees value in HIAM continuing agency heads. coordination meetings, usually at The collection agencies hold formal bilateral cover both management and operational intervals. Their agendas six-monthly issues, and they provide an effective mechanism both for resolving organisational conflicts not able to be resolved at more junior levels, and for setting a strategic agenda for cooperation between the agencies. meetings and working groups on numerous community-wide there are Finally, groups through to specific issues. These range from intelligence target-specific the AIC human resources forum, and the interagency administrative bodies like security forum, established to oversee implementation of the recommendations Some of these are standing bodies: others are of the Blick report on security. formed in response to specific, time limited events. All of these are Communication Among the Agencies Among Communication

report of the inquiry into australian intelligence agencies 82 suitability of the current division of functions among agencies 83 Conclusion Hope in the 1970s for the Australian The architecture designed by Justice and there is no need for fundamental intelligence community remains valid, collection and assessment avoids structural change. The separation between raw and assessed intelligence which duplication and provides a clarity between to ensure integrity of the assessment is valued by senior consumers. It helps boundaries around the collection agencies’ and collection process. The discrete mutual dependency and cooperation. But functions avoid duplication and build is not being well managed and overlap between the assessment agencies foreign intelligence role as the peak national needs redefinition, with ONA’s assessment agency reasserted. and is a very the agencies is strong, Communication and cooperation among AIC must The leadership of the positive feature of the Australian community. the inherent risk of inadequate continue to foster this environment, noting agencies housed in separate portfolios. cooperation and coordination amongst since 1999 AFP has increased markedly AIC support to both the ADF and the and valued. and is generally both effective and 2002 respectively, of The greater interaction between foreign and security intelligence as a result focus has required deeper cooperation and new structures. the counter-terrorist once is developing rapidly and may need review Interaction on counter-terrorism current structures are more settled. supplemented by regular desk-level contact between agency analysts. Agency agency analysts. contact between by regular desk-level supplemented committees. inter-departmental a large number of also participate in members this is not to suggest community, of this is a well-networked While the sum of all exist between and within normal tensions and frictions which that there are not the that any of these are the Inquiry has received no indication any organisations. But on the community’simpacting significantly All were discussed effectiveness. it is clear that and, where problems have been identified, openly with the Inquiry to their resolution. investing an appropriate level of effort agency seniors are chapter 6 ility of assessments contestab community focuses on how the Australian intelligence Much of this report vital element is how to get the best can best serve the national interest. A they can write the best assessment information to the best analyst so that alone, no matter how well prepared, for government. But an analyst working Australia to have the highest assessment. For will not produce a first-class be challenged, confronted by different quality assessment, analysts need to their arguments. This chapter examines perspectives, and alerted to flaws in can best with limited resources, how the intelligence assessment community, challenge and test its assessment product. government has, overall, been increasing The level of contestability in advice to trends: a changing relationship between in recent years. This reflects two broad governments look for a broader range ministers and the public service, in which enhanced capacity of the external of inputs to decision-making; and an of advice. environment to provide alternative sources is not a feature of government alone. The surge in the availability of advice has had possible by new technology, The increased flow of information, made a dramatic impact on how day-to-day decisions are made in all fields—about available, and what financial services are which flight is cheapest, what jobs are government ministers have been able to most advantageous. In a similar way, access more competitive options, and are less dependent on the public service for advice. Against this backdrop, it is not surprising that the Inquiry found widespread support for contestability in the area of intelligence assessments amongst as ministers and those who have served as ministers in previous governments operational and intelligence communities. The rationale for well as in the policy, It supports effective decision-making by ministers by contestability is strong. chapter 6

84 contestability of assessments 85 external commentators , which force analysts from one agency to , which force analysts from one agency , achieved by having overlapping , achieved by effective challenge mechanisms (journalists, think , academics), whose views are taken seriously whose views are taken (journalists, think tanks, academics), by government decision-makers. inside agencies, and through access by intelligence customers to the source inside agencies, and through access material behind assessments. Contestability by joint assessments Contestability between agencies responsibilities between agencies. Contestability within agencies instrument for system, the key confront the views of others. In the Australian which formalises consultation joint assessments is the National Assessment, and provides a mechanism for across the intelligence and policy communities dissenting views. a level of contestability is And, beyond the government framework, of increasingly achieved through the impact Overlap Between ONA and DIO While the overlap in functions between ONA and DIO undoubtedly provides it is interesting that this was not intended in the a level of contestability, architecture drawn up by Justice Hope in the 1970s. He recommended the establishment of a “centrally located assessments function... placed in a location in the centre of government”. predecessor, He saw those parts of DIO’s which were clearly ‘national’ being transferred to ONA, and all other parts JIO, which examined to see which should not be transferred. Thus the contestability Means of Achieving Contestability Means of Achieving can be achieved in a number of ways: Contestability of intelligence assessment providing differing viewpoints; it constitutes a check and balance mechanism check and balance it constitutes a differing viewpoints; providing government the full breadth of and it ensures that assessment; against faulty expertise is brought to bear. (and non-government) government how much contestability is needed inside What is at issue is issue in settling A key be achieved, and at what price. systems, how it should is needed to achieve how much overlap between agencies these questions is contestability. is currently offered by areas of overlap between DIO and ONA is an incidental DIO and ONA is of overlap between offered by areas is currently intelligence architecture. planned part of our rather than figure would be overlap is relatively high. While a precise The current level of per cent of the topics by some estimates as many as 75 difficult to determine, although the focus also covered to some extent by DIO, covered by ONA are overlap and often different. But to be effective, and level of detail are agencies need to be properly structured—designed contestability between and to minimise waste. to maximise testing against these systems in Australian agencies Examining the contestability ways, partly as found the system wanting in some important criteria, the Inquiry in Australia growing in a haphazard a result of contestability between agencies rather than being designed for specific outcomes. way, on their work there is very little coordination between the agencies First, of which issues warrant contestability. programmes, nor any clear management consider formally a forward work plan Both have a weekly meeting—ONA to Collection agencies inter alia, current defence requirements. and DIO to brief, agency attends the other’sattend both, but neither assessment As meeting. on what issues are significant enough a result, there is a lack of coordination to warrant coverage by both agencies. agreement and, where necessary, Instituting a mechanism to enable discussion and DIO forward work programmes on duplication or reconciliation of ONA deliberate system of contestability would be a useful step towards a more overlap). (and would help to reduce unproductive clearly points of agreement and Second, there is no system for identifying Where ONA and DIO write difference between ONA and DIO assessments. consultation but no systematic approach on the same topic, there is often some to weighing (and using or discarding) alternative views. Customers receive the and need to work out for themselves where the points of material separately, on difference and agreement are. A clear articulation of the points of difference for substantive issues, and why they have come about—a potentially useful tool save in exceptional circumstances, absent from the system. decision-makers—is, RECOMMENDATION: ONA and DIO should consult on and, where appropriate, reconcile their forward work programmes. As a minimum each should attend the other’s existing weekly requirements meetings.

report of the inquiry into australian intelligence agencies 86 contestability of assessments 87 . This is an extremely Office of National Assessments Act 1977 National Assessments are a special form of assessment provided for in the National Assessments are a special form must, as circumstances require, make ONA Act. The Act stipulates that ONA that are of national importance. National assessments on international matters product of relevant departments Assessments are intended to be an agreed for dissent to be recorded when and agencies, although there is provision agreement cannot be reached. in consultation with an interdepartmental working group Drafting is undertaken the Act requires that the Director- chaired by an ONA branch head. However, General of ONA shall consult with a National Assessments Board in relation to each National Assessment. The National Assessments Board will approve the terms of reference and the final text of each National Assessment—the terms of reference usually by an exchange of letters and the final text by a meeting of the Board. National Assessments The National Assessments process offers another, more formal, mechanism more formal, mechanism process offers another, The National Assessments developed, by which National Assessments are The process for contestability. develop their and intelligence officers debate and in which senior policy exercise of challenge. judgments on significant issues, is a robust key views, where they exist, is outlined in The requirement to record dissenting section 8 of the The National Assessments Process The National a contestability perspective: indeed important feature of the process from intelligence assessments should, in Justice Hope had recommended that of the disagreement and provide case of disagreement, expose the nature and further that options of interpretation for incorporation of minority dissents, views have been recorded only should be indicated. It is of note that dissenting that some two decades ago—in the knowledge—and once to ONA’s since 1978. 220 National Assessments produced Notwithstanding the focus of recommendations in this and other chapters on in this and other chapters recommendations the focus of Notwithstanding some areas of there will remain ONA and DIO, duplication between reducing in assessment must ensure that substantive differences overlap. The agencies ground are clearly set out. in this overlapping The composition of the National Assessments Board is also laid down in the is also laid down Assessments Board of the National The composition includes of ONA and is chaired by the Director-General legislation. The board the Affairs and Trade, the Department of Foreign representatives from and an Australian Public a member of the Defence Force, Department of Defence, with economic Affairs and Trade) Defence or Foreign Service officer (not from provides the Defence Intelligence Organisation normally expertise. The Defence observers. departments are invited to attend as representation. Other Assessments Board. the establishment of an Economic The Act also required Board has been subsumed since 1998 the Economic Assessments However, have been Board, and economic assessments into the National Assessments representative has Board. A Treasury approved by the National Assessments of the meetings of the National been invited to attend most, if not all, does not attend, the Treasury Assessments Board since that time. Where the Deputy Director-Generalposition of economic expert is filled by of ONA responsible for economic issues. RECOMMENDATION: 1977 should be amended to remove the The Office of National Assessments Act National Assessments Board and references to two assessments boards—the reflect the reality that there is only one the Economic Assessments Board—to strategic, political and economic National Assessments Board which covers composition according to subject matter. issues, but with provision for different through a National Assessments Board is The production of National Assessments its early years, ONA produced more than 20 legislation. During enshrined in ONA’s and they were the primary focus for the Director- National Assessments annually, over the years, with an annual General. This number has declined significantly average of less than four since 1984. In two years, none at all was produced.

report of the inquiry into australian intelligence agencies 88 contestability of assessments 89 2 5 4 3 0 0 8 2 4 39 25 13 11 220 NUMBER 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 YEAR 6 6 5 4 3 1 4 2 4 4 0 13 33 19 NUMBER 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 YEAR TOTAL In part the decline represents the increasing utility of intelligence to In part the decline represents the increasing demand for more current intelligence. government, and the consequent high business—with new technology and a It also reflects the pace of government the demand for immediate advice heightened tempo of government business, has also varied according to has grown. The focus on National Assessments the preferences of successive Directors-General and, in recent years, has been National Assessments Board process. influenced by some debate about the subject to differing perceptions, are less But the reasons, which are many and the important than the fact of the decline in National Assessments. ONA needs capacity both to serve current intelligence needs and to produce comprehensive assessments on issues of strategic significance. RECOMMENDATION: ONA should produce a greater number of National Assessments on issues of strategic importance to Australia and reflect significant dissenting views. A National Assessment should be prepared prior to any significant deployment and in support of major strategic reviews. by the Australian Defence Force, NATIONAL ASSESSMENTS 1978–2004 ASSESSMENTS NATIONAL In light of the recommendation in Chapter 7 on a revised DIO mandate, In light of the recommendation in Chapter critically important to meeting internal contestability mechanisms become government needs. the process of developing an assessment, Within ONA, contestability is built into both within and outside the organisation, primarily through circulation of drafts, judgments themselves both the key and through the clearance process, where are challenged. All ONA product is cleared and the sources which underpin them The level of challenge clearly varies with the for release by the Director-General. under consideration, but it is a robust significance and complexity of the issue As a larger of intellectual rigour. process underpinned by a strong culture are processes organisation producing greater quantities of product, DIO’s understandably somewhat different, with less external review of drafts, and at a more junior level. clearance of product for release typically undertaken As at ONA, there is a strong culture of contest and challenge. contestability is the capacity of the analyst to to the success of internal Key engage widely to ensure the fullest possible range of views, and to interrogate what the systems which provide the information. It is necessary not only to test one has, but to identify what one does not have, and to seek to fill those gaps where possible. While the agencies recognise the vital nature of this and Contestability Within Agencies At a less formal level, ONA and DIO joint reporting provides some of the provides some DIO joint reporting level, ONA and At a less formal overheads. Such reporting without the National Assessments benefits of a substitute for appropriate, but not be used as should continue where on areas of significance. National Assessments as the Department of from policy departments such The inclusion of officers National in the of the Treasury and the Department Affairs and Trade Foreign of such legislation. The contribution is specified in ONA’s Assessments Board policy context to the bring both unique expertise and officers is critical—they both warranted and process, which the Inquiry finds National Assessments The importance of the topics under consideration. appropriate given the of ONA has a vital role in ensuring that policy considerations Director-General influencing their integrity: the Inquiry inform intelligence judgments without influence from policy departments received no indications of inappropriate Assessments Board. in any previous National (or Economic)

report of the inquiry into australian intelligence agencies 90 contestability of assessments 91 reinforce it consistently with analysts, including through induction training, it training, through induction analysts, including it consistently with reinforce works against analytic workforce aspects of the always happen. Some does not to tend towards introspection analysts are more likely it: in personality terms, engagement and the process of broad and dynamic than extroversion, or other Security issues, where external sources is typically not natural. can compound the are not cleared for sensitive material, government officials problem. The Inquiry’s of high significance study of Iraq found that, while issues sources and agencies, the process of interrogating were discussed across dynamic one. interlocutors was not a sufficiently engaging with external RECOMMENDATION: to ensure rigorous and interactive ONA and DIO should institutionalise measures dialogue between collectors and assessors. challenging of sources, and effective to ensure effective challenge They should also institutionalise measures mechanisms within, between to judgments, including formal peer review technical and geographic experts. and outside the agencies, and between mechanisms for internal An alternative approach to these ‘mainstream’ within agencies specifically designed to contestability involves establishing cells either against authoritative provide alternative—or deliberately contrary—views, cells’, these units Often called ‘red assessments, or on self-generated topics. a fresh look at issues or playing the devil’s provide contestability either by taking cells Red in mainstream assessments. advocate by looking for gaps or mistakes use ‘brainstorming’ techniques and rigorous peer review. has certain attractions. It gives contestability teaming’ This system of ‘red it ensures that specific resources are an established place in the system; and generating fresh ideas. In an intelligence devoted to testing assessments and cells would warrant a place. system with bountiful resources, red the with limited funding, In the Australian intelligence system, however, establishment of red cells seems extravagant. Scarce high-quality analytical staff should be devoted to core assessment tasks, not to developing artificial critiques. Sufficient internal contestability should be achievable through the notably those in management critical analysis of assessments by in-line staff, that artificial criticism might drive out good, there is a danger positions. Further, straightforward assessment, and lead to as many blind alleys as fruitful paths. The focus so far has been on the Australian assessment agencies’ product. been on the Australian assessment The focus so far has of related intelligence customers get a range But ministers and other by the serves to challenge the judgments presented information which directly from an amount of unassessed intelligence assessors. Some receive on its meaning. independent judgments and can make the collection agencies, source of from our overseas posts is a significant Diplomatic reporting defence and reporting on international, of DFAT information—the volume by a factor the volume of assessed intelligence security issues outweighs of policy advice from And of course there is a range of approximately twelve. including intelligence, to come departments, which uses various sources, recommendations. to judgments and make references within ONA and DIO reports, assessments, either in toto or as Foreign Chapter 7 provide an alternative view. are also available to government, and access to, and making greater use discusses the importance of getting greater UK. assessments sourced from countries other than the US and the of, This and nature of material available strategy would further extend the range to government. contestability comes from outside the An increasingly significant source of seen the most welcome arrival of two government. The past four years has policy and intelligence and independent think tanks focused on international Institute for the Lowy Institute (ASPI) and the Australian Strategic Policy security, some previous think tanks with a similar focus, which Unlike International Policy. both have secure funding bases and had difficulty maintaining critical mass, such organisations Without access to intelligence, strong leadership and staff. and DIO in providing contestability; are not on an equal footing with ONA nonetheless, ASPI has already produced a number of useful strategic reports, in its field of international policy. Institute promises to do likewise and the Lowy role An illustration of ASPI’s utility in the strategic policy arena is the significant its report on the Solomon Islands played in supporting government decision- making in its response to the worsening crisis in the Solomon Islands in 2003. Complementing these institutes are a number of well informed and well respected commentators and journalists. Many have significant foreign experience, and bring to their commentaries a deep cultural understanding of the countries on which they write. Many bring a fresh perspective to the Competing Sources Competing

report of the inquiry into australian intelligence agencies 92 contestability of assessments 93 provides coordinates collection and provides military intelligence provides foreign intelligence collects and processes foreign signals intelligence information for national decision-makers and war-fighters, signals intelligence information for national decision-makers and protects critical US information security systems from compromise. on national security topics to national policy and decision-makers. policy and decision-makers. on national security topics to national (DIA): DEFENSE INTELLIGENCE AGENCY and force planners. policy makers to war-fighters, (NGA): AGENCY GEOSPATIAL-INTELLIGENCE NATIONAL in support of national security. OFFICE (NRO): RECONNAISSANCE NATIONAL analysis of information from aeroplane and satellite reconnaissance by the military services and the CIA. (NSA): NATIONAL CENTRAL INTELLIGENCE AGENCY (CIA): CENTRAL INTELLIGENCE AGENCY US Intelligence Agencies to generate assessments, and many subagencies within those organisations to generate assessments, and many produce assessments in their own right. Most American commentators regard produce assessments in their own right. to deliver ‘competitive analysis’— this range of agencies—and their ability system. As a point of comparison with as one of the strong features of their National Intelligence Estimates register Australian National Assessments, US 10 per cent of cases. some form of dissent in approximately The US and UK systems offer points of comparison, but are ultimately of limited offer points of comparison, but The US and UK systems have much in common specific circumstances. While we value to Australia’s and foreign intelligence needs are specific, Australia’s with US and UK partners, modification. be transferred without significant models could not usefully the ability to support multiple assessment Size matters. The vast US system has the US Intelligence Community are able agencies—indeed, all 15 members of How Do We Compare? How Do We debate—and often the capacity to view world events through the eyes of events through the to view world often the capacity debate—and of what drives understanding many have a deep or culture. And another nation a potent and not to be its challenges are. They represent government and what underestimated capability. prevents terrorist attacks prevents investigates acts of terrorism; investigates acts of deals with information related to US collects and processes information that collects and processes information that performs analyses of foreign nuclear weapons, performs analyses deals with information affecting US foreign deals with information each collects and processes intelligence relevant each collects and processes intelligence policy. This includes the Bureau of Intelligence and Research (INR) which This includes the Bureau of Intelligence and Research policy. the Secretary of State and senior provides intelligence assessment to officials in the department. OF TREASURY: DEPARTMENT DEPARTMENT OF HOMELAND SECURITY (DHS): HOMELAND SECURITY OF DEPARTMENT criminal cases. and data about international deals with counterespionage OF STATE: DEPARTMENT may affect US fiscal and monetary policy. , CORPS INTELLIGENCE AND MARINE , ARMY, ORGANISATIONS: to their particular Service needs. INTELLIGENCE: GUARD COAST maritime borders and Homeland Security. nuclear non-proliferation and energy security-related intelligence issues in intelligence and energy security-related nuclear non-proliferation objectives. security policies, programmes and support of US national (FBI): OF INVESTIGATION FEDERAL BUREAU within the United States, reduces America’s vulnerability to terrorism and vulnerability to terrorism reduces America’s within the United States, from attacks that do occur. minimises the damage OF ENERGY: DEPARTMENT No doubt there are advantages in this level of contestability. But for Australia, But for level of contestability. No doubt there are advantages in this that in the US system even remotely like with fewer resources, a level of overlap would be profligate. reflects the wider US government system, The proliferation of US agencies also designed to satisfy the bifocal interests of the executive and the congress. does not need, system, with its greater focus of power, The Westminster or encourage, such a spread of assessment agencies. the UK system embeds contestability inside the core analysis the US, Unlike unit. At the centre of the UK intelligence system is the Joint Intelligence the JIC settles the texts of all important UK Committee (JIC). Meeting weekly, the intelligence assessments. Under a chairman based in the , key meeting brings together the heads of all of the intelligence agencies with and Commonwealth Office, policy figures—from the Cabinet Office, the Foreign

report of the inquiry into australian intelligence agencies 94 contestability of assessments 95 indeed it is the second largest source — for ONA after open source material although, as reflected in Chapter 2, analysts’ access to diplomatic reporting is contracting with the reduction in Australian diplomatic resources. A rebalancing within ONA towards the strategic would body produce the effect intended in the proposal for the creation of an INR-like without the need for an additional organisation. The Inquiry received one recommendation for an additional agency to be The Inquiry received one recommendation Affairs and the Department of Foreign established—an analytic element within the lines of the US State Department’s along Bureau of Intelligence and Trade rationale for this was to exploit commonly known as INR. While the Research, overseas, and officers capacities of DFAT more fully the information gathering such an organisation or element would to provide more strategic assessments, The Inquiry does not find the arguments also provide further contestability. primarily on the basis compelling, for creating an additional organisation limited pool of qualified staff. of affordability and further strain on the to support duplication of intelligence The Australian system is not of a size so. functions, and runs the risk of losing critical mass in such capability if it does reporting ONA has full access to DFAT Other Proposals the Treasury and the Ministry of Defence. Servicing the JIC is a small group JIC is a small group Servicing the the Ministry of Defence. and the Treasury and policy of intelligence from the same group analysts, drawn of talented differences in view of players at the analysis table, agencies. With a range resolved inside the assessment process. are highlighted and senior readers with one three advantages: first, it provides The JIC system has topics; second, because all of assessments on key indisputably peak source assessments, it is supported by a agencies sit together to settle of the key specialist who bring a very high level of from each agency, committee of experts structure of the topic; and third, because of the committee knowledge on each system. analysis are fully contested inside the JIC system, lines of the Inquiry found these benefits to be an Australian perspective, From such a committee structure, and outweighed by the overheads of supporting assessments are cleared by a weekly the time delay inherent in a system where committee meeting. There are many positive features to the delivery of contestability in the features to the delivery of contestability There are many positive within the agencies The culture of challenge and contest Australian system. give it greater to achieve process changes would and some simple is strong, positive and environment is providing an increasingly assurance. The external alternative views. effective source of and a broad range and consistent message from ministers But against a clear intelligence that contestability is valued, the Australian of senior customers provide it. Most to be more deliberate in its efforts to community needs effective means to achieve it needs to determine what is the most importantly, both in terms of outcome and cost. contestability, highly valued by most intelligence customers, The Inquiry finds that contestability, Overlap between ONA and DIO is not optimised under the current arrangements. and National Assessments are not being is not managed to support contestability, used to best effect. in Chapter 7 will not—nor mandate The changes recommended to DIO’s between the two agencies. If the are they designed to—eliminate overlap the decrease in overlap in terms recommendations of the Inquiry are adopted, management of what remains. of volume will be balanced by more deliberate internal contestability This would be supplemented by strengthened with More National Assessments, mechanisms, subject to external scrutiny. contest, would be produced, and the their inherent processes of debate and be encouraged. As an adjunct, we can recording of dissenting views would as those currently provided by think tanks, expect that the external inputs, such capacity with a continuing strong focus on will continue to grow in number and security issues nationally. Conclusion

report of the inquiry into australian intelligence agencies 96 97 chapter 7 chapter 7 resourcing and effectiveness of the agencies intelligence five foreign of Australia’s The Inquiry has examined the performance agencies in their task of providing high-quality and independent intelligence advice to government. The Inquiry’s examination has drawn from the perspectives foreign users of Australia’s key of those working inside the organisations, of individuals with relevant expertise. intelligence product and a broad range This chapter sets out the Inquiry’s findings on the quality of support Australia’s government in the protection of foreign intelligence agencies are providing national interests. security and the pursuit of key Australia’s The chapter also examines each agency’s current resource levels. In most years has provided a firm foundation cases, budget supplementation in recent high-qualityfor the agencies to continue delivering intelligence on matters ensuring that they are able to meet of enduring importance to Australia while threats and emerging national priorities. the challenges posed by new security Inquiry has identified funding the In a number of discrete areas, however, attention. shortfalls requiring further government and includes a section on a range The chapter deals in turn with each agency of issues with relevance across agency boundaries. It seeks to identify key factors currently affecting the quality of foreign intelligence produced by the agencies, to highlight areas of best practice and to propose measures to redress any weaknesses. a Each of the agencies faces its own set of challenges. There are, however, every agency—collection or assessment, number of themes common to all. For professionalism and motivation of the people Defence or civilian—the quality, is working in the organisation are fundamental to the contribution the agency Office on 19 October 1977. Its genesis is found in on 19 October 1977. Its genesis is found THE OFFICE OF NATIONAL ASSESSMENTS NATIONAL THE OFFICE OF Background peak intelligence agency. is Australia’s The Office of National Assessments under which it founded by an act of parliament It is an autonomous body, Its primary role is to produce analytical Minister. reports direct to the Prime Minister, to assist the Prime assessments of international developments of policy and plans. It bases its ministers and departments in the formation and outside government. Intelligence assessments on information from within for ONA assessments, which have is one but by no means the primary source and published information. ONA a heavy reliance on diplomatic reporting monitoring and coordination role. also performs an intelligence community following royal assent of the ONA commenced operations early in1978, of National Assessments Act 1977 Commission report of the Hope Royal a series of recommendations in the third Commission, national At the time of the Royal on Intelligence and Security. organisation, predecessor by DIO’s intelligence assessments were produced the National Intelligence Committee, the Joint Intelligence Organisation, and Department of Defence. Current both subordinate elements within the intelligence assessments were produced by an element of the JIO operating Affairs. Justice Hope found under the direction of the Department of Foreign in that there was “a need for a centrally located assessments function… placed a location in the centre of government”. He recommended that this be achieved by the establishment of an Office of Australian Intelligence Assessments, with a charter establishing its independence Minister, responsible to the Prime of control or direction by any policy department or direction by ministers as Justice Hope saw this new organisation to what assessments it must make. subsuming the national-level roles performed by JIO and the National Intelligence Committee. able to make to Australia’s national interests. All the agencies gain significant All the agencies national interests. to Australia’s able to make the extent for every agency, linkages. And their international strength from recipients depends deliver the right product to the right to which it is able to it has been able relationships and the communication fundamentally on the customers the key agencies in Australia and with to foster with counterpart of foreign intelligence.

report of the inquiry into australian intelligence agencies 98 resourcing and effectiveness of the agencies 99 ONA Today for a staff complement of 74, including 39 analysts. ONA is funded Today reports (including 333 biographical Its reporting output in 2002–03 was 908 notes), of which two were National Assessments. Its budget for 2003–04 was $13.1 million, representing less than two per cent of expenditure across the intelligence community. This is particularly apparent in By any measure ONA is a small agency. comparison with US counterpart entities, but relevant too in terms of the But despite this, or perhaps in part because Australian intelligence community. of it, ONA enjoys a very strong reputation within its customer community, amongst the other intelligence agencies, with external commentators and performance as an overseas. The views expressed to the Inquiry on ONA’s Justice Hope’s Office of Australian Intelligence Assessments came to fruition Assessments came Intelligence Office of Australian Justice Hope’s on the Act which drew heavily with an of National Assessments, as the Office The Act directs ONA to prepare Commission. of the Royal recommendations reports on matters of and other appropriate persons and furnish to ministers importance. It and, as circumstances require, of national current significance under review Australian activities for keeping also gives ONA a responsibility and making intelligence, and for reporting connected with international or arrangements on any inadequacies in the nature, extent recommendations for coordination. by ONA, of the assessments produced It enshrines the independence an Economic Assessments Board and establishes two assessments boards, considerations, and a National for matters primarily involving economic issues. It is headed by a Director- Assessments Board for other than economic for a period not exceeding General who is appointed by the Governor-General seven years. 1978. In its first year of operations, ONA produced its first report on 2 March produced a total of approximately 140 reports, 13 of which and ONA had 53 staff, there has been considerable fluctuation were National Assessments. Since 1978, 37 of them analysts, and of 83 staff, in its numbers, with a peak in 1994–95 Deputy Directors-General.a management structure including three Over the seven Directors-General,26 years of its existence, ONA has had and served of Australian politics. four governments, two from each side ONA’s capability is ultimately measured by the quality of its output. The almost capability is ultimately measured by the quality ONA’s by the Inquiry was that ONA’s universal opinion amongst those interviewed most commonly praised were its readable product was very good. The qualities to the The main general concern expressed style, its relevance and its brevity. quality per se, but to the balance between Inquiry on ONA product related not to There were several representations for more reporting. current and long-term term pieces. This was noted in ONA’s emphasis on strategically focused, longer the context of its 2002–03 classified own customer research, conducted in articulated the need for a rebalancing annual report, where several respondents term analysis, and noted priorities to enable greater focus on longer of ONA’s the scope for more assessment on economic or resource issues which have important political content. These observations were, by and large, borne out by the research undertaken ONA reporting is generally very readable, thoughtful and well- by the Inquiry. judgments, which are typically well presented. Analysts are prepared to make 2002–03 customer research shows high levels of satisfaction supported. ONA’s against the quality criteria for assessment in its outcomes-outputs framework responsive, relevant, accurate and forward-looking), with an (unique, timely, average of around 75 per cent of customers finding that ONA mostly or always met expectations and requirements in these areas. Quality of Product assessment agency were generally very positive: this perception of ONA’s this perception very positive: agency were generally assessment Inquiry’s borne out by the strength was of the organisation’s examination output, staff and structure. Behind that lie assessments. factor in this is the quality of ONA’s The key and a focus, a flat structure and lack of bureaucracy, a clear high-quality staff, Its cooperative relevant, readable and short assessments. commitment to policy a largely positive oversight role is also seen as approach to its community feature of the organisation. ONA well, they also while these characteristics serve The Inquiry found that, today effectiveness downsides. In reviewing ONA’s bring with them some future size and structure, the Inquiry and making recommendations on its of its product, the quality of its staff, considered four main factors: the quality role within the Australian and ONA’s the issues associated with its small size, intelligence community.

report of the inquiry into australian intelligence agencies 100 resourcing and effectiveness of the agencies 101 a conscious review and restatement of previous positions a conscious review of the basis for judgments in reports clearer identification assumptions a more systematic approach to challenging by analysts greater active engagement of others of sources more rigorous and consistent testing greater use of external expertise. STRATEGIC ASSESSMENTS STRATEGIC strategic Strategic Assessments are periodic reviews of Australia’s environment, or important aspects of it, prepared to assist policy deliberations. They are circulated in draft to interested agencies but are not subject to the formal mechanisms and the requirement for consensus that apply to National Assessments. Types of Reports (other than National Assessments) Types While these measures should improve ONA’s product, on balance the Inquiry ONA’s While these measures should improve and outside government was well strong reputation within found ONA’s it distributes. deserved on the basis of the product [see box]. Of these, the most common ONA produces six basic product types Guidelines for each, Report. Watch are the Current Assessment, and the requirements, are published including purpose, length and consultation ONA also publishes new starter. in an analyst handbook, provided to every stressing the need to be concise, logical a generic style guide for its product, and direct language, reports which and judgmental. It calls for spare, succinct and focused on the implications are forward looking rather than descriptive, of issues for Australian interests. This is not to say that the reporting is faultless: the Inquiry’s is faultless: to say that the reporting This is not study detailed WMD-relatedof the Iraq unsupported some inaccuracies, uncovered reporting ONA judgments judgment changes. Nor are judgments and unintended 100 per Although other case studies in the report show. invariably right, as of measures a realistic expectation, there are a number cent accuracy is not to guard against chapters which ONA could implement identified in previous these are: judgments. In summary, flawed reporting and Current Assessment Report Watch Intelligence Note Report Warning Biographic Report. CURRENT INTELLIGENCE REPORTS CURRENT as current intelligence in the reports are published Most of ONA’s following forms: underlying National Assessments, current intelligence reports identify Like and motives. They seek to make trends, forces for change, turning points They look ahead but, judgments and not simply report on developments. than National normally far less especially in the case of crisis reporting, do not have to be approved by Assessments. Current intelligence reports Assessments are shown in draft to the Assessments Board, but Current and Intelligence Notes are usually Reports interested departments. Watch issued without consultation outside ONA. CURRENT ASSESSMENT of current intelligence standard form The Current Assessment is ONA’s issues. It has a normal length reporting for both political and economic Current by a short summary. of two to three pages of text preceded the Departments of the Prime Assessments are circulated in draft to and other DIO Affairs and Trade, Minister and Cabinet and Foreign interested departments for comment. REPORT WATCH crises or when responding at short during Reports ONA produces Watch ONA is not notice to sudden developments. In order to publish quickly, do not have any Reports committed to consult with other agencies. Watch them as short as possible. particular length, but every effort is made to keep are also used to provide summary analysis and narrative Reports Watch of an evolving situation to meet customer needs for a regular synthesis of information. contain more narrative than most other ONA product, Reports Though Watch they should still be analytical in approach.

report of the inquiry into australian intelligence agencies 102 resourcing and effectiveness of the agencies 103 briefing note, a short National Security Committee (one-page) Committee. note prepared for meetings of the National Security INTELLIGENCE NOTE INTELLIGENCE from customers are used to respond to particular tasking Intelligence Notes the normal are specialised or sensitive, not warranting or where subjects signed product. An Intelligence Note is sometimes distribution of ONA by the Director-General. REPORT WARNING customers to emerging are occasional products alerting Reports Warning crises. require policy attention or to imminent issues which could BIOGRAPHIC REPORT portraits of foreign provide analytical biographic Biographic Reports to meet. are likely identities whom Australian ministers A recent innovation is the Part of ONA’s success can be attributed to its focus, or clarity of role. At its success can be attributed of ONA’s Part simplest, this is to produce all-source Justice Hope assessments for ministers. that “Ministers are, in the final analysis, noted, in his third report of April 1977, is produced”. This focus was reinforced the ones for whom intelligence advice there is specific reference functions in its Act, where in the articulation of ONA’s persons” as the recipients of to “appropriate Ministers and other appropriate about ONA product stems from that output. Much of what is valued ONA’s relevance, readability and brevity. focus on a ministerial readership: policy relevance set comes at a price. Policy But such a sharp focus on this customer only the government’shas to some extent translated to meeting immediate does at times result in lack of appropriate needs. Readability or short-term can lead to superficiality—it is not qualification or attribution. And brevity possible to do justice to all topics covered in Current Assessments, for example, in two to three pages. focus The Inquiry found almost no-one who advocated major change to ONA’s or style, but amongst some customers there was a belief that the pendulum The Inquiry finds that there had swung too far towards readability and brevity. the is room for ONA to adjust the balance between readability and brevity on one hand, and completeness and thoroughness of presentation on the other. internal efforts to review its product and processes along these It notes ONA’s to lines and encourages ONA to develop more flexible guidelines with respect length and type of reporting vehicle. In doing so, it will clearly be important not it will clearly be vehicle. In doing so, type of reporting length and by senior customers. are so valued characteristics which to lose the between current to the Inquiry is the current imbalance Of greater concern Assessment vehicle, Greater use of the National and longer term assessments. that balance. But 6, will go some way to redressing recommended in Chapter a longer look is needed, to identify those issues where ONA is also encouraged with a longer up report might usefully be backed or where a short focused any case been done). of the work for which will have in research piece (much Inquiry is in part to of resources recommended by the The supplementation resources are allocated reporting: ONA must ensure that enable more long term subsumed into current intelligence needs. to this task and, once allocated, are not RECOMMENDATION: term and strategic assessment. ONA should give greater focus to longer favoured ONA continuing with much While the balance of inputs to the Inquiry some thoughtful representations were the same focus and volume of output, ‘expansion’ customer set—and that DIO’s made that ONA should cater to a larger for intelligence role reflected a market outside the strategic military assessment find strong The Inquiry did not, however, that was not otherwise being fulfilled. either internally or within the support for greatly expanded ONA production, strategic- nor much evidence of unfilled requirements for customer community, is encouraged to give more deliberate level national assessments. While ONA on balance the Inquiry found focus to the needs of senior policy departments, satisfied by product designed primarily that senior officials’ needs were being as recommended, ONA will mandate be refined for ministers. Should DIO’s Defence customers of intelligence, need to pay particular attention to senior capacity on politico-militaryand may need to strengthen its analytic issues. ONA product draws heavily on published or open source material—it is the Given its significance, single largest source of material for ONA reporting. the Inquiry believes that the Open Source Unit, currently positioned in the should be relocated to ONA. This Affairs and Trade, Department of Foreign would allow ONA to effect greater integration of open source material into assessment, ensuring that analysts are at less risk of losing sight of the substantial source material in the open domain. It would also enable ONA to manage open source collection within the broader construct of the intelligence burden-sharing arrangements, which is how the US views it. transfer of the Open Source Unit to ONA. would welcome DFAT

report of the inquiry into australian intelligence agencies 104 resourcing and effectiveness of the agencies 105 read a selection of ONA product on key contemporary international issues read a selection of ONA product on key to obtain a sense of the independence of the judgments interview a range of senior members of the relevant policy departments assessments to gather their perceptions of the independence of ONA’s a cross-section under conditions of strict confidentiality, interview, of ONA analytical staff up to and including the Director-General RECOMMENDATION: the at present within budget $2.5 million), Source Unit (annual The Open its budget should be transferred and Affairs Trade, and Department of Foreign years. practicable over the next two financial to ONA as soon as ONA argues product quality question is independence. A vital element of the and that this is a strong protection of its independence, that its Act represents with ministerial of the organisation and its relationships supported by the culture Given the persuasive but not sufficient. The Inquiry finds this argument staff. judgments are a key business, where individuals’ nature of the assessment the Prime direct line of responsibility to and ONA’s factor in the final product, influence, there with the consequent potential for charges of political Minister, ensure independence is preserved, and is a need for some external process to is seen to be so. is reported, and to what is not reported. This relates both to the content of what for either overt pressure from government In the former case, there is potential judgment, or an unconscious or policy departments to reach a particular policy outcome. In the latter identification by the analyst with a particular either consciously or unconsciously, case, analysts and managers may choose, sensitivity for government. not to report on a particular issue of potential of independence is whether ONA has the A secondary element to the question immediate region, outside Australia’s capacity to form assessments, particularly UK assessment agencies. This issue is independent of the much larger US and of Iraq WMD assessments. In that case, discussed in Chapter 3 in the context capacity to form judgments which differed ONA proved overall that it did have the resource constraints and time from those of US and UK agencies, although of foreign-sourcedpressures led to insufficient questioning intelligence reports. of The Inquiry finds that it would be appropriate for the Inspector-General statutory independence on a periodic Intelligence and Security to review ONA’s might: the Inspector-General basis. As part of such a review, seek an account from the offices of the Prime Minister and Foreign Foreign Minister and of the Prime from the offices seek an account kinds ONA and what they interact with Ministers of how and Defence they have provided to ONA. of advice and feedback RECOMMENDATION: conduct a periodic review of ONA’s should The Inspector-General statutory independence. Quality of Staff is a truism. Its meaning depends on the quality of its staff That an organisation which have a intelligence agencies, like increases in relation to organisations, for ONA it has a particular resonance. high reliance on intellectual capital. But has none of the technical staff are the sum total of its capability—it ONA’s in the Australian intelligence community. wizardry of many of the other agencies highest intellectual calibre, judgment and experience are vital of the People success. to ONA’s to writing that care should be taken Justice Hope recognised this in 1977, He proposed that the staff. select people of high quality for the assessments from departments, the Defence Force assessments staff largely be seconded and agencies, and that no-one should have a lien on any job or ‘represent’ He recommended that there should his department, service or agency. be an understanding that ONA may co-opt officers from other departments as required, and that an attachment or agencies with particular expertise landmark in an officer’sto ONA should be recognised as an important career. has been true to Justice Hope’s vision. The Inquiry a large extent, ONA To These reports quality of ONA staff. heard very largely positive views on the held by the Inquiry with ONA staff, were generally supported by discussions both on more general organisational issues and in regard to specific geographic or functional areas. There was no indication that any staff sought to represent record is strong, their home or former departments. In educational terms, ONA’s analysts holding doctorates or master’s with 22 (more than half) of ONA’s was degrees. Despite this, the Inquiry did receive some indications that there effort in some areas. room to lift the intellectual calibre of ONA’s Across the organisation, ONA has a strong cadre of experience, including As at April 2004, ONA significant language skills and cultural understanding. had a capability against 13 languages, mostly to a high level of proficiency.

report of the inquiry into australian intelligence agencies 106 resourcing and effectiveness of the agencies 107 While this is impressive for an organisation of only 39 analysts, it is notable only 39 analysts, it an organisation of is impressive for While this has six skills (one of whom with multilingual of only two staff that the loss to eight languages. four) would reduce that capability languages, the other and analysts have lived of ONA’s around three quarters Equally importantly, The need in the countries on which they are working. overseas, many worked be overstated: the great with depth of experience cannot analysts for first-class diplomatic and available though intelligence collection, wealth of information intelligence alliances network of and through Australia’s published sources, by analysts with to government only when assessed can give optimal value understanding. appropriate contextual the production of rounded assessments. A core of such experience is critical to numbers, is not a training ground for ONA, with its flat structures and small ONA would not be well served the larger agencies, would-be analysts. Unlike Not only would the overheads be running its own graduate programme. suitable for the novice analyst. That said, unaffordable, but ONA has few tasks in a limited way in the other ONA may obtain some benefit from participating the recommendation to increase its size agencies’ programmes, particularly if at the recruitment stage to enable is accepted. This could include involvement for graduates with particularly some ‘talent spotting’, or work placements relevant skill sets. who bring with them significant But primarily ONA needs to employ people While some of these are available from levels of experience and analytic skill. potentially also think tanks, mostly academia, and now the private sector, departments and agencies is vital to the capacity to second staff from other in the Hope philosophy, success. This was clearly embedded optimise ONA’s it more difficult now to second the staff but has had mixed success. ONA finds officers, are reluctant to release first-class it wishes to, partly because agencies and partly because of the increasing emphasis in the public service on management experience, not available to analysts at ONA. up to six officers available for secondment, and has agreed to make DFAT has number of secondees. (Treasury usually provides a smaller Treasury indicated the importance it attributes to continued economic representation within ONA, particularly at the senior level. While ONA is temporarily without background, the recommended with an economic a Deputy Director-General increase in staff numbers will allow that to be remedied.) There are also While there have been up to two ADF secondees from ASIO and DSD. secondees in the past, there is currently none. The difficulties experienced by other agencies in making staff available to ONA in making staff available by other agencies experienced The difficulties or should have that ONA can not realistic to expect and it is are understandable, numbers. But any analyst it identifies, and on unlimited unrestricted call on requests ONA’s are encouraged to view favourably agencies and departments should the particularly during its period of expansion, for seconded staff, Inquiry’s there is an in that regard be accepted. Where recommendations renegotiated in line number of secondees, this should be agreed cap on the increased overall numbers. with ONA’s and utilises flexibility in its employment mechanisms, ONA has considerable population was effect. In January 2004, its analyst this flexibility to good seconded employees, six contract made up of 17 ongoing employees, eight a healthy balance of core and shorter staff and two consultants. This represents conditions creates some although the use of differing employment term staff, carefully managed. inevitable tension which needs to be limited use of short term contracts The Inquiry also found that ONA made employed in this way since 2000. for specific issues, with only five contractors a paper or share expertise would help Greater use of such contracts to write and provide a relatively simple extend the capabilities of a small workforce, the organisation. and inexpensive means of refreshing are the and development, and the related issue of career development Training These issues were raised in the most cause of some concern within ONA. groups and also featured, to differing degrees, in discussion recent staff survey, development as one of their with most identifying career held with Inquiry staff, particularly important to the younger staff top three priorities for change. It was who had career aspirations beyond ONA. ONA analysts begin with, they still need Despite the high level of skill that most training and development. There is a view that analysts’ skills are more inherent analysts with than learned—and this argument has some merit. But even ‘born’ their broad experience have the capacity to become better analysts, or to retain edge most sharply when challenged and refreshed. Apart from a reasonably well-targeted and well-received induction course, the current approach to training and development is best characterised as minimalist and ad hoc. but Self-initiated proposals are usually endorsed, subject to availability, there is little to no conscious management of staff’s development training or needs, and little focus on the specific issue of career development.

report of the inquiry into australian intelligence agencies 108 resourcing and effectiveness of the agencies 109 Size and Resource Issues branches has between three analytic As it is currently structured, each of ONA’s head. All staff work directly to the branch including the branch and seven staff, majority of his time to analytic work, and head, who is also able to allocate the and his deputy review Director-General has few management overheads. The all drafts go through the one editor for every product before publication, and of product which is of a uniformly quality control. This contributes to a standard atmosphere and The small staff numbers add to the cooperative high quality. strong , with staff themselves attributing great value to the flat structures branch heads. and and ready access to the Director-General Nearly all interviewed wished to retain what they saw as these positive elements of being small. Many customers and external commentators noted a concern that ONA might lose its edge if it were to grow significantly. small size brought There was also widespread acknowledgment that ONA’s with it a number of problems or limitations. These relate to capacity to produce assessments, depth and coverage of research for assessments, internal In Chapter 3 the Inquiry identified shortcomings in the use and testing of in the use and testing shortcomings 3 the Inquiry identified In Chapter in an of arguments most accurate presentation sources, and the intelligence of IT tools, and also highlighted a gap in analysts’ knowledge assessment. It has and/or technical and developing analysts’ cultural the desirability of refreshing on career development. also a need for some targeted focus expertise. There is discipline is formal training in the intelligence assessment The extent to which analysts It is true that many ONA contentious issue for staff. needed at ONA is a come with well-developed they are analytic, research and writing skills—indeed honed with While these skills can certainly be selected on that basis. the found the real skill deficit was in the Inquiry training, appropriately targeted environment. Identifying gaps and translation of those skills into the intelligence are not necessarily intuitive—nor is an driving an intelligence collection system agencies’ processes, capabilities understanding or knowledge of the collection for an intelligence community induction and limitations. The recommendation ONA may need. In relation to the former, programme may help to meet the latter system has elements which might find that the Defence intelligence training If ONA analysts are to take specific needs. meet, or be modified to meet, ONA’s such training will be critical. a more active role in collection management, contestability processes, active management of intelligence collection, of intelligence collection, management processes, active contestability development opportunities. and staff limitation on ONA’s the most important of these as the The Inquiry identified at any time. In most cases, ONA topics analysis on all key capacity to provide be unable It is unacceptable that ONA in expertise. deep’ is literally only ‘one they would be most useful or ensure assessments at the time to produce key because the one is brought to bear on assessments appropriate expertise While there are other that expertise is absent or unavailable. analyst who holds as a conscious can help mitigate this problem, such mechanisms which and develop ‘secondary’programme to identify the current skills in analysts, capability. reserve or back-up number of analysts precludes effective inadequate time to research as of Many of the analysts at ONA identified matter what the resources some extent it will always be so—no concern. To will always be more that could be done. applied to an analytic problem, there of increasing the number of analysts to There are also a number of ways short in the use of IT tools, for example, is extremely manage this problem. Training and less confident in their results than limited, with analysts both less efficient staff as research assistants would they might be. But employment of additional improve the quality of research— not only free up analytic time and potentially of new analysts for ONA. The proposed it would also serve as a potential source also increase the size and strength relocation of the Open Source Unit would research capability. of ONA’s and active management of The issues of strength of internal contestability is a significant context of size. Time intelligence collection are related in the and test sources, and perhaps more factor in analysts’ capacity to challenge the collection agencies to fill those. A more importantly to identify gaps and drive collection management is systematic and formal approach to community-wide cases, needed to ensure that the community operates to maximum value. In both management emphasis, clarity of role, and underpinning process are training, also critical and need improvement. But even well trained analysts who understand the importance of doing these things and have a structure to support With current staffing them in their endeavours can only do so much in one day. numbers, the Inquiry finds that analysts do not have sufficient capacity to robust, the underpinning activities to produce the high-quality, undertake comprehensive assessments that government requires from ONA.

report of the inquiry into australian intelligence agencies 110 resourcing and effectiveness of the agencies 111 to increase the analytic strength in the top-orderto increase the analytic strength in the issues for Australia: and South East Asia, North Asia, terrorism, WMD the South Pacific, international economic issues foreign capacity to coordinate and oversee Australia’s to strengthen ONA’s intelligence agencies research capability to strengthen ONA’s to strengthen quality control systems and training and development of analysts Proposed Expansion Proposed argued that an expansion with the Inquiry Almost all of those who spoke manageable. The Inquiry found that of staff numbers was both essential and would be appropriate to address the an approximate doubling of staff numbers revised structure, excluding the funding major issues identified. The cost of the Affairs and the Department of Foreign of $2.5 million to be transferred from includes for the Open Source Unit, will be $25 million per annum. This Trade development overseas and enhanced significant additional funding for analyst engagement with allied agencies. are fivefold: The main drivers behind the changes The opportunities for staff development are limited by size, amongst other by size, amongst are limited for staff development The opportunities the proposed investment, and in staff requires excellence factors. Maintaining which are not for ONA contains a number of options additional expenditure analyst to regional Sending the one Pacific organisation. possible in a ‘one-deep’ ONA unacceptably months, for example, would leave posts for up to three have no management also means that analytic staff exposed. The flat structure effect on their the SES level, with a potentially adverse responsibility below in ONA should be in the public service. A placement employability elsewhere But the increased emphasis further a policy officer’senough in itself to career. and the increased experience in the policy agencies given to management policy arena have led to a tempo of government activity in the international and policy departments. Not only does divergence in the skills valued by ONA it denies the policy departments this impact on ONA analysts’ career options, by a secondment to ONA. access to the deep analytic skills developed to ensure greater focus on cross-branchto ensure issues or functional in the Inquiry’s analysis is highlighted of integrated (the importance reporting). findings on Iraq WMD With the additional capacity, ONA will also have greater flexibility to respond ONA will also have greater capacity, With the additional to surges in demand. is recommended not that the additional capacity for ONA It is important to note but to improve way, of reporting output in any significant to boost the quantity enable ONA analysts to product—and to of ONA’s the quality and assurance less. These goals by analysing more, and reporting create ‘new knowledge’ and comprehensive greater analytic depth, more effective will be achieved by stronger quality control, and more research, better training and development, more rigorous collection effective community coordination, including be improved by greater focus quality will also management. Product the Inquiry’son the process issues identified throughout report. staffing from 74 to 145, with the In numbers, the changes will bring ONA four Deputy Director-General, additional 71 staff made up of one additional analysts, 10 research assistants, five additional branch heads, 18 additional nine additional corporate and IT additional community coordination staff, Affairs of Foreign and 24 staff transferred from the Department services staff, staff with the Open Source Unit (five of whom are locally engaged and Trade would be liaison officer in Washington (LES) based overseas). In addition, the has one LES officer in Washington, upgraded to a SES Band I position. ONA (this position is included in in London and is in the process of recruiting one the current total of 74). RECOMMENDATION: peak foreign Australia’s The budget of the Office of National Assessments, million to should be expanded significantly from $13.1 intelligence agency, $25 million (excluding $2.5 million by transfer from the Department of Foreign by 30 June 2007 to enable a significant expansion in its Affairs and Trade) analytic capacity. An increase in ONA staffing along these lines would require appropriate accommodation arrangements. ONA currently shares a building with ASIO, an arrangement which works well, facilitates communication between the security and foreign intelligence communities, and is strongly supported by the heads of both agencies.

report of the inquiry into australian intelligence agencies 112 resourcing and effectiveness of the agencies 113 With ASIO too in the process of recruiting a substantial number of additional number of of recruiting a substantial too in the process With ASIO would be for accommodation the best option for Inquiry finds that the staff, The to share a single building. both expanded, to continue ONA and ASIO, examining how this and Administration is currently Department of Finance the existing ASIO be realised including through extending option might best a new building. building or through for ASIO to vacate Inquiry that one option would be ASIO has advised the the the current ASIO building to accommodate sufficient space in separate ASIO would then lease in ONA staffing. recommended increase as the new as well those vacating the ASIO building, accommodation for This relocation would be temporary, recruits for which ASIO has been funded. agencies can again be accommodated perhaps for three to four years, until both that the cost of such an option The Inquiry understands in a single building. and above the costs of any extended would be of the order of $11 million over million) of a 24-hour guarding This includes the cost ($2.4 or new building. leased separate accommodation. service at ASIO’s it would enable ONA to expand This option would have several advantages: new accommodation or being split without the disruption of having to find to ASIO which would, in any across two sites. It would minimise disruption accommodate its new recruits. It would case, have to rent additional space to which is important for the integration of the ONA and ASIO together, keep to deal effectively with terrorist threats. intelligence community and its capacity RECOMMENDATION: ONA and an expanded should be provided to ensure that an expanded Funding including as already decided upon, can continue to share a building, ASIO, arrangements. The Inquiry is funding to cover transitional accommodation advised that the cost for this is likely to be in the order of $11 million over and to the present ASIO building. of an extension above the construction and fit-out The timeline for implementing the changes will be determined to a large degree by accommodation issues, although the availability of suitable staff and ONA’s capacity to absorb them successfully will also be defining factors. ONA foresees a three-year plan, starting with 15 additional staff in 2004–05, should additional Subject to accommodation availability, space be available in the current building. ONA would seek to recruit a further 20 staff in 2005–06, with the balance, including the physical relocation of the Open Source Unit, the following year. ONA’s Role Within the Australian Intelligence Community Role Within the Australian ONA’s in Australia, ONA plays a dual role, Within the foreign intelligence community Assessments, and coordinating the being charged with both producing National The combination of the two roles activities of the foreign intelligence agencies. with responsibility intelligence community, places ONA at the peak of the foreign amongst other intelligence community, not only for utilising the output of the but also for managing the coordination sources, in its assessments for ministers, is producing what is necessary to mechanisms which ensure that the community assessment role is spelt out in ONA’s contribute to those assessments. While and in relatively briefly, Act, the latter role is reflected only detail in ONA’s appropriate and achievable in 1978. unspecific language, reflecting what was role merit in a clear articulation of ONA’s The Inquiry finds that there would be to have this reflected and agency, peak foreign intelligence as Australia’s position ONA to fulfil to greatest effect explicitly in legislation. Doing so would the government’s that requirements for assessments on international matters significance to Australia. The intelligence are of political, strategic or economic over the past two and a half decades, and community has matured significantly the requirement for the leading role played by ONA is largely accepted within and more broadly within government. the community, The first is There are two major elements underlying this concept of ‘peak’ agency. quite clear that ONA is the national foreign intelligence assessment body, to make in line with Justice Hope’s 1977 recommendations. A number of the changes recommended throughout this report complement this recommendation, not mandate. the least of which is the recommended change to DIO’s role with respect to coordination of the The second is to strengthen ONA’s The substantive issues which relate to this role, foreign intelligence community. are dealt with in Chapter 4, oversight and accountability, such as priority setting, The sum of the proposed expansion is a near doubling of ONA’s current size. of ONA’s is a near doubling of the proposed expansion The sum a scale which of a nature or on many of them with it challenges, This will bring priorities must be to maintain key ONA’s in managing. ONA is not experienced While ONA will product and staff for which it is valued. the high quality of is significant, and terms, in relative terms the change remain small in absolute sees not be underestimated. The Inquiry culture should its impact on ONA’s and manage their expert assistance to help plan for merit in ONA engaging expansion programme.

report of the inquiry into australian intelligence agencies 114 resourcing and effectiveness of the agencies 115 Conclusion producing high-qualityONA is a well-regarded organisation product with intelligence output, while highly valued generally strong customer support. Its current has too strong a bias towards for its relevance, readability and brevity, better researched longer term intelligence at the expense of more thoughtful, Assessments. assessments, including more National by highly skilled staff and flexible staffing performance is underpinned ONA’s Its staff. strategies, with a healthy balance between permanent and short-term secondment programme should be strongly supported by other agencies and departments, both in the release of high-quality officers, and in making clear the analytic talent is currently value that is attached to secondments to ONA. ONA’s too thin, leaving it with insufficient depth both regionally and on globally significant need greater focus, particularly as ONA and career development issues. Training expands its staff numbers. ONA is also ill-equipped in resource terms to undertake effective community coordination, set out in its legislation. role as the peak foreign intelligence agency should be asserted, both ONA’s through a stronger legislative mandate, and through a more appropriate and and there are a number of recommendations aimed at strengthening ONA’s at strengthening aimed are a number of recommendations and there this role in Enshrining community coordination. deliver effective capacity to this regard. responsibilities to government in ONA’s legislation would formalise role ONA’s that there would be merit in reflecting The Inquiry believes Intelligence Foreign its name. A name such as the Australian unambiguously in (AFIAA) would be appropriate. Assessments Agency RECOMMENDATION: name which reflects be given to investing ONA with a Consideration should understandable, it does and one which is more publicly more accurately what Assessments Agency (AFIAA). Intelligence Foreign such as Australian would produce more agency, The new AFIAA, as the peak foreign intelligence It would have greater reporting. National Assessments, and more long-term and agency the public service community, flexibility to second staff from within to ensure that secondments to AFIAA and department heads would be charged directive role in It would play a more were recognised as career enhancing. the current formal processes with collection management, supplementing collection. responsibility to identify gaps and drive intelligence working-level strategic-level foreign intelligence assessment relevant to the security strategic-level foreign intelligence assessment of Australia and potential operations and assessment to support ADF operations and defence technologies. technical assessment of weapons systems As an all-source assessment agency, DIO draws on a broad range of information, DIO draws As an all-source assessment agency, Director of DIO also operates as principal both covertly and overtly gathered. The (CDF) and strategic-level intelligence adviser to the Chief of the Defence Force senior ADF and Defence leaders to support strategic-level command, planning enabling role for the DIO plays a key and conduct of ADF operations. In this way, in CDF and Defence leaders in executing their advisory roles to government and the effective conception and execution of military operations. and non- product is broad, and includes non-ADF The range of clients for DIO’s role operational customers, including outside the Defence Organisation. DIO’s are to provide intelligence support relevant to Australia’s and focus, however, national security interests. THE DEFENCE INTELLIGENCE ORGANISATION THE DEFENCE in 1990 as the Organisation (DIO) was established The Defence Intelligence all-source strategic-level, intelligence assessment Defence Organisation’s subordinate ONA, DIO is a It is not an autonomous body; unlike agency. Defence with no separate statutory organisation within the Department of character and purpose is mandate or direct budget line. The organisation’s portfolio. defined by its position within the Defence current role is to develop all-sourceDIO’s intelligence assessment to support Defence policy making and the planning and conduct of military operations, government decision-making. capability development and wider planning, areas: Its functions fall broadly into three main more publicly understandable name such as the Australian Foreign Intelligence Australian Foreign name such as the understandable more publicly to $25 million from $13.1 million A budget increase Agency. Assessments Source Unit from million for the transfer of the Open per annum (plus $2.5 one-off and some additional costs Affairs and Trade Foreign the Department of in staff numbers from which includes an increase relating to accommodation), This effectively. to equip ONA to fulfil its mission 74 to 145, is recommended branch heads. and four additional deputy Director-General includes an additional

report of the inquiry into australian intelligence agencies 116 resourcing and effectiveness of the agencies 117 . While single-Service assets still exist at various levels, intelligence 1 In organisational terms, the Defence intelligence system constitutes DIO, DSD, DIGO, the DIGO, DSD, In organisational terms, the Defence intelligence system constitutes DIO, the Joint Operations Intelligence Centre (JOIC) at Headquarters Defence Security Authority, Centre and ADF intelligence Joint Operations Command, the Defence Intelligence Training staffs and units at the strategic, operational and tactical levels of command. 1 defence intelligence is now regarded and managed in most respects as an defence intelligence is now regarded integrated, cross-Defence capability. was 2,975 reports of all types, formal output in financial year 2003–04 DIO’s publications, DIO maintains two major current and long term. Besides its formal databases which are drawn on to varying degrees by the ADF and other parts of the Defence Organisation. DIO also operates as a centre of defence-related scientific and technical expertise to support broader defence capability objectives. development and national counter-proliferation The organisation today operates with a staffing base of approximately 300: The organisation today operates with per cent since 1999–00 and represents it has increased in number by about 12 Civilians increasingly outnumber a mix of civilians and military personnel. 34 per cent of uniformed staff—from military personnel. The decline in DIO’s cent in 2004—is a matter of concern total staffing in 1996 to less than 20 per 160 analysts, with the remainder DIO has some dealt with later in this chapter. functions. of its staff in management and enabling collection intelligence Defence’s key DIO sits at the national level alongside part of the broader Defence intelligence and is a key agencies, DSD and DIGO, system DIO Today DIO is accountable through the Defence Deputy Secretary, Intelligence and Intelligence Secretary, the Defence Deputy through DIO is accountable through the It is funded the CDF. of Defence and to the Secretary Security, sense as part its performance is reported in a general Defence budget and report and own annual as well as through DIO’s of the Defence portfolio, mechanisms. reporting intelligence community-wide assessment DIO’s Australian intelligence community, As a member of the Assessment Priorities Intelligence by the National Foreign priorities are guided are case these general priorities in DIO’s 4). Importantly, process (see Chapter moderated by Defence-specific to support ADF operations, needs, particularly development. planning and capability DIO’s purpose DIO’s its customer base is broad and the demands on remit is wide reaching, DIO’s it are high. The complex character of the organisation brings with it a number of difficult challenges for DIO and Defence management. mandate overlaps with the roles of other organisations at both ends; DIO’s at the military end, there is overlap with other parts of the Defence intelligence system and, in terms of national-level strategic assessments, there is some overlap with ONA. Indeed, the two significant overlap issues in the Australian DIO’s budget for 2004–05 is approximately $52.5 million (this does not include (this does not $52.5 million 2004–05 is approximately budget for DIO’s which in DIO, personnel serving a year for ADF of some $5 million staffing costs about $17 million is Service). Of this $52.5 million, are met by the contributing specific projects which expenses and some $23 million for for civilian employee spent on behalf of Defence, with the remainder DIO administers on DIO received supplementation travel and security. administration, training, areas. for 19 additional positions in priority in the 2004–05 Budget an has been made in recent years to entrench Significant progress is, it should be as a defence capability; that understanding of intelligence assets war-fighting in the same way as other front-line regarded and developed is being accepted across land and sea forces. This represented by the ADF’s air, evolving posture of trends and the war-fighting Recent Defence, but unevenly. the integration of the intelligence function the ADF are helping to push forward has gathered pace As the tempo of ADF operations with broader ADF activity. of non-traditional security threats, in recent years, and with the emergence ADF operations is being increasingly the importance of good intelligence for its usefulness to military planners recognised. Intelligence is demonstrating and operational commanders. the evolution of intelligence as an Institutional adjustments have reflected the years ago, Defence recognised that Four integral military capability. were sufficiently large, complex portfolio’s intelligence and security functions be brought together in a single group. and significant in capability terms to portfolio as one of the six key Intelligence was subsequently designated and Security was appointed, outputs. A Deputy Secretary for Intelligence the Defence intelligence system charged with overseeing and coordinating and operating to provide the best and to ensure the system was structured portfolio. most relevant capability for the Defence

report of the inquiry into australian intelligence agencies 118 resourcing and effectiveness of the agencies 119 foreign intelligence system both involve DIO. This underlines the need to define This underlines the both involve DIO. system foreign intelligence the AIC and the Defence can bring to both unique value DIO clearly the of the and indicates a need for better management intelligence system, between with other agencies. Better communication boundaries DIO shares respective roles will deeper mutual understanding of their organisations and and its product, DIO needs a redefined sense of purpose be essential to this. need to be geared to deliver accordingly. staffing and systems assessments between ONA and DIO in strategic Some level of overlap on which each may the set of common strategic issues is inevitable, given sheared economic developments cannot be and Political legitimately report. of defence strategic issues facing off from a comprehensive assessment fixed boundaries between ONA and DIO Australia. Seeking to define and police debilitating for both organisations and assessment subject matter would be less comprehensive and contextualised would produce assessments which are to be. Defence leaders’ understanding of —and less relevant—than they need might regional developments, for example, and how those developments key of their advisory function upwards interact with ADF capability is at the core Just as ONA, as the government’sand command responsibilities downwards. in will need on occasion to cover military matters peak assessment agency, to be aware of political and economic its assessments, so DIO analysts need strategic they might hold for Australia’s events and trends for the implications necessarily need do not, however, circumstances and future postures. They to publish on those subjects. also desirable as a source Some level of overlap—properly managed—is of contestability in strategic-level assessments. a sharp focus. ADF expectations DIO needs But there are costs. More than ever, developments Far-reaching and demands on, intelligence are growing. of, have methods and over the past several years in war-fighting had a profound effect on the interaction of intelligence and military operations. notably the emergence of network-centric The nature of modern war-fighting, to warfare has placed a premium on intelligence information and assessment has inform the development and execution of battle plans. While intelligence today’s with today’s fought always been crucial in war, weaponry against timely and today’s adversaries are even more demanding of high-quality, relevant intelligence support. The rise of non-traditional security threats, has also drawn intelligence as a capability to the terrorism in particular, centre of strategic and operational decision-making. These developments are global, and have implications for military intelligence for military and have implications are global, These developments case, there is In Australia’s all over the world. and armed forces organisations tempo in recent it. Not only has the high ADF operational something more to DIGO) but also the demands on DIO (and on DSD and years placed additional in what defence ADF operations has forced a major shift changing nature of as a military need from intelligence. Intelligence planners and commanders not been tested for is being tested now in ways it has capability for the ADF Australia in 1999, for the first time in decades, East Timor several decades. In not an option many previous deployments, it was Unlike was in command. support essential on others for the intelligence and other for the ADF to rely this was not the and achieving the mission. While our soldiers alive to keeping active Australian foreign and strategic case in Iraq or Afghanistan, increasingly reinforced the centrality of have in particular, region, policies in the Pacific capability. intelligence as a war-fighting that DIO cannot afford to be anything Demands on DIO from Defence are such but tightly focused on priority defence-related resources, it needs. With finite focus on their central purpose and key is crucial that all members of the AIC its work and resources on areas clients, and that each agency concentrate where it is best able to add value. some deliberate refocusing by DIO on Both DIO and the AIC would benefit from As an agency operating at defence-related matters and the Defence customer. is necessarily orientation part of DIO’s the national strategic level, an important Important the CDF and senior Defence policy-makers. upwards, to the Minister, come at the expense of its more upwards focus should not as this is, DIO’s prosaic but vital role of providing wide-ranging, up-to-date data and and conduct of military operations. assessments required for the planning Better resourcing of ONA should help this readjustment. ONA, of course, needs to be alert to the needs of senior Defence customers when developing its assessments. The Inquiry recommends that DIO cease to produce intelligence not directly serving Defence requirements for strategic-level defence-related analysis, on noting that there are some specialist areas such as counter-proliferation which DIO provides special expertise to support whole-of-government efforts. DIO should be more judicious in publishing on political-economic developments, and should do so only to provide context for military strategic assessments and in ways that draw out clearly the military strategic implications

report of the inquiry into australian intelligence agencies 120 resourcing and effectiveness of the agencies 121 of those developments. The resulting product should be more strongly defence should be more strongly resulting product The of those developments. of the As leader to Defence customers. distributed primarily oriented and Intelligence system, the Defence Deputy Secretary, Defence intelligence monitoring role in this area. an active needs to take and Security, RECOMMENDATION: intelligence Organisation should cease publishing The Defence Intelligence analysis. requirements for strategic-level military-related not directly serving should be more strongly defence-orientedThe resultant product distributed and should take an customers. The Department of Defence primarily to defence this. active role in monitoring be a challenge and will continue to be a Maintaining such a focus will always leadership team. A tighter focus is likely difficult management task for the DIO and certainly less by way of current to mean DIO produces fewer assessments, and economic developments. This may intelligence updates covering political Policy- high-level readership. of DIO’s require some adjustment on the part look elsewhere—including to ONA, in Defence and beyond will need to makers open sources—for political-economicto relevant policy departments and to events which do not have particular analysis and for updates on international that DIO will not be able to continue defence implications. They need to accept intelligence update service on all matters. to produce a comprehensive current activity, a good proportion of DIO’s And they will need to appreciate that and valuable work, will remain largely including some of its most important invisible to many. DIO are internal to the Defence portfolio Another set of boundary issues facing and works in a complementary way with and have to do with how DIO interacts other intelligence elements in the ADF. As with the DIO-ONA relationship, some level of overlap is inevitable. The very and nature of the military intelligence environment, where the same information led to analysis might have value at strategic, operational and tactical levels, has the Joint Operations Intelligence some blurring of the boundaries between DIO, Centre (JOIC) at Headquarters Joint Operations Command, the intelligence staffs at the environmental commands and deployed intelligence staff. strategic-level focus on these issues and the The boundaries between DIO’s operational and tactical intelligence work done by the JOIC and other ADF intelligence staff are complex and require high levels of mutual understanding, Managing these communication and goodwill to negotiate successfully. boundaries will remain an ongoing challenge for the Defence Organisation the Defence Organisation challenge for will remain an ongoing boundaries as a whole. Theatre Joint of the JOIC (until recently the Australian The establishment differences ASTJIC) in 1996 recognised fundamental Intelligence Centre, at strategic requirements of Defence decision-makers in the intelligence support consumer is At the strategic level, the principal and operational levels. and broad who is more interested in trends the national-level policy-maker battlefield information. than the detail and ephemera of capability assessments are different: at the operational and tactical levels Intelligence needs task, directly an intelligence staff which is theirs to commanders want priorities and agile enough to drill down responsive to their particular operational and the threat situation. While there will into the detail of the intelligence picture to be aware of strategic context and likely be some overlap—commanders need and tactical-level intelligence staff need developments, and operational-level by DIO—this does not mean the efforts to draw on data and analysis developed are necessarily duplicative. Analysis of the different intelligence functions the strategic to operational conducted at the different levels of command—from different purposes and applications. and tactical levels—supports significantly on going tension in relation to the Despite their distinct roles, there remains and JOIC. This division was last agreed division of responsibility between DIO formal agreement between DIO and the Commander, 1999 with a in February significant changes since then in ADF Australian Theatre. There have been reforms are still being implemented to needs and operational orientation and Defence intelligence arrangements ADF arrangements. arrangements, and the planned must flow from and support current command Canberra area, and the bedding down of move of the JOIC from Sydney to the a good opportunity to review the new ADF command arrangements, affords This move, however, optimal intelligence arrangements to support the ADF. will not be complete for several years and the current arrangements should be addressed, as much as possible, as soon as possible. On this basis, the Inquiry recommends that working arrangements and divisions of responsibility between DIO and JOIC, last defined in 1999, be re-examined by the Defence Organisation to ensure they reflect current needs and command The performance structures and to build understanding of them among staff. of both organisations should be judged by their ability to work with each other The Inquiry also recommends renewed efforts by both in a complementary way. are organisations to build mutual understanding and to ensure the organisations

report of the inquiry into australian intelligence agencies 122 resourcing and effectiveness of the agencies 123 operating in an appropriately complementary way. The theory is not complex. The theory complementary way. in an appropriately operating operational and tactical-level cascade into assessment should Strategic-level deployed level should analysts at the operational and assessment: intelligence assessments they DIO product and data to inform the be able to reach into and field-level commanders and to support operational provide to guide their should flow in both directions. This complementary relationship decision making. and leadership. but communication, coordination The issue is not location, RECOMMENDATION: should Force Defence and the Australian Defence The Department of re-examineDefence of responsibility between the guidelines for the division Operations Intelligence Centre (JOIC), Intelligence Organisation and the Joint current needs and command last agreed in 1999, to ensure they reflect strategy with the ADF and structures. DIO should undertake an outreach set of requirements and level the JOIC in particular to develop an agreed and reduce duplication. of service in order to synchronise expectations sides. Under heavy workload pressure There is room for improvement on both day-to-day priorities readers, DIO’s and information demands from high-level the operational levels of the ADF and to have not always given prominence to Even assessments produced by support for Defence capability development. seen as meeting ADF operational needs. DIO for ADF customers are not always ensuring that DIO is staffed appropriately and has of the solution rests in Part ADF planning table it needs to underpin the systems in place and access to the needs. DIO and the JOIC (and other ADF its understanding of ADF operational working to coordinate their efforts to best intelligence assets) need to continue the assessment process. draw on the strengths each brings to causal one, the composition of DIO’s While the relationship is not a direct the number of its ADF staff which has been workforce—and, in particular, reduced by about half over the past eight years—is a matter of some concern. control, but DIO needs to The issue of ADF staffing is largely out of DIO’s the case to commanders to increase the number of its continue to make Even still, DIO uniformed staff and secure high-quality ADF personnel in DIO. is and will remain a predominantly civilian-staffed organisation working to a this, the organisation needs mixed civilian and ADF client base. Recognising way enhanced strategies to build understanding among its civilian staff of the the Defence organisation and the ADF operates, what its intelligence needs are and the particular conceptual lenses through which the ADF approaches intelligence assessment. Discussion and debate within Defence about the preferred background (civilian preferred background Defence about the and debate within Discussion DIO’s some time. Historically, position, dates back of the Director DIO or military) established in 1990, all military—since the organisation was leadership has been at the level of Major have been serving military officers but the current Director has considered the The Inquiry is unusual internationally. General. A civilian head some points in favour sides of the debate and can appreciate arguments on both positions to help represented in DIO senior leadership of having military officers Nevertheless, is attuned to ADF needs and processes. ensure the organisation in that merit should be the central consideration the Inquiry considers DIO needs to produce Now more than ever, lead DIO. determining who should support to Defence decision-makers. the highest possible quality of intelligence cannot afford to settle for anything but The Defence Organisation as a whole The ideal outcome would be a Director the best possible leadership of DIO. background and high-orderof DIO who has both a strong military analytical this, the ADF needs to be prepared to achieve and management skills. To and its direct relevance to the acknowledge the importance of the position for the job. candidates the highest-quality defence of Australia by putting forward RECOMMENDATION: should, on Defence Force The Department of Defence and the Australian Intelligence Organisation through Defence fill the position of Director, vacancy, military candidates. Selection should be a competitive selection of civilian and a suitably qualified high-qualitymade on merit with a preference for military position should be filled on a 3–4 year officer if such an officer is available. The contract basis. at articulating its intelligence needs at The ADF for its part needs to be better Organisation has not always been all levels of command. The broader Defence to do for them and in engaging DIO good at understanding what DIO is able and the other agencies on their particular intelligence needs. An appreciation in of intelligence as a core capability is also incompletely felt and implemented some parts of the Defence Organisation. A higher level of engagement between intelligence functions and staff will be essential to the ongoing task of building trust and interoperability between the organisations. mutual understanding, part The shortage of ADF staff numbers in the Defence intelligence system is of a broader ADF staffing deficit being felt in many parts of the Defence ADF organisation. This deficit will not be easily solved. Here, as in other areas of ADF staffing levels require difficult choices—Service chiefs are finding activity,

report of the inquiry into australian intelligence agencies 124 resourcing and effectiveness of the agencies 125 the organisation clearly on supporting defence strategic policy and meeting the organisation clearly on supporting defence strategic policy and meeting Quality of product DIO produces much good quality strategic-level assessment. The organisation’s staff mix, spanning analytic, technical and scientific expertise, is a valuable the strategic assessment needs of the Australian Defence Force. A renewed mandate for DIO A renewed mandate for DIO There is a strong case for re-enunciating clear, role in a way which makes DIO’s core business—to support defence the organisation’s internally and externally, role, Such a mandate would state DIO’s strategic policy and operational needs. to support Defence planning and as part of the broader Defence Organisation, operations through the provision of all-sourceto intelligence advice on threats threats or those requiring a military the national interest, in particular military account of organisational and take response. A refreshed mandate would of the Defence intelligence and structural changes, including the establishment Intelligence position of Deputy Secretary, security group and the creation of the by DIO to It might also serve as a basis for renewed outreach efforts and Security. the organisation and Defence customers build more dynamic interaction between constituency for DIO product. and to promote a more active and engaged RECOMMENDATION: should issue The Department of Defence and the Australian Defence Force a revised mandate for the Defence Intelligence Organisation which focuses themselves increasingly with too few personnel available to meet demand available to meet too few personnel increasingly with themselves review staffing across underway to currently organisation. Work across the by the Chiefs of Service agencies for consideration all the Defence intelligence of coordination to the bring a higher and welcome degree Committee should personnel across intelligence functions. distribution of ADF RECOMMENDATION: should agree Force Defence and the Australian Defence The Department of assigned to the the shortfall of military personnel on a strategy to redress to ensure agencies, including in leadership positions, Defence intelligence importance of are commensurate with the growing military staffing levels and planning. intelligence in war-fighting asset. Readability and product presentation have improved considerably over considerably have improved and product presentation asset. Readability a culture work hard to foster DIO and his staff The Director of recent years. do not interfere Managers internal contestability. of critical inquiry and to the Inquiry work of line analysts. Customer feedback inappropriately in the was generally positive. of DIO’s hear some concerns about the breadth The Inquiry did, however, to provide ability and the effect it has on the organisation’s range of reporting planners at all levels. to ADF operations and defence policy intelligence support DIO to be more refocusing proposed above would allow The organisational the analytical all of its core constituency and to deepen responsive across base it is able to apply to complex defence-related tasks. assessment term strategic longer to which DIO’s Another related concern is the extent by perceived weight of demand for assessment task is being crowded out on matters not directly related to daily and other current products, including of DIO product is in the form of short defence policy and operations. The bulk snapshots. While this balance does not daily reports and current intelligence time devoted to current as opposed necessarily reflect the amount of analyst lines are clear. to longer term assessment, the trend as for its counterparts elsewhere, An ongoing challenge for DIO management, A lesson and longer term reporting. is to get the balance right between short of balancing day-to-dayof recent crises has been the importance crisis reporting over a longer time frame—putting with reports assessing broader trends The Inquiry’simmediate developments into context. findings from the case of wider use of the Strategic studies in Chapter 3 underline the importance analysis of current Short descriptions and Intelligence Estimate in particular. not represent the best investment of events have limited shelf life; they do assessment resources. They distract busy analysts from the longer Australia’s term strategic assessments which are of deepest and more enduring value for strategic policy-makers. The current intelligence bias also exacerbates resource gaps at a time when demands on the organisation are high from new areas of reporting need (terrorism, ADF deployments), resulting in less work being done on issues of enduring and fundamental defence-strategic relevance to Australia. DIO and its expertise on, must ensure it maintains its production of assessments of, national current and future military capabilities of most relevance to Australia’s

report of the inquiry into australian intelligence agencies 126 resourcing and effectiveness of the agencies 127 Other areas for improvement attributes of high-qualityChapter 2 identifies key intelligence assessment. discussed in foregoing paragraphs. A number of those attributes have been parts of the close management of key Others, including the growing need for below in discussion of essential supporting , are covered again systems for high-quality assessment. Contestability is another area integral to good assessment and one deserving of further attention. Chapter 6 of this report reviews formal and informal contestability processes operating in DIO (and ONA) and recommends more deliberate processes of critical review of product before it is published. DIO’s organisational culture in general terms supports a healthy level of internal as for ONA and others, the onus should as well DIO, For contestability. continue to be on analysts and their managers to ensure that rigorous testing place through all stages of assumptions, sources and inherited judgments takes of the assessment process. security. Such assessments are essential support for operational planning and for operational are essential support Such assessments security. notwithstanding priority, must be given due decisions. They procurement support short-term demand for current assessments to changing levels of decision-making. is not unique to DIO. of the current intelligence load The creeping dominance in Australia and are felt by other assessment agencies The same pressures pace of quickening and have been exacerbated by the in allied communities the information revolution and the inter-connectedness, globalisation and global a greater volume of security threats. There is now emergence of non-traditional on. Customer appetites intelligence for our agencies to report significant current in some areas, although a range of and expectations may also have grown the Inquiry about the volume of snapshot customers also expressed concern to falling off of longer term strategic assessments flowing to them and the themselves need to be more assessments. DIO managers and analysts snapshots. judicious in publishing current intelligence RECOMMENDATION: should give greater focus to longer The Defence Intelligence Organisation should produce Strategic Intelligence term and strategic assessments. DIO and for issues of high security Estimates for significant military operations relevance to Australia. Human resources and people management Human resources DIO is a source of significant strength up mix that makes The broad personnel helps DIO straddle the different for the organisation. The staffing combination high-quality leavening analytical and the ADF planner, worlds of the policy-maker experience. skills with relevant technical and military challenges to management in building But the mix also presents a number of in the organisation and ensuring methodological and cultural coherence DIO management has consistently high-quality output. Most crucially, staffing profile, turnover rates and incomplete control over the organisation’s military staffing and has opted to date recruitment. It relies on the ADF for its processes for its graduate-levelto draw on central Defence recruitment intake. numbers in DIO (and other parts of the The steady decline of ADF personnel for concern, including for the agency Defence intelligence system) is a cause relationship between the number of uniforms While there is no mechanical itself. to ADF needs and ways, a good in the organisation and its responsiveness the agency in the Defence environment uniformed presence does help ground The Inquiry understands the many pressures and assist mutual understanding. that civilianisation reforms have had and demands on the Service chiefs, and an impact across many parts of the Defence Organisation. Still, the Inquiry It would be desirable if the considers that the pendulum has swung too far. examination of staffing coordination across the Defence intelligence agency for the Chiefs of Service Committee was workforce currently being undertaken able to go some way towards redressing the current situation. An important partner for DIO in this respect is ONA. There are many ways ONA. There are many in this respect is partner for DIO An important in testing with each other organisations engage in the two in which analysts through place formally, Some of this takes assumptions and conclusions. reports. ONA-DIO as the National Assessment and joint mechanisms such within and between of contestability play out informally But most methods should continue and other sources of expertise. This assessment agencies an essential part of high-qualityto be encouraged as assessment. intelligence

report of the inquiry into australian intelligence agencies 128 resourcing and effectiveness of the agencies 129 Support Systems Good assessment Good assessment is defined by more than words on paper. also requires more than top-quality important as these are. Good staff, full intelligence assessment requires active and engaged management of the Another part of this chapter (see Cross-community of this chapter Another part addresses training Issues) and intelligence agencies needs of the foreign development and professional not only training, coordination of analyst community-wide recommends some training has to case, but during their careers. In DIO’s on arrival in an agency special staffing mix. There is an ongoing, hybrid respond to the organisation’s Defence-relatedto be sensitised very early to DIO’s need for DIO staff its various to the way the Defence Organisation—and responsibilities and managers should All DIO analysts and intelligence components—operates. offered by the Defence Organisation. early intelligence staff training undertake leaders, a including from senior staff at all levels of DIO, The Inquiry heard from organisation, and the broader AIC, is able concern about the extent to which the professionals. There are difficult issues to offer career paths to their intelligence intelligence agencies. here for DIO and for the other foreign many of these points. Acknowledging The Inquiry is sympathetic to DIO on and seek approval for career structures these difficulties, DIO should develop to It should seek attract high-qualitythat enable it to fulfil its mission and staff. professionals. The Inquiry recommends develop a cadre of career intelligence for some broader use of the senior that the organisation explore possibilities other workplace reforms already under analyst designation in combination with Defence Organisation. Such reform should consideration by the agency and the in the direction of specialist analysts. Structural reforms help DIO to retain key greater ‘broadbanding’ and development of agency- classifications of work-level also provide additional flexibility for specific workforce arrangements might management to attract and retain high-quality staff. RECOMMENDATION: should review its workforce management The Defence Intelligence Organisation workforce structures, including possible introduction of agency-specific arrangements and wider use of senior analyst positions and Australian particularly Agreements, to attract and retain high-quality staff, Workplace in key technical and scientific disciplines. The designation in 2001 of a dedicated Defence Deputy Secretary, Intelligence The designation in 2001 of a dedicated Defence Deputy Secretary, recognised the need for high-level stewardship of defence and Security, The appointment has already had defence capability. intelligence as a front-line it has helped promote within Defence an image of the an impact. Importantly, Defence intelligence agencies and staffs as distinct parts of a team, working Coordination & Oversight of the Defence Intelligence System intelligence cycle—from defining intelligence requirements right through requirements right intelligence cycle—from defining intelligence Support customer feedback. and assessment of of product to dissemination timely and An organisation will not produce high-quality, functions are crucial. for determining what in the absence of effective systems relevant assessment Effective systems form, for whom, in what order of priority. to write on, in what need to see and determine what analysts are also needed to in the intelligence picture. what gaps there are as they need to. DIO are not functioning as effectively Current systems in to strip back inefficient over the past several years undertaken Reforms but they have also to reinvigorate the organisation processes have helped revealed some systems gaps. management of the intelligence The need for more deliberate and systematic A comprehensive review of itself. cycle has been recognised by the organisation is planned with computer support, publication and dissemination systems DIO’s commends this production processes. The Inquiry a view to overhauling DIO’s intelligence of DIO’s review be undertaken step and recommends that a similar management processes in totality. facing Australia and the high Acknowledging the serious security challenges DIO should continue to re-examineADF operational tempo of recent times, for crisis management. Sustainability and test the procedures it has in place situations continue for extended periods. issues will be inevitable where crisis limited expertise is applied only to tasks The problem can be eased by ensuring of resources or borrowing from other which require it by internal reallocation also to be involved in their are likely agencies where possible (although others shifts to relieve stress on staff. own agencies’ crisis efforts) and by designing intelligence agencies. Systems need to None of these pressures are unique to be shaped to deliver surge capacity as needed while minimising staff burn-out and ensuring that the rest of the organisation is able to continue with its essential tasks.

report of the inquiry into australian intelligence agencies 130 resourcing and effectiveness of the agencies 131 towards the same basic goals. It has also helped encourage closer cooperation encourage closer It has also helped same basic goals. towards the for provided a focal point agencies, and has across the and coordination and with other capability and resource planning engagement with Defence security matters. on wider intelligence and national departments and agencies is still some way to go in portfolio-wideNevertheless, there and coordination is an important job to be done in cross-communitycommunication. There intelligence capability the development of the Defence management, in driving Defence intelligence activity and priority setting across the and in coordinating consisting intelligence system is a complex grouping, system. The Defence them. Each in common and much also to separate of agencies with much reflecting its technical focus and history. characteristically has its own orientation, is not appropriately Intelligence and Security, The position of Deputy Secretary, only two staff work directly to the resourced for the task. As things stand, is lodged with the Deputy Secretary, position. While the coordination task coordination and community management the staff to support the position’s among the intelligence agencies. roles are lodged elsewhere, distributed to support intelligence capability It is something of an anomaly that staffing resides currently of the Deputy Secretary, development, a central responsibility wide financial and administrative oversight just as community inside DIO, is managed by a unit lodged in DSD. recommends a clearer matching This situation is not ideal. The Inquiry the Deputy Secretary position is of resources and responsibility such that would entail a restructuring to shift the This functionally united with its staff. Intelligence Capability and Support to Operations, position of Director-General, coordination and intelligence and associated staff responsible for system–wide staff Similarly, Deputy Secretary staff. capability development from DIO to the lodged within DSD and performing system-wide resource management and business operations functions should also work directly to the Deputy Secretary. While accommodation shortages may preclude co-location,reporting lines of direct to the Deputy Secretary position. should reflect lines of responsibility, Correcting the current situation and ensuring that the Deputy Secretary position is adequately resourced to drive coordination of the Defence intelligence system should also relieve some pressure on the directors of DIO and DSD. coordinating role to play to ensure the Defence The Deputy Secretary has a key and intelligence system collectively is geared to producing the right kind, quality amount of intelligence support to the Defence Organisation. This means playing For DIO, the primary issue is not resources; it is organisational focus. A number the primary issue is not resources; DIO, For adequate attention and corresponding of areas of DIO activity have not received discussed above, are not only in depth resources in recent times. Those gaps, in maintenance of essential subject areas; they are also of coverage of key through which DIO manages functions supporting systems and back-office been made more obvious by the high level the intelligence cycle. The gaps have tempo over the past several years. of intelligence activity and ADF operational or would like, areas in which it is seeking, DIO alerted the Inquiry to a number of resource supplementation. the A number of these relate to increased analytical staff resources to deepen subject and country areas. coverage of a number of important organisation’s The Inquiry notes recent funding supplementation provided to DIO in the 2004–05 Budget for 19 additional staff positions to increase analytical strength areas. This targeted supplementation, combined with the in a number of key sort of organisational refocusing recommended above, should help fill any gaps. Nevertheless, over time, DIO should continue to be alert to any significant to resource weaknesses in emerging and priority areas and should continue a case for supplementation where internal reallocation of resources make cannot provide the coverage needed. Resources a central role in overseeing collection and liaison management, tasking and management, tasking collection and liaison in overseeing a central role to invigorate and working intelligence system, for the Defence priority setting in the by the broader Defence Organisation a more dynamic engagement this An important part of Defence intelligence capability. development of the the system to ensure future needs and reaching back into involves interpreting that the agencies are understood by the agencies and priority requirements resourcing to meet these needs. have the tools and RECOMMENDATION: should restructure Force Defence and the Australian Defence The Department of Intelligence to ensure the position of Deputy Secretary current arrangements resources to undertake an effective and Security is supported by adequate staff agencies. In particular, coordination role for the Defence intelligence coordination and capability working on defence intelligence system-wide development issues, and cross-agency administrative issues, should be to the Deputy Secretary. functionally united with and report directly

report of the inquiry into australian intelligence agencies 132 resourcing and effectiveness of the agencies 133 Under-investment in DIO is perhaps most acute in information management. in information is perhaps most acute in DIO Under-investment because to its potential may not be exploited risk that information There is a recommends an early, As noted above, the Inquiry of assessment bottlenecks. and its review by DIO of its business systems thorough and integrated DIO IT systems needs. Any strategy for upgrading information technology processes. Depending in a complementary way with AIC needs to be developed on the form of re-engineering required, some one-off supplementation to allow upgrade its IT may an information management plan and DIO to implement proposed development be considered in the context of be needed. This should of the main cross-community (see section in this chapter IT network, AICNet dealing with Cross Community Issues). RECOMMENDATION: should undertake an integrated review The Defence Intelligence Organisation for information, collection and liaison of its business systems, including those needs. The latter should take management, and of its information technology across the AIC and place in the context of IT network developments one-offinternationally and may require some funding supplementation. is another area which senior management structure and staffing levels Finally, DIO as an organisation faces significant may warrant some additional resources. with such a broad-ranging mandate and management challenges. In an agency be regarded as a second-ordervaried client base, management cannot issue. It needs to be adequately resourced. DIO, of a Deputy Director, The Inquiry recommends the formal designation one-starat the SES Band 2 lower or Band 1/military an level. This would be the reassignment of the position of additional position and would balance and Support to Operations, to provide Director-General, Intelligence Capability with Working Intelligence and Security. direct support to the Deputy Secretary, the Director as part of the DIO leadership team, the Deputy Director could product, or be operate as either principal analyst overseeing the organisation’s charged with management coordination for the organisation, with a particular analytical capabilities and on developing and focus on the development of DIO’s overseeing systems and enabling functions to support high-quality assessment. The appointment of a deputy would free up the Director to focus on analytical broad product, strategic intelligence support for senior Defence leaders and the that management of the organisation. And while the Inquiry does not consider in the civilian or military complexion of candidates should be a primary factor DEFENCE SIGNALS DIRECTORATE Background intelligence agency. signals The Defence Signals Directorate is Australia’s Group of the Department of Situated within the Intelligence and Security and national-level capability Defence, DSD provides both a vital Defence of foreign communications. through the interception and reporting value. It conveys directly the views Signals intelligence has special intelligence of the target, in contrast to the second-hand accounts usually provided in humint reporting or the expressions of view or position in public statements or diplomatic exchanges. Supported by sophisticated technology and large sigint is also often the timeliest source elements of automated processing, The national-level intelligence of information for analysts and decision-makers. the provided by DSD is important, and is becoming increasingly so as part of government’s role played overall response to global terrorism. But it is the key for by sigint during war and other military operations that is the principal driver and the significant government investment in DSD—it has the largest budget number of staff within the intelligence community. selection of DIO’s leadership group, a balance should be struck between military be struck between a balance should leadership group, of DIO’s selection When level in the organisation. at the management experience and non-military position should if is filled by a civilian, the deputy the position of Director may assist DIO officer and vice versa. This by a uniformed possible be taken it needs to operate. of straddling the two worlds in which in the difficult task RECOMMENDATION: should create Force Defence and the Australian Defence The Department of Organisation. Where for the Defence Intelligence a Deputy Director position be the Deputy Director should is a military officer, possible, if the Director civilian, and vice versa. at DIO, classification level of the Director, The Inquiry considers that the current The Inquiry does not find compelling the SES Band 2 upper level, is appropriate. the position to SES Band 3 level. The the arguments it has heard for upgrading designations of DIO represents a good fit with the current level of Director, the agencies both of whom, like leaders of the other two Defence intelligence Band 3 level. report to a Defence Deputy Secretary at SES DIO Director,

report of the inquiry into australian intelligence agencies 134 resourcing and effectiveness of the agencies 135 Intelligence . DSD Today DSD is a strong and capable organisation with a talented and highly skilled Today, workforce and an impressive technological base. Its roles are clearly defined intelligence a unique and highly valuable contribution to Australia’s and it makes effort. DSD has a sharp customer focus and sound business practices. The Inquiry found DSD to be well managed with a leadership that is closely engaged in the challenges of maintaining an effective sigint capability for Australia. DSD’s Origins and Role Origins DSD’s in the development of Australian current activities have their origins DSD’s Australia the war, Following II. War military sigint capabilities during World East sigint organisation with Far joined with Britain in the Commonwealth Signals Bureau was established a headquarters in . The Defence Defence, with responsibility for in 1947, as part of the Department of in peacetime. maintaining a national sigint capability within the its status as a “directorate” In 1977, DSD assumed its current name, Hope’s recommendations that DSD’s Department of Defence reflecting Justice recognition. The relocation of DSD’s important national role be given greater was completed in 1993 (the last headquarters from Melbourne to Canberra functions DSD’s this move). to make member of the intelligence community with the enactment of the were subsequently defined by legislation have been foreign partnerships, dating back to its wartime origins, DSD’s alliances remain these intelligence a central factor in its development. Today dynamic, and of immense value to Australia. strong, Services Act 2001 DSD also has an important role in advising on and supporting information in advising on has an important role DSD also involves some significant This role across government. security practices with managing complex business relationships challenges, including requirements companies, and balancing security information technology business is in an environment in which government against user needs DSD also maintains a number of electronically. increasingly conducted high-security communications and IT systems. The Inquiry heard almost universal praise for DSD’s performance from policy The Inquiry heard almost universal praise for DSD’s departments, from other members of the intelligence community and from within Defence. DSD is widely held in high regard for the sigint capability it maintains and the quality of the service it provides. Its response to the DSD’s Activities DSD’s As part of the Department of Defence, DSD is subject to the Department’s of Defence, DSD is subject to As part of the Department to the Deputy arrangements. Director DSD reports internal accountability him to the Secretary of the and through and Security, Intelligence Secretary, with legislation and its compliance Externally, Department of Defence. of Intelligence are monitored by the Inspector-General ministerial direction of the propriety of who also has responsibility for oversight and Security, to parliament in on DSD is provided publicly and its activities. Information Budget Statement. and its Portfolio Defence’s annual report added significant new the Intelligence Services Act in 2001 The enactment of of DSD were set out functions Key elements to this accountability framework. relating to authority for specific in that legislation together with requirements administration Act also provides for DSD’s intelligence collection activities. The Joint Committee by the Parliamentary and expenditure to be subject to scrutiny DSD is subject to scrutiny by other parliamentary While ASIS and DSD. on ASIO, security constraints limit the committees mandated to consider Defence, these committees. The Inquiry found that information which can be provided to in working under the provisions of the DSD has encountered no major problems Intelligence Services Act. of representations that DSD should be The Inquiry received a small number of its significance as a national established as a statutory body in recognition capabilities. These views were asset and its powerful intelligence gathering that DSD was appropriately and the Inquiry concluded very much in the minority, of sigint support to military operations positioned in Defence. The importance closest possible links between DSD and and the necessity of maintaining the argue overwhelmingly that DSD should remain the Australian Defence Force activities are well regulated by the within the Defence portfolio. DSD’s Intelligence Services Act, and the Inquiry received every indication that national customers are being well served by DSD. Accountability Accountability

report of the inquiry into australian intelligence agencies 136 resourcing and effectiveness of the agencies 137 heightened pace of ADF operations and to counter-terrorism has been has and to counter-terrorism pace of ADF operations heightened top Australia’s closely focused on efforts are DSD’s noteworthy. particularly dedicated to issues with 92 per cent of its resources intelligence priorities, of requirements. in the highest category ADF THE SUPPORT TO support to military operations. focus on effective DSD has had a long-standing in 1999 has been deployment the ADF’sDSD experience during East Timor ADF operations. enhanced support arrangements for drawn on to develop to the Gulf. in Afghanistan and Iraq-related deployments These were utilised or other assets, collection related to Iraq was by American While much of the and technical tasks in support of coalition DSD performed a number of analytical sigint organisations. forces, and provided a vital link to allied COUNTER-TERRORISM SUPPORT TO to the whole-of-governmentDSD has made a strong contribution response committed to the counter- Personnel to Islamic terrorism in South East Asia. since 2001, and will rise further as a terrorism effort have risen significantly achievements 2004–05 Budget. DSD’s consequence of extra funding in the the significant adjustments necessary have already been considerable, despite target and adjust its processes for DSD to understand the nature of this agencies close cooperation with relevant government DSD’s accordingly. factor in its success. has been a key GAPS AND CHALLENGES The rapid rate areas. in some key Despite its successes, DSD has gaps affordability of sophisticated of technological change and the increasing Over and opportunities for DSD. technology have created both challenges recent years, technological changes have resulted in some loss of access or in a limited ability to exploit collected communications. The Inquiry by DSD, intelligence targets, and finds efforts to improve access to key notes DSD’s there would be merit in a periodic external review of its performance against high priority and enduring targets. RECOMMENDATION: should commission with Intelligence Coordination Committee The Foreign performance against the Department of Defence, a periodic review of DSD’s top-priority targets. DSD’s Resourcing DSD’s intelligence agencies, both in terms of its annual DSD is the largest of Australia’s available to DSD have increased by budget and personnel numbers. Resources around 60 per cent since 2000–01. operations through two mechanisms— is provided for DSD’s Resourcing through the Defence budget and supplementation through government-wide budgetary processes. While the former accounts for the bulk of DSD funding, it has received additional funding from government over recent years, including for counter-terrorism. As a large and complex organisation, DSD presents significant management organisation, DSD presents significant As a large and complex highly specialised fulfil a diverse range of functions, from challenges. Its staff It manages a large jobs to linguistic and analytic tasks. engineering and IT international and is part of an interdependent investment programme, practices management and business found that DSD’s partnership. The Inquiry signals intelligence for the maintenance of Australia’s provided a strong basis is impressive, as are the inherent flexibility of DSD processes The capability. of management and staff alike. skills and dedication over recent years, of tasks DSD has undertaken The range and intensity placed heavy have and counter-terrorism, particularly in support of ADF operations number of prudent measures While DSD has adopted a demands on DSD staff. of staff through high pressure areas, to minimise stress, including the rotation such as potential burn-outit must continue to manage problems with great care. structure within DSD stretched by The Inquiry found the senior management The growth in staff numbers, and the range and diversity of its responsibilities. response to terrorism about by Australia’s the additional responsibilities brought operational tempo have not been Force and a heightened Australian Defence senior management team. of DSD’s mirrored by a corresponding strengthening remedied by the addition of two Senior The Inquiry recommends that this be complement. management Executive Service level officers to DSD’s RECOMMENDATION: should strengthen Defence Force The Department of Defence and the Australian structure with the creation of a Deputy Director responsible management DSD’s responsible for collection and analysis. for technical matters and a branch head Management of DSD Management

report of the inquiry into australian intelligence agencies 138 resourcing and effectiveness of the agencies 139 THE DEFENCE IMAGERY & GEOSPATIAL ORGANISATION & GEOSPATIAL THE DEFENCE IMAGERY Background Organisation (DIGO) is an agency The Defence Imagery and Geospatial in November 2000. While DIGO of the Department of Defence, established intelligence is not. involvement in imagery is a new organisation, Australia’s intelligence was integrated into the role of 1964 until 1998, imagery From DIO and its antecedents. in the 1990s and growing appreciation of the potential improvements Technological decision to work towards an utility of imagery intelligence led to a government improved capability for Australia. The imagery intelligence function was separated from DIO and the Australian Imagery Organisation (AIO) was created in 1998. enabling for the Australia developed the ability to exploit digital imagery, In AIO, first time the rapid analysis and dissemination of imagery intelligence products Defence’s geospatial capability remained to customers. Until 2000, however, in a structurally distinct from the imagery function and was principally resident in , . But with Agency, separate body—the Defence Topographic the development of the AIO came increasing awareness of the close functional relationship between geospatial information (the accurate location of an object) and imagery (the ability to capture high resolution images of a location). Conclusion sigint capability and agency that provides a first-class DSD is an impressive Its response to regional national security asset for Australia. represents a major for Australian Defence has been excellent, and its support counter-terrorism It is producing high-quality operations highly valued. product with strong Force and planning processes are customer satisfaction levels. Its management well tailored and its investment programme effective and forward looking, organisation. to the technical challenges facing the An increasingly large component of DSD’s budget is allocated to its capital budget is of DSD’s large component An increasingly in major projects which, currently has four programme. DSD expenditure over more than a decade. capital expenditure extending out some cases, involve communications and the will ensure access to required these projects Together by a large the resultant intercept. These are supplemented capacity to process specific challenges. projects, typically targeted against number of minor capital DIGO Today capability has developed considerably in imagery and geospatial Australia’s a 1999 pre-merger strength of 240 imagery and geospatial recent years. From Canberra located in the organisation’s DIGO now consists of 311 staff staff, budget has also in Bendigo. DIGO’s headquarters and its geospatial facility yearly expenditure of $26.7 million in expanded significantly—from actual of $90.5 million in 2004–05. Reflecting 2000–01 to an estimated expenditure capital investment has accounted for the high infrastructure costs involved, budget. Initial development of AIO a significant portion of the organisation’s saw a multi-year commitment by government of $70 million through the late 1990s. Continued development will see further capital investment in excess of $150 million over the next four years, including some $43 million in 2004–05. first three years has been on setting foundations for the The focus of DIGO’s continued growth of the organisation. This will remain the case in the short-term: considerable capability development work is still to occur in the next 12–18 months. Changes ahead include the relocation of DIGO headquarters to new facilities in Canberra in late 2004, the recruitment and training of over 100 additional some workforce relocation from construction of a new geospatial facility, staff, Bendigo to Canberra, and rationalisation of five IT systems into two. As a result, in February 2000, the Department of Defence commissioned commissioned Department of Defence 2000, the in February As a result, Study’. Information Organisation ‘Defence Geospatial an external key The and imagery this study was that Defence’s geospatial recommendation of In November 2000, centralised in a single organisation. capability should be Organisation, by the merger of the Australian Imagery DIGO was created and the Directorate of Strategic Military Agency the Defence Topographic Geospatial Information. intelligence in support of role is to provide imagery and geospatial DIGO’s for other national objectives. It is responsible defence interests and Australia’s and geospatial analysis and dissemination of imagery the collection, processing, for imagery and geospatial information products, and for determining standards within Defence. Intelligence and Deputy Secretary, DIGO is accountable through the Defence of the to the Secretary of the Department of Defence and the Chief Security, by national activities are guided At the national level, DIGO’s Defence Force. requirements. assessment priorities and collection

report of the inquiry into australian intelligence agencies 140 resourcing and effectiveness of the agencies 141 Building Awareness of DIGO’s Role Building Awareness of DIGO’s need to build clear and widespread understanding of these is the Foremost Australian intelligence community, of the capability DIGO can bring to the the ADF and other customers. uniform understanding of the staff share a generally Within DIGO itself, But outside the organisation, purpose as an intelligence agency. organisation’s uneven across the role and capabilities is currently understanding of DIGO’s While there exists broader customer base. Defence Organisation and DIGO’s what DIGO can do, detailed understanding broadly a basic level of knowledge of situation needs to be redressed as is less evident across the board. This fully the potential of an imagery a matter of priority if Australia is to exploit resources have been invested. intelligence capability in which significant of awareness is understandable: the organisation is an extent, some lack To resourcing and capability its staffing, new and has been focused on establishing has begun to focus on the issue. foundations. Nevertheless, DIGO management and engagement strategies are A customer support team has been established being developed. The Inquiry endorses these early initiatives and recommends further work in this area; raising awareness will be critical to the future success of DIGO and must be addressed in a comprehensive and structured manner. RECOMMENDATION: The Defence Imagery and Geospatial Organisation should develop and implement a comprehensive customer engagement strategy. Against this back drop of organisational change, DIGO has been able to meet DIGO has been change, back drop of organisational Against this a period of high demands during and geospatial varied intelligence ongoing and and output, growth in size, capability despite DIGO’s Yet operational tempo. a developing capability. intelligence in Australia remains imagery and geospatial its products and to establish its customer base, refine As DIGO continues it would be premature organisational and capability changes, manage significant the organisation. The major changes in direction for for the Inquiry to propose will need continued issues that of key identified a number Inquiry has, however, development. ongoing attention in DIGO’s Tasking of DIGO Tasking Clear articulation by customers of their intelligence requirements is essential intelligence agencies, is to work with maximum the other like if DIGO, case without effectiveness. Once again, this will not be achieved in DIGO’s role and capabilities better and broader understanding of the organisation’s across its customer base. Within the Australian intelligence community, in DIO in particular, there has in particular, in DIO intelligence community, Within the Australian and analytical role in recent years over the nature of DIGO’s been some debate years to promote the by AIO and by DIGO in its early responsibilities. Efforts all-sourceagency as having an unhelpful to assessment responsibility were has now been resolved The matter intelligence community. relations within the by the Director of management level with clear direction appropriately at the there remains some level of uncertainty Nevertheless, DIGO to DIGO staff. to which DIGO and outside DIGO) regarding the extent among some (within without trespassing on the territory assessment analysts should undertake of the all-source assessment agencies. not an all-sourceA balance needs to be struck. DIGO is agency. assessment is it simply a provider of images and maps. DIGO undertakes however, Neither, of geospatial intelligence product. single source analysis and dissemination single source collection and analytical As such, it should be recognised as a in this context. This role must be agency and needs the leeway to produce all levels (internal and external to DIGO) clearly articulated and understood at attempts at all-sourceif inappropriate tasking and inappropriate assessment are to be avoided. in responsibilities between DIGO and There is also a need to clarify any overlap The overlap in Analysis Facility. Target the Joint Operations Intelligence Centre respects to the blurring of responsibilities relation to imagery is similar in some it relates to imagery intelligence between DIO and JOIC, but in this case ADF”responsibilities. While “support to the role, as a key is seen by DIGO who is responsible for its provision needs exactly what that support means and for Defence, but given the manning to be clarified. This is essentially a matter pressures that exist, Defence should clearly identify what these support functions entail and allocate responsibilities accordingly. Interagency Issues Interagency

report of the inquiry into australian intelligence agencies 142 resourcing and effectiveness of the agencies 143 Inspector-General of Intelligence Inspector-General , which predated DIGO’s establishment, be , which predated DIGO’s External Oversight foreign intelligence agencies is covered in detail External oversight of Australia’s in Chapter 4. The Inquiry recommends that the and Security (IGIS) Act 1986 amended to incorporate DIGO formally in the Inspector-General’s oversight to remedy the current situation action should be taken responsibilities. Similarly, in which DIGO is not covered by the Intelligence Services Act and does not come under the administrative and financial oversight of the Parliamentary Priorities national intelligence contribution to With its current level of resources, DIGO’s of the the highest priority targets. Part efforts generally does not reach below growth in recent years of the number of reason for this can be found in the fast resources have been although additional subjects deemed to be of high priority, Nevertheless, the situation made available to meet increased expectations. to satisfy a broader range of national should be rectified: DIGO should work the case, particularly as the organisation intelligence priorities than is currently disciplines internal priority-setting grows. DIGO needs to develop rigorous and focus on priority subjects amenable which align with external requirements of the number of high priority expansion analysis. Future to imagery-based for additional staff. targets should not default to a requirement Too frequently, DIGO receives tasking to provide illustrative products to support to provide illustrative receives tasking DIGO frequently, Too to produce requirements given specific intelligence rather than being briefings, of an imagery and briefing support is a useful byproduct against. While such to view this as the it would be wasteful for customers geospatial organisation, support available from DIGO. complete range of a clearly articulated set DIGO tasking is the absence of A broader issue affecting a framework and geospatial requirements. Establishing of Defence intelligence the best balance with requirements would help achieve of Defence intelligence is no guidance from requirements. Currently there national foreign intelligence a situation that customers for geospatial production, either Defence or national are to be effectively utilised. needs to be addressed if geospatial resources and the relationship between Defence-specificThe issue of priority-setting is discussed in Chapter 4. and national foreign intelligence requirements DIGO is midway through a significant expansion in all aspects of its capability— a significant expansion in all aspects DIGO is midway through geospatial facilities, and imagery and resources, communications, staffing, consolidated expansion is managed and the capability production. How this and will be critical to the long term stability over the next few years effectiveness of the organisation. AND RECRUITMENT STAFFING the full potential of DIGO’s training, Without the right staff and appropriate It is crucial for the organisation’s technical capability will go unrealised. continues to match the significant development that investment in personnel to date are good: an appropriate staffing capital investment in train. Indications proceeding as planned. expansion programme is underway and In seeking to recruit some 100 needs go beyond raw staff numbers. DIGO’s years, it is essential that DIGO and the additional analysts over the next few for a staffing mix that is suitable for Defence organisation identify and recruit needs to be maintained between recruiting individuals A proper balance DIGO. education and aptitude, and those with at the graduate level with appropriate suited to the requirements of imagery work experience and established skills will also be crucial for the and geospatial intelligence. Staff retention future health, and management will need to focus on creative organisation’s workplace structures, career management options, and agency-specific to retain good staff. Adequate and targeted training will remain fundamental to staff development effectiveness. The current suite of technical imagery training and to DIGO’s high-qualityprepares staff well to undertake imagery analysis. There remain, training in broader intelligence skills—those which help shortfalls in however, staff understand how to turn imagery recognition skills into intelligence product, of and to appreciate where imagery intelligence fits into the broader scheme take intelligence. Such training will be essential as the organisation continues to DIGO should participate fully in the cross-communityon new staff. training recommended later in this Chapter. Managing Expansion Managing Expansion Joint Committee on ASIO, ASIS and DSD. As an intelligence collector with As an intelligence and DSD. ASIS on ASIO, Joint Committee DIGO should of Australians, and civil liberties to affect the privacy the potential Act and come relevant sections of the Intelligence Services be included in the Committee. Joint of the Parliamentary within the purview

report of the inquiry into australian intelligence agencies 144 resourcing and effectiveness of the agencies 145 Quality of Product Quality of Product of product DIGO is able to provide is being made in the quality Progress from organisations intelligence users. Customer feedback to Australia’s to its capabilities is positive. DIGO and agencies which have been exposed is regarded as providing high-qualityand unique products with a support to exploit as about their role and keen professional staff that is enthusiastic at their disposal. In some areas, DIGO effectively as possible the capabilities geospatial and imagery expertise. already provides world class levels of areas of concern. Most notable is the balance of current There remain, however, The tendency intelligence and long term intelligence being produced by DIGO. an for current intelligence tasks to crowd out longer term intelligence work is issue that affects all intelligence agencies to some degree. DIGO must work to ensure a better balance is struck between current and long term reporting. from As with other areas of the AIC, there is a distinct need for better feedback and users. In those areas of close customer interaction, there has been strong definite feedback on the utility and quality of DIGO product. In other areas, DIGO remains uncertain of the relevance of some products, unaware of whether UNIFORMED PERSONNEL UNIFORMED Current levels of DIGO. responsibility the ADF is a primary Support to modest increase organisation are less than ideal. A of ADF staffing in the ability to provide tailored and would improve DIGO’s in ADF staffing levels that DIGO has Such an increase would help ensure ADF. timely support to the links with the ADF support ADF deployments and to build appropriate staff to and geospatial products. that are prime users of imagery headquarters and units agencies staffing across the Defence intelligence The adequacy of ADF recommends by the Service chiefs. The Inquiry is currently under review to redress the shortfall. that a strategy be developed elsewhere in this chapter RESOURCES should resolve most resource issues The programmed expansion of DIGO the most make must however, for the organisation. DIGO and its customers, Continued funding increases cannot from the resources already committed. geospatial intelligence: the growth of be seen as a birthright of imagery and and managed to ensure that Australia the capability must be properly cultivated substantial investment. reaps the best possible return for its The Australian Secret Intelligence Service (ASIS) was established in 1952 region. as a collector of secret foreign intelligence, primarily in the Asia-Pacific the and was modeled on, its British counterpart, The organisation grew out of, to UK Secret Intelligence Service (UKSIS). The organisation was first referred in parliament in 1975 and was not publicly avowed until 1977. ASIS underwent a series of shocks in the 1980s and early 1990s. The ill-conceived training exercise which resulted in the use of force in the Melbourne Sheraton Hotel, and the public disclosures by disaffected members of ASIS in 1994 were AUSTRALIAN SECRET INTELLIGENCE SERVICE SECRET INTELLIGENCE AUSTRALIAN Background DIGO is partway through a significant expansion and remains a developing, expansion and remains a developing, DIGO is partway through a significant building awareness DIGO must continue but already valuable, capability. It is incumbent also on intelligence users of its current and future capabilities. of the asset represented by DIGO. to ensure they are making the best use expansion will be critical to Effective management of the organisation’s workforce able to exploit fully ensuring a stable, well-trained and productive the significant resources at its disposal. Conclusion products are being used, and uncertain about whether its development of new whether its development uncertain about are being used, and products to future complementary heading in directions and products is capabilities should be customers Building better dialogue with key national security needs. Inquiry has customer awareness strategy the an integral part of the DIGO. recommended for as an has been flagged to the Inquiry quality control of DIGO product Finally, analysis are technical be addressed. Imagery and geospatial issue that needs to the untrained analyst simply cannot take An detailed training. subjects requiring customers may understand its importance. As a result, raw information and these product. For to assess the accuracy of DIGO’s often be in no position to monitor closely the accuracy and reasons, it is critical that DIGO continue to improve the skills represented standard of its product and seek continuously examine the need to develop a dedicated DIGO management should in its staff. as a final step in its production processes. and robust quality control mechanism

report of the inquiry into australian intelligence agencies 146 resourcing and effectiveness of the agencies 147 provided a legislative footing for ASIS for the provided a legislative Intelligence Services Act 2001 Intelligence Services The Inquiry found that, overall, ASIS’s performance in undertaking its core business of producing secret intelligence was very good. Producing Secret Intelligence Producing ASIS Today substantial transition in its history. ASIS is going through perhaps the most ASIS’s responsibilities are now In line with the changing security environment, requirements remain, ASIS also has more diverse. While important traditional on non-statea growing role in gathering intelligence including terrorist actors, networks and illegal immigration syndicates. Since 2000, laid on it, ASIS is growing. In line with the additional requirements ASIS In the 2004–05 financial year, the funding available to ASIS has doubled. million. An extra $20 million has been will have a budget of more than $100 alone. allocated since September 11 for counter-terrorism ASIS works has also changed. The accountability environment in which years in force, has become a The Intelligence Services Act, only three operates. mainstream part of the way the organisation Overall, it is change that characterises ASIS today more than any other dynamic. to the success of the organisation Managing that change successfully is the key in the foreseeable future. first time, placing on the public record the functions of the organisation, and its the public record the functions of first time, placing on fundamental role is to produce the organisation’s limits. Under that legislation, tasks to be added but the Act allows for additional foreign secret intelligence, to ASIS’s mandate. It has particularly with a wide group of intelligence partners. ASIS works closely and has a wide US, services in the UK and the close links with comparable many of them in services of other countries, range of ties with intelligence the Asian region. exceedingly low points. These incidents resulted in detailed inquiries into the in detailed inquiries incidents resulted low points. These exceedingly reform. which led to substantial organisation, The QUANTITY AND QUALITY OF OUTPUT OF OUTPUT AND QUALITY QUANTITY However, are rising. and levels of reporting on its mission, ASIS is focused and the quality than quantity in intelligence collection, quality is more important complimentary is mixed. Though some customers were of ASIS’s reporting indicated that there were areas others ASIS’s reporting, about the value of was not as good as it should be. where ASIS’s coverage priority success against some of its highest ASIS has clearly achieved throws into relief other That success, however, intelligence requirements. does not produce significance to Australia, on which ASIS priorities, of similar reporting. the same quality of specific recommendations the Inquiry makes In the classified version of this report, where ASIS’s performance should be that would more clearly identify areas also to achieve that. The Inquiry taken improved, and measures that should be report, ways in which ASIS should be indicates, in the classified version of the structured to maximise its output of high-quality secret intelligence. the high-priority intelligence requirements ASIS is still building its capabilities on time to develop capabilities in It takes which have emerged in recent years. judgment about ASIS’s success against human intelligence, and a conclusive at this point. ASIS needs to manage its new requirements would be premature new targets carefully and effectively, its development of capability against high-quality business. However, to a timeframe determined by the humint can and should be expected performance against terrorism requirements from ASIS in the foreseeable future. human intelligence, a compromise The Inquiry recognised that, in producing the production of secret intelligence needs to be struck between maximising management of risk. The Inquiry reporting against requirements and the underlined the need for ASIS not to abandon that prudent risk management framework in its effort on new requirements. NEEDS FOCUS ON PRIORITIES AND CUSTOMER priorities, and ASIS activities are closely matched to government-approved the Inquiry noted the considerable effort made by ASIS to tailor its output to the requirements set for it. ASIS is focused on its customer base. It solicits feedback on its reports through to a variety of methods. It has made genuine efforts to engage with customers

report of the inquiry into australian intelligence agencies 148 resourcing and effectiveness of the agencies 149 Management Issues well managed. In its historical context, that Overall, the Inquiry found that ASIS is by Justice Samuels and Mr Codd in 1995, is a notable finding—prior to the inquiry of its staff and resources. the organisation had a poor record in management carrying out its mandate. Their approach ASIS’s managers are confidently Today, there are occasional lapses, they seem is contemporary and professional. While compares well with modern Australian rare, and ASIS’s management mostly Service norms. Public STAFF staff On the whole, staff are satisfied with their employment. The most recent and 70 per cent believe survey showed that 73 per cent are satisfied with ASIS, with that ASIS is meeting its current challenges well, a finding that is consistent the Inquiry’s Staff were, with marginal exceptions, discussions with ASIS staff. complimentary of management and supported the direction that the organisation is taking. ensure that their needs are being met. Despite this, some customers in policy this, some customers being met. Despite their needs are ensure that assistance to only limited ASIS reporting provided indicated that departments them in their day-to-day work. AND MAINTENANCE OF EFFORT NEW TARGETS TO ADAPTATION ON EXISTING TARGETS adapting to its the success that ASIS has had in The Inquiry examined on its work and the impact of that adaptation new intelligence priorities, to form a While it is not possible, at this point, on traditional priorities. adaptation to new about the success of ASIS’s comprehensive conclusion a high degree of been achieved in some areas; in others tasks, success has level of resources devoted to terrorism adaptation is being attempted. The high Innovative approaches terms of quantity. is notable, as is the output, at least in And in recruitment, ASIS is to new requirements are being developed. its officers to fit the new requirements. diversifying the skill sets required of its coverage of traditional The Inquiry noted that ASIS had maintained the major new effort it is directing intelligence requirements notwithstanding to terrorism and to other new topics. In general, commitment is a feature of ASIS staff. They are, broadly, keenly They are, broadly, feature of ASIS staff. commitment is a In general, normal requirements to work beyond in their work, and prepared engaged A number of staff tasks are performed to a high standard. to ensure that their in ASIS is high. that the sense of camaraderie volunteered the observation that they are not sections of the ASIS workforce feel Having said that, some was no systemic failing The Inquiry found that there favoured for advancement. to ensure that all sections this area, but notes that ASIS needs by management in for senior positions. given opportunities to be competitive of its workforce are EXPANSION MANAGING come a need for expansion of the organisation has With the substantial effort gives rise to real risks and considerable effort in recruitment. This staff selection is being handled with challenges. The Inquiry found that, overall, been some notable recent exceptions appropriate caution, though there have evident. ASIS management should ensure where poor recruitment decisions are utmost and that they make prudently, that recruitment decisions are undertaken who might prove to be poorly suited to efforts to avoid the recruitment of staff at risk to the rapid expansion of the the organisation in the future. If that comes not ASIS’s standards. that should suffer, organisation, then it is the expansion including ASIS workplace. Some staff, Stress is an increasing feature of the health of personnel, detailed to those responsible for ensuring the mental by a large group of the the Inquiry the high level of stress experienced is particularly so in high-priority areas, but members. That organisation’s in general. ASIS’s leadership should is a feature of much of the organisation and should monitor closely concern key have the wellbeing of their staff as a to remedy them. the signs of stress, and act promptly issue for ASIS is its ability to grow and diversify in a healthy the key In summary, selection managed growth could give rise to the Poorly and sustainable way. of the wrong staff or the wrong internal systems, with serious risks. Those involved in monitoring ASIS’s performance also need to recognise the difficulties associated with substantial growth, and tailor their expectations of the organisation accordingly. RESOURCES Overall, the Inquiry found that the resources available to ASIS are appropriate it— for its mandate. Some very substantial requirements have been placed on

report of the inquiry into australian intelligence agencies 150 resourcing and effectiveness of the agencies 151 not least its new obligation to develop knowledge of the activities and networks of the activities to develop knowledge its new obligation not least are to ASIS for that task resources available The additional of terrorists. scale of the undertaking. appropriate for the ability to sustain its level reassured about ASIS’s continuing The Inquiry was also fact that substantial traditional intelligence priorities. The of reporting against traditional intelligence priorities is to be available for key resources continue security and prosperity. national important for Australia’s sound, with an resource management practices The Inquiry found ASIS’s The Department of resources among priority tasks. appropriate allocation ASIS’s spending pattern saw no problems with and Administration of Finance since the increase in its resources. ACCOUNTABILITY It was clear in government is strong. Overall, the accountability of ASIS to and in documentation that the Inquiry discussions with staff and management, conscious of its role in government, its analysed, that the organisation is very accountability mechanisms, and that it responsibilities to ministers and other needs. is focused on delivering to customer the confines of the Intelligence ASIS has adapted well to working within ASIS management and staff of from Services Act. The Inquiry heard, however, for some of their work. In the main, these the complications that the Act creates burden that the Act, and a range concerns relate to an additional administrative found that much of that burden The Inquiry of other legislation, places on ASIS. levels of control on the work of intelligence is directly attributable to appropriate that the additional administrative agencies. Overall, the Inquiry is not convinced for accountability. burden is out of proportion with the need TRAINING LANGUAGE closely at the question of the language skills of intelligence The Inquiry looked ASIS agencies, and the topic is covered generically later in this chapter. language capabilities of its staff. specifically sought funds to bolster the key skills are a vital tool of trade for gathering humint. ASIS’s skill base in Language but not optimal. It has a strong cadre in some areas, but this area is satisfactory, deficiencies in others. The Inquiry recommended that ASIS should be provided language capabilities of its staff. with additional funding to bolster the key Recruitment and Training The essential ingredient for high-quality intelligence is a cadre of top-class professionals with access to the information they need to identify significant CROSS–COMMUNITY ISSUES its own set of challenges. foreign intelligence agencies faces Each of Australia’s the quality of Australian a number of factors underpinning There are, however, are related most These intelligence which apply across the community. in the AIC, distribution of intelligence particularly to the quality of the people external intelligence relationships and material, management of Australia’s well-trained agency needs high-quality, agency interaction with the public. Every foreign the most of Australia’s All agencies need to make and motivated staff. about how new partnerships might intelligence partnerships and think creatively each agency needs to have mechanisms in place be shaped. And increasingly, to respond to growing levels of public interest in intelligence and the occasional wish of governments to put intelligence-based information in the public domain. The following section deals with these cross-cutting identifies issues and approach. a number of areas amenable to a community-wide Conclusion is objectives its key found that ASIS’s performance against Overall, the Inquiry team. Its production staff and an able management very good. It has committed in quality is strong in some areas, though improvements of secret intelligence achievements, it is While there have been some early are required in others. on new judgment about ASIS’s success a comprehensive too soon to make requirements, including terrorism. It must complete a major expansion, ASIS has a challenging period ahead. to produce high-qualitywhich entails some real risks. It is required intelligence terrorism. In doing this, it must balance on new and complex subjects, notably production against the maintenance carefully the demands for new intelligence of a prudent risk management framework. RECOMMENDATION language to bolster the key additional funding be provided with ASIS should capabilities of its staff.

report of the inquiry into australian intelligence agencies 152 resourcing and effectiveness of the agencies 153 events and trends and the conceptual framework to judge what these to judge what framework trends and the conceptual events and in the future. for Australia now and might mean developments years community has expanded over recent foreign intelligence As Australia’s recruitment and on intelligence agencies have grown, and expectations placed each more than ever, have assumed greater significance. Now training challenges the skills and expertise recruitment strategy that identifies agency needs an active them into the future. out the talent they will need to sustain required and seeks attention to identifying agency recruitment needs to pay particular Increasingly, to match these. technologies and seeking out skills emerging issues and is factor in the Australian context limiting here. A key There are difficult issues available. The number of people with the restricted pool of professional talent interest and experience to be top-classthe skills, training, intelligence collectors agencies are competing for talent and assessors is relatively small. Intelligence and with alternative professions, with the attractions of the private sector in some areas, the agencies are academia and policy departments. Inevitably expansion of the intelligence The recent competing also amongst each other. shortages—a number of the agencies are agencies has exacerbated the supply to fill the new positions provided to them having difficulties finding the people by government in recent years. is and will continue to be needed over an In these circumstances, special effort pool of recruits to the AIC, including extended period to broaden the traditional in short supply within the community. to target specialist knowledge currently also needs to be skilled at sharing The Australian intelligence community sense it from elsewhere. It makes expertise among agencies and borrowing centres of excellence; defence-relatedfor the community as a whole to develop to reside in DIO. for example, is likely WMD, technical expertise on issues like agencies need to be able to reach And given the small size of the community, This beyond their boundaries and the AIC for expertise and new perspectives. and is particularly important in the case of the assessment agencies. Managers staff in ONA and DIO should continue working to build links with government departments, think tanks and other repositories of analytical strength. Some selective development of career management across the intelligence including possibly a programme of secondments between community, agencies, should also be explored. of But even with the best recruitment strategies and the most prudent sharing talent, early training and ongoing professional development will remain crucial. An AIC-wide with a general orientation training course to provide new starters a sense of community among intelligence knowledge base and to build course for middle-level This should be followed by a refresher agency staff. AIC officers focused on cross-community issues and challenges. Some supplementary funding may be required for this A common training course for analysts in DIO and ONA to develop and hone Such a skills in analytical tradecraft and professional intelligence writing. course could also address topics such as the cultural dimensions of analysis as well as analytical approaches to non- and interaction with policy-makers traditional security threats. There may be opportunities for Australia to learn from analyst training approaches used overseas and in other analytical agencies of government and Intelligence agencies need to invest in their staff, both through formal training both through invest in their staff, agencies need to Intelligence their and update opportunities to expand them with and by providing overseas. Increasingly and tradecraft, in Australia and knowledge, perspectives to build the require dedicated training intelligence professionals also, Australia’s non-traditional security needed to collect against and assess special set of skills threats such as terrorism. and related training figure for community-wide There is no single expenditure reflecting in large part the agency to agency, range widely, activities. The figures intelligence disciplines associated with different different training requirements to staff recruitment. taken and the various approaches the community in approaches to There is currently little commonality across While a one-size-fits-allstaff training and professional development. approach and all agencies, cross-communitywill not meet all the needs of all staff benefit from some greater use of understanding and interaction could areas approach in key training initiatives. A common community-wide efficiencies. might also offer a number of administrative Committee (FICC) should play Intelligence Coordination The proposed Foreign to address cross-cuttinga role in identifying and developing strategies training under way among agency heads. Common needs, building on discussions already for whole-of-governmenttraining would help provide a foundation approaches mobility around the community. to intelligence needs and improve employment to: consideration should be given In particular,

report of the inquiry into australian intelligence agencies 154 resourcing and effectiveness of the agencies 155 A programme of strategic seminars for AIC senior leaders to consider leaders to consider for AIC senior of strategic seminars A programme AIC-wide issues. intelligence capability and Such joint courses would supplement, rather than replace, training developed would supplement, rather than replace, Such joint courses (and, requirements of the AIC to meet agency-specific by individual members on Defence-specific agencies, common training in the case of the Defence the training, In developing and presenting common needs and issues). expertise available able to draw on considerable Australian agencies would be careers in intelligence professionals who have spent in the form of seasoned collection and assessment. with developing resource needs associated examine likely The FICC should also A system of cost recovery from and running common training courses. The FICC should develop for participating agencies should be explored. for some additional funding to establish a government consideration a proposal two-person training cross-AIC secretariat within one of the agencies to manage the utility of The FICC might also consider on behalf of the broader community. to develop a framework for cross-engaging a professional training consultant community training. RECOMMENDATION: Intelligence Coordination Committee should develop community- The Foreign of a general induction wide training initiatives, including consideration some joint training in the discipline programme, a mid-level refresher course, language training and a programme of of intelligence assessment, common senior leadership strategic seminars. RECOMMENDATION: Intelligence Coordination Committee should consider options for The Foreign including a programme community, career management across the intelligence of secondments across agencies. proficiency represents another core competency for the AIC. Many Language poor of the agencies lack depth in this area, a weakness that reflects generally have levels of formal foreign language training in Australia. Most of the agencies in place some kind of system for remunerating staff with relevant language skills, with remuneration levels reflecting not only linguistic ability but also, the importance of the language in terms of national intelligence crucially, priorities. All of the agencies need to be active in identifying and reviewing skills, language shortfalls and building a profile of staff with necessary language paying particular attention to emerging issues and ensuring the agencies have and ensuring the agencies emerging issues attention to paying particular developing needs. skills to match the language skills in key for each organisation. High-level The needs will be different (apart from DIGO), asset for the collection agencies languages are an essential ability to operate effectively. fundamental to their priority on recruiting for and this, both DSD and ASIS place high Recognising but strong, language skills are reasonably DSD’s training in target languages. problematic. The Inquiry growing organisation - is more the situation in ASIS—a for ASIS to in this report some additional funding recommends elsewhere pace with increased and ensure its language training keeps bolster its strength continue working to build their staff numbers. Both ASIS and DSD should language bases. language skills are also important While the need is most obvious for collectors, of vernacular languages can be crucial for the assessment agencies. Knowledge to an analyst’s of an issue and to the checking understanding of the context professional practices which are of intelligence sources and other basic fundamental to high-quality About 40 per cent of ONA’s intelligence assessment. case, only In DIO’s level of fluency. analysts have language skills at a workable accredited with relevant language skills. four per cent of analysts are currently lines recommended elsewhere staffing numbers along the An expansion of ONA’s with an opportunity to supplement in this report should provide the organisation up this opportunity. language skills. The organisation should take its stock of key Source Unit from the Department of The recommended transfer of the Open language base. to ONA will also help bolster ONA’s Affairs and Trade Foreign language skills in its recruitment DIO similarly should continue to target remunerate staff for relevant high- strategies, facilitate language skills retention, level language proficiency and to ensure best use is made across the organisation All AIC agencies should have policies of the language skills represented in its staff. languages. in place to help staff consolidate and enhance existing skills in key to language Affairs and Trade by the Department of Foreign The approach taken training and skills retention might provide a useful model for the AIC. RECOMMENDATION: staff The Australian intelligence agencies should be active in building a profile of with necessary language skills, paying particular attention to emerging issues and ensuring the agencies have the language skills, including in Arabic, and other expertise to match emerging needs.

report of the inquiry into australian intelligence agencies 156 resourcing and effectiveness of the agencies 157 Australia’s set of relationships with foreign intelligence counterparts represents with foreign intelligence counterparts set of relationships Australia’s yielded the greatest asset. Our ties are strongest, and have a valuable national The value of Australia’s States and the . return, with the United considerable additional United States in particular provides partnership with the foreign intelligence capability. potency to Australia’s intelligence relationships, every AIC agency key reinforcing Australia’s Further partner officers stationed in key maintains a network of out posted liaison working well and represent a worthwhile capitals. These networks are generally investment of agency resources. agencies’ liaison better use of the It should be possible over time to make and support have the seniority, officer network to ensure liaison officers With this in mind, relationships. our key resources to maximise the potential of (through the FICC) develop a community- the Inquiry recommends that the AIC to maximize the value Australia draws wide strategy on liaison relationships with the US and UK.from our foreign intelligence alliances issue of The more fully in the classified report. intelligence relationships is considered RECOMMENDATION: Intelligence Coordination Committee should develop a community- The Foreign to ensure maximum value from traditional wide strategy on liaison relationships alliances with the US and UK. Beyond the US and UK, there is a case for building a wider range of liaison relationships with targeted foreign intelligence organisations in our region and beyond. AIC agencies have been working for many years to develop mutually counterparts. beneficial ties of varying kinds with European and Asia-Pacific These efforts should continue. Flexibility is also important: while there will be some constants, the range and focus of intelligence exchanges and dialogue should continue to be responsive to particular events and trends, including terrorism. increasingly important security issues like Intelligence Relationships RECOMMENDATION: language to bolster the key additional funding be provided with ASIS should make use of additional staff resources ONA also should capabilities of its staff. key linguistic skills. this Inquiry to supplement its stock of recommended by The Public Presentation of Intelligence Presentation The Public of intelligence relating Debate surrounding the handling by governments to prominence the issue of public to Iraq’s WMD programmes has brought when and how of whether, presentation of intelligence. The question in support of policy is one that has governments should use intelligence some discomfort within intelligence attracted public attention and causes agencies around the world. intelligence assessments disclosure of The issue is not an easy one. Public and important issues surrounding the carries real risks. There are legitimate the identities of Australian intelligence protection of sources and methods and broadly too, public More carefully. These need to be handled very staff. the assessment process and make disclosure can complicate and distort judgment precisely where users of the wary of exercising analysts risk-averse, our material most need it. While the community has a right to know how well accountability should be found through intelligence agencies are performing, mechanisms other than the public exposure of individual assessments. Nevertheless, there will be circumstances in which the public’s right to know and the government’s wish to explain the context of important policy decisions require some public presentation of intelligence-based material. It is legitimate, under certain circumstances, for governments to commission assessment agencies to prepare material for public release and to release no legitimate publicly other intelligence-based material. There is, however, Offering best prospects in terms of expansion of intelligence relations are of intelligence relations of expansion prospects in terms Offering best afield, European region. Further services in our effective intelligence the more cooperation; services offer prospects for increased countries’ intelligence place between our to build on the interaction already in there may be ways of ties with a range capitals. Further, European in key assessment agencies the basic links already communities in addition to Middle Eastern intelligence increasing globalisation, some value. Indeed, in an age of in place may also offer crucial relevance in distant places can have direct and intelligence gathered at home and abroad. and to the security of Australians interests to Australia’s RECOMMENDATION: Intelligence Coordination Committee should develop recommendations The Foreign of intelligence partnerships. to Ministers to extend the range and utility

report of the inquiry into australian intelligence agencies 158 resourcing and effectiveness of the agencies 159 COMMISSIONING OF INTELLIGENCE-BASED MATERIAL FOR PUBLIC RELEASE: SUGGESTED GUIDELINES COMMISSIONING OF INTELLIGENCE ASSESSMENTS FOR PUBLIC RELEASE A request to prepare an intelligence-based assessment for public release Minister to the Director-General should be made in writing by the Prime of the Office of National Assessments (ONA) following consultation with the Director-General. Minister would The request should set out the issues which the Prime to be addressed in the assessment. like place for policy-makers or advisers to seek to influence the substance of any the substance to seek to influence or advisers policy-makers place for without material or to release intelligence so commissioned assessments appropriate clearance. the issues navigate might help agencies and policy-makers A set of guidelines process. Such protects the integrity of the intelligence involved in a way that to commission or clear the process for government guidelines should formalise foreign intelligence-based should be product for public release. Any request the case to the Director-General of ONA. In Minister directed from the Prime act as final arbiter assessment, the Director-General should of a commissioned of the assessment’s should the Director-General contents. Among other things, sources, breach intelligence-ensure that the content does not compromise national security information. sharing arrangements or reveal sensitive the guidelines should state explicitly that there should Most importantly, offices or from policy departments be no influence from ministers and their commissioned. on the conclusions of any product so material proposed for release, including In the case of other foreign intelligence of ONA, agencies, the Director-General intelligence reports from the collection head, should ensure that any proposed in consultation with the relevant agency breach intelligence-sharingrelease does not compromise sources, arrangements The following box suggests a set or reveal sensitive national security information. of intelligence material. of guidelines for the public presentation RECOMMENDATION: Minister and Cabinet should prepare for The Department of the Prime as outlined in the attached text box, Government consideration guidelines, intelligence material. for the public presentation of foreign There should be no influence from ministers and their offices or from their offices or from ministers and be no influence There should assessment. on the conclusions of any commissioned policy departments of ONA who be approved by the Director-General The assessment should responsibility for its contents. would retain complete must ensure that the content of any of ONA The Director-General compromise sources, breach intelligence-sharingassessment does not This sensitive national security information. arrangements or reveal way. issues cannot be covered in a useful may mean that some in producing an assessment of the Director-General The independence as that applying to ONA assessments for public release would be the same under the ONA Act. FORMS OF FOREIGN INTELLIGENCE MATERIAL PUBLIC RELEASE OF OTHER foreign intelligence notice of an intention to release publicly any Prior to the Director- Minister the Prime material should be made in writing by with the Director-General. General of ONA following consultation of ONA, in consultation with the head of the relevant The Director-General material must ensure that the content of any intelligence intelligence agency, sources, breach intelligence proposed for release does not compromise national security information. sharing arrangements or reveal sensitive not appropriate for release. This may mean that some material is Similarly, in of the terrorist threat, intelligence-based assessment needs Similarly, advisories issued by the government, to find its way in some form into the travel to guide Australians travelling abroad. Current arrangements, through DFAT, as the coordination that should be refined after the Bali bombings, as well achieved through the newly established National Threat Assessment Centre, one represent a sensible way of managing this need. The approach is a balanced abroad which recognises and gives the highest priority to the safety of Australians the system is without compromising intelligence sources and methods. Crucially, on. now geared to ensure that genuine threats to Australians can always be acted and government generally while it is imperative for intelligence agencies Finally, to avoid disclosure of material that could prejudice the capabilities of the agencies to support the national interest, material that can be put in the public domain in relation to the agencies should be. Intelligence agencies should prepare for consideration by government an unclassified brochure on the

report of the inquiry into australian intelligence agencies 160 resourcing and effectiveness of the agencies 161 Distribution of Intelligence Reporting The degree of government focus on national security and the heightened need for intelligence have led to an increase in the amount of intelligence of material available to Australian customers. While this increase in the quantity intelligence reporting is welcome, it has given rise to problems with the capacity of clients of intelligence to absorb properly all of the information they receive. find Some customers, particularly in ministers’ offices and policy departments, them. it difficult to digest the large volumes of intelligence product that come to Information Technology Connectivity among the Agencies Connectivity Information Technology integrated and interdependent, While the work of the agencies is increasingly the IT system that supports cross-agency optimal. An AIC- efforts is less than date fallen short of providing an optimal wide system does exist but it has to there are agencies. Further, level of communication among the intelligence analysts’ need for ready access to a difficult issues in seeking to balance of information security. wide range of information, and the demands needs will almost certainly be high. The cost of IT upgrades to meet these of the AIC is such that the further Nevertheless, the impact on the effectiveness cross-communitydevelopment of the IT system that allows linkages warrants FICC. The Inquiry recommends that the consideration as a priority task of the and collaborative intelligence FICC develop a strategy for IT connectivity (including ASIO), and IT production within the intelligence community connectivity with primary customers. RECOMMENDATION: Intelligence Coordination Committee should develop a strategy for The Foreign production within the intelligence IT connectivity and collaborative intelligence for IT connectivity with primary customers. and a strategy community, working of the intelligence agencies, their place in government, and the in government, their place the intelligence agencies, working of A version of this should that support them. mechanisms accountability up to date. on the internet and be kept be made available RECOMMENDATION: agencies, produce with the foreign intelligence ONA should, in consultation their place on the role of the intelligence agencies, an unclassified brochure support them. the accountability mechanisms that in government and This gives rise to risk that material is not being fully utilised by decision-makers is not being rise to risk that material This gives who support them. and those to the new intelligence intelligence customers need to adapt a large extent, To will necessarily need to accept that intelligence flows environment. They will also that they expend to manage that flow and the effort be greater, need to expand. issue. The need for have already been made to resolve this Significant efforts should now be met large amounts of threat intelligence quick analysis of the Centre. However, of the National Threat Assessment with the establishment intelligence material in which managing the volume of there are further ways can be addressed. and their customers is generally Communication between collection agencies effort that collection agencies make good, and the Inquiry noted the substantial policy agencies. But further effort could to meet the needs of assessment and products produced by agencies properly be made to ensure that the intelligence match what customers need. contact with individual readers of Intelligence agencies should be in close of products to strong efforts to tailor the distribution intelligence, and make not judge their efforts by how much actual needs. Collection agencies should how useful it is in a practical way available to users, but by material they make in assisting users with their work. responsibility for identifying pieces Collectors can also help by taking greater require attention at high levels and those of intelligence reporting that genuinely need to ensure that their internal their part, policy agencies which do not. For intelligence with the reports they need, distribution systems provide users of without burdening them excessively. up the issue of the distribution The Inquiry recommends that the FICC take with the aim of ensuring that reports reaching senior of intelligence reporting, not readers in ministers’ offices and policy agencies are well-targeted and do excessively overload users. RECOMMENDATION: should examine the flow Intelligence Coordination Committee The Foreign of foreign intelligence product to senior users and identify means by which distribution can be more precisely tailored to requirements.

report of the inquiry into australian intelligence agencies 162 163 chapter 8 chapter 8 Good intelligence is arguably more important to government now than Good intelligence is arguably more important has transformed Australia’s II. Global terrorism War at any time since World Security problems in our immediate neighbourhood perceptions of its security. resolve them have also brought security and the use of Australian forces to help this response to element in Australia’s to centre stage. Intelligence is a key years have seen a doubling of the changed environment, and the past four invested in the intelligence intelligence budget, with over $650 million in the Australian intelligence community community in 2004–05. Staff numbers period. Overall, the government has have risen by 44 per cent over the same funding for national security from committed more than $3 billion in additional 2001–02 to 2007–08. has been far greater public scrutiny and Coupled with the increased investment interest—and concern— agencies. Public intelligence expectation of Australia’s on Iraq’s weapons of mass destruction, has been fuelled by intelligence failures and the failure to prevent either the September 11 attacks or the Bali bombings. Asia Intelligence successes, such as uncovering terrorist networks in South East and and helping to disrupt planned terrorist attacks, receive little or no publicity, leaving an impression that must remain secret to protect intelligence capability, is unbalanced. This is complicated by the confusion in much of the public debate between intelligence assessment and raw intelligence, between policy advising and intelligence assessment, and between decision-making and policy advising. intelligence—an intercepted phone call, an image, or a report from a Raw summary of findings and recommendations Overview Effective oversight and accountability of intelligence agencies is critically The more relevant intelligence becomes to important for a healthy democracy. government, the greater the need and public demand for strong and transparent extent possible, these mechanisms the greatest To oversight and accountability. Oversight and Accountability human source—may be used in the formulation of an intelligence assessment. of an intelligence in the formulation be used human source—may influence the both or either may policy advice, and may inform That assessment government’s in policy formulation decision. But the role of intelligence ultimate should not be overstated. or in government decision-making are performing well Australian intelligence agencies The Inquiry found that All have adapted a potent capability for government. overall, and represent requirements posed by global terrorism and increased to the major challenges profile failures, the Australian forces. Despite the high for support to deployed generally very good provided to government has been quality of assessment of political influence. Intelligence independent and, just as importantly, predictive, often based on information assessment is by its nature inexact and will never get Intelligence which is incomplete, ambiguous or contradictory. of this Inquiry were to be everything right—even if all the recommendations would still be intelligence ‘failures’.accepted and fully implemented, there can do better—and must give optimum intelligence community But Australia’s the new security environment. On South performance to meet the demands of Australia needs to be an unquestionable global East Asia and the South Pacific, good on North East Asia, and very good leader—and it needs to be exceptionally the US and UK are a great asset to on South Asia. Intelligence alliances with and carefully managed. Stronger Australia, and need to be fully exploited partners. relationships can also be built with other are fundamentally sound, the While the structures supporting the community stronger coordination, especially in Australian intelligence community needs and collection management. assigning of resources the areas of priority setting, tightened and made more transparent, Accountability mechanisms need to be of intelligence, and public interest recognising both the increased importance in it. The division of effort between the assessment agencies needs refinement, and contestability needs to be better managed. While most agencies are appropriately resourced, ONA needs to be strengthened significantly.

report of the inquiry into australian intelligence agencies 164 summary of findings and recommendations 165 although, consistent Intelligence Services Act 2001 Intelligence Services Inspector-General of Intelligence and Security Act 1986 Inspector-General covering the activities of ASIS and DSD, and the extension of parliamentary and the of ASIS and DSD, covering the activities of Intelligence The Office of the Inspector-General DSD. oversight to ASIS and in monitoring the operational activities and Security has been increasingly active as a result of these developments, and changes to the ASIS and DSD of ASIO, engaged National Security Committee agencies’ mandates. A vigorous and on resources and strategic of Cabinet has exercised strong decision-making are closely Ministers And Portfolio directions for the intelligence community. the agencies. The Intelligence Services engaged in the collection activities of accountability for the operational activities Act has brought increased ministerial of ASIS and DSD in particular. they have come about in a somewhat While these are welcome developments, DIGO, and there is a lack of consistency across the community. haphazard way, in the Intelligence Services Act along established in 2000, is yet to be included DIGO is not yet legally subject Similarly, with the other foreign collection agencies. to the should be similar to those of other government agencies. In particular, greater agencies. In particular, other government similar to those of should be in Australia’s public confidence to enhance scrutiny is necessary parliamentary full parliamentary Because security issues will preclude intelligence agencies. agencies, the role of and output of the intelligence scrutiny of the operations extended to cover ASIS and DSD, Joint Committee on ASIO, the Parliamentary review. be supplemented by periodic external all agencies, should have been strengthened and accountability mechanisms oversight Australia’s the introduction of the over recent years through with government agreement to establish DIGO, it operates as if it were. The it operates DIGO, with government agreement to establish The Joint Committee has no purview over ONA, DIO and DIGO. Parliamentary Inspector-General limited authority to initiate of Intelligence and Security has more than into the foreign collection agencies. inquiries into the assessment agencies with the Intelligence Services These anomalies should be remedied as a priority, Joint Committee the mandate of the Parliamentary Act amended to include DIGO, ASIS and DSD extended across the community to create a Parliamentary on ASIO, of and the Inspector-General Joint Committee on Intelligence and Security, Intelligence and Security powers to initiate inquiries independent of a ministerial referral made consistent across all agencies. visible to the public, but nonetheless essential for effective oversight and Less are strengthened processes within government. The present accountability, arrangements to support National Security Committee oversight are too Priorities and Resource Planning Priorities accountable intelligence for a healthy, An effective priorities system is vital At the highest level, the system must provide for government to capability. set broad priorities, and to allocate resources on the basis of those priorities. At the other end of the scale, it must provide detailed guidance to collectors of intelligence, matching requirements to the capabilities of each collection discipline and ensuring that expensive intelligence assets are directed only towards that which cannot be gained through overt means. The priorities and oversight system needs also to identify gaps in coverage against the government’s intelligence priorities and to monitor and report on achievements. Australia has many of the elements of a strong priorities system. Ministers endorse the national-level foreign intelligence assessment priorities, and these cumbersome and need to be streamlined to ensure effective and timely effective and streamlined to ensure and need to be cumbersome Minister Prime of the The Department of agencies’ performance. consideration the National Security have a strengthened role in providing and Cabinet should should and community, independent of the intelligence Committee with advice with a report the foreign intelligence community reporting on supplement ONA’s and reporting on monitoring role in coordinating, ONA’s performance. on ONA’s and appropriately community needs to be strengthened the foreign intelligence to be more searching of the agencies’ performance needs resourced. Its review successes, failures, and should highlight more explicitly and comprehensive, in collection. and significant gaps for community coordination should The current relatively informal arrangements process. The Inquiry recommends the be enhanced by a formal committee Coordination Committee to assist the Intelligence establishment of a Foreign role, chaired by the Director-General Director-General of ONA in his coordination intelligence agencies, the Commissioner of ONA and comprising the heads of and senior representatives from the Police, of the Australian Federal Affairs and Foreign Minister and Cabinet, Defence, Departments of the Prime The committee should consider cross-community including issues and Trade. capability development and resources. intelligence policy, be the subject of periodic review by the statutory independence should ONA’s the Prime who should report to Security, Inspector-General of Intelligence and of ONA reporting and interviews with Minister on the basis of an examination ONA staff and senior customers.

report of the inquiry into australian intelligence agencies 166 summary of findings and recommendations 167 High Quality and Independent Advice High Quality and Independent It can give government— Intelligence can be a potent tool for government. or in battle. But its utility, edge in policy formulation and the war-fighter—the as it competes for the decision-maker’s attention with many other sources of and its independence. Good intelligence information, is dependent on its quality current, issues. It is soundly based, covers important strategic, as well as to create new knowledge, rather than analytical and predictive. It should seek rehearse what is known. And it must be free of political influence, of bias, of untested assumptions, and of the intent to influence policy. While Australia is generally well-served by the quality of intelligence provided to government, significant improvements can be made against the criteria above. is Intelligence derived from all sources and integrating all elements of an issue product is ONA’s produced by ONA, as the peak foreign intelligence agency. generally regarded as very good: typically it is relevant to policy and tightly tailored to the needs of its readers, comes to judgments, and explores individual implications for Australian interests. Despite the overall high quality, are effective in setting the broad agenda and providing the basis on which the basis agenda and providing in setting the broad are effective a committee ONA chairs back to government. performance is reported agencies’ agencies. broad priorities into guidance for collection which translates the processes. is an effective supplement to these formal Informal feedback most significant of in the present system. The But there are also weaknesses priorities and resource inadequate links between reporting, these relates to the to align the three Inquiry recommends a number of changes allocation, and the coordinating role consideration, including a stronger processes for government for Minister and Cabinet. There is a need of the Prime for the Department more discipline in the drafting of priorities and greater policy engagement in the highest category has more in their allocation: the number of priorities of a system which is designed to than tripled since 2001, limiting the utility Defence priorities of integration of strategic discriminate among priorities. Lack its effectiveness, particularly in enabling into the national system further limits decisions on relative priorities, and should be redressed. key ministers to make These top-order changes, supplemented by stronger community-wide deliver a tighter and more effective collection management by ONA, would performance. system which would optimise agencies’ Division of Labour and Communication among Agencies and Communication Division of Labour Australia to get best value from the government’s significant investment in For intelligence, the agencies must operate with minimal duplication and maximum cooperation. In 1977, Justice Hope found the Australian intelligence community “fragmented, poorly coordinated and organised”. He articulated a set of principles on which the current intelligence architecture was built that remain valid and important, supporting much of what is successful about the The separation between intelligence assessment and community today. reports sometimes sacrifice thoroughness for brevity and readability, and there brevity and readability, thoroughness for sacrifice reports sometimes and National Assessments, longer term reporting too little focus on has been be redressed. which the Inquiry recommends has improved considerably over strategic assessment The quality of DIO’s for a fundamentally different also generally good. Written recent years and is contains more purpose from that of ONA, it typically audience and a different but readers tend to find it less readable Senior-level detail than that of ONA. than ONA product. more comprehensive with staff and DIO strategic assessments and speaking In reviewing ONA and found no indication that either agency’scustomers, the Inquiry reporting was reporting on Iraq also demonstrated their subject to any political influence. Their assessments, despite heavy reliance capacity to remain independent of allied on allied intelligence collection. independence of intelligence. The Many factors underpin the quality and for the agencies in maintaining Inquiry has identified a number of challenges amongst these are recruitment Key and improving the quality of their output. and cultures, and in core particularly in non-traditional languages and training, agencies; more active exploitation of intelligence analysis skills across the partners; more active and collaborative alliances, including with non-traditional on intelligence sources; and interaction between collectors and assessors collection. Agencies also need to more active management of intelligence to ensure that senior readers are manage distribution of intelligence closely particularly direct from collection not swamped with too much intelligence, pieces of intelligence as a result of too agencies, and at risk of missing vital Intelligence sees a role for the Foreign great a volume of material. The Inquiry the distribution of intelligence. Coordination Committee in reviewing

report of the inquiry into australian intelligence agencies 168 summary of findings and recommendations 169 Contestability of Assessments of the information age. It strengthens Contestability of advice is a hallmark Australian intelligence assessments by policy making and is highly valued in Contestability commanders alike. ministers, senior officials and operational areas of overlap or duplication between is being provided, to some extent, by which have contestability is built into assessments Importantly, ONA and DIO. internally within judgments, either key been through processes to challenge each agency or across agencies, departments and sometimes external bodies. as such intelligence community, information from sources outside the Finally, journalists, think tanks and academics, provides government with alternative points of view on issues of national significance. But contestability mechanisms are not being used to best effect: to give greater authority to decision-makers most by presenting considered alternative interpretations or judgments, or the rounded single interpretations. The architecture of the Australian intelligence community was not designed with contestability as a goal, nor has the issue attracted great priority in the policy formulation has contributed to strongly independent intelligence advice. independent intelligence to strongly has contributed policy formulation has helped to and collection assessment between intelligence The distinction particular sources. of assessment and lack of bias towards ensure the integrity agencies with clarity disciplines has produced three The separation of collection international alliances. of purpose and strong principles the success of Justices Hope’s underpinning At a community level, the lack of the minimal duplication among agencies, is demonstrated by nature of and the cooperative and inter-dependent wasteful competition, is extensive Communication amongst the agencies agency relationships. community’sand constructive. The value is particularly well illustrated by Australian Defence Force. the strong support it has given to the of the overlap between ONA and The Inquiry recommends some rationalisation role as the provider of all-source national assessments emphasising ONA’s DIO, support of Defence planning and focus on defence assessment in and DIO’s detract from the overall conclusion that the operational needs. But this does not for current challenges, have demonstrated agencies are appropriately structured environments, and operate their flexibility to adapt to new and demanding effectively as a community. Australia’s intelligence agencies have faced enormous challenges over the past intelligence agencies have Australia’s to get the most accurate, timely and five years. It has always been important leaders and operational commanders. considered intelligence to government supported Australian men and women But since 1999, intelligence has not only the Solomon Afghanistan, as East Timor, in four operational theatres as different been at the forefront of the fight Islands and Iraq but has also, since 2001, threat to Australia and Australians in against terrorism—the greatest direct always got it right, and all of the agencies many decades. Intelligence hasn’t commitment of the intelligence staff can improve their performance. But the is unquestionable. The people and their leaders to helping secure Australia of intelligence capability work under the stress up Australia’s who make information and They often deal with disturbing a great responsibility. of intelligence to ensure the provision sometimes operate in personal danger, security. vital to Australia’s The effectiveness of the agencies in meeting these challenges has been and in some cases excellent. The collection agencies have generally strong, had some notable successes over recent years. These significant successes areas, which the agencies are working are balanced by collection gaps in key to redress. Environmental factors will always impact on collectors’ capability— time to humint sources will come and go, and new technologies will take exploit. What is important is that the agencies anticipate such changes to the greatest extent possible, and overcome gaps expeditiously. Agencies’ Effectiveness and Resources Agencies’ Effectiveness and past. It is unsurprising, therefore, that the community is not currently optimising is not currently that the community therefore, unsurprising, past. It is with support ONA, it to provide contestability. available to the mechanisms to ensure more of Defence, needs to establish systems from the Department and conscious DIO, of the overlap between ONA and deliberate management between points of agreement and difference identification of substantive internal processes ONA and DIO must foster stronger analysts and agencies. experts, and greater more engagement with external of contest and challenge, the recording as the National Assessment, including use of vehicles such views. This will ensure the government’stherein of dissenting requirements better served. for contestability are

report of the inquiry into australian intelligence agencies 170 summary of findings and recommendations 171 is a well-regarded organisation producing high-qualityis a well-regarded product with has made significant improvement to the quality of its strategic assessment has made significant improvement to Most of the agencies have had significantly increased resources since resources had significantly increased agencies have Most of the has the budget intelligence agencies, Across the five foreign 2000–01. cent. With the important cent, and staff numbers by 44 per increased by 88 per the foreign intelligence this investment is sufficient to allow exception of ONA, mandates. agencies to meet their ONA by highly support. Its performance is underpinned generally strong customer talent is analytic staffing strategies, although ONA’s skilled staff and flexible and on globally with insufficient depth on both regional too thin, leaving it has too strong Its intelligence output, while highly valued, significant issues. the expense of more thoughtful, better a bias towards current intelligence at including more National Assessments. researched longer term assessments, ONA is also ill-equipped effective community in resource terms to undertake coordination, set out in its legislation. might be asserted, both role as the peak foreign intelligence agency ONA’s and through a more appropriate and through a stronger legislative mandate, Intelligence such as the Australian Foreign more publicly understandable name million to $25 million per A budget increase from $13.1 Assessments Agency. for the transfer of the Open Source annum (plus the reallocation of $2.5 million and some additional Affairs and Trade Unit from the Department of Foreign one-off in staff costs relating to accommodation), which includes an increase to equip ONA to fulfil its mission numbers from 74 to 145, is recommended and four This includes an additional deputy Director-General effectively. Service level. additional officers at the Senior Executive DIO is satisfying well the needs of strategic- product over the past several years, and level customers in Defence. The extent to which it is fulfilling the military DIO’s assessment needs of the ADF operational elements is less clear. current mandate overlaps with ONA on strategic assessments, and with the or operational-level intelligence centre (the Joint Operations Intelligence Centre With unlimited JOIC) in the provision of support to the Australian Defence Force. resources DIO might be able to cover this range of requirements, but in an ADF, environment of constrained resources and high operational tempo for the has DIO must have its primary focus on strategic defence issues. The Inquiry to recommended a refined mandate to reduce areas of overlap and enable DIO made become a centre of excellence on strategic defence issues. The changes is undergoing a period of substantial transition with a doubling of its is undergoing a period of substantial is a highly regarded, well-managed agency with a technically skilled and budget since 2000 and an expanded and more diverse range of responsibilities. budget since 2000 and an expanded posed by this transition, with a It is well-positioned to meet the challenges a tight customer focus, and good management team, high staff commitment, its expansion. These characteristics a strong focus on planning and managing the systemic organisational failings represent a significant step forward from the 1980s and 1990s. that led to the damaging exposures of regarded, with strong coverage of Its current intelligence reporting is well improvement in others. The Inquiry some high-priority areas, and room for to review and strengthen ASIS’s has recommended a number of measures government. The sensitivity of the business practices and its output for their inclusion in a public report. It activities to which these relate precludes is critical that ASIS’s new capabilities be allowed to mature at an operationally manageable pace. The potential risks of pushing too hard and too soon for a return on the significant investment in ASIS are greater than any short-term benefits of increased intelligence. DSD talented workforce. It represents a significant and impressive capability for Australia. DSD has adapted well and quickly to the new requirements of the security environment, and has been much valued for its support on post-2001 Its operational support to ADF operations since 1999 has also counter-terrorism. to DIO’s workforce over recent years have been positive and have lifted the and have lifted have been positive over recent years workforce to DIO’s more refocus to respond need review and but will capability, organisation’s of the Australian Defence Force. fully to the requirements in from the ADF, DIO will need assistance effectively, fulfil its mandate To requirements and the better articulation of ADF intelligence particular through in senior leadership including uniformed officers in DIO, placement of more management DIO needs to develop more robust its part, positions. For recommends few to underpin its efforts. The Inquiry processes and systems of management of save the divesting changes for DIO, structural or resource Deputy Secretary of intelligence system to the office of the broader Defence (along with the resource and administrative Intelligence and Security in Defence three Defence agencies), and the formal functions performed within DSD for all may review of structure and resources Further designation of a Deputy Director. its new mandate. be warranted once DIO has implemented ASIS

report of the inquiry into australian intelligence agencies 172 summary of findings and recommendations 173 is the newest of the foreign intelligence agencies, and one that has is the newest of the foreign intelligence undergone a rapid expansion programme over the past four years. Although still undergone a rapid expansion programme in recent DIGO has provided useful support to the ADF developing capability, as an organisation of significant, if as yet operations, and is generally regarded are twofold: first, to bring the undersold, potential. Its primary challenges through effective management of imagery and geospatial capability to fruition customer to engage DIGO’s growth path through to 2007 and second, DIGO’s fully utilised. The first of these appears community to ensure that capability is sound processes and systems to be well managed and on track, with customers is less efforts. The level of engagement with underpinning DIGO’s that DIGO develop and implement advanced, and the Inquiry recommends a strategy to redress this gap. growth path and investment plans clearly articulated within the With DIGO’s other Defence system, the Inquiry recommends no resource changes for DIGO, DIGO allocates in the than to note the inadequacy of ADF numbers within DIGO. it cannot realise order of 70 per cent of its resources to support of the ADF: maximum value with only five per cent of its staff coming from the ADF. been strong. Its alliances with its counterparts are the strongest in the the strongest in its counterparts are Its alliances with been strong. to Australia. great dividend pay a disproportionately community and intelligence and has capital investment programme effectively, DSD manages a large of the sigint structures which underpin its management sound organisational relatively large budget, view of its technical complexity and In capability. capability against from a periodic external review of its DSD would benefit mechanism for its targets as a quality assurance high-priority intelligence annual reporting process. and the ONA-led internal processes the Inquiry agency, that DSD might become a statutory Despite suggestions portfolio, particularly positioned within the Defence found DSD appropriately DSD has grown defence capability. given its dual role as a national and central and is adequately resourced to fulfil its significantly over the past four years, has remained management structure mission. Despite this growth, DSD’s Inquiry recommends an additional two largely static for many years, and the to military officers to ensure DSD is equipped SES officers or star-ranked it carries. manage the significant responsibilities DIGO who make up the intelligence who make people are an enormous asset to Australia. are an enormous asset intelligence partnerships Australia’s Australia’s the board they are deep across the sigint community, While strongest within work overwhelmingly mutual trust and shared goals, and and broad, based on that of intelligence But in most areas, particularly favour. in Australia’s to deliver better agencies need a more focused effort assessments, the network of liaison interests. Australia’s vital to Australia’s access to intelligence to be driven in a more UK is generally effective, but needs officers in the US and to exploit more fully these strategy community-wide as part of a deliberate way, valuable relationships. agencies have a network traditional intelligence allies, the Beyond Australia’s region, but also with key the Asia-Pacific of additional partnerships, primarily in benefit in reviewing these relationships European partners. The Inquiry sees to provide access to information to establish how they might be strengthened partners. A wider range of views or perspectives not gained through traditional and provide more contestability could help to broaden Australian assessments more fully in the classified report. for government. These issues are covered critically important tasks and high In an environment of strong growth, the expectation, strategic management of Community-wide Issues Community-wide community becomes ever more vital. The staffs of the various agencies are not community becomes ever more vital. skills or attributes in many areas. interchangeable; nor do they need common in which a corporate community But the Inquiry found a number of areas all agencies. approach might maximise the value of basis, on a selective developing, At the broadest level, this could involve career management, reducing approach to an intelligence community-wide offering wider career options for staff. competition within the community and Cross-community to which they training will help staff understand the system and contribute. This might be achieved by the development of both induction mid-course and by a targeted strategy of training aimed at awareness raising, people secondments. Most agencies have a need for linguists and inter-agency including Arabists and specialists from other non- with cultural understanding, traditional areas for Australia. Common strategies to develop a pool of such expertise, both through recruitment and development, may ensure a better to develop and extend the analytic skills community outcome. Programmes particularly relevant to ONA and DIO might be developed in conjunction with

report of the inquiry into australian intelligence agencies 174 summary of findings and recommendations 175 , both within the community and out to policy-makers and to policy-makers , both within the community and out Public Presentation of Intelligence Presentation Public prominence by debate in the public domain, brought to The use of intelligence interest in having access raises complex issues. The public on Iraq’s WMD, to use by government, and government requirements to information used of be balanced against both the protection must policy, intelligence to support intelligence process. and methods, and the integrity of the intelligence sources both continued access to intelligence and The critical importance of protecting understood. Equally important is ensuring intelligence officers in the field is well adversely influenced by the knowledge that intelligence assessments are not would serve Australia less well if that they may become public—intelligence the basis of iron-cladanalysts made assessments only on evidence. a cautious approach to public governments should take these reasons, For there will be occasions on which public release of intelligence. Nevertheless, interest or government’s policy need to explain the context of important to put intelligence in the public decisions will lead to a legitimate requirement guidelines be adopted to manage domain. The Inquiry recommends that in these circumstances. Chapter 7 the public presentation of intelligence includes suggested guidelines. IT connectivity academic institutions. And the agencies’ senior leaders might strengthen leaders might strengthen agencies’ senior institutions. And the academic the community’sand extend organising and participating capability by overall in strategic seminars. The AIC-widecustomers, is in need of urgent attention. AICnet, was system, but has a number of limitations in the a significant advance in the late 1990s, it supports to organisations applications it can provide, and the connectivity which interact at a secure level with external agencies, such as the AFP and the Department of Immigration and Multicultural and Indigenous Affairs. constraints, some agency-specific AICnet is further limited by policy-imposed In developing a new and some derived from the 2000 Blick review into security. architecture, the intelligence community should review the principles underlying the architecture, and seek to maximise the opportunities for collaborative to be significant There are likely intelligence production across the community. costs associated with this project. , set out in Chapter 3, concludes that there has , set out in Chapter Iraq WMD (and that there was indeed a weapons programme, if not stockpiles of indeed a weapons programme, if not (and that there was weapons); that there was insufficient evidence to determine that Iraq had was insufficient evidence to determine weapons); that there nuclear weapon of WMD; and that production of a renewed production to be at least four to six years away. was likely which might have been achieved The lack of comprehensive assessment, by ONA or an Intelligence Estimate by production of a National Assessment was regrettable. Such by DIO to support ADF deployment considerations, to clarify a complex and fragmented comprehensive reporting may have helped assessment agencies to explain the picture. The failure, by and large, of the WMD in terms of the threat posed significance of their judgments on Iraq’s the assessments. by Iraq also impacted on the utility of consistent until late January judgments were largely The two agencies’ key that Iraq must have WMD while DIO 2003, when ONA reporting assessed lesser use of detail including ONA’s reporting did not. But differences in style, in assessment on that issue from and qualification, led to an implicit difference and the of WMD, points of Iraq’s possession late December 2002. On the key activities, ONA judgments were significance of its concealment and deception greater certainty than those of DIO. expressed with fewer qualifications and the Inquiry’sOn the critical issue of independence, investigations showed that, despite a heavy reliance on foreign-sourced intelligence collection, both UK,agencies had formulated assessments independent of those of the US and in several notable cases choosing not to endorse allied judgments. The Inquiry on found no evidence to suggest policy or political influence on assessments Iraq WMD. failure of intelligence judgments on WMD stockpiles, the Despite the key assessments produced by ONA and DIO up to the commencement of combat operations reflected reasonably the available information and used intelligence been a failure of intelligence on Iraq. been a failure of intelligence question of Iraq the allied intelligence failure on the key Australia shared in cautious on the ONA more exposed and DIO more WMD stockpiles, with that the Iraqi of their judgments have proved correct: subject. But many programme the ambition and intent to have a WMD leadership retained A full analysis of Intelligence case studies Intelligence

report of the inquiry into australian intelligence agencies 176 summary of findings and recommendations 177 was inadequate prior to the December 2001 was inadequate prior to the December Jemaah Islamiyah arrests in Singapore—in fact, little was known of Jemaah Islamiyah under that arrests in Singapore—in fact, little was the threat posed by JI was made challenge in understanding name. Australia’s nature of that failure to appreciate the serious the more difficult by Indonesia’s it is possible to say that Australia and threat. But with the benefit of hindsight, by the end of 2001, much more about regional countries should have known, terrorist capabilities, and its intentions Jemaah Islamiyah, its development of of effective links with regional targets. The importance towards Western is well-illustrated by Australia’s intelligence and security organisations experience with Jemaah Islamiyah. December 2001, ONA assessments on Jemaah Islamiyah reflected an From increasingly deep understanding of the nature of the JI threat, including its and its capacity to launch significant terrorist potential focus on Westerners the other hand, continued to assess that regional extremist on attacks. DIO, groups were domestically focused and had little intent or capability to target foreigners or launch mass-scaleincreased focus terrorist attacks. Despite the to of both agencies on regional extremist groups, the Inquiry has seen nothing had any specific intelligence including ASIO, suggest that any Australian agency, warning of the attack in Bali. This is consistent with the findings of the Inspector- General of Intelligence and Security’s report on the Bali terrorist attack. sources with appropriate caution, although ONA’s judgments on Iraq’s judgments on although ONA’s appropriate caution, sources with the weeks immediately in firmer than DIO’s of WMD became possession of major combat operations. preceding the commencement available ambiguous and incomplete. The publicly Intelligence was thin, together with the large body of UNSCOM material, information, including and obfuscation, contributed heavily deceit of WMD, Iraq’s history of use assessments. to the intelligence his ultimate the months before March 2003 and behaviour in Saddam Hussein’s and him captured, saw his regime fall, his sons killed miscalculation, which measure his was a the assessment challenge. By any further complicated March 2003, the only to 19 Prior miscalculation of massive proportions. that Iraq was not working on, and government in the world that claimed weapons or prohibited missile systems did not have, biological and chemical was the Government of Saddam Hussein. changes to ONA and DIO processes The Inquiry recommends a number of to improve the robustness of assessments. Intelligence on was generally of a very high quality, was generally of a that “a pro-Jakarta lobby exists in DIO, Solomon Islands Report of Investigation—Redress of Grievance submitted of Investigation—Redress Report by Lieutenant Colonel Lance Collins Lieutenant Colonel Lance Collins Lieutenant Colonel Lance the conclusion of Captain Martin The Inquiry received no evidence to support RANR in the Toohey which distorts intelligence estimates to the extent those estimates are heavily driven by Government policy… in other words DIO reports what the Government wants to hear”. at all assessments on Indonesia produced by DIO (and by The Inquiry looked ONA) from 1998 to May 2004. The Inquiry found no evidence of pro-Jakarta or pro-Indonesian assessments. The present situation in ONA and DIO is that there is no evidence of any pressure on either organisation, or pressure within either organisation, The Australian Federal Police, in cooperation with the Indonesian police, did with the Indonesian in cooperation Police, Federal The Australian responsible track down those 2002 in helping work post 12 October outstanding of Australian JI’s rise demonstrates the crucial importance for the bombings. and the to shifts in the regional security environment agencies being alert threats. emergence of new on the Intelligence advice particularly post-June of policy or political 2000, and clearly independent 2000 coup suffered produced before the June influence. The assessments events, and while tended to do little more than monitor in two aspects: they its immediate potential for a coup, they either dismissed they recognised the DIO reporting it might occur. or failed to predict how and when likelihood sufficiently in active planning did not engage operational decision-makers to respond to a coup, as it ideally should. 2000, both agencies’ reporting was accurate and useful, assessing Post-June spiral was irreversible and highlighting the that the Solomon Islands downward assessments were made in a context necessity for external intervention. These intervene in the Solomons, a clear of Australian government policy not to of the intelligence advice. The indication of the integrity and independence ONA focused on the with reporting of the two agencies was complementary, collapse in terms of regional Honiara’s political and economic implications of focused primarily on national interests, and DIO reactions and Australia’s ADF operational planning. security and operational issues to support

report of the inquiry into australian intelligence agencies 178 summary of findings and recommendations 179 Conclusion to focus on those issues which need It is the nature of such a report as this a number of failings both in the way attention—and the Inquiry has identified operate as a community and in the in which the foreign intelligence agencies that the intelligence But these do not suggest performance of each agency. without the diligence demanded by the agencies are, on the whole, performing found the Inquiry On the contrary, importance and sensitivity of their functions. within the leadership and staff of the level of commitment, talent and integrity and their focus on the goal of protecting the intelligence community impressive, which The recommendations clear. Australians and Australian interests very deliver for Australia a more effective follow will underpin their efforts, and foreign intelligence capability. to produce pro-Indonesianto produce of down any criticism or to tone assessments they see the situation as are free to call It is clear that analysts Indonesia. interests. to Australia’s reflect a robust approach it and that their assessments Inquiry notes that it found no the about DIO, In view of media comments Lewincamp, Mr Frank that the current Director of DIO, evidence whatsoever particular conclusions of any kind on his analysts to reach has exerted pressure might be presumed analysts to report what the Government or that he expected is evident that while Mr Lewincamp it the contrary, hear.On to have wanted to he encourages analysts through vigorous internal debate, tests analysts’ views to reach conclusions to express different and robust opinions, to think freely, prudent risks to be prepared to take irrespective of Government policy and in their assessments. to subject matter. The Act should also be amended to strengthen ONA’s to subject matter. (PJCAAD) should be extended to all of Australia’s intelligence agencies— intelligence extended to all of Australia’s (PJCAAD) should be also ONA,that is, it should cover basis as it at DIO and DIGO on the same renaming The parliament may consider and DSD. ASIS present covers ASIO, and Joint Committee on Intelligence Parliamentary the committee as the Security (PJCIS). Act 2001. Similarly, to the Intelligence Services in legislation by amendments Act 1986 should be of Intelligence and Security the Inspector-General on a basis comparable with that amended to include scrutiny of DIGO which applies to DSD and ASIS. at his or her own discretion into be extended to allow IGIS to initiate inquiries ministerial referral, consistent with matters relating to ONA and DIO without The Inspector-General ASIS and DSD. the IGIS jurisdiction in respect of ASIO, statutory independence. of ONA’s should also conduct a periodic review be expanded significantly from $13.1 million should intelligence agency, by transfer from the Department to $25 million (excluding $2.5 million 5 below) by 30 June 2007 to enable Affairs and Trade—see of Foreign a significant expansion in its analytic capacity. and its budget should be Affairs and Trade, the Department of Foreign over the next two financial years. transferred to ONA as soon as practicable the references to two assessments boards—the National Assessments Board and the Economic Assessments Board—to reflect the reality that there is only one National Assessments Board which covers strategic, political and economic issues, but with provision for different composition according community coordination role in section 5(1)(d). Consideration should be given to investing ONA with a name which reflects more accurately what it does and one which is more publicly understandable, such as Australian Foreign Intelligence Assessments Agency (AFIAA). RECOMMENDATIONS: 1. ASIS and DSD on ASIO, Joint Committee of the Parliamentary The mandate 2. should be formalised and ministerial accountabilities of DIGO The functions 3. Security should of Intelligence and The mandate of the Inspector-General 4. peak foreign of the Office of National Assessments, Australia’s The budget 5. The Open Source Unit (annual budget $2.5 million), at present within 6. The Office of National Assessments Act 1977 should be amended to remove

report of the inquiry into australian intelligence agencies 180 summary of findings and recommendations 181 management strategy with the US and UK maximum value from traditional alliances of intelligence partnerships be more precisely tailored identify means by which distribution can to requirements performance against top-priority targets refresher course, some joint a general induction programme, a mid-level training in the discipline of intelligence assessment, common language training and a programme of senior leadership strategic seminars including a programme of secondments across agencies community, for IT and a strategy production within the intelligence community, connectivity with primary customers. a) collection develop and implement a community-wide b) strategy on liaison relationships to ensure develop a community-wide c) to extend the range and utility develop recommendations to Ministers d) product to senior users and examine the flow of foreign intelligence e) Defence, a periodic review of DSD’s commission with the Department of f) including consideration of training initiatives, develop community-wide g) consider options for career management across the intelligence h) a strategy for IT connectivity and collaborative intelligence develop under the chairmanship of the Director-General of ONA comprising the of ONA Director-General chairmanship of the under the AFP and Deputy Secretary-level DIGO and the DSD, DIO, ASIS, heads of ASIO, Cabinet, Minister and the Departments of the Prime representation from FICC should assist the Director- The Affairs Trade. and Defence, and Foreign monitoring and undertaking his role in coordinating, General of ONA in of the Australian foreign intelligence reporting on the performance and should consider cross-community including issues community, and resources. The FICC capability development intelligence policy, the Secretaries National Security Committee through should report to the Committee on National Security. 7.established (FICC) should be Committee Coordination Intelligence A Foreign 8. Committee should also: Intelligence Coordination The Foreign therein, should inform the priorities setting process, which should therein, should inform the priorities setting Security Committee promptly. be undertaken annually. National Security Committee’s consideration of the resource report. to inform the individual budget processes of each agency. performance should be produced and considered by the National performance should be produced and of the foreign intelligence community ONA for the agencies, based on advice from intelligence community on the resource needs of the foreign current role in reviewing its own performance. c) Both the reporting and priority setting processes should inform the d) The resource report should be considered each year in sufficient time b) of intelligence gaps Annual reports, in particular the identification a) report on the agencies’ The annual reports of agencies and ONA’s a) advise the National Security Committee annually on the performance b) on the appropriate priorities advise the National Security Committee c) the National Security Committee undertake the central role for advising d) performance, replacing ONA’s undertake an annual review of ONA’s performance and resource reporting is undertaken in parallel with the process outlined in recommendation 11 for the foreign intelligence community. foreign intelligence community’s priority setting and resource reporting, allocation mechanisms are aligned. Specifically: of strategic importance to Australia and reflect significant dissenting views. significant dissenting and reflect importance to Australia of strategic significant should be prepared prior to any A National Assessment major and in support of Australian Defence Force, deployment by the strategic reviews. using community, manage the foreign intelligence role in assisting Ministers of the community as a resource. The Department knowledge of the ONA’s and Cabinet should: Minister Prime 12.The Minister and Cabinet should ensure that ASIO’s Department of the Prime 11.The should ensure that the Minister and Cabinet of the Prime Department 9. on issues of National Assessments a greater number ONA should produce 10.Theenhanced and Cabinet should take an Minister Department of the Prime

report of the inquiry into australian intelligence agencies 182 summary of findings and recommendations 183 which focuses the organisation clearly on supporting defence strategic organisation clearly on supporting defence which focuses the needs of the Australian policy and meeting the strategic assessment Defence Force the Joint Operations Intelligence Defence Intelligence Organisation and ensure they reflect current needs Centre (JOIC), last agreed in 1999, to undertake an outreach strategy and command structures. DIO should to develop an agreed set of with the ADF and the JOIC in particular to synchronise expectations requirements and level of service in order and reduce duplication including in leadership positions, to the Defence intelligence agencies, with the growing to ensure military staffing levels are commensurate and planning importance of intelligence in war-fighting supported by adequate resources Secretary Intelligence and Security is role for the Defence intelligence to undertake an effective coordination staff working on defence intelligence system-wide agencies. In particular, coordination and capability development issues, and cross-agency administrative issues, should be functionally united with and report directly to the Deputy Secretary through a competitive selection of civilian and military candidates. Selection should be made on merit with a preference for a suitably qualified high-qualityis available. military officer if such an officer The position should be filled on a 3-4 year contract basis a) Organisation mandate for the Defence Intelligence issue a revised b) re-examineguidelines for the division of responsibility between the c) of military personnel assigned agree on a strategy to redress the shortfall d) ensure the position of Deputy restructure current arrangements to e) Defence Intelligence Organisation fill the position of Director, on vacancy, the national and defence priorities systems are integrated, and approved integrated, and approved systems are and defence priorities the national by Cabinet annually. 7, for the guidelines, as outlined in chapter Government consideration of foreign intelligence material. public presentation 13.The ensure Cabinet should Minister and of the Prime Department 14.The for and Cabinet should prepare Minister Department of the Prime 15.The should: and the Australian Defence Force Department of Defence of sources, and effective dialogue between collectors and assessors including formal peer review mechanisms within, between and outside the agencies, and between technical and geographic experts and for issues of high security relevance to Australia and for issues of high analysis. The resultant product should strategic-level military-related be more strongly defence-oriented and distributed primarily to defence should take an active role in customers. The Department of Defence monitoring this workforce arrangements and wider introduction of agency-specific Agreements, Workplace use of senior analyst positions and Australian and particularly in key technical to attract and retain high-quality staff, scientific disciplines management, and of its information for information, collection and liaison place in the context of IT network technology needs. The latter should take and may require some developments across the AIC and internationally one-off funding supplementation. Organisation. Where possible, if the Director is a military officer, a military officer, if the Director is Where possible, Organisation. should be civilian, and vice versa the Deputy Director head responsible for technical matters and a branch Director responsible for collection and analysis. a) give greater focus to longer term and strategic assessments b) institutionalise measures to ensure rigorous and interactive challenging c) institutionalise measures to ensure effective challenge to judgments, a) military operations Intelligence Estimates for significant produce Strategic b) serving requirements for cease publishing intelligence not directly c) including possible review its workforce management structures, d) including those undertake an integrated review of its business systems, f) Defence Intelligence position for the a Deputy Director create g) structure with the creation of a Deputy management strengthen DSD’s implement a comprehensive customer engagement strategy. 17.The Imagery and Geospatial Organisation should develop and Defence 18.ONA and DIO should: 16.The Organisation should: Defence Intelligence

report of the inquiry into australian intelligence agencies 184 summary of findings and recommendations 185 programmes. As a minimum each should attend the other’s each should attend As a minimum programmes. existing meetings. weekly requirements d)their forward work reconcile and, where appropriate, consult on staff with necessary language skills, paying particular attention to emerging language skills, paying particular attention staff with necessary including in the agencies have the language skills, issues and ensuring to match emerging needs. Arabic, and other expertise make use of additional staff resources ONA also should capabilities of its staff. key linguistic skills. this Inquiry to supplement its stock of recommended by as already decided upon, can continue to share a building, expanded ASIO, accommodation arrangements. The including funding to cover transitional is likely to be in the order of $11 million Inquiry is advised that the cost for this of an extension to the present fit-out over and above the construction and ASIO building. every five to seven years. the intelligence agencies, their place an unclassified brochure on the role of mechanisms that support them. in government and the accountability 19.The a profile of agencies should be active in building Australian intelligence 20.ASIS key language with additional funding to bolster the should be provided 21.Funding to ensure that an expanded ONA and an should be provided 22.The community should be subject to periodic external review intelligence 23.ONAshould, in consultation with the foreign intelligence agencies, produce annexe s 187 annex b

SECRETARIAT

The Inquiry was supported by a Secretariat drawn from the Departments of Defence, Foreign Affairs and Trade, and the Prime Minister and Cabinet, and from the Australian Defence Force. While the members of the Secretariat undertook a wide range of tasks in support of the Inquiry, Mr Flood accepts responsibility for all views in the report.

The members of the secretariat were: Philip Green OAM

Stephanie Foster

Kathy Klugman

Peter Furlonger

Colonel David Gillian

Donna Woodward PSM eoto h nur into inquiry the of report austra initliec agencies intelligence lian 188 annex c PERSONS INTERVIEWED BY THE INQUIRY

This list covers persons interviewed formally and informally.

GOVERNMENT The Hon. John Howard MP, Prime Minister

The Hon. Peter Costello MP, Treasurer

The Hon. MP, Minister for Foreign Affairs

Senator the Hon. Robert Hill, Minister for Defence

The Hon. Philip Ruddock MP, Attorney-General

The Hon. MP, Minister for Trade

Senator the Hon. Amanda Vanstone, Minister for Immigration and Multicultural and Indigenous Affairs

MEMBERS AND FORMER MEMBERS OF PARLIAMENT The Rt Hon. Malcolm Fraser AC CH

The Hon. Robert Hawke AC

The Hon.

The Hon. Kim C. Beazley MP

Senator Chris Evans

Senator Steve Hutchins

The Hon. David Jull MP

Senator Sandy Macdonald

Senator the Hon. Robert Ray

Mr MP

AUSTRALIAN PUBLIC SERVICE nees annexe Mr Ron Bonighton AM, Deputy Secretary, Intelligence and Security, Department of Defence

Dr Ashton Calvert AC, Secretary, and staff of the Department of Foreign 189 Affairs and Trade CONTINUED... Mr Ian Carnell, Inspector-General of Intelligence and Security Mr Ian Carnell, Inspector-General and staff of the Department of Immigration Secretary, Mr Bill Farmer, Indigenous Affairs and Multicultural and of the Australian Secret and staff Mr David Irvine, Director-General, Intelligence Service Police of the Australian Federal APM and staff Keelty Commissioner Mick and staff of the Defence PSM, Director, Lewincamp Mr Frank Intelligence Organisation Ambassador for Counter-Terrorism Luck, Mr Les and staff of Defence Imagery and Director, Mr Ian McKenzie, Geospatial Organisation Directorate and staff of Defence Signals Mr Stephen Merchant, Director, Minister’s Prime Senior Adviser (International), Office O’Sullivan, Mr Paul and staff of the Australian Director-General, Mr Dennis Richardson AO, Security Intelligence Organisation of the Prime and staff of the Department Shergold AM, Secretary, Dr Peter Minister and Cabinet and staff of the Department of Defence PSM, Secretary, Mr Richard Smith AO of Office of National Assessments and staff Director-General, Varghese, Mr Peter DEFENCE FORCE AUSTRALIAN MC, Chief of the Defence Force Cosgrove AC General Peter former Commander Australian Theatre AO, Rear Joint Operations Major General AM DSC, Deputy Chief, Australia Maritime Commander, Gates, Raydon Admiral Rear Australia Commander, DSC CSC, Land Gillespie AO Major General Ken AM AFC, Chief of Air Force Capability DSC, Chief, Lieutenant General AO Development Group annex c

report of the inquiry into australian intelligence agencies 190 annexe s 191 Lieutenant General AO, Chief of Army AO, Leahy General Peter Lieutenant CSC Special Operations DSC Lewis Major General Duncan Australia Commander, Command—Army Training Commander, McNarn AO Major General Maurie Analysis Technical Director-General, Scientific and Brigadier Steve Meekin, Organisation Branch, Defence Intelligence Norris, former J2 HQAST Colonel Mike Chief of Navy Ritchie AO, Chris Joint Operations Captain David Scott, J2 Headquarters Commander Australia Air Vice Marshal , Air Chief of the Defence Force Vice Admiral CSC, Vice Capability Silverstone CSC, Director-General, Intelligence Brigadier Mike Intelligence Organisation and Support to Operations Branch, Defence Joint Operations Intelligence Centre Sutton, Commander, Colonel Lester ADF AND OTHERS FORMER APS, and former Force former Chief of the Defence AC, General Defence Intelligence Organisation Director, , Australian National University Professor of Intelligence and Security Mr Bill Blick PSM, former Inspector-General for Strategic Policy former Deputy Secretary Dr Richard Brabin-Smith AO, and Chief Defence Scientist Defence Signals Directorate and former Director, Mr Martin Brady AO, former Chairman, Defence Intelligence Board Affairs Department of Foreign former Secretary, Mr Michael Costello AO, and Trade and Returned National President, (Retd) Major General Bill Crews AO Defence Intelligence Organisation and former Director, Services League Dibb AM, Australian National University Dr Paul Ltd. Ian Dudgeon and Associates Pty. Mr Ian Dudgeon, Principal, CONTINUED... Mr Robert Furlonger, former Director-General, Office of National Assessments former Director-General, Furlonger, Mr Robert Office of National Assessments former senior officer, Dr Richard Gordon, Institute Lowy Mr Alan Gyngell, Director, Brian Hutton Kt, PC Lord Assessments former Director-General, Office of National Mr Kim Jones AM, Defence Association Australian Director, Mr Neil James, Executive of Intelligence and Security Mr Neil McInnes AM, former Inspector-General Office of National Assessments former Director-General, Mr Geoffrey Miller AO, Department of the Prime former Secretary, AC, Mr Max Moore-Wilton Minister and Cabinet former Deputy Director-General, Office of Mr David Reese, National Assessments Director-General, Australian Security former Mr David Sadleir AO, Intelligence Organisation Mr Richard Smith AM, former Director-General, of National Assessments Office AM, former Director-General, Australian Secret Mr Allan Taylor Intelligence Service former Office of National Assessments officer Dr Carl Ungerer, Institute Australian Strategic Policy Mr , Director, Australasia Centre, Asia Society Director, AC, Mr Richard Woolcott NOTE for discussions and Washington In addition, members of the Secretariat visited London with intelligence agencies and commissions of inquiry. annex c

report of the inquiry into australian intelligence agencies 192 annexe s 193 SUBMISSIONS RECEIVED BY THE INQUIRY RECEIVED BY SUBMISSIONS Attorney-General’s Department Service Australian Customs Police Australian Federal Audit Office Australian National Service Australian Secret Intelligence Intelligence Organisation Australian Security Defence Imagery and Geospatial Organisation Defence Intelligence Organisation Defence Signals Directorate Fisheries and Department of Agriculture, Forestry Department of Defence and Administration Department of Finance Affairs and Trade Department of Foreign and Indigenous Affairs Department of Immigration and Multicultural and Resources Tourism Department of Industry, Minister and Cabinet Department of the Prime Department of the Treasury Security Inspector-General of Intelligence and Office of National Assessments Asian Studies Association of Australia Mr Bill Calcutt PSM Ms Janet Crews Dr W Frick Dr Richard Hames Mr HF Keen Mr David H Lewis MacRae Mr Kenneth Lieutenant Colonel BP Mahony (Retd) Mr Alastair Paton Smernos Mr Peter AC Mr Richard Woolcott annex d (US State Department) JICJOICMEFNSA Joint Intelligence Committee (UK) Joint Operations Intelligence Centre Malaitan Eagle Force US ACRONYMS AND ABBREVIATIONS ACRONYMS ADFAFPAICASIOASIS Defence Force Australian ASTJIC (now JOIC) Police Australian Federal BW Joint Intelligence Centre Australian Theatre Australian intelligence community CDF Australian Security Intelligence Organisation CIA Secret Intelligence Service Australian CWDFAT DIGO Chief of the Defence Force DIO Central Intelligence Agency DSD Chemical Warfare Affairs and Trade Department of Foreign FICC Defence Imagery and Geospatial Organisation GRAHIAM Defence Intelligence Organisation Humint Defence Signals Directorate IFM Intelligence Coordination Committee Foreign INR Army Guadalcanal Revolutionary Heads of Intelligence Agencies Meeting Human Intelligence Movement Isatambu Freedom of Intelligence and Research Bureau annex e

report of the inquiry into australian intelligence agencies 194 annexe s 195 ASIS and DSD the UK, New Zealand Australia, Canada and US, Inspection Commission SigintUKUSAUNMOVIC Signals Intelligence UNSCOM between Agreement governing sigint relationship WMD and Verification Monitoring, United Nations Nations Special Commission United of Mass Destruction Weapons NSCONAPJCAAD of Cabinet Security Committee National of National Assessments Office Committee on ASIO, Joint Parliamentary

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