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Intelligence

Report of the Inquiry into  Australian Intelligence Agencies  

Chapter 7 - Resourcing and effectiveness of the agencies


[Table of Contents]

 

Office of National Assessments

Background
ONA Today
Quality of Product
Types of Reports (other than National Assessments)
Quality of Staff
Size and Resource Issues
Proposed Expansion
ONA's Role Within the Australian Intelligence Community
Conclusion

Background

The Office of National Assessments is Australia's peak intelligence agency. It is an autonomous body, founded by an act of parliament under which it reports direct to the Prime Minister. Its primary role is to produce analytical assessments of international developments to assist the Prime Minister, ministers and departments in the formation of policy and plans. It bases its assessments on information from within and outside government. Intelligence is one but by no means the primary source for ONA assessments, which have a heavy reliance on diplomatic reporting and published information. ONA also performs an intelligence community monitoring and coordination role.

ONA commenced operations early in1978, following royal assent of the Office of National Assessments Act 1977 on 19 October 1977. Its genesis is found in a series of recommendations in the third report of the Hope Royal Commission on Intelligence and Security. At the time of the Royal Commission, national intelligence assessments were produced by DIO's predecessor organisation, the Joint Intelligence Organisation, and the National Intelligence Committee, both subordinate elements within the Department of Defence. Current intelligence assessments were produced by an element of the JIO operating under the direction of the Department of Foreign Affairs. Justice Hope found that there was "a need for a centrally located assessments function...placed in a location in the centre of government". He recommended that this be achieved by the establishment of an Office of Australian Intelligence Assessments, responsible to the Prime Minister, with a charter establishing its independence of control or direction by any policy department or direction by ministers as to what assessments it must make. Justice Hope saw this new organisation subsuming the national-level roles performed by JIO and the National Intelligence Committee.

Justice Hope's Office of Australian Intelligence Assessments came to fruition as the Office of National Assessments, with an Act which drew heavily on the recommendations of the Royal Commission. The Act directs ONA to prepare and furnish to ministers and other appropriate persons reports on matters of current significance and, as circumstances require, of national importance. It also gives ONA a responsibility for keeping under review Australian activities connected with international intelligence, and for reporting and making recommendations on any inadequacies in the nature, extent or arrangements for coordination.

It enshrines the independence of the assessments produced by ONA, and establishes two assessments boards, an Economic Assessments Board for matters primarily involving economic considerations, and a National Assessments Board for other than economic issues. It is headed by a Director-General who is appointed by the Governor-General for a period not exceeding seven years.

ONA produced its first report on 2 March 1978. In its first year of operations, ONA had 53 staff, and produced a total of approximately 140 reports, 13 of which were National Assessments. Since 1978, there has been considerable fluctuation in its numbers, with a peak in 1994-95 of 83 staff, 37 of them analysts, and a management structure including three Deputy Directors-General. Over the 26 years of its existence, ONA has had seven Directors-General, and served four governments, two from each side of Australian politics.

ONA Today

Today ONA is funded for a staff complement of 74, including 39 analysts. Its reporting output in 2002-03 was 908 reports (including 333 biographical 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.

By any measure ONA is a small agency. This is particularly apparent in comparison with US counterpart entities, but relevant too in terms of the Australian intelligence community. But despite this, or perhaps in part because of it, ONA enjoys a very strong reputation within its customer community, amongst the other intelligence agencies, with external commentators and overseas. The views expressed to the Inquiry on ONA's performance as an assessment agency were generally very positive: this perception of ONA's strength was borne out by the Inquiry's examination of the organisation's output, staff and structure.

The key factor in this is the quality of ONA's assessments. Behind that lie high-quality staff, a clear focus, a flat structure and lack of bureaucracy, and a commitment to policy relevant, readable and short assessments. Its cooperative approach to its community oversight role is also seen as a largely positive feature of the organisation.

The Inquiry found that, while these characteristics serve ONA well, they also bring with them some downsides. In reviewing ONA's effectiveness today and making recommendations on its future size and structure, the Inquiry considered four main factors: the quality of its product, the quality of its staff, the issues associated with its small size, and ONA's role within the Australian intelligence community.

Quality of Product

ONA's capability is ultimately measured by the quality of its output. The almost universal opinion amongst those interviewed by the Inquiry was that ONA's product was very good. The qualities most commonly praised were its readable style, its relevance and its brevity. The main general concern expressed to the Inquiry on ONA product related not to quality per se, but to the balance between current and long-term reporting. There were several representations for more emphasis on strategically focused, longer term pieces. This was noted in ONA's own customer research, conducted in the context of its 2002-03 classified annual report, where several respondents articulated the need for a rebalancing of ONA's priorities to enable greater focus on longer term analysis, and noted 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 by the Inquiry. ONA reporting is generally very readable, thoughtful and well-presented. Analysts are prepared to make judgments, which are typically well supported. ONA's 2002-03 customer research shows high levels of satisfaction against the quality criteria for assessment in its outcomes-outputs framework (unique, timely, responsive, relevant, accurate and forward-looking), with an average of around 75 per cent of customers finding that ONA mostly or always met expectations and requirements in these areas.

This is not to say that the reporting is faultless: the Inquiry's detailed study of the Iraq WMD-related reporting uncovered some inaccuracies, unsupported judgments and unintended judgment changes. Nor are ONA judgments invariably right, as other case studies in the report show. Although 100 per cent accuracy is not a realistic expectation, there are a number of measures identified in previous chapters which ONA could implement to guard against flawed reporting and judgments. In summary, these are:

  • a conscious review and restatement of previous positions
  • clearer identification of the basis for judgments in reports
  • a more systematic approach to challenging assumptions
  • greater active engagement of others by analysts
  • more rigorous and consistent testing of sources
  • greater use of external expertise.

While these measures should improve ONA's product, on balance the Inquiry found ONA's strong reputation within and outside government was well deserved on the basis of the product it distributes.

ONA produces six basic product types [see box]. Of these, the most common are the Current Assessment, and the Watch Report. Guidelines for each, including purpose, length and consultation requirements, are published in an analyst handbook, provided to every new starter. ONA also publishes a generic style guide for its product, stressing the need to be concise, logical and judgmental. It calls for spare, succinct and direct language, reports which are forward looking rather than descriptive, and focused on the implications of issues for Australian interests.

Types of Reports (other than National Assessments)

Strategic Assessments
Strategic Assessments are periodic reviews of Australia's strategic 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.

Current Intelligence Reports
Most of ONA's reports are published as current intelligence in the following forms:
  • Current Assessment
  • Watch Report
  • Intelligence Note
  • Warning Report
  • Biographic Report.
Like National Assessments, current intelligence reports identify underlying trends, forces for change, turning points and motives. They seek to make judgments and not simply report on developments. They look ahead but, especially in the case of crisis reporting, normally far less than National Assessments. Current intelligence reports do not have to be approved by the Assessments Board, but Current Assessments are shown in draft to interested departments. Watch Reports and Intelligence Notes are usually issued without consultation outside ONA.

Current Assessment
The Current Assessment is ONA's standard form of current intelligence reporting for both political and economic issues. It has a normal length of two to three pages of text preceded by a short summary. Current Assessments are circulated in draft to the Departments of the Prime Minister and Cabinet and Foreign Affairs and Trade, DIO and other interested departments for comment.

Watch Report
ONA produces Watch Reports during crises or when responding at short notice to sudden developments. In order to publish quickly, ONA is not committed to consult with other agencies. Watch Reports do not have any particular length, but every effort is made to keep them as short as possible.

Watch Reports are also used to provide summary analysis and narrative of an evolving situation to meet customer needs for a regular synthesis of information.

Though Watch Reports contain more narrative than most other ONA product, they should still be analytical in approach.

Intelligence Note
Intelligence Notes are used to respond to particular tasking from customers or where subjects are specialised or sensitive, not warranting the normal distribution of ONA product. An Intelligence Note is sometimes signed by the Director-General.

Warning Report
Warning Reports are occasional products alerting customers to emerging issues which could require policy attention or to imminent crises.

Biographic Report
Biographic Reports provide analytical biographic portraits of foreign identities whom Australian ministers are likely to meet.

A recent innovation is the National Security Committee briefing note, a short (one-page) note prepared for meetings of the National Security Committee.

Part of ONA's success can be attributed to its focus, or clarity of role. At its simplest, this is to produce all-source assessments for ministers. Justice Hope noted, in his third report of April 1977, that "Ministers are, in the final analysis, the ones for whom intelligence advice is produced". This focus was reinforced in the articulation of ONA's functions in its Act, where there is specific reference to "appropriate Ministers and other appropriate persons" as the recipients of ONA's output. Much of what is valued about ONA product stems from that focus on a ministerial readership: policy relevance, readability and brevity.

But such a sharp focus on this customer set comes at a price. Policy relevance has to some extent translated to meeting only the government's immediate or short-term needs. Readability does at times result in lack of appropriate qualification or attribution. And brevity can lead to superficiality - it is not possible to do justice to all topics covered in Current Assessments, for example, in two to three pages.

The Inquiry found almost no-one who advocated major change to ONA's focus or style, but amongst some customers there was a belief that the pendulum had swung too far towards readability and brevity. The Inquiry finds that there is room for ONA to adjust the balance between readability and brevity on the one hand, and completeness and thoroughness of presentation on the other. It notes ONA's internal efforts to review its product and processes along these lines and encourages ONA to develop more flexible guidelines with respect to length and type of reporting vehicle. In doing so, it will clearly be important not to lose the characteristics which are so valued by senior customers.

Of greater concern to the Inquiry is the current imbalance between current and longer term assessments. Greater use of the National Assessment vehicle, recommended in Chapter 6, will go some way to redressing that balance. But ONA is also encouraged to identify those issues where a longer look is needed, or where a short focused report might usefully be backed up with a longer research piece (much of the work for which will have in any case been done). The supplementation of resources recommended by the Inquiry is in part to enable more long term reporting: ONA must ensure that resources are allocated to this task and, once allocated, are not subsumed into current intelligence needs.

RECOMMENDATION:

ONA should give greater focus to longer term and strategic assessment.

While the balance of inputs to the Inquiry favoured ONA continuing with much the same focus and volume of output, some thoughtful representations were made that ONA should cater to a larger customer set - and that DIO's 'expansion' outside the strategic military assessment role reflected a market for intelligence that was not otherwise being fulfilled. The Inquiry did not, however, find strong support for greatly expanded ONA production, either internally or within the customer community, nor much evidence of unfilled requirements for strategic-level national assessments. While ONA is encouraged to give more deliberate focus to the needs of senior policy departments, on balance the Inquiry found that senior officials' needs were being satisfied by product designed primarily for ministers. Should DIO's mandate be refined as recommended, ONA will need to pay particular attention to senior Defence customers of intelligence, and may need to strengthen its analytic capacity on politico-military issues.

ONA product draws heavily on published or open source material - it is the single largest source of material for ONA reporting. Given its significance, the Inquiry believes that the Open Source Unit, currently positioned in the Department of Foreign Affairs and Trade, should be relocated to ONA. This 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. DFAT would welcome transfer of the Open Source Unit to ONA.

RECOMMENDATION:

The Open Source Unit (annual budget $2.5 million), at present within the Department of Foreign Affairs and Trade, and its budget should be transferred to ONA as soon as practicable over the next two financial years.

A vital element of the product quality question is independence. ONA argues that its Act represents a strong protection of its independence, and that this is supported by the culture of the organisation and its relationships with ministerial staff. The Inquiry finds this argument persuasive but not sufficient. Given the nature of the assessment business, where individuals' judgments are a key factor in the final product, and ONA's direct line of responsibility to the Prime Minister, with the consequent potential for charges of political influence, there is a need for some external process to ensure independence is preserved, and is seen to be so.

This relates both to the content of what is reported, and to what is not reported. In the former case, there is potential for either overt pressure from government or policy departments to reach a particular judgment, or an unconscious identification by the analyst with a particular policy outcome. In the latter case, analysts and managers may choose, either consciously or unconsciously, not to report on a particular issue of potential sensitivity for government.

A secondary element to the question of independence is whether ONA has the capacity to form assessments, particularly outside Australia's immediate region, independent of the much larger US and UK assessment agencies. This issue is discussed in Chapter 3 in the context of Iraq WMD assessments. In that case, ONA proved overall that it did have the capacity to form judgments which differed from those of US and UK agencies, although resource constraints and time pressures led to insufficient questioning of foreign-sourced intelligence reports.

The Inquiry finds that it would be appropriate for the Inspector-General of Intelligence and Security to review ONA's statutory independence on a periodic basis. As part of such a review, the Inspector-General might:

  • read a selection of ONA product on key contemporary international issues to obtain a sense of the independence of the judgments
  • interview a range of senior members of the relevant policy departments to gather their perceptions of the independence of ONA's assessments
  • interview, under conditions of strict confidentiality, a cross-section of ONA analytical staff up to and including the Director-General
  • seek an account from the offices of the Prime Minister and Foreign and Defence Ministers of how they interact with ONA and what kinds of advice and feedback they have provided to ONA.
RECOMMENDATION:

The Inspector-General should conduct a periodic review of ONA's statutory independence.

Quality of Staff

That an organisation depends on the quality of its staff is a truism. Its meaning increases in relation to organisations, like intelligence agencies, which have a high reliance on intellectual capital. But for ONA it has a particular resonance. ONA's staff are the sum total of its capability - it has none of the technical wizardry of many of the other agencies in the Australian intelligence community. People of the highest intellectual calibre, judgment and experience are vital to ONA's success.

Justice Hope recognised this in 1977, writing that care should be taken to select people of high quality for the assessments staff. He proposed that the assessments staff largely be seconded from departments, the Defence Force and agencies, and that no-one should have a lien on any job or 'represent' his department, service or agency. He recommended that there should be an understanding that ONA may co-opt officers from other departments or agencies with particular expertise as required, and that an attachment to ONA should be recognised as an important landmark in an officer's career.

To a large extent, ONA has been true to Justice Hope's vision. The Inquiry heard very largely positive views on the quality of ONA staff. These reports were generally supported by discussions held by the Inquiry with ONA staff, 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 their home or former departments. In educational terms, ONA's record is strong, with 22 (more than half) of ONA's analysts holding doctorates or master's degrees. Despite this, the Inquiry did receive some indications that there was room to lift the intellectual calibre of ONA's effort in some areas.

Across the organisation, ONA has a strong cadre of experience, including significant language skills and cultural understanding. As at April 2004, ONA had a capability against 13 languages, mostly to a high level of proficiency. While this is impressive for an organisation of only 39 analysts, it is notable that the loss of only two staff with multilingual skills (one of whom has six languages, the other four) would reduce that capability to eight languages. Equally importantly, around three quarters of ONA's analysts have lived and worked overseas, many in the countries on which they are working. The need for first-class analysts with depth of experience cannot be overstated: the great wealth of information available though intelligence collection, diplomatic and published sources, and through Australia's network of intelligence alliances can give optimal value to government only when assessed by analysts with appropriate contextual understanding.

A core of such experience is critical to the production of rounded assessments. ONA, with its flat structures and small numbers, is not a training ground for would-be analysts. Unlike the larger agencies, ONA would not be well served running its own graduate programme. Not only would the overheads be unaffordable, but ONA has few tasks suitable for the novice analyst. That said, ONA may obtain some benefit from participating in a limited way in the other agencies' programmes, particularly if the recommendation to increase its size is accepted. This could include involvement at the recruitment stage to enable some 'talent spotting', or work placements for graduates with particularly relevant skill sets.

But primarily ONA needs to employ people who bring with them significant levels of experience and analytic skill. While some of these are available from the private sector, mostly academia, and now potentially also think tanks, the capacity to second staff from other departments and agencies is vital to optimise ONA's success. This was clearly embedded in the Hope philosophy, but has had mixed success. ONA finds it more difficult now to second the staff it wishes to, partly because agencies are reluctant to release first-class officers, and partly because of the increasing emphasis in the public service on management experience, not available to analysts at ONA.

DFAT has agreed to make up to six officers available for secondment, and Treasury usually provides a smaller number of secondees. (Treasury has indicated the importance it attributes to continued economic representation within ONA, particularly at the senior level. While ONA is temporarily without a Deputy Director-General with an economic background, the recommended increase in staff numbers will allow that to be remedied.) There are also secondees from ASIO and DSD. While there have been up to two ADF secondees in the past, there is currently none.

The difficulties experienced by other agencies in making staff available to ONA are understandable, and it is not realistic to expect that ONA can or should have unrestricted call on any analyst it identifies, and on unlimited numbers. But agencies and departments are encouraged to view favourably ONA's requests for seconded staff, particularly during its period of expansion, should the Inquiry's recommendations in that regard be accepted. Where there is an agreed cap on the number of secondees, this should be renegotiated in line with ONA's increased overall numbers.

ONA has considerable flexibility in its employment mechanisms, and utilises this flexibility to good effect. In January 2004, its analyst population was made up of 17 ongoing employees, eight seconded employees, six contract staff and two consultants. This represents a healthy balance of core and shorter term staff, although the use of differing employment conditions creates some inevitable tension which needs to be carefully managed.

The Inquiry also found that ONA made limited use of short term contracts for specific issues, with only five contractors employed in this way since 2000. Greater use of such contracts to write a paper or share expertise would help extend the capabilities of a small workforce, and provide a relatively simple and inexpensive means of refreshing the organisation.

Training and development, and the related issue of career development are the cause of some concern within ONA. These issues were raised in the most recent staff survey, and also featured, to differing degrees, in discussion groups held with Inquiry staff, with most identifying career development as one of their top three priorities for change. It was particularly important to the younger staff who had career aspirations beyond ONA.

Despite the high level of skill that most ONA analysts begin with, they still need training and development. There is a view that analysts' skills are more inherent than learned - and this argument has some merit. But even 'born' analysts with broad experience have the capacity to become better analysts, or to retain their 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. Self-initiated proposals are usually endorsed, subject to availability, but there is little to no conscious management of staff's training or development needs, and little focus on the specific issue of career development.

In Chapter 3 the Inquiry identified shortcomings in the use and testing of intelligence sources, and the most accurate presentation of arguments in an assessment. It has also highlighted a gap in analysts' knowledge of IT tools, and the desirability of refreshing and developing analysts' cultural and/or technical expertise. There is also a need for some targeted focus on career development.

The extent to which formal training in the intelligence assessment discipline is needed at ONA is a contentious issue for staff. It is true that many ONA analysts come with well-developed analytic, research and writing skills - indeed they are selected on that basis. While these skills can certainly be honed with appropriately targeted training, the Inquiry found the real skill deficit was in the translation of those skills into the intelligence environment. Identifying gaps and driving an intelligence collection system are not necessarily intuitive - nor is an understanding or knowledge of the collection agencies' processes, capabilities and limitations. The recommendation for an intelligence community induction programme may help to meet the latter need. In relation to the former, ONA may find that the Defence intelligence training system has elements which might meet, or be modified to meet, ONA's specific needs. If ONA analysts are to take a more active role in collection management, such training will be critical.

Size and Resource Issues

As it is currently structured, each of ONA's analytic branches has between three and seven staff, including the branch head. All staff work directly to the branch head, who is also able to allocate the majority of his time to analytic work, and has few management overheads. The Director-General and his deputy review every product before publication, and all drafts go through the one editor for quality control. This contributes to a standard of product which is of a uniformly high quality. The small staff numbers add to the cooperative atmosphere and strong morale, with staff themselves attributing great value to the flat structures and ready access to the Director-General and branch heads.

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.

There was also widespread acknowledgment that ONA's small size brought with it a number of problems or limitations. These relate to capacity to produce assessments, depth and coverage of research for assessments, internal contestability processes, active management of intelligence collection, and staff development opportunities.

The Inquiry identified the most important of these as the limitation on ONA's capacity to provide analysis on all key topics at any time. In most cases, ONA is literally only 'one deep' in expertise. It is unacceptable that ONA be unable to produce key assessments at the time they would be most useful or ensure appropriate expertise is brought to bear on assessments because the one analyst who holds that expertise is absent or unavailable. While there are other mechanisms which can help mitigate this problem, such as a conscious programme to identify and develop 'secondary' skills in analysts, the current number of analysts precludes effective reserve or back-up capability.

Many of the analysts at ONA identified inadequate time to research as of concern. To some extent it will always be so - no matter what the resources applied to an analytic problem, there will always be more that could be done. There are also a number of ways short of increasing the number of analysts to manage this problem. Training in the use of IT tools, for example, is extremely limited, with analysts both less efficient and less confident in their results than they might be. But employment of additional staff as research assistants would not only free up analytic time and potentially improve the quality of research - it would also serve as a potential source of new analysts for ONA. The proposed relocation of the Open Source Unit would also increase the size and strength of ONA's research capability.

The issues of strength of internal contestability and active management of intelligence collection are related in the context of size. Time is a significant factor in analysts' capacity to challenge and test sources, and perhaps more importantly to identify gaps and drive the collection agencies to fill those. A more systematic and formal approach to community-wide collection management is needed to ensure that the community operates to maximum value. In both cases, training, management emphasis, clarity of role, and underpinning process are also critical and need improvement. But even well trained analysts who understand the importance of doing these things and have a structure to support them in their endeavours can only do so much in one day. With current staffing numbers, the Inquiry finds that analysts do not have sufficient capacity to undertake the underpinning activities to produce the high-quality, robust, comprehensive assessments that government requires from ONA.

The opportunities for staff development are limited by size, amongst other factors. Maintaining excellence in staff requires investment, and the proposed additional expenditure for ONA contains a number of options which are not possible in a 'one-deep' organisation. Sending the one Pacific analyst to regional posts for up to three months, for example, would leave ONA unacceptably exposed. The flat structure also means that analytic staff have no management responsibility below the SES level, with a potentially adverse effect on their employability elsewhere in the public service. A placement in ONA should be enough in itself to further a policy officer's career. But the increased emphasis given to management experience in the policy agencies and the increased tempo of government activity in the international policy arena have led to a divergence in the skills valued by ONA and policy departments. Not only does this impact on ONA analysts' career options, it denies the policy departments access to the deep analytic skills developed by a secondment to ONA.

Proposed Expansion

Almost all of those who spoke with the Inquiry argued that an expansion of staff numbers was both essential and manageable. The Inquiry found that an approximate doubling of staff numbers would be appropriate to address the major issues identified. The cost of the revised structure, excluding the funding of $2.5 million to be transferred from the Department of Foreign Affairs and Trade for the Open Source Unit, will be $25 million per annum. This includes significant additional funding for analyst development overseas and enhanced engagement with allied agencies.

The main drivers behind the changes are fivefold:

  • to increase the analytic strength in the top-order issues for Australia: the South Pacific, South East Asia, North Asia, terrorism, WMD and international economic issues
  • to strengthen ONA's capacity to coordinate and oversee Australia's foreign intelligence agencies
  • to strengthen ONA's research capability
  • to strengthen quality control systems and training and development
    of analysts
  • to ensure greater focus on cross-branch or functional issues (the importance of integrated analysis is highlighted in the Inquiry's findings on Iraq WMD reporting).

With the additional capacity, ONA will also have greater flexibility to respond to surges in demand.

It is important to note that the additional capacity for ONA is recommended not to boost the quantity of reporting output in any significant way, but to improve the quality and assurance of ONA's product - and to enable ONA analysts to create 'new knowledge' by analysing more, and reporting less. These goals will be achieved by greater analytic depth, more effective and comprehensive research, better training and development, stronger quality control, and more effective community coordination, including more rigorous collection management. Product quality will also be improved by greater focus on the process issues identified throughout the Inquiry's report.

In numbers, the changes will bring ONA staffing from 74 to 145, with the additional 71 staff made up of one additional Deputy Director-General, four additional branch heads, 18 additional analysts, 10 research assistants, five additional community coordination staff, nine additional corporate and IT services staff, and 24 staff transferred from the Department of Foreign Affairs and Trade with the Open Source Unit (five of whom are locally engaged staff (LES) based overseas). In addition, the liaison officer in Washington would be upgraded to a SES Band I position. ONA has one LES officer in Washington, and is in the process of recruiting one in London (this position is included in the current total of 74).

RECOMMENDATION:

The budget of the Office of National Assessments, Australia's peak foreign intelligence agency, should be expanded significantly from $13.1 million to $25 million (excluding $2.5 million by transfer from the Department of Foreign Affairs and Trade) by 30 June 2007 to enable a significant expansion in its 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.

With ASIO too in the process of recruiting a substantial number of additional staff, the Inquiry finds that the best option for accommodation would be for ONA and ASIO, both expanded, to continue to share a single building. The Department of Finance and Administration is currently examining how this option might best be realised including through extending the existing ASIO building or through a new building.

ASIO has advised the Inquiry that one option would be for ASIO to vacate sufficient space in the current ASIO building to accommodate the recommended increase in ONA staffing. ASIO would then lease separate accommodation for those vacating the ASIO building, as well as the new recruits for which ASIO has been funded. This relocation would be temporary, perhaps for three to four years, until both agencies can again be accommodated in a single building. The Inquiry understands that the cost of such an option would be of the order of $11 million over and above the costs of any extended or new building. This includes the cost ($2.4 million) of a 24-hour guarding service at ASIO's leased separate accommodation.

This option would have several advantages: it would enable ONA to expand without the disruption of having to find new accommodation or being split across two sites. It would minimise disruption to ASIO which would, in any case, have to rent additional space to accommodate its new recruits. It would keep ONA and ASIO together, which is important for the integration of the intelligence community and its capacity to deal effectively with terrorist threats.

RECOMMENDATION:

Funding should be provided to ensure that an expanded ONA and an expanded ASIO, as already decided upon, can continue to share a building, including funding to cover transitional accommodation arrangements. The Inquiry is advised that the cost for this is likely to be in the order of $11 million over and above the construction and fit-out of an extension to the present ASIO building.

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 space be available in the current building. Subject to accommodation availability, 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.

The sum of the proposed expansion is a near doubling of ONA's current size. This will bring with it challenges, many of them of a nature or on a scale which ONA is not experienced in managing. ONA's key priorities must be to maintain the high quality of product and staff for which it is valued. While ONA will remain small in absolute terms, in relative terms the change is significant, and its impact on ONA's culture should not be underestimated. The Inquiry sees merit in ONA engaging expert assistance to help plan for and manage their expansion programme.

ONA's Role Within the Australian Intelligence Community

Within the foreign intelligence community in Australia, ONA plays a dual role, being charged with both producing National Assessments, and coordinating the activities of the foreign intelligence agencies. The combination of the two roles places ONA at the peak of the foreign intelligence community, with responsibility not only for utilising the output of the intelligence community, amongst other sources, in its assessments for ministers, but also for managing the coordination mechanisms which ensure that the community is producing what is necessary to contribute to those assessments. While ONA's assessment role is spelt out in detail in ONA's Act, the latter role is reflected only briefly, and in relatively unspecific language, reflecting what was appropriate and achievable in 1978.

The Inquiry finds that there would be merit in a clear articulation of ONA's role as Australia's peak foreign intelligence agency, and to have this reflected explicitly in legislation. Doing so would position ONA to fulfil to greatest effect the government's requirements for assessments on international matters that are of political, strategic or economic significance to Australia. The intelligence community has matured significantly over the past two and a half decades, and the requirement for the leading role played by ONA is largely accepted within the community, and more broadly within government.

There are two major elements underlying this concept of 'peak' agency. The first is to make quite clear that ONA is the national foreign intelligence assessment body, in line with Justice Hope's 1977 recommendations. A number of the changes recommended throughout this report complement this recommendation, not the least of which is the recommended change to DIO's mandate.

The second is to strengthen ONA's role with respect to coordination of the foreign intelligence community. The substantive issues which relate to this role, such as priority setting, oversight and accountability, are dealt with in Chapter 4, and there are a number of recommendations aimed at strengthening ONA's capacity to deliver effective community coordination. Enshrining this role in legislation would formalise ONA's responsibilities to government in this regard.

The Inquiry believes that there would be merit in reflecting ONA's role unambiguously in its name. A name such as the Australian Foreign Intelligence Assessments Agency (AFIAA) would be appropriate.

RECOMMENDATION:

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).

The new AFIAA, as the peak foreign intelligence agency, would produce more National Assessments, and more long-term reporting. It would have greater flexibility to second staff from within the public service community, and agency and department heads would be charged to ensure that secondments to AFIAA were recognised as career enhancing. It would play a more directive role in collection management, supplementing the current formal processes with working-level responsibility to identify gaps and drive intelligence collection.

Conclusion

ONA is a well-regarded organisation producing high-quality product with generally strong customer support. Its intelligence output, while highly valued for its relevance, readability and brevity, has too strong a bias towards current intelligence at the expense of more thoughtful, better researched longer term assessments, including more National Assessments.

ONA's performance is underpinned by highly skilled staff and flexible staffing strategies, with a healthy balance between permanent and short-term staff. Its secondment programme should be strongly supported by other agencies and departments, both in the release of high-quality officers, and in making clear the value that is attached to secondments to ONA. ONA's analytic talent is currently too thin, leaving it with insufficient depth both regionally and on globally significant issues. Training and career development need greater focus, particularly as ONA expands its staff numbers. ONA is also ill-equipped in resource terms to undertake effective community coordination, set out in its legislation.

ONA's role as the peak foreign intelligence agency should be asserted, both through a stronger legislative mandate, and through a more appropriate and more publicly understandable name such as the Australian Foreign Intelligence Assessments Agency. A budget increase from $13.1 million to $25 million per annum (plus $2.5 million for the transfer of the Open Source Unit from the Department of Foreign Affairs and Trade and some additional one-off costs relating to accommodation), which includes an increase in staff numbers from 74 to 145, is recommended to equip ONA to fulfil its mission effectively. This includes an additional deputy Director-General and four additional branch heads. 

 

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