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Report of the Inquiry into  Australian Intelligence Agencies  

Chapter 2 - Australia's Intelligence Needs

[Table of Contents]


Changing Global Needs
Enduring Regional Imperatives
Changes in the Operating Environment
Australia's Intelligence Partnerships
Resources Applied to Australian Intelligence

Australia's strategic circumstances and the challenges Australia faces make intelligence a vital part of the national government machinery. Situated in a potentially volatile region, and subject to an increasingly uncertain global environment, Australia's need for good intelligence is arguably greater now than at any time since World War II. The Australian Government must be able to anticipate emerging threats and capitalise on national opportunities. With a foreign and defence policy that engages deeply with our region and beyond, it should be well informed about the intentions of regional and global players. Australia must be able to give the greatest possible support to the men and women deployed on operations in pursuit of Australia's national interests. Finally, the Government needs to exploit fully every asset at its disposal to help protect Australia and Australians from the threat of terrorism.

High-quality, independent intelligence is a critical element of the government's armoury to meet these challenges. Despite the limitations on intelligence described in Chapter 1, there are nonetheless qualities which define good intelligence and which the government should expect. Australia's expensive intelligence collection assets must be focused on the government's highest priorities: coverage of those priorities must be as comprehensive as possible, and reporting accurate and timely. Intelligence assessments must be soundly 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 assessments come to a judgment to aid decision-making. And most importantly, while intelligence priorities should be driven by policy needs, intelligence judgments must be uninfluenced by policy or political considerations.

Intelligence is of greatest value where it informs decisions - from the strategic choices facing ministers in government to the tactics employed by operational commanders in war. It is this value that justifies the considerable expenditure on intelligence, and its covert activities. Intelligence assists decision-making on defence capabilities. It gives insights into the thinking and actions of foreign governments and non-government actors, which help avoid miscalculations and guide the actions we take as a nation. Forthright, high-quality and objective intelligence can challenge the foundations of existing policy.

Australia has built on the foundation of a strong intelligence history to help it meet these challenges. Our intelligence culture draws on liberal political traditions, as well as the legacy of Western intelligence in World War II. Consistent with these traditions, intelligence in Australia has been focused outward and on threats to genuinely national interests. Unlike those of other cultures, Australia's intelligence agencies do not focus on internal political dissent, or engage in operations to support the government of the day. Further, legality and propriety characterise Australia's intelligence culture. With the exception of some rare but notable mistakes - such as the 1983 raid on the Sheraton Hotel - Australian agencies operate within strict limits defined by law, and firmly under political guidance.

Changing Global Needs

Australia's intelligence needs are dynamic, reflecting rapid global transformation. Just as economic globalisation was a feature of the last decade, this decade has seen the globalisation of security threats, particularly from non-state actors. Fast-paced technological change has been diffusing power and empowering individuals and groups to play roles in world politics. Political and military threats to Australia's security and prosperity - the focus of previous 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.

The numerous recent attacks on Western targets underline the emergence of Islamic extremist terrorism as the major threat to Australia's security in the first decade of the twenty-first century. The threat is serious and enduring. The level of organisation and support for Islamic terrorist networks, and the deeply rooted socioeconomic factors that underpin them, suggest that they will be a major feature of the security environment for at least a generation.

This terrorist phenomenon is new in scale, method and ambition. Al Qaida and similar networks have demonstrated both the willingness and the capability to inflict massive casualties on civilian targets, and display no concern for the loss of innocent life. They have an active interest in obtaining chemical, biological or radiological weapons. Unlike the terrorist groups of the last century, the extremist Muslim terrorism embodied by Al Qaida is uncompromising. In the words of one spokesman, "We are not trying to negotiate with you, we are trying to destroy you". It is adaptive and amorphous, characterised by loosely linked groups within which cells operate semi-autonomously, and is without settled structure, methodology or territory.

Australia is an avowed target. Where previous forms of terrorism barely touched Australia, this new form of extremist Muslim terrorism has declared its aim to inflict damage on Australians and Australian interests. Global in scale, it is closer than ever before. In our own region, Jemaah Islamiyah has emerged as a serious threat.

Intelligence is the front line of the government's campaign against terrorism. It is vital in seeking warning of terrorist plans. It can help us understand terrorist groups, as well as the context that sustains them.

Changing global dynamics have resulted in a number of other less dramatic, but nonetheless important, demands on intelligence. With a strong governmental focus on border security, intelligence plays an important part in countering illegal immigration networks. It is a substantial task, not least because of the phenomenal increase in people movements - authorised and unauthorised - over recent decades. There are on average some 8.4 million passenger arrivals through Australian international airports each year, of which some five million (14,000 each day) are not Australian citizens.

Proliferation issues are also of pressing concern to Australia. Scientific advances 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 Asia-Pacific region. Australia, with a highly urbanised population, is particularly at risk. The clandestine character of WMD proliferation makes intelligence support, particularly to warn of threats, critical.

Non-traditional threats are more difficult to prosecute. Often well-defined, slow-changing and predictable targets have been replaced with networks which are complex, adaptive and elusive. Intelligence agencies are responding with new doctrine and training, and are increasingly engaged in whole-of-government and international teams, a key feature of the intelligence campaign against non-state targets.

Enduring Regional Imperatives

These new global threats and challenges do not however displace the continuing importance of Australia's more traditional security interests in the Asia-Pacific region. Our region remains the most likely source of threat, as well as a vital determinant of our prosperity. Asia and the South Pacific remain the focus of our intelligence efforts, and it is in these areas that Australia's intelligence performance needs to be strongest.

On South East Asia and the South Pacific, Australia needs to be a global leader in intelligence. Instability or a breakdown in law and order in nations in our immediate neighbourhood would have profound consequences for Australia. Australia needs the highest quality, most comprehensive intelligence to give warning if threats to stability worsen, to inform our policies on the region, and to prepare for worst case outcomes if those policies do not succeed. High-quality intelligence will also be essential if Australia and Australians are to take advantage of the economic and other opportunities generated by developments in the region.

Australia's intelligence on North East Asia should be exceptionally good. This region has a high and rising significance for Australia. With key export markets accounting for up to 35 per cent of Australia's trade, conflict in North Asia would have serious consequences for Australia's economy. The Korean peninsula is a key regional flashpoint. Conflict across the Taiwan Straits would have profound consequences. Australia needs warning of any such threats, and information more generally on the shifting economic, political and strategic dynamics within the region to help drive our diplomacy, enhance our trade policy, and ensure defence preparedness.

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 South Asia and North East Asia will be key determinants of Asian security. Nuclear brinkmanship and the activities of extremist elements in South Asia are of great concern. Intelligence on the rich economic opportunities and globally significant threats in this region is needed to inform government policy and further Australian interests in the region.

Beyond these direct national interests, strong intelligence performance in the Asia-Pacific region is also driven by intelligence alliance considerations. Intelligence sharing is based on mutual benefit, and Australia's intelligence partners value Australia's expertise on its near region.

Changes in the Operating Environment

The past five years have brought significant changes to the environment in which the intelligence agencies are meeting these demands. Key among these has been the greatly increased demand for support to military operations. Since the deployment to East Timor in 1999, the operational tempo of the Australian Defence Force has risen markedly. With deployments to Afghanistan, Iraq, the Solomon Islands and elsewhere, the ADF has been on major operations almost continuously for the past five years.

Current ADF Operations

These deployments require intensive intelligence support, including the assignment of staff and equipment to theatre. There are heavy demands at strategic and operational headquarters for information to guide operational and policy decisions. Overall, the heightened operational tempo has required a substantial effort on the part of the intelligence agencies to maintain the flow of timely and authoritative information to decision-makers.

The nature of war-fighting is also changing in ways that affect the intelligence community. New concepts such as effects based operations and network centric warfare will result in requirements for more detailed analysis and tailored intelligence products in a shortened time frame. The changes will force even closer cooperation between the operations and intelligence communities, as commanders and decision-makers seek a more detailed understanding of the operational environment. This, in turn, will drive demands for intelligence of greater detail, reliability and timeliness.

Another dynamic affecting the intelligence community has been technology, a two-edged sword for intelligence agencies. Technology is enabling, for the first time, individual access to communications that are instantaneous, diverse and robustly encrypted. New technology can impose great difficulties and costs on intelligence collection. On the other hand, access to our own and allied technology innovations gives our agencies new levels of reach. But keeping up with technology is a costly business.

Finally, increased public focus has shaped the environment in which the intelligence community operates. Public debate on intelligence has been driven in part by Western governments choosing to draw on intelligence to explain policy. A series of high-profile incidents involving intelligence agencies or staff has contributed to its greater exposure. Where that publicity reveals details of intelligence successes, sources or methods, it has a potentially serious impact on intelligence capability.

These environmental changes have made intelligence both more relevant and more challenging. Our agencies are dealing with information that is more frequently urgent and operational. Not only are they supporting Australian forces deployed into dangerous operational theatres, they must also be alert to the possibility of attacks on civilians at home and abroad. Access to intelligence is getting harder, and public interest and expectations greater. To meet these challenges, effective partnerships and adequate resources are critical.

Australia's Intelligence Partnerships

Intelligence partnerships are fundamental to meeting Australia's intelligence needs. But in recognising the enormous value of these partnerships, it is critical not to lose sight of Justice Hope's philosophy on intelligence partnerships. In 1977, he wrote:

"It would be naive to imagine that overseas governments will always tell us everything they know about a particular matter. The position they take is quite natural and we should face up to it realistically."

Realism dictates that Australia should maintain a strong but necessarily selective indigenous intelligence effort. We should collect intelligence to maintain independent sources on those issues of most importance to us. But in analysis, Australia needs to maintain an independent capacity across the whole spectrum of issues on which the government needs advice. Australia must be able to critically assess intelligence sourced from others.

Realism also involves taking full advantage of intelligence partnerships where the balance of benefit is clearly in our national interest. Key elements of Australia's relationships work strongly in Australia's favour. Overall, they represent a significant force multiplier: the US intelligence budget is around $A50 billion, and the UK's is $A4 billion, 100 times and eight times respectively that of Australia's.

While levels of sharing vary among countries and intelligence disciplines, overall the amount of foreign intelligence shared with Australia is high. Global cooperation on counter-terrorism has strengthened traditional partnerships and, importantly, has initiated or reinvigorated a range of others.

Chapter 7 highlights a number of key issues with Australia's intelligence partnerships, including the need to broaden and strengthen relationships with countries other than the US and UK.

Resources Applied to Australian Intelligence

The adequacy of resources across the foreign intelligence community is a key issue for this Inquiry: the considerable requirements levied on Australian intelligence agencies require substantial resources. The government has recognised the increasing need for intelligence in the new security environment with a doubling of the Australian intelligence community budget over the past four years. In 2000-01, a total of $332 million was spent on both foreign and security intelligence, rising to $659 million in 2004-05. Excluding ASIO, the increase has been 88 per cent, from $269 million in 2000-01 to $506 million in 2004-05.

In addition a small part of the budget of the Defence Science and Technology Organisation assists the intelligence community. The above figures omit expenditure on intelligence by the Australian Defence Force other than the costs of ADF personnel working within the defence intelligence agencies.

Staff resources have also increased substantially in the past five years. Numbers of personnel in the intelligence community have increased by 44 per cent, from 2,301 in June 2000 to 3,324 in June 2004. Excluding ASIO, the increase has been from 1,696 to 2,494 over the same four-year period, an increase of 47 per cent. In addition to ADF personnel posted to the intelligence agencies, the ADF also maintains approximately 900 intelligence staff working in both joint and single service roles.

Another vital input to intelligence assessment comes from diplomatic reporting. While diplomatic reporting cannot replace covertly collected material, it has many benefits: it is cheaper than intelligence, and its collection does not entail the same risks. It also often carries the added value of analysis and interpretation by diplomatic staff. As a result of budget reductions over successive governments, the number of Australian diplomatic staff overseas (and the amount of information they are able to report to Canberra) has been declining, with a 38 per cent drop between 1990 and 2003. While this Inquiry is concerned primarily with the intelligence community, it is apparent that the reduction in Australian diplomatic resources is a constraint on optimising the output of the intelligence assessment agencies.


Australia's intelligence needs are many and enormously varied. The agencies of the Australian intelligence community must be able to respond to the detailed operational intelligence requirements of the Australian Defence Force deployed on military operations and to those of the Australian Federal Police or ASIO in a terrorism investigation, while also informing government policy on regional political, economic and strategic issues. For their part, decision-makers of all kinds need to understand what intelligence can provide, set clear direction, and be demanding and critical to ensure greatest value. More than ever in this uncertain and dangerous environment, Australia's intelligence needs, and the resources and capabilities of Australia's intelligence agencies, must coincide.


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