MINISTER FOR FOREIGN AFFAIRS

GOVERNMENT RESPONSE TO COMMISSION OF INQUIRY INTO THE

AUSTRALIAN SECRET INTELLIGENCE SERVICE

[XIII/95]

On 15 March 1994 the Government appointed a Commission of Inquiry into the Australian Secret Intelligence Service (ASIS) headed by The Honourable Gordon J Samuels AC QC and Mr Michael H Codd AC. The terms of reference of the Inquiry required the Commissioners to:

(a) enquire into the effectiveness and suitability of existing arrangements for :

(i) the control and accountability of ASIS;

(ii) the organisation and management of ASIS;

(iii) the protection of ASIS intelligence sources and methods;

(iv) the resolution of grievances and complaints relating to ASIS; and

(b) to consider whether any changes in existing arrangements are required or desirable.

In setting up the Inquiry, the Government was mindful of the desirability of periodic 'root and branch' reviews of the intelligence and security agencies. Although the roles, functions and performance of the intelligence and security agencies had been reviewed extensively by the Government in 1992, there had not been a thorough independent judicial review of ASIS since the second Hope Royal Commission into the intelligence and security agencies in 1984. I had been considering in 1993, well before any individual grievances became public, whether it was time for another review of ASIS.

The Government was also concerned by the apparent failure of some former ASIS officers to accept the results of the investigations of their grievances by the Inspector-General of Intelligence and Security, and by the development of a damaging media campaign directed against both ASIS and the Inspector-General, culminating in the ABC 4 Corners program that went to air on 21 February 1994. In all the circumstances as they evolved, the Government felt that an Inquiry was needed to provide a reassurance to the public of the proper functioning of ASIS.

The Commission of Inquiry into ASIS reported to Government on 31 March 1995. Before commenting on the Report itself, I would like to take this opportunity to thank the Commissioners and their staff on behalf of the Government for their hard work and dedication. The Report is a perceptive, rigorous and comprehensive examination of ASIS. Like the Reports of the two Hope Royal Commissions in 1977 and 1984, this Report forms an important building block in the arrangements for the oversight and accountability of the Australian intelligence and security agencies.

THE REPORT

The Commissioners' full Report consists of two substantive volumes, plus a volume of appendices containing lists of witnesses, organisation charts and the like. The first volume deals with the issues related to the four main elements in the terms of reference - control and accountability, organisation and management, protection of sources and methods, and the resolution of grievances and complaints. Although this volume is classified, the Commissioners have recommended that large parts of it be made public, subject only to such deletions as are necessary to protect national security and privacy. The Government has agreed to do this: edited in line with the Commissioners' recommendations, it is tabled with this statement as the Public Edition of the Report. (The Commissioners' summary Public Report was tabled in the Senate on 24 April 1995. It is reproduced at pages xix-xxxvi of the Public Edition tabled today.)

The second volume deals in detail with the cases of the former ASIS officers and the wife of one of those former officers, who were represented jointly before the Inquiry (referred to hereafter as the complainants). For reasons of privacy and national security, and consistent with the Commissioners' recommendation, the Government does not intend to make public any part of this volume. The Government has agreed with the Commissioners' recommendation that the complainants and their legal representatives be allowed to see those parts of the second volume which relate to their individual cases, on conditions of strict confidentiality. All but one of the complainants availed themselves of this offer.

In accordance with past practice, the Government has provided the Leader of the Opposition and the Shadow Foreign Minister with a copy of the full classified Report subject to assurances of confidentiality.

In tabling this Report, the Government is making a significant advance in what it is prepared to say publicly about ASIS. In the past, successive Governments have strictly limited the extent of their public comment on ASIS in the interests of national security. But while we judge that it is now an appropriate time to be more forthcoming than we have been in the past, there is still a self-evident need for certain kinds of information relating to ASIS, and intelligence and security in general, to remain secret so as to protect national security, the safety of individuals, and Australia's international relations. This especially includes information that could identify ASIS officers, sources and methods; places of ASIS deployment and operation; areas and issues of intelligence interest; and the purpose or objectives of individual operations, be they past, current or projected. The continuing need for certain details about ASIS to remain secret is wholeheartedly endorsed by the Commissioners.

MAJOR FINDINGS AND RECOMMENDATIONS

Control and Accountability of ASIS

Because of the highly delicate nature of ASIS's work, special arrangements have existed for its control and accountability. The current arrangements were put in place following the two Hope Royal Commissions into the intelligence and security agencies - the Royal Commission on Intelligence and Security in 1977 and the Royal Commission on Australia's Security and Intelligence Agencies and 1984. The most significant outcome of these inquiries for the control and accountability of the intelligence and security agencies was the recognition of the fundamental principle that the agencies should be under the control of, and properly accountable to, Ministers for their activities. Mr Justice Hope saw this as essential in circumstances where the majority of those agencies' activities are shielded from public view. Through Ministers, the agencies are accountable to the Parliament.

ASIS is an arm of the executive government, and is subject to Ministerial direction like any other department or agency of government. In the case of ASIS, Ministerial control is exercised by the Foreign Minister through the Director-General of ASIS. The Minister presently exercises this control both directly and through the ASIS Directive, which sets limits to the activities that ASIS may perform, and specifies approval for certain kinds of activities. Broader Ministerial oversight of ASIS and the other agencies is exercised by the Security Committee of Cabinet, with officials-level advice being coordinated by the Secretaries Committee on Intelligence and Security (SCIS). Intelligence priorities are set by the Security Committee of Cabinet, which also scrutinises the performance of the agencies. Independent oversight of the agencies' compliance with Australian law and propriety is provided by the Inspector-General of Intelligence and Security.

The Commissioners have found that the current arrangements for control and accountability are highly effective. In particular, they have found that ASIS acts only in response to direction from the Government; that the procedures for the approval, development and carrying out of operational proposals have been meticulously observed by ASIS; and that these procedures would make it impossible to conceal illicit operational activity from Government. To quote the Commissioners:

We have discovered no evidence capable of supporting the conclusion that ASIS is operating out of control ... or pursuing its own targets unrestrained by any government agency, or is unaccountable for the activities it undertakes or the funds it expends. ... On the contrary its operational management is well structured and its tactical decisions are thoroughly considered and, in major instances, subject to external approval. ... It does not maintain 'tens of thousands of files' containing dossiers about Australian citizens, as alleged in the media. We have absolutely no reason to suppose that, again as alleged, in November 1994 it set fire to embarrassing records so as to prejudice the work of this inquiry. It does not represent a threat to Australian democracy.

Although the Commissioners go on to suggest ways in which the arrangements for control and accountability might usefully be enhanced, they point out that this should not be taken to imply that the current arrangements have failed, or taken as a response to disorder. They say rather that their report "provided an opportunity for a review of the arrangements for control and accountability of ASIS in the context of the relevant reforms of recent years in the Australian public sector..." and the changes proposed by them "are a response to that opportunity, not a criticism of the current accountability regime".

Legislation. The Commissioners have recommended several measures to enhance the degree of, and widen the scope of the arrangements for, ASIS accountability. The first and most important of these is to place ASIS on a statutory basis through the enactment of legislation. Mr Justice Hope recommended in 1977 that ASIS be placed on a statutory basis. His recommendation was not taken up by the Fraser Government on the basis that it was judged unnecessary. The recommendation was not renewed in the second Hope Royal Commission. The Commissioners are very firmly of the view that legislation to affirm ASIS's existence and to provide for parliamentary acknowledgment of its role and functions is desirable in principle and will be of benefit in practice. They believe it will serve to reassure the public that the activities of ASIS are properly authorised and controlled and help to dispel the persistent mythology that ASIS is out of control. Overall, they argue that the move from an executive to a legislative charter would add a significant new dimension to the accountability framework for ASIS.

The Government accepts this recommendation, and proposes to introduce legislation at the earliest practical opportunity. ASIS is a valuable national asset which serves and protects Australia's national interest through the collection of foreign intelligence. It is desirable that this role be afforded public recognition. It is also important, from the point of view of protecting democratic freedoms, that ASIS's activities be regulated in a way which provides a significant degree of reassurance to the public. Legislation is an appropriate way to achieve these objectives.

As I pointed out before, the recommendation that accountability be enhanced does not suggest that the current arrangements have failed. Similarly, the proposal for legislation should not be taken to imply that ASIS has acted outside the law. ASIS is and has always been subject to Australian law like any other government agency. And the move to legislation should not be interpreted as a sign that the Government regards Ministerial responsibility for the intelligence and security agencies as less important now than previously. On the contrary, strong executive control remains fundamental. The Government's support for legislation signifies that it feels a legislative rather than an executive charter would provide a more relevant and publicly acceptable basis for ASIS's existence in the post-Cold War world.

The Commissioners have provided detailed recommendations on what legislation for ASIS should include. As with the ASIO Act, these include specific limits on ASIS's functions, activities and powers, the powers and responsibilities of the Director-General, privacy rules, and provision for the legal protection of the identities of ASIS officers and sources, briefing of the Opposition Leader on ASIS, and the creation of a joint statutory parliamentary committee on ASIS. In all these matters we will be guided in large measure by the specific suggestions of the Commissioners. While discussion of legislative detail is better left to Parliament when a Bill is introduced, it is appropriate now to specify the Government's responses to the major legislative proposals. These responses, like the others in this Statement, have been the subject of discussion with the Shadow Foreign Minister and represent, it is believed, a broad measure of agreement between Government and Opposition.

Briefing of Opposition. Since the two Hope Royal Commissions, Governments of both political persuasions have adopted a practice of keeping the Opposition Leader and, as appropriate, shadow Ministers, informed of significant intelligence and security matters, on the understanding that these briefings remain strictly confidential in order to protect national security. Such briefings do not include operationally sensitive details. The Commissioners have recommended that the Opposition Leader be given a right of access to briefings on ASIS, and that this right be enshrined in legislation. Such a right currently exists for the Opposition Leader in the case of ASIO, but it remains at the discretion of the Government in the case of the other agencies.

The Government accepts the value of keeping the Opposition regularly informed of significant intelligence and security matters, and is prepared, subject always to the exercise of Ministerial discretion, to continue that practice at an expanded and more frequent level, with briefings to be provided every six months, and otherwise on request. While a statutory right to briefings is justified in the case of ASIO to ensure that the agency is not misused for political purposes, there is less justification for such an automatic right in the case of ASIS, which has far less potential to affect the civil rights of Australians or to conduct activities with domestic political implications. ASIS is an agency of Government subject to ministerial responsibility and control. It is not above Government in any way. For these reasons, it is best that the practice of briefing of the Opposition on ASIS matters remains at the discretion of the Government. But the Government does agree that more regular briefings would be desirable. Obviously, as was the case in the past, it is essential that the Opposition respects the confidentiality of the information that is provided. Overall, the Government accepts the practical outcome intended by the Commissioners, but with the maintenance of the current formalities and procedures.

Parliamentary Committee. Another significant recommendation is the creation of a joint statutory parliamentary committee to oversee the activities, expenditure and administration of ASIS and ASIO. The Commissioners also recommend that such a committee replace the current Parliamentary Joint Committee on ASIO. They recommend that the committee be small and consist of experienced parliamentarians; that it operate in camera; that it have the power to initiate its own inquiries and have access to relevant information (including reports of the Inspector-General on ASIS's compliance with the law and other rules and procedures, but not including operationally sensitive information); that its staff be security cleared, and that members be subject to strict sanctions for the unauthorised disclosure of classified information. While the Commissioners do not contend that a parliamentary committee is a prerequisite or necessary accompaniment for legislation, they do point out the desirability, in the interests of greater accountability, of the Parliament having a more direct, albeit limited, role in the oversight of ASIS than it does now.

The Government accepts in principle the value of limited parliamentary oversight of ASIS. ASIS, like any other agency of government, can benefit from responsible parliamentary scrutiny. The highly delicate and secret nature of ASIS's work necessarily places limits on the information a parliamentary committee could receive or upon which it could report. Nevertheless, the Government has explored appropriate designs for a committee model which satisfy the needs of both accountability and secrecy, and would be prepared to accept a committee model constructed along lines similar to those proposed by the Commissioners, but with some limited amendments.

The Commissioners recommended that there be a combined committee on ASIS and ASIO. Whereas the domestic security agency's activities necessarily have great potential to impinge on the rights and privacy of Australians, this potential does not exist in the case of ASIS, whose activities are focused almost exclusively overseas. In the Government's view, this means the case for parliamentary scrutiny of ASIS is more qualified than it is in the case of ASIO. It also means that the nature of parliamentary scrutiny that is appropriate for ASIS is not necessarily the same as that which is appropriate for ASIO. For these reasons, the Government does not favour the proposal that a single parliamentary committee should oversee both ASIO and ASIS.

The Government favours a small committee on ASIS, comprising six members, appointed by the Parliament on the nomination of the Government, with three members from the Government and three members from the Opposition, with the Government providing the Chair who would have a casting vote. The committee's role would be to review the expenditure and administration of ASIS, and ASIS's compliance with Australian law and other rules and procedures. The committee secretariat would be security-cleared and seconded from the executive Government. This committee model resembles, to a significant extent, that currently in place in the UK.

In addition to the enactment of legislation and the establishment of a parliamentary committee, the Commissioners propose some additional enhancements to accountability. This includes modifications to the ASIS Directive, an expansion of the Inspector-General's monitoring role, opening up ASIS's exempt operational account to external auditing by the Australian National Audit Office, and making the Director-General of ASIS a full member of the Secretaries Committee on Intelligence and Security.

ASIS Directive. The proposed modifications to the ASIS Directive are relatively minor and would be largely consequential on the enactment of legislation. They include the omission of provisions which will no longer be necessary once legislation is passed. Other changes are secret, or involve minor administrative detail which need not be discussed here. However, two points are worthy of mention. The modifications do not entail any alteration to ASIS's basic functions or powers. ASIS will still be prevented from carrying out, or training to carry out, covert action, by which I mean interference in the internal affairs of other countries by means of paramilitary action or covert interference in politics. Second, the Department of Foreign Affairs and Trade will continue to have an important role in commenting on ASIS's operational proposals and ensuring ASIS is guided by, and does not run counter to, Australian foreign policy.

Compliance Audits by Inspector-General. The Commissioners recommend an expansion of the role of the Inspector-General of Intelligence and Security in monitoring ASIS through a system of retrospective audits of ASIS's compliance with Australian law and with operational rules and procedures. Such a system would provide further reassurance to the Minister and the Parliament that ASIS abides by the rules. It is also proposed that a parliamentary committee on ASIS would have access to the broader findings of such audits. Again, this is proposed as an enhancement of the existing accountability arrangements. The Government supports this recommendation for retrospective compliance audits by the Inspector-General.

External Financial Audit. The Commissioners propose a system of external audit of ASIS's finances by the Australian National Audit Office. The majority of ASIS's finances are already subject to external audit. But its exempt operational account is audited by an internal auditor who reports to the Director-General, who in turn reports to the Minister. (A similar arrangement applies to ASIO's operational accounts.) The Commissioners propose that ASIS's exempt account be audited by a senior officer of the ANAO, with appropriate safeguards and procedures to protect the security of the information in question. The Government supports this recommendation for ASIS, and will adopt a similar approach for ASIO.

Secretaries Committee. The Government has accepted the Commissioners' recommendation that the Director-General of ASIS be made a full member of the Secretaries Committee on Intelligence and Security. With ASIS now to be subject to legislation and parliamentary oversight, inclusion of the Director-General would help better to integrate ASIS into the higher policy-making machinery, and would improve its interaction with the rest of Government.

Organisation and Management of ASIS

In their consideration of the organisation and management of ASIS, the Commissioners paint a picture of a highly skilled, focused and dedicated organisation that is highly attuned to its core function of collecting intelligence. One consequence of this strong focus on ensuring ASIS does its job well has been a high degree of concern for secrecy. For reasons I have explained before, this concern for secrecy is unavoidable. The need for secrecy imposes great burdens upon ASIS officers, such as not being able to discuss their experiences with their friends and family. This burden also has its effect on management, sometimes in ways which don't necessarily reflect modern management practice. The need for secrecy and strict compliance with directions has, in the Commissioners' view, led to the development of a culture which values conformity above diversity and executive direction over consultation.

The extent to which some management practices within ASIS have been deficient is closely related to the issue of the internal resolution of grievances, which I will deal with in a moment. Those deficiencies have manifested themselves in part through the cases of the complainants. The Commissioners did not find the gamut of inefficiencies, impropriety, or gross incompetence which had been alleged by the former ASIS officers. But they did find that there had been some shortcomings in ASIS's internal management, particularly with regard to the methods it adopted to deal with allegations of misconduct.

It is worth noting that many of the events that were subject of complaint occurred some years ago, in some cases up to ten years. The Commissioners have also noted that the current Director-General has acknowledged many of these problems and has taken steps of his own initiative, without prompting from the Inquiry or from the Government, to address them. The Government commends this approach by the Director-General.

It is difficult to comment extensively on the Commissioners' recommendations on organisation and management without divulging details of ASIS's methods of operation. As has been stated, the Commissioners did not recommend that these parts of the full Report be made public. But in essence, they propose a number of management reforms aimed at developing an internal culture which respects differences and diversity between staff and management as healthy rather than threatening. They include greater emphasis on corporate planning; greater delegation of functions by the Director-General and enhanced executive support; more uniform and transparent staff selection procedures and improved career opportunities for all ASIS staff; greater mobility for ASIS staff within the Australian Public Service; improved staff counselling; fairer and more transparent procedures for internal investigation of allegations of misconduct; and a clearer and more transparent policy by ASIS of its expectations of the spouses of ASIS officers, particularly in relation to operational work and internal investigations. The continued secrecy and effectiveness of ASIS's work depends just as much on the maintenance of a culture which promotes and accommodates a diversity of ideas as it does on strict adherence to operational rules and procedures.

The Government considers many of these changes to be necessary, and is pleased that ASIS has already set about implementing many of them before the Inquiry was completed. The Government intends to pursue these reforms vigorously to ensure they are carried through, and will review periodically ASIS management's performance in this area. This will be necessary to bring ASIS into line with management practice elsewhere in the public sector.

Protection of Intelligence Sources and Methods

I have referred above to the importance of maintaining secrecy in ASIS operational matters, and explained the reasons for that secrecy. The Commissioners were asked in their terms of reference to examine whether the measures for protecting secrecy are adequate. They have made some suggestions to improve those measures.

Offences. The most important measures available to the Government to prevent and punish the disclosure of sensitive national security information are the official information provisions in the Crimes Act. These provisions were examined as part of the Review of Commonwealth Criminal Law conducted by The Right Honourable Sir Harry Gibbs AC, which reported to the Government in December 1991. The Government's final consideration of the Gibbs Committee's proposals is awaiting the finalisation of a response to the Report of the Senate Select Committee on Public Interest Whistleblowing, which was tabled on 30 August 1994.

The Government is firmly of the view that, in the areas of intelligence and security, defence and foreign relations the criminal provisions relating to the disclosure of official information need to be redesigned so as to overcome the problems of imprecision and potential overreach involved in the application of the present Sections 70 and 79 of the Crimes Act. This view is reflected in the Gibbs Committee recommendations, the general thrust - although not all the detail - of which has been endorsed by the ASIS Inquiry Commissioners. The Government agrees with the Commissioners that there should be specifically drafted offences, and proposes that these offences should be incorporated in the Crimes Act as part of the proposed ASIS legislation package.

The definition of the elements of any criminal offence in this area involves a complex balancing of public interest considerations, in which national security concerns, the effective practical administration of justice and the rights of defendants all have to be weighed. The Government's preferred position, which differs in some respects from the positions of both the Commissioners and the Gibbs Committee, involves the following basic elements:

. descriptions, as full as possible, of the kinds of disclosures of security information which are prohibited;

. liability to extend not only to disclosures by members and former members of the intelligence and security services and other relevant officials, but to 'secondary' disclosures;

. the Government to be required to prove damage or likely damage in all cases;

. illegality under Australian law of an act the subject of a disclosure to be a defence to prosecution; and

. a presumption that all proceedings to be in camera, subject to the judge being satisfied that no national security interest would be prejudiced by the proceedings, or part of the proceedings in question, being determined in open court.

It will be seen that, while the Government has preferred a tougher proof of damage test than that recommended by the Commissioners and has allowed a defence of illegality, we do not agree with the Commissioners' proposal to introduce an even broader defence of 'public interest'. The establishment of appropriate grievance mechanisms, as outlined below, should make such a defence unnecessary in cases where matters of personnel administration are involved. And, as the Commissioners themselves make clear, any officer with concerns about possible improper activity or serious maladministration has an avenue already through the Inspector-General of Intelligence and Security for expressing those concerns: certainly there should be no need ever to unlawfully disclose information.

Nor does the Government propose to defer introduction of the offence of secondary disclosure. The Commissioners' rationale for such a deferral - namely that we should give the D-Notice system time to work - does not take account of the fact that the proposed offences would be applicable beyond the recipients of D-Notices. Failure to provide criminal sanctions to secondary disclosures could make the sanctions on primary disclosure quite ineffective.

As to injunctive action to deal with threatened unlawful disclosures, the Government accepts the Commissioners' recommendations that proof of damage or likely damage should continue to be required in all cases. We would also apply here the presumption in favour of such cases being dealt with in camera, subject to a judicial determination that no national security interest would be prejudiced by not doing so.

D Notices. For the most part, the Government has relied on a system of voluntary restraint on the part of the media to prevent the publication or broadcast of sensitive matters that would harm national security or foreign relations. This system, known as the D Notice system, is voluntary, and is dependent on the goodwill and cooperation of the media for its success. Breaches of the D Notices are not, as such, subject to criminal sanctions.

The Commissioners have found that the D Notice system was ineffective in preventing the disclosures on ASIS made in the lead-up to the Inquiry. To some extent the Government could have been more active in promulgating the D Notices and keeping media representatives aware of the Government's concerns. As the disclosures became more serious, the Government did take steps privately to inform the media of its concerns. A review of the D Notice system was underway when the Inquiry began. The Commissioners stress the importance of retaining and reinvigorating the D Notice system, so that the Government will be in a better position to respond to similar contingencies in the future. In line with the recommendations of the Commissioners, the Government will, in consultation with the media, update and reinvigorate the D Notice system so that it will be more effective in the future.

The other reason for the ineffectiveness of the D Notice system was the attitude of the media. It is worth noting here that the Commissioners' assessment of the role of the media in relation to ASIS before and during the Inquiry is not a flattering one. As they note, ASIS makes a good story, precisely because it is shrouded in secrecy. In these circumstances, the media is prone to exaggerate facts, and even experienced and responsible journalists are prone to suspend their powers of judgment and good taste in the pursuit of a good spy story. The Commissioners found that, in some instances, journalists had published allegations about ASIS which they had good reason to suspect were untrue. In some other cases, they made no attempt to verify the accuracy of the claims made to them. I hope the media will take note of these observations.

It seems to be an unhappy fact of life at the moment that, if the media sees advantage for itself in running a manifestly national security-sensitive story, its collective instinct is to publish come what may. It is true that, if the media do not understand or accept the underlying need for secrecy, or are unable to distinguish between those disclosures which are likely to be damaging and those which are not, any system of voluntary restraint is likely to have mixed success. This points to the importance of the Government maintaining a continuing consultative dialogue with the media on these issues. The Government and the media will not always share the same view on national security, but they can move towards a better understanding of each others' position, and thereby minimise the chances of causing damage to the national interest. The Government was encouraged by the broad support for the voluntary D Notice system that was expressed by media representatives who appeared before the Inquiry.

The Commissioners have suggested that the Government could be more open about ASIS in its public comments. They suggest that the 'neither confirm nor deny' approach to questions about ASIS could be modified in some circumstances, and that a complete prohibition on discussion of past ASIS operations may be unnecessary. The Government would prefer the basic rule to remain one of neither confirming nor denying reports and allegations. There may from time to time be instances where it is possible, indeed desirable, to be more forthcoming, e.g. in response to allegations of activities which are clearly proscribed by legislation. But the Government is strongly of the view that the disclosure not only of the identity of individuals, but of the detail of ASIS operations - past, present or future - can be damaging to our foreign relations, can compromise operational methods and techniques, and can endanger sources.

Media Liaison. Finally, the Commissioners propose the appointment of an ASIS media liaison officer to assist in helping to develop a better understanding between ASIS and the media. Given the very small likelihood of the Government being able to provide any significant comment on reports and allegations about ASIS, and the enhanced expectations likely accordingly to be disappointed, the Government sees little value in such an appointment. It is, however, anticipated that under the new statutory regime the Director-General of ASIS will have a somewhat higher profile, and be more often available for discussion, than was the case previously. Otherwise, all queries should be directed, as at present, to my office.

Resolution of Grievances and Complaints Relating to ASIS

As mentioned above, many of the problems that the Commissioners noted in ASIS's management revolved around the question of how to deal with internal dissent and staff grievances. ASIS is not the first government department or agency to experience disharmony or staff difficulties, nor is it likely to be the last. The existence of differences between staff and management in ASIS is not inherently a cause for greater concern than it would be in another organisation. The Commissioners reject the notion that ASIS management has any 'special' duty of care towards its employees over and above that owed by any employer to its employees, although they noted the need for ASIS management to take particular measures to meet its duty effectively.

What is important is that all agencies, including ASIS, have adequate and effective procedures for resolving internal disputes when they do occur, and that these procedures are fair, equitable, and take account of the rights of individuals as well as the needs of the organisation. It is also important, if problems remain after all internal avenues of appeal have been exhausted, that staff have recourse to external review of their grievances.

Internal Mechanisms. In the case of ASIS, the Commissioners have found those mechanisms to be deficient and have made recommendations for improvement. These include fairer procedures for the formation and operation of grievance panels within ASIS and improved staff counselling facilities. The Commissioners also found deficiencies in the procedures for internal investigation of allegations of misconduct. Those deficiencies were found to be a significant factor in the complaints made against ASIS. The Government accepts the need for reform in this area. The Commissioners also recommend clarification of the roles and responsibilities of the ASIS staff ombudsman and the ASIS psychologist. The Commissioners found that the preparation of a secret psychological report on one of the complainants without his knowledge, and the subsequent use of that report, to have been highly improper. These modifications of internal procedures should prevent any repetition of that unfortunate incident.

External Mechanisms. In line with the preferred practice elsewhere in the public sector, the Commissioners stress the importance of staff grievances being resolved internally wherever possible before avenues of external review are pursued. In the case of ASIS, the failure of internal procedures led to the involvement of the Inspector-General of Intelligence and Security, who is responsible for investigating complaints against the intelligence agencies. The former Inspector-General investigated the complaints of the complainants, and in some instances upheld those complaints and made recommendations accordingly. But in many cases the conclusions and recommendations of the Inspector-General were rejected by the complainants, who then chose to pursue their cases through the media, making highly damaging allegations about ASIS operations (a great many of them untrue or highly distorted, or of no relevance to their grievances) in the process.

The Commissioners have made several observations on the handling of these complaints by the former Inspector-General. They have found deficiencies in the procedural approach taken to the investigations and in the time taken to resolve the cases. Some of these problems were caused by procedural constraints dictated by the IGIS Act. Based on these observations, the Commissioners make several recommendations for change to the procedures for external review of ASIS staff grievances.

The Commissioners recommend that the function of external review of staff grievances be transferred from the Inspector-General to the Security Division of the Administrative Appeals Tribunal (AAT), which has a determinative power. This would have the advantage of keeping the staff grievance review function on a more detached and adjudicative basis, and would provide for legally binding findings. It would also allow the Inspector-General more time for his agency monitoring function.

The Government's preferred position is for the Inspector-General to retain the grievance function, but for that function to be very clearly delineated from the Inspector-General's other functions; for the Inspector-General to act in a more adjudicative manner in relation to staff grievances; and for the Inspector-General to be given a determinative power. We believe this approach is more consistent with the role envisaged by Mr Justice Hope for the Inspector-General. The deficiencies that arose in the cases of the complainants arose not because of the involvement of the Inspector-General per se, but because of the constraints under which the Inspector-General operated, some limitations in the mode of operation he adopted and the refusal of some of the complainants to accept his conclusions and recommendations.

The Government agrees with the Commissioners that a move to a more adjudicative process for resolving grievances is necessary, but considers this role should be performed by the Inspector-General, who already possesses the statutory power to do so, rather than the AAT. The Inspector-General already has the flexibility to adopt more adjudicative processes in those grievances where it is appropriate, and has experience and knowledge of the workings of ASIS which will both assist, and be assisted by continued involvement with grievances. The Government has never envisaged a role for the AAT in the resolution of staff grievances within the intelligence community, and believes such a role is more appropriately performed by the Inspector-General, operating under modified procedures, and with a limited determinative power in relation to compensation and reinstatement following unfair dismissal.

I also note that on 6 April 1995 Mr Ron McLeod took up the position of Inspector-General of Intelligence and Security. He is a senior public servant with particular depth of experience in defence and public administration. He was formerly Deputy Secretary, Budget and Management, in the Department of Defence and, more recently, headed the team that reviewed the Public Service Act.

The Complainants

It is appropriate to comment at this point on the findings of the Commissioners in relation to the complainants. As I have indicated, the second volume of the classified Report will not be tabled, for reasons of national security and privacy. However, the Commissioners make some comment on the cases in their summary Report, which has already been tabled. They note that there had been significant shortcomings in the treatment of two former officers and the wife of one of those former officers by ASIS management. The Commissioners also found that the wife of one of the former officers is entitled to an apology from ASIS for the stress and hurt caused by her treatment. The Government accepts these findings. In fairness to ASIS management, it needs to be pointed out that to the extent that ASIS's actions with regard to the complainants were found to be deficient, those actions were influenced by ASIS's legitimate concern with secrecy and not motivated by malice. This, of course, does not justify those actions, nor does it ease the suffering of those who were affected. The Director-General of ASIS will make a formal apology to the wife of the former officer, and I join with him in this apology.

Set against these findings, the Commissioners also found that the complainants had no justification whatsoever for their disclosures of sensitive information about ASIS, in view of the solemn and binding commitments of confidentiality they had given. The complainants have put forward the argument that they had no alternative but to make the disclosures they did in order to have their cases heard. This is not true. Despite procedural flaws in the former Inspector-General's handling of some of the cases, his conclusions and recommendations were nevertheless reasonable. The Government cannot be held to account for the complainants' refusal to accept those conclusions. Nor can the disclosures or purported disclosures of sensitive details of ASIS operations, in clear breach of confidentiality undertakings, in any way be excused. In any case, the former officers' grievances concerned deficiencies in administration rather than operations. Finally, there can be no justification, under any circumstances, under any definition of public interest, for making allegations which are known to be untrue.

The Commissioners suggested that, in relation to three of the complainants, considerations of general justice and fairness might warrant an award of compensation, although they also note that the amount of any compensation should be discounted to some degree by the complainants' breaches of confidentiality. The Commissioners made a more specific recommendation in relation to a fourth complainant. The Commissioners judged that it was not within their terms of reference to recommend an amount of compensation to the first three complainants. Therefore, the Government has agreed to set up a process of arbitration to make binding determinations on compensation and other issues arising from the complainants cases. That arbitration process will begin soon, and we expect it to be finalised as quickly as possible. Once that is done, the Government hopes to close the book once and for all on these cases.

Conclusion

As will be apparent from the Report that I am now tabling, many of the public allegations that have been levelled against ASIS - such as rogue activities or bumbling incompetence - are simply not borne out by the facts. ASIS does well the job it was established to do, and is firmly under the control of the Government. The arrangements for its accountability are effective. The Commissioners have made suggestions for enhancing and widening the arrangements for accountability - not as a response to disorder, but as improvements to already satisfactory arrangements which are warranted by changed circumstances. The Government broadly accepts these proposals as positive and useful.

ASIS is well-managed in the performance of its primary task. But its internal organisation and management has at times in the past experienced problems as a result of an internal culture that places a high premium on secrecy and loyalty. These problems unfortunately led in some cases to the inappropriate treatment of some individuals. Those events were unfortunate for all concerned and I do not seek to justify them.

Steps are in hand to change management practices as a matter of priority, including changes to the arrangements for internal review of grievances. There is every indication that the current ASIS management at the most senior levels recognises the need for change and has already embarked on that path. Improvements to the mechanisms for external review of ASIS staff grievances, including the role of the Inspector-General, are also in hand.

Finally, the Government reaffirms the need for secrecy in ASIS's activities, and will take the necessary steps to improve its ability to deter and prevent, in the national interest, the disclosure of sensitive details of ASIS operations.