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STEPHEN SMITH: As you would be aware, I, at the commencement of the Parliament today, made a statement to the Parliament about the abuse of Australian passports in the Dubai assassination matter.

Can I start by making this point; that because I'm dealing here with the detail of national security matters, because I'm dealing here with the detail of our intelligence community, I am constrained in what I can sensibly add to my statement to the Parliament.

Let me just briefly summarise the substance of my statement to the Parliament and the Government's response on this matter.

You will recall that in February, when this matter came to public attention, I asked, through the Secretary of the Department of Foreign Affairs and Trade, the Commissioner of the Australian Federal Police to conduct an investigation into the alleged abuse of Australian passports in Dubai.

I received a preliminary report from the Commissioner of the Federal Police through the Secretary in April and it was clear from that report that further work was required by the Australian intelligence community.

That work has been done. It included a visit to Israel by the Director-General of ASIO and I received last week the final advice from relevant agencies and the Department of Foreign Affairs & Trade on this matter.

This morning I briefed the National Security Committee of the Cabinet and arranged for the Deputy Leader of the Opposition and my counterpart, the Shadow Minister for Foreign Affairs, to receive a briefing in this matter.

The substance of the investigation and the advice is in three essential parts; firstly, that there is no evidence - absolutely no evidence - that any of the now four named Australians in this matter were anything other than innocent victims of deliberate passport fraud.

Secondly, that the nature of the fraud was such that the cloning and the counterfeiting and the quality was such that on the advice I had it could only be effected by a nation through a state intelligence service.

And thirdly, on the basis of the evidence before us it is beyond doubt, but that regrettably, Israel was responsible for the counterfeiting and the cloning of those passports.

I made the point to the Parliament that regrettably this is not the first occasion on which Australian passports have been misused by Israel and regrettably what occurred in this Dubai incident is contrary to and in breach of, understandings reached between Australia and Israel of some years standing.

Can I say that the decision to ask Israel to remove from Australia one of its officers at the Israeli Embassy in Canberra, is not something which fills the Australian Government with any joy. On the contrary.

The decision today was made in our national security interests, made in support of the integrity of our passport system, made in efforts to protect those Australians who travel overseas, the decision was made much more in sorrow than in anger.

Australia and Israel are firm friends and that remains the case, but this, as I said to the Parliament, was not the act of a friend and as a consequence, at my request, the Department of Foreign Affairs and Trade has asked for a member of the Israeli Embassy to leave Australia within the week.

Within the constraints that I referred to earlier, I'm happy to do my best to respond to your questions.

I'll make this point; whilst I may have constraints, I don't have constraints on time other than Question Time so we can just take it orderly one by one.

QUESTION: Who's the member of the Israeli Embassy that you've expelled.

STEPHEN SMITH: In accordance with the usual diplomatic traditions, I'm not proposing to identify that particular person. It is a member of the Israeli Embassy.

QUESTION: That's fine. I wouldn't expect a name, but can you give us some - I mean I understand the British asked the Mossad station chief to leave. Did this person...

STEPHEN SMITH: I'm not disclosing the name nor to identify. I am happy though to say that our response on any measure is comparable to the British response and people may well draw their own conclusions about the person who has been asked to leave Australia.

QUESTION: Minister, has the Australian Government informed the United States of the action that it's taken and was this - if you did was this done before you made your statement to Parliament?

STEPHEN SMITH: I took the opportunity of letting the new British Foreign Secretary know that today we would be making a decision because I wanted to take the matter to the National Security Committee of the Cabinet and I also wanted to take the matter back to the Parliament.

Such is its importance that I wanted to advise the Parliament first. But I took the opportunity of letting the British Foreign Secretary know of the substance of our decision and its announcement today.

I also took the opportunity of alerting shortly in advance the Foreign Minister from the United Arab Emirates. And officials on my behalf have been alerting, either in advance of or contemporaneously with, my announcement and statement to the Parliament, foreign ministries and Foreign Ministers of relevant countries.

That includes the United States because of its alliance status with us, but also because of its close friendship with Israel. It also includes other countries who have had their passports involved in this matter, so the United Kingdom, France, Germany and Ireland.

QUESTION: Mr Smith has there been any response from Israel?

STEPHEN SMITH: I alerted our Ambassador. I had officials on my behalf alert our Ambassador to this matter, our Ambassador in Tel Aviv, to this matter last night. She will be providing Israeli officials in Tel Aviv at the opening of business with all of the information that I've made public firstly.

Secondly, of course, the Secretary of the Department called in the Charge d'Affaires in advance of my statement to the Parliament.

If Ambassador Rotem had been present in Australia then of course I would have done that personally with Ambassador Rotem as I did in February when the matter first became public.

QUESTION: Mr Smith do you concede that history would suggest that this diplomatic retaliation is going to have no impact on the modus operandi of the Israeli Intelligence and Security Agency, Mossad?

STEPHEN SMITH: Well, that will be a matter for the current Israeli Government and future Israeli governments. In my statement to the Parliament I made the point that regrettably this is not the first example of misuse.

I am not proposing to go through that detail because it was at a time which pre-dates the Government coming to office, but you would all be aware that my predecessor Mr Downer has made public remarks in recent times. I'm not proposing to add to that.

I also made the point to the Parliament, and I make it again, that we are a firm friend of Israel. We regret very much that this incident has occurred, but friendship is a two-way street.

We now need to rebuild the confidence and trust in the relationship. And after this incident, after the Australian Government's response, then I would hope that any Israeli Government would be on notice that any future conduct along similar lines would be greeted in a similar manner or indeed, in a greater manner, reflecting any repetition.

QUESTION: Minister has there been any acknowledgement, has there been any apology, has there been any gesture of contrition at any official level from Israel?

STEPHEN SMITH: Well, you'll recall that one of the questions that I was asked in February was the extent to which Israel may or may not assist or facilitate our investigations.

Let me make a couple of points; firstly, as is well known, the Australian Federal Police in the course of the preparation of their report visited Israel. Israel and Israeli officials facilitated that visit.

As I made clear to the Parliament and again to you, the Director-General of ASIO also visited Israel as part of our inquiries and as part of the Government wanting to put itself in a position of receiving exhaustive advice. His visit was also facilitated.

I think it is fair, though, to say that in terms of the substance of these matters, Israel has not been drawn in those conversations or drawn on these matters. That I think is a comparable experience to that which the United Kingdom found.

QUESTION: If there hasn't been an apology, if there hasn't been any gesture of contrition, who are we to talk about remaining firm friends? It's not a firm friendship, if that's what it is, based on an understanding and acknowledgement of error and wrong and if the Government is willing to remain firm friends, should the Australian people feel that same firm friendship with a country that doesn't acknowledge a wrong as severe as this?

STEPHEN SMITH: I have made very firmly, from day one, the point that we do not regard these actions as the actions of a friend. That's the first point.

Secondly, I also made the point to the Parliament that we now need to embark upon the rebuilding of trust and confidence in our relationship with Israel. Friendship is a two-way street. But I don't think you'll find in any of this matter, whether it's in Australia, whether it's with Australian officials or generally, that is Israel has been drawn on these matters.

There was one up the back.

QUESTION: Yeah, on these other occasions that you've given [indistinct] were the Australian people involved in that aware of their passports being misused...

STEPHEN SMITH: Well, as I say, I'm not proposing to add to what is already on the public record about...

QUESTION: In terms of...

STEPHEN SMITH: I'm not proposing to add to what is already on the public record about matters which predate my becoming Minister.

QUESTION: In relation to this other matter, the more recent matter, the victims - what's being done to support those four Australians?

STEPHEN SMITH: When we started this matter in February there were three and since then one further Australian has been publicly identified by the Dubai authorities. All of those four Australians have been rendered consular assistance and we continue to provide that assistance on an as-needs basis if required. We have already facilitated the replacement at request of a number of those passports.

But we continue to stand ready, willing and able to provide whatever consular assistance is required to those four named Australians. Officials have been in contact and will be in contact again, bearing in mind that this matter, as a result of the Government's decision today and my announcement, will obviously be subject to media commentary.

Just one here.

QUESTION: You said in your statement that the pass - the nature of declined passports, the high quality of them, suggested the involvement of a state agency. You've also talked about it being beyond doubt that Israel was involved. I assume that what you're saying there is that there is other proof that the ASIS, ASIO investigation has uncovered as to Israel's involvement?

STEPHEN SMITH: I'm not proposing to go through the detail of the advice. I'm certainly not proposing to make public the report or the advice that I have received. That falls very squarely into national security deliberations. But on the basis of the investigations and on the basis of the advice and the assessment that I have from the Australian Federal Police, from the Department of Foreign Affairs and Trade, from ASIO and from ASIS, the Government is left in no doubt that this very regrettably was a matter authorised by Israel.

This one here.

QUESTION: Are you expecting a...

STEPHEN SMITH: Sorry, that might have been up the back and I'll come back to you.

QUESTION: Does this impact on any future intelligence sharing between Australia and the Israeli intelligence agencies?

STEPHEN SMITH: Australia, as I've said, traditionally has had a close and firm friendship with Israel. In the past that has included intelligence on cooperation matters. Clearly, as a result of today's events, there will be something of a cooling off period, so far as relevant agencies are concerned. And just as in the United Kingdom, time will tell how long that may or may not be.

But from our perspective, from the Government's perspective, we want to have a good relationship with Israel. That has been the position of successive Australian Governments since the creation of Israel. We believe it is in our national interest and Israel's national interest for there to be cooperation on intelligence and security matters, particularly, for example, in some of the challenges that confronts not just Israel, not just the Middle East but the international community, for example, Iran's nuclear program.

We would want very much for those cooperative relationships to proceed, but there does require a rebuilding of trust and confidence.

This one here.

QUESTION: The L series passports...

STEPHEN SMITH: Sorry, I missed it.

QUESTION: If the L series passport can be forged, shouldn't they all be retained and reissued?

STEPHEN SMITH: This is something we've given consideration to but we don't believe that circumstances justify or warrant that. There remain very many L series passports in circulation.

Let me make a couple of points. Firstly, no Government can guarantee that its passport system is foolproof. No Government can guarantee that and any Government that does is frankly foolish. That's the first point.

Secondly, Australia is regarded as world class in the sanctity and integrity of its passport system, both in the past and now. And you may have seen, for example in the Budget, the allocation of, from memory, $101 million over six years to continue the enhancement of the integrity of the system and greater and better and further technology.

We are constantly reviewing and updating, and we are held in very high regard. But that doesn't mean that your passports can't be forged. But on the basis of our serious consideration about the integrity of our passport system, we don't believe that that step is warranted.

QUESTION: I just wanted to ask about the overseas development assistance...

STEPHEN SMITH: I'm happy to take it up if we can exhaust any...

QUESTION: Are we expecting, or should we expect, any retaliatory diplomatic response from the Israelis, given the...

STEPHEN SMITH: Well, that will be a matter for Israel and the Israeli Government. I note that there was no such retaliation when the United Kingdom effected a similar response. I would be disappointed if there was, but that's a matter for Israel.

QUESTION: Minister, is there any suggestion that this will change attitudes towards Israel at the UN on...

STEPHEN SMITH: Absolutely not. And I have to say that since the announcement of the AFP investigation until now there have been a couple of matters with respect to Israel, either before the General Assembly or in respect of Middle East peace talks, which people have tried to look through this prism in terms of the Australian Government's approach and response.

Can I just say that we have not allowed this issue to disturb in any way, our policy approach to Israel, our policy approach to Middle East peace matters and we will not allow that to occur.

So far as United Nations General Assembly resolutions on the Middle East are concerned, we consider these annually on a case by case basis, within a well understood policy framework about whether the resolutions advance, for example, the furtherance of peace in the Middle East.

So we have not allowed this matter to disturb the fundamental basis of our approach to the Middle East and nor will we.

QUESTION: Minister, you say you want to rebuild and work at rebuilding the strength of your relationship. Does that include contact between you and your counterpart, Leiberman? Are you going to try and speak to him personally to try and resolve this?

STEPHEN SMITH: I have not sought to make contact with Foreign Minister Leiberman. If he wishes to make contact with me then obviously I will response in a positive and constructive manner.

One more on this matter.

QUESTION: Yes, on this matter...

STEPHEN SMITH: Yes.

QUESTION: As Minister for Foreign Affairs, you have responsibility for ASIS. Can you say with your hand on your heart that ASIS has never used foreign passports in the course of its work?

STEPHEN SMITH: Well, I could say...

QUESTION: ..or forged foreign passports...

STEPHEN SMITH: I can say with my hand well and truly firmly clasped on my heart that when it comes to intelligence matters, when it comes to operational matters, consistent with the long-standing tradition of all Australian governments, I'm never drawn on our intelligence community or the intelligence agency for which I have formal ministerial responsibility, ASIS.

Now okay, everyone's happy. I'm happy to go to other matters.

QUESTION: When you say that politics hasn't been involved - hasn't played any part at all in your, in this retaliation, that the fact that the Government's struggling in the polls, that you've tried to...

STEPHEN SMITH: Absolutely not.

QUESTION: ...beat this up a little?

STEPHEN SMITH: I have made it clear from day one that I regarded this as a most serious national security issue that went to the integrity of our passport system, that went to the safety and well-being of Australians travelling overseas. It was most regrettable that it involved a firm friend, and I have taken no personal pleasure or joy in any of this. I represent a constituency where there is a very strong Jewish community. I'm a well-known, long-standing supporter of our policy approach to Israel and the Middle East. I visited Israel on a number of occasions.

I have taken no joy in this. But I have had to recommend to the National Security Committee of the Cabinet, armed with advice from every relevant national security agency, the Australian Federal Police, the Department of Foreign Affairs and Trade, ASIO and ASIS and the clear advice and conclusions that any Government would have been caused to make were the ones that I have announced today.

QUESTION: Minister, can I just - following up Kieran's question, why wasn't it possible, given that you received your report last week, to release this decision last week?

STEPHEN SMITH: I received the final advice from memory on 19 May. I think I was, on 19 May, either in Shanghai or somewhere between Shanghai and Tokyo. I think you would have complained somewhat if I had announced this matter overseas, firstly.

Secondly, whilst I had come to my own conclusion after considering that advice and all the previous advice I had received, I wanted to do two things. I wanted to take my recommendation to the National Security Committee of the Cabinet. And I then wanted to advise the Parliament first.

After I received the final advice last week, this was the first opportunity which I did at five past 12 after prayers this morning.

QUESTION: Minister, why do you think Australian passports were singled out for misuse? I mean, are we seen as a soft touch?

STEPHEN SMITH: We weren't the only ones whose passports were used. There were United Kingdom passports, Irish passports, French and German passports. So I don't regard that as a singling out, I do regard it as very regrettable that our passports were abused in that way.

QUESTION: How long is the person at the Israeli Embassy flying out of the country for, what's the timeframe that he has?

STEPHEN SMITH: There's no set time, that's an indeterminate time. Time will tell if and when that person returns or is replaced.

QUESTION: On that point, how did you settle on this particular person, I mean I appreciate you won't name this person but why...

STEPHEN SMITH: In accordance with all of the usual traditions in these matters. As I said, I'm not proposing to name or to categorise the individual officer concerned. People will draw their own conclusions about that particular officer and the nature of his or her work.

QUESTION: How many diplomats are there in the Israeli Embassy?

STEPHEN SMITH: You'll have to ask the Israeli Embassy.

QUESTION: When was the last time an Israeli diplomat was expelled?

STEPHEN SMITH: I may well have to stand corrected on the record, my memory is 2004 but I could be...

QUESTION: Do you remember what that was for?

STEPHEN SMITH: As I said I'm not proposing to go into detail of matters which predate my time as Minister for Foreign Affairs.

QUESTION: You said that this person was expelled according to the usual traditions. Can you just sort of walk us through what the usual traditions...

STEPHEN SMITH: Yes, you don't identify the officer, you don't name the officer and you allow people to draw conclusions as to which particular area of the Embassy that person may or may not have come.

QUESTION: There was someone due to leave quite soon and be replaced. Was this expulsion quite separate to that natural replacement process?

STEPHEN SMITH: This expulsion is done by a positive decision of the Government today. What other arrangements are made by the Israeli Embassy, you'd need to speak to the Embassy.

QUESTION: Minister you can't tell us at all about the other incident that Downer's talked about in 2003?

STEPHEN SMITH: I could, but I'm not proposing to add to the public record of matters that predated me.

QUESTION: But you must have been briefed on it.

STEPHEN SMITH: I'm not proposing to add to the public record of matters which predate me.

QUESTION: Is this the end of retaliatory measures, Mr Smith?

STEPHEN SMITH: Well again if I make the same point I made to Sky, we don't regard this as retaliation. We regard this as a regrettable but necessary step in our national interest to send a signal about the sanctity and integrity of our passport system, to also send a signal about prior misuse and conduct inconsistent with a longstanding agreement between Australia and Israel.

QUESTION: On the overseas aid budget, are you concerned about some of the very large amounts of money going to private consultants [indistinct] the aid program?

STEPHEN SMITH: Sure. Let me make a number of points about the aid program. Can I say firstly, I welcome very much the fact that there is interest in the program and interest in some of the detail. That's the first point.

Secondly, I'll be releasing or announcing later today the results of the review into the Aid Cooperation Treaty between Australia and Papua New Guinea, which makes a number of points.

Two, I think, important points are: firstly, the need to review the level of technical assistance or technical advisors through the aid program. Secondly, it makes a series of points about the need for us to help ensure that our aid program and this is a need that both the Australian and the Papua New Guinea Governments must discharge, is more effective.

So I'll be releasing that later today and I welcome that very much. Can I make this point, in 1999 my predecessor Mr Downer, who I suspect was concerned about effectiveness and value for money, instituted a Treaty Aid Cooperation Treaty between Australia and Papua New Guinea. It was last reviewed in 2004.

Nearly two years ago, Prime Minister Rudd and Prime Minister Somare in the context of the PNG Australia Partnership for Pacific Development agreed to effect a Review of the Treaty, which has been done. I received the Review results on Friday and I'll be releasing it in conjunction with the PNG government later today.

You might recall that on the general question of advisors or technical assistants in the Budget we announced our own review of advice the use of advisors and technical assistants and that review will be done together with partner Governments.

I do make this point because I see my counterpart has been calling for a review on these matters.

I do make this point. Under this Government the average amount of technical assistance in our aid program stands at about 35 per cent. Over the Howard years, the average was over 40 and it peaked at about 47 per cent. So there has been a decline under the current government in the volume and amount of technical assistance.

Our review makes it clear, without pre-empting it, that we see further capacity for that amount of technical assistance to be further reduced.

A couple of other general points. We are scaling up our program to meet our election commitment of 0.5 per cent and to do that a number of things need to occur. Firstly, we need to ensure continual effectiveness in our aid program. Secondly, we need to ensure we get value for money.

A number of things have occurred. This year will be, I think, the second year in which the Auditor-General has conducted an annual review of aspects of the AusAID program. That's a good thing, I welcome that and I encourage it.

Secondly, this is the second year in which we've had the AusAID Effectiveness Evaluation Committee report to the Parliament. That's also a good thing.

I'm also currently giving consideration as to whether the AusAID Effectiveness Committee should be independent from AusAID itself and done externally. So there are a range of things that we are doing.

More generally, let me make this point. When you are dealing with developing countries in a difficult environment and no-one under appreciates the long-standing, long term difficulties of this environment in Papua New Guinea, you are always going to be able to find examples, which put in isolation, are easily able to be asserted as not getting value for money.

You should not throw the baby out with the bath water. In Papua New Guinea, for example, we have made substantial and credible progress in a number of areas: the number of students attending primary school, for example; the number of roads being extended into regional areas; and the effectiveness with which our HIV AIDS program has also seen in PNG.

So whilst I'm very happy for a debate about these matters and whilst I'm very happy for AusAID to give a detailed response to all of the particular incidents that have been drawn attention to, we just need to very calmly work through that a development assistance program is in our national interest. It's also a good thing for Australia, to be a good international citizen. It doesn't help Australia if countries around Australia remain long-standing developing countries and don't develop their economy, don't develop their capacity.

That's what our aid program is about and in the course of that, yes, you can find some bad examples but you've got to proceed in a sensible, responsible way to maximise the value that we get out of our program.

QUESTION: So Minister, into the third year of your government, are you confident that you've done all you can to address this problem, because I mean aid groups...

STEPHEN SMITH: No, I'm not.

QUESTION: ...have been talking about this since 2004?

STEPHEN SMITH: No, I'm not. I'm not confident that we've done all we can. I think we can do more and I think we need to do more. The point I'm making is that very much of this are long-standing, decades long, systemic difficulties.

And I compliment Alexander Downer for making his effort with a Treaty Cooperation in the aid area with Papua New Guinea. One of the first things we did was to effect a Review of that and, as I say, I'll put the results out later today in conjunction with PNG.

No, I am not satisfied or happy that we have done everything that we can. We need to do more.

The point is to do those things sensibly, systematically, in conjunction with donor countries and not to be sidetracked by any number of potentially salacious examples which will always occur in any nation's development assistance program when you are dealing with very difficult donor countries.

QUESTION: And just on the issue of the contractors, I mean, there seems to me a very high concentration of technical assistants going through a small number of contractors, big amounts of money. To what extent do you think the aid budget...

STEPHEN SMITH: Well, that is...

QUESTION: ...is hamstrung by that? I mean...

STEPHEN SMITH: That is one of the reasons why in the Budget, as disclosed in the Budget papers, as announced by me at Budget time, as included in the Budget materials distributed by the Director-General of AusAID, that one of the reasons, one of the factors, why we have effected our own review of the technical assistants and technical advisor regime.

QUESTION: Are you still promoting Australian polymer bank notes...

STEPHEN SMITH: Sorry, I missed that.

QUESTION: Are you still promoting Australian plastic bank notes to other countries to use and ...?

STEPHEN SMITH: I have

QUESTION: ...do you have any view on the latest allegations...?

QUESTION: Securency.

STEPHEN SMITH: Well, firstly on Securency, I haven't made and don't propose to make a public comment on Securency while there is an Australian Federal Police investigation.

Secondly, I answered a question on notice in the Parliament, I think a month or so ago in April, about the representations that I had made, or the contact that I had had with Securency. It's on the Parliamentary record. I'm very happy to produce that again publicly today.

I don't pretend to carry the detail in my head but it's there as a Parliamentary answer and I'm very happy to republish that, but I have not, as a matter of course, made representation in respect of Securency since I became aware of the Australian Federal Police investigation.

Okay, thanks very much.

END

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