1

HOPE FOR A NEW BEGINNING

Responding to New Leadership and the Royal Commission on Intelligence and Security, 1975–1983

The dismissal of the Whitlam Government on 11 November 1975 was one of the most dramatic events in Australian politics. Rumour and innuendo circulated through the parliamentary corridors and bureaucratic chambers around the capital and across the nation. ASIO’s reputation and its role, as described in Volume II, remained under a cloud, with accusations it was involved in the Government’s downfall. The recent political crisis and preceding events made clear that ASIO lacked clear and unambiguous bipartisan political support.

The Whitlam Government had first initiated legislative changes affecting ASIO in 1975, but these were derailed by the political turmoil and change of government in November of that year. Once the Fraser Government was elected to office, much of that work was continued, but a number of aspects were reviewed and adjusted. This process took some time, and legislative reforms were held back until the completion of Justice Robert Hope’s Royal Commission on Intelligence and Security in 1977.

That royal commission had been initiated some time earlier, in 1974. Less than two months before the dismissal, ASIO’s Director-General, Peter Barbour, resigned at short notice and was replaced by an interim Director-General, Frank Mahony. He was in the chair until Whitlam’s chosen successor, Justice Edward Woodward, could fill the position. Australia’s foreign intelligence service, ASIS, had also seen its director replaced a few weeks before the dismissal.

The subsequent electoral victory of the Coalition parties led by Malcolm Fraser in December 1975 left those in the Organisation wondering exactly how the new Government would respond. ASIO had been the butt of severe criticisms, and Hope’s royal commission looked set to bring further criticism. Not surprisingly, therefore, questions were raised as to whether ASIO would survive the experience—indeed, from some elements in politics, even whether such an organisation was required in a liberal democracy.

This chapter examines the new Director-General Edward Woodward’s approach to management of an organisation that had been buffeted and was in need of change. It scrutinises not only his management of key staff, but also his relationships with the Prime Minister, the Attorney-General, the Leader of the Opposition and the Royal Commissioner, Justice Hope. Having considered these relationships, the chapter then looks at the spectrum of reform initiatives called for in Hope’s royal commission. This sets the scene for the following chapter, which examines the reforms Woodward undertook.

Major events of the Fraser era

Out of the dramatic and turbulent events that unfolded in Canberra in late 1975, a number of new challenges emerged. First, the new Government came to power with a conservative agenda for reform, apparently intent on winding back many of the Whitlam-era institutional changes. Fraser and his colleagues had been critical of the entire reform program the Whitlam Government had initiated, so it was unclear what the implications would be for any reform measures already in train within ASIO. There were many questions. How different would the Fraser Government be from its predecessor and earlier Coalition governments? How supportive would it be of the work undertaken by the Hope Royal Commission?

Fraser had made clear that he saw himself as against big government, believing in individual responsibility. He became Prime Minister before his conservative political counterparts, Margaret Thatcher and Ronald Reagan, came to office in the United Kingdom and the United States. But he was viewed at the time as equally associated with small-government conservatism and a belief in the need to make a stand as part of the Cold War against the Soviet Union. How these broad perspectives would translate into policy directives for ASIO was not immediately apparent.

In a speech before becoming Prime Minister, Fraser declared ‘the key difference between liberalism and socialism was that socialists turned to government for solutions, while liberals asked “Can individuals solve it for themselves? Can the government create the climate in which that can happen?” ’ One of Fraser’s ‘most valuable ministers’, Robert (Bob) Ellicott, QC, was appointed Attorney-General,1 but the implications for ASIO were hard to discern at first.

The second challenge ASIO senior management had to face was the appointment of an outsider as Director-General. It was unclear what the appointment of Justice Edward Woodward, a Supreme Court judge, would mean for ASIO—particularly after more than two decades with Charles Spry and Peter Barbour at the helm. Woodward had been selected for the appointment by Whitlam, a fact that indicated he was trusted by the ALP to follow through on the reform initiatives Murphy and Whitlam had sought and pursued by means of a royal commission. But just how Woodward would interact with the Royal Commissioner and ASIO staff was largely unknown.

A third challenge lay in the Royal Commission on Intelligence and Security itself. Justice Hope had been commissioned in 1974 by Whitlam and Murphy to undertake a wide-ranging review of ASIO and the other national intelligence and security arrangements. Hope would not complete his final report until 1977, but those at ASIO knew there would be dramatic ramifications and that significant reforms would eventually be implemented. One issue was how many of the imminent reform initiatives ASIO should seek to implement in anticipation. After all, Barbour had already sought to initiate some of the reforms he expected Hope to recommend. How should ASIO react? Should it simply sit and wait or take an active approach?

Before considering what happened in response to the arrival of Fraser and the work of Hope, it is helpful to place ASIO’s predicament in the context of the times. The years of the Fraser Government from 1975 to 1983 were marked by financial constraints. Seeking to implement Fraser’s approach to smaller government, the Treasury-led ‘razor gang’ set about identifying cost-saving measures to reduce government spending. Thus, while ASIO was better placed as a result of the royal commission to argue for additional resources, the financial climate constrained the Organisation’s ability to fund the changes it was being called upon to implement.

Environmental issues also flared during this period. While Fraser opposed Queensland Premier Joh Bjelke-Petersen’s push for extensive sand-mining on Fraser Island in 1976 and supported the establishment of Kakadu National Park, he also fostered the development of uranium mining and uranium exports. A range of protests and protest groups would arise from these policies, and ASIO would be called upon to monitor them.

Meanwhile, the cultural mix of Australian society underwent significant change, with the arrival of substantial migrant groups from the Middle East and South-East Asia. Notably, the 1975 civil war in Lebanon resulted in an influx of tens of thousands of migrants from the Middle East. Similarly, the end of the Vietnam War in 1975 was followed by a wave of Vietnamese refugees or ‘boat people’ who initially sought refuge in other parts of South-East Asia. Fraser’s approach to the Vietnamese was more generous than that of his predecessor, Gough Whitlam, who had objected to opening the gates to Vietnamese refugees at the time of the fall of South Vietnam in April 1975. The Fraser Government agreed for many to settle in Australia, particularly during the late 1970s and early 1980s. Like the Greek, Italian, Serbian, Croatian and other migrant groups that had settled in Australia earlier, these new arrivals changed the face of Australia and led to a reassessment of ASIO’s security intelligence priorities. It also presented ASIO with hitherto unknown challenges, especially given the rise of international terrorism.

To Fraser, the Commonwealth as an organisation remained a useful forum, and he was a strong advocate for African causes, including independence for Namibia and Zimbabwe, and the end of apartheid in South Africa. This meant he opposed sporting tours by the South African Springboks and meeting with South African authorities.2 Engagement with the Commonwealth was a priority for Fraser. For ASIO, matching Fraser’s enthusiasm led to some interesting international engagement opportunities.

Fraser was also an advocate of the Commonwealth Heads of Government Regional Meeting (CHOGRM), little realising that the international guests it would attract could generate such violent domestic reactions as the detonation of a bomb at the Hilton Hotel in Sydney in February 1978. The CHOGRM bombing brought the issue of terrorism into sharp focus. Fraser promptly asked Justice Hope, who had recently completed his royal commission, to conduct a protective security review and report on ways to improve domestic security arrangements. That report, concluded by 1979, further influenced the way ASIO operated and engaged with other government instrumentalities, particularly the Australian Federal Police (AFP).

That year, 1979, also witnessed the Soviet invasion of Afghanistan. To Fraser, it was essential that the West present a united face in opposition to Soviet action; he backed US President Jimmy Carter in imposing sanctions, and provided partial support to the US sporting boycott of the 1980 Olympic Games in Moscow.3 Domestically, this meant that Fraser was supportive of ASIO’s counterespionage remit, which remained focused on Soviet and other ‘Eastern Bloc’ targets.

A few years later, in April 1982, Argentina invaded the Falkland Islands (which it calls Las Malvinas) and British forces ousted them in June of that year. Australia studiously avoided siding with Britain and maintained a consular presence in Buenos Aires, along with ASIO immigration officers. This was in part a reflection of Fraser’s eagerness to maintain close ties with both Britain and Argentina. The Fraser years reflected a range of continuities and discontinuities with the past, but for ASIO the level of discontinuity generated significant organisational stresses.

New leadership for an ASIO under strain

As the Fraser years commenced, ASIO was under significant pressure. Despite the significant surge in counterespionage tasks arising from the influx of diplomats from Communist countries, ASIO had shrunk by more than 10 per cent from a peak strength of 560 personnel in 1972 to 508 by 1975. In large part this was a consequence of original members of ASIO reaching retirement age without being replaced, along with uncertainty following the Whitlam Government’s attempts at major reform. There was the looming possibility of relocation to Canberra, which brought into question the continued employment of those serving in the Melbourne headquarters. But the years that followed would see substantial growth; ASIO staff numbers reached 624 by 1977, thanks in part to an active recruitment campaign and the provision of additional resources.4 A further increase of 80 staff was approved during the 1978–79 financial year, and this presented ASIO with a number of challenges both in recruiting and absorbing the influx, as well as managing the vacancies.5 By 1980, the approved numbers would grow yet again to 750—virtually a 50 per cent increase in five years, reflecting not only the expanding array of tasks but also the increase in administrative tasks in order to comply with regulations arising from new legislation.6

When the Fraser Government took office, ASIO’s previous Director-General, Peter Barbour, had already been posted as Consul-General to New York. Whitlam’s choice as Barbour’s replacement, Justice Woodward, was initially selected on 26 September 1975 but he was yet to take up the appointment.7 His start date of 24 November had been dependent on the passage of a bill enabling him to retain his judicial status. As Parliament was dissolved before the bill was passed, Woodward had no option but to decline to take up the appointment at that stage.8

In the interim, the Deputy Secretary of the Attorney-General’s Department, Frank Mahony, was Director-General in a temporary capacity, with his term initially set to expire on 23 November. Mahony had agreed to take up the appointment on the understanding that he would thereafter return to his position as Deputy Secretary in the Attorney-General’s Department.9 As it turned out, Mahony was required to stay at ASIO until 8 March 1976, to allow for Woodward to finalise his responsibilities with the Trade Practices Tribunal.10

Mahony had an unenviable job at a very difficult time in the life of ASIO. Aware that his was but a temporary position, he consulted with Woodward on all significant decisions and held off implementing any major changes, leaving those to his successor. Nonetheless, he provided ASIO with a steady hand and, given his public service status, showed some in ASIO just how important it was to work with the Government. On completion of Mahony’s short tenure, Justice Hope wrote to Prime Minister Malcolm Fraser declaring: ‘I should like you to know that I believe Mr Mahony has done an excellent job as Director-General during a difficult time. He has taken a number of steps designed to improve ASIO’s morale with noticeably good effect.’11 To many ASIO officers, Mahony, with his public service objectivity, provided a refreshing contrast to the subjectivity and favouritism that had been a hallmark of the Organisation’s management. In response to Hope’s letter, Fraser wrote to Mahony recording his appreciation for the way he had discharged a difficult task.12

Some time afterwards, when Mahony retired from the public service, ASIO’s Deputy Director-General, Harvey Barnett, wrote to praise him for his efforts, declaring: ‘Your tough, pragmatic, but humane leadership provided stability and encouragement when the times were uncertain. You earned great respect within ASIO and you are remembered with affection. Your contribution is one of the cornerstones on which the re-fashioned ASIO is built.’13 Mahony later went on to serve as President of the Repatriation Review Tribunal, from 1979 to 1985.

Judge Woodward as Director-General

In February 1976, Edward Woodward’s appointment was confirmed by the Fraser Government and signed off by the Governor-General, Sir John Kerr.14 The son of Lieutenant General Sir Eric Woodward, a former senior military officer and Governor of New South Wales from 1957 to 1965, Edward, or ‘The Judge’ as he was affectionately known in ASIO, was a former pupil of Melbourne Grammar School and a graduate of Melbourne University. Like his father, he served in the military, but he then became a barrister and Queen’s Counsel, with impeccable establishment credentials.15

Woodward was the first judge to head ASIO since its first Director-General, Justice Geoffrey Reed in 1949. A quarter of a century had passed and there was some trepidation within ASIO about how his appointment would work out. As it transpired, there was little cause for concern. Woodward had a supportive management style. He set clear objectives, communicated them well and ensured all involved were informed of what was expected. In addition, he set objectives and demanded his staff report back with updates and results.16 He was, as one officer put it, ‘a great bloke and a straight operator’, or, as a journalist described him, a ‘man for all seasons’.17 Another ASIO officer who worked closely with Woodward on administrative matters described him as ‘perhaps one of the finest men I have ever met. He was an impressive man, very very fair. He worked tirelessly, he was extremely talented. He was really a standout. He was a wonderful man.’18 These epithets are particularly noteworthy given that Woodward was charged with implementing some wide-ranging reforms. The complimentary remarks speak volumes about how he managed the Organisation, helping to rehabilitate its reputation while earning the staff’s trust. Woodward served as Director-General for five years, from 1976 to 1981, overseeing a wide range of reforms in recruitment, training, pay and conditions, control of operations and accountability to government.19

Some within ASIO, however, were not so upbeat about the new management style emerging from the reforms prompted by the Royal Commission on Intelligence and Security. One senior ASIO officer, Michael Boyle, for instance, declared: ‘Judge Woodward was a very fine man, he really was. But he had no administrative organisation experience, no public service experience, apart from running Royal Commissions.’20 Criticisms aside, Woodward had his work cut out for him, but he was well aware of this and brought in people with the requisite skills, including Les McBride, a member of the royal commission staff who was aware of ASIO’s management and personnel woes.

Harvey Barnett as Deputy Director-General

Tudor Harvey Barnett, a 50-year-old senior Australian intelligence officer, was brought in because of his extensive operational and management experience. He would be Woodward’s right-hand man, his expert on intelligence matters, and he was chosen to help rejuvenate the Organisation. Barnett’s appointment was announced on 1 April 1976, and he commenced work in September.21 In other circumstances, the employment of outsiders as both Director-General and Deputy Director-General would have been poorly received. But the situation was extraordinary, and the considerable reform challenges called for fresh perspectives from the most senior members of the management team. Woodward and Barnett provided these.

In his previous intelligence roles, Barnett had impressed both Hope and the Secretary of the Royal Commission on Intelligence and Security, George Brownbill. Barnett had grown up in Western Australia and served with the Royal Australian Navy in the Pacific during the Second World War. After some travel and work as a teacher, he joined an Australian intelligence agency in 1957 and served in various capacities before accepting Woodward’s invitation to join ASIO.22 His Executive Officer, Liz Marks, described Barnett as ‘a lovely man. I have a great deal of respect for him but [he was] a very much softer personality, much more used to working in the undercurrent than actually being in the forefront.’23

Woodward and the Attorney-General

The Director-General of ASIO had always had a relationship with his minister, the Attorney-General, unlike that of other heads of agencies or departments with their ministers. The Attorney-General maintained oversight of ASIO, and the Director-General reported to the Attorney-General. In addition, however, due to the way ASIO had been created and the ASIO Act 1956 had been written, the Director-General was expected to brief the Prime Minister directly on matters of sufficient gravity or urgency to warrant his attention. To a certain extent, in practice, this prerogative was exercised at the discretion of the Director-General and, until Whitlam’s term in office, successive prime ministers had been satisfied with this arrangement. While under the ASIO Act 1956 the Director-General was required to submit telephone interception warrants to the Attorney-General for authorisation, in other areas the Director-General exercised considerable powers that were not subject either to the Attorney-General’s or the Prime Minister’s imprimatur. Much of this changed when Murphy became Attorney-General in 1973, and it would change further once the ASIO Act 1979 came into force.

The first Attorney-General during the Fraser period was Woodward’s friend, Bob Ellicott, who happened to be a cousin of an earlier Liberal Attorney-General, Billy Snedden. With Hope’s royal commission still to be finalised and legislative changes on hold, his term passed relatively uneventfully for ASIO, and most matters were handled without significant consternation. As later chapters attest, Ellicott was more prepared than his Labor Government predecessors to authorise warrants against not only counterespionage but also counter-subversion targets. In an incident not directly linked to his ASIO responsibilities, on 6 September 1977 Ellicott resigned from the Government as a matter of principle when the Cabinet overrode a decision he wanted to make as the chief law officer. Woodward noted in Ellicott’s defence that this was ‘not a common act for politicians’.24 To Woodward, Ellicott’s successor, Peter Durack,

proved to be an admirable minister, and a good friend, although having our headquarters in Melbourne meant that we did not have as much of him as we would have liked. And when he did visit, I usually had to vacate my office for 20 to 30 minutes while he dealt on the phone with other government business.25

Durack was in office when the new ASIO Bill (which would become the ASIO Act 1979) arising from Hope’s reports was passing through Parliament. Woodward sat behind Durack in Parliament and assisted him, when called upon, in dealing with questions and criticisms from the Opposition. Woodward noted that Durack’s position was eased by the Opposition’s Senate spokesman on the bill, the Deputy Leader of the Opposition in the Senate, John Button, having ‘a very reasonable attitude’.26 Relations with the Attorney-General were undoubtedly important in setting the right framework for communication between ASIO and the Government, but so were dealings with the Prime Minister himself.

Briefing the Prime Minister

Early in 1976, Woodward went to Canberra to meet with Prime Minister Fraser. They had met earlier when Woodward was working on an inquiry in Portland, Victoria. Fraser saw Woodward as someone who ‘had a very high reputation and had done a lot of good work’.27 Woodward told him that he had not sought the job and would be perfectly content if Fraser wanted someone else to do it. Woodward records in his autobiography that Fraser replied he wanted Woodward to take it: ‘this put me in the enviable position,’ wrote Woodward, ‘of being selected by one side of politics and actually appointed by the other’.28

Nonetheless, Woodward’s appointment and Fraser’s incumbency not surprisingly involved a few teething issues when it came to established lines of communication. By October 1976, Woodward was concerned that ASIO had received a few recent requests for information in the name of the Prime Minister that in fact did not originate from Fraser’s office and of which the Prime Minister was not apprised. Woodward was concerned that ASIO could be tasked improperly and unnecessarily, and that its material could be misinterpreted if presented by a departmental officer as an intermediary. As a result, he asked and Fraser agreed to accept regular briefings, on Woodward’s initiative, about every six weeks. For transparency, the Attorney-General would also be present.29

Fraser took a keen interest in physical security matters, supporting ASIO’s review of physical security arrangements in the ministerial offices at Parliament House, and he supported ASIO’s initiatives when they were presented to him.30 Reflecting later on his interactions at the time with Fraser, Woodward admitted: ‘From a professional point of view, Fraser was very supportive and I had no trouble getting the funds I needed to develop the Organisation, although I always had to make out a good case for them.’31

Briefing the Opposition Leader

As was by now established practice, Woodward obtained approval from Fraser to undertake ongoing briefings for the Opposition Leader on questions relating to the internal security of Australia. Woodward therefore wrote to Whitlam in November 1976 inquiring whether there was any matter on which he would particularly wish to be briefed.32 In response, Whitlam visited Headquarters ASIO in Melbourne early in February 1977.33 Whitlam’s staff asked on his behalf for briefings on trade unions, political parties, staff of front-bench members, entertainment by embassies and consulates, and foreign activities within Australia.34

At the briefings, Whitlam was interested in the degree to which unions or individual unionists could be ‘won over’ by the intervention of foreign government agencies. The ASIO officer who recorded details of the visit noted that ‘Mr Whitlam’s interest was, not unnaturally, dictated by his political position, as the brief discussion on America and British intelligence demonstrated.’35

Whitlam was also briefed on the ‘high incidence of marital breakdown’ and heavy drinking culture in ASIO. Woodward stated that in part the stress was due to a lack of public acceptance of ASIO and the secrecy required.36 Others contended that the culture of the Organisation, which relied heavily on drinking—a factor common to many security-related organisations at the time—was as much to blame.37 In early February 1977, Woodward wrote to Fraser and related a conversation he had with Whitlam. The discussion had been ‘very cordial’, Woodward recalled, but Whitlam confirmed newspaper reports that the next ALP conference, scheduled for July 1977, might call for the abolition of ASIO. Woodward noted: ‘The possibility may be relevant to your decisions about the publication of appropriate parts of the Hope report.’38 Fraser appears to have taken Woodward’s counsel. On 5 May 1977, he made a statement to the House of Representatives going considerably beyond anything that had been officially made public before on the nature of Australia’s security and intelligence organisations. In his speech, Fraser explained that

The Australian intelligence community is fragmented, poorly co-ordinated and organised … The Commission’s findings affirm the growing importance of intelligence and security services. The Commission also finds, however, that these services have not occupied an appropriate place within the machinery of government and that their activities have not been well enough co-ordinated.39

In a move that appeared to pre-empt any criticism of the Government, Fraser placed on the public record his concerns about ASIO and the Australian intelligence community.

Woodward’s rapport with Whitlam came in handy shortly afterwards, when a newspaper reported on a purported break-in by ASIO at the ALP national headquarters in Curtin House, Canberra.40 Woodward wrote to Whitlam indicating that while he would not normally respond on isolated matters such as this, ‘the allegation is a very grave one, and I was disturbed to hear Bob Hawke, in his capacity as the president of the ALP, say that he believed it to be true’. Woodward assured him that his inquiry into the matter ‘leaves me with no shadow of doubt that there was no A.S.I.O involvement’.41

When Whitlam was replaced by Bill Hayden (a former police officer with his own appreciation for the place of a security intelligence organisation in society), Woodward wrote in December 1977 to congratulate Hayden on his election as leader of the parliamentary ALP. Woodward assured him of the bipartisan approach of ASIO to its statutory function, and proposed a briefing on security matters of interest. With the Prime Minister’s approval, Woodward also sent him recent ASIO papers on the internal security of the country and on ASIO’s priorities.42 Woodward provided Hayden with copies of ASIO reports, including the annual report of 1977.43

Woodward eventually briefed Hayden in person in May 1978 on the state of internal security in Australia.44 This was the first in a series of briefings that Hayden, with the arrangement and knowledge of the Prime Minister, would receive while Leader of the Opposition.45 In 1979 Woodward briefed Hayden on the ASIO Bill and its implications.46 He met with Hayden periodically thereafter, covering a range of issues including the annual reports and other assessments, Middle Eastern activity in Australia, the strength of the Communist movement in Australia, the possibility of urban violence, the Indian organisation Ananda Marga, America’s intelligence presence in Australia, and telephone and audio interceptions against ASIO’s major targets.47 Woodward, and his successor, Barnett, both appreciated Hayden’s approach to ASIO and his ‘friendly support in a sometimes difficult task’. In turn, Hayden made clear that he maintained a keen and constructive interest in ASIO, believing it ‘essential that a sensible attitude towards ASIO be preserved in the Labor Party’.48

Woodward also welcomed a number of interested Labor politicians who visited Headquarters ASIO, where he explained what he called ‘the bi-partisan approach of the Organization’. Woodward stressed to them the willingness of ASIO officers at all levels to abide by the rules laid down by Parliament. Woodward put it this way:

I said that ASIO would perform its functions with whatever tools it was permitted to use. Even if it was necessary to operate with one hand tied behind its back, it would do so, although in my view excessive restrictions would not be in the public interest.49

Reports from the Royal Commission on Intelligence and Security

The Royal Commission on Intelligence and Security, and the related government deliberations, generated significant organisational renewal. That process was turbulent but constructive for an Organisation whose management had largely fallen out of favour with the Whitlam Government and which had yet to establish just how favourably or unfavourably it would be viewed by the incoming Fraser Government.

The Royal Commissioner, Justice Hope, and his staff undertook extensive research, including a wide range of interviews and travel to a number of counterpart organisations abroad. The eight multi-volume reports were issued successively over the course of 1976 and 1977. As far as ASIO was concerned, the two reports of immediate consequence were the second and the fourth.

The Second Report was presented to the Governor-General, Sir John Kerr, in March 1976 and published in 1977. Subsequent reports were presented later in 1976 and published together in 1977.50 In essence, the Second Report focused primarily on security checking and assessments, and the need for a security appeals system.51

The Fourth Report came in three volumes with a supplement. It concerned the scope of security intelligence, including espionage, subversion and sabotage, but it also examined other terms that were additions to ASIO’s charter, expanding on what previously had simply been characterised as ‘subversion’.52 ‘Active measures’, for instance, was interpreted as clandestine or deceptive action taken by, or on behalf of, a foreign power to promote the interests of that power—in a manner ASIO would previously have categorised as subversion.53

‘Terrorism’, defined in part as violence, or the threat of violence for effect, was becoming a matter of increasing concern to the Organisation, and at the same time was a criminal activity of primary concern to the police. This fact presented additional impetus for closer inter-agency collaboration. The Permanent Heads Committee on Intelligence and Security and the Royal Commission on Intelligence and Security Implementation Task Force concluded that these definitions of terrorism and active measures should be added to the Organisation’s charter.54 Woodward would later observe that these were all important concepts in a security service’s range of options: ‘They do enable us, with limited interference with civil liberties, to maintain a watching eye on the sort of people who are likely to be involved in terrorism, politically motivated violence and espionage.’55

These reports concluded that ASIO had been ineffective, that its resources had been directed too much to counter-subversion at the expense of counterintelligence and counterespionage, and that ASIO could not be certain of the degree and nature of success of any extant attack on Australia by hostile intelligence services. Hope recommended that the Director-General receive strong support and encouragement from the Government in his task of improving the effectiveness of ASIO, that ASIO’s management be active in opening and maintaining communication with staff, and that the Government recognise that quite large sums of money would be needed to improve ASIO’s capacity and capabilities.56

Hope further recommended that ASIO make the Government aware of its need for resources and that ASIO receive strong and sympathetic support from the Public Service Board in improving its personnel policies. ASIO’s lack of effectiveness in the period reviewed by Hope was attributed to issues of morale, management and organisation, as well as personnel policies and practices.57

Considering responses to the royal commission

The mounting workload generated by the recommendations arising from Hope’s reports prompted Fraser to establish, in May 1976, an ad hoc Cabinet Intelligence and Security Committee to consider their implementation, and coordinate security and intelligence matters at ministerial level. The committee consisted of the Prime Minister, the Deputy Prime Minister, the Treasurer, the Attorney-General, and the Ministers for Foreign Affairs, Defence, and Immigration and Ethnic Affairs. The Cabinet committee was to be serviced by a Permanent Heads Committee on Intelligence and Security comprising the departmental secretaries of the departments of Prime Minister and Cabinet, Foreign Affairs, Defence and the Attorney-General, as well as the directors-general of ASIO and ASIS.58

The Cabinet Intelligence and Security Committee deliberated over a plethora of decisions arising from the reports of the Royal Commission on Intelligence and Security. These decisions concerned the full range of functions performed by ASIO and the other organisations covered by the royal commission.59

In light of the contentiousness for the public of much of ASIO’s activities, Hope’s recommendations were directed at mitigating the risks posed by the existence of a security organisation. He saw that ASIO’s functions should be limited principally to the collection, evaluation and dissemination of security intelligence, and the giving of advice relevant to security. In saying so, Hope did not detract from what he saw as ‘the necessity for the continuance by some organization of the functions of counter-espionage, counter-terrorism and counter-sabotage’.60 In other words, Hope saw the necessity for ASIO, with its multifaceted mandate. Key to the mitigation strategy was that ASIO carefully observe the principles delineated by the royal commission; that it operate within the terms of its statute and remain concerned only with matters relevant to security; that it comply with the law; and that it observe standards of propriety by not intruding on the rights and freedom of the public except to the extent that the requirements of the nation’s security justified and the law allowed.61

Hope’s report invigorated the Permanent Heads Committee on Intelligence and Security as they dealt with the implementation of the wide-ranging intelligence and security reform. The committee established a task force to deliberate over the royal commission’s recommendations, but this task force raised relatively few matters on which it differed to any real degree from the recommendations of the royal commission.62 Within ASIO, a small team of senior officers was appointed to study the task force’s recommendations.63 With so much communication required during the preparation of the report, ASIO assigned a Liaison Officer to the royal commission who worked mainly in Canberra, supporting the commission staff.64

The Secretary of the Attorney-General’s Department, Clarrie Harders, wrote to the Attorney-General, Ellicott, in June 1977 to brief him on the views of the task force regarding the royal commission’s Fourth Report. Harders noted that the basic theme was ‘to ensure that ASIO becomes fully effective’ while redefining the Organisation’s charter to remove uncertainty as to its role, providing additional lawful means of intelligence collection, ensuring that ASIO receive greater support from government and a clearer definition of the direction and ministerial control to be exercised over ASIO.65

ASIO estimated in May 1977 that full implementation of the recommendations arising from the royal commission would require the employment of an additional 125 officers at an annual cost of around $2.5 million.66 Oversight and accountability came with a price tag, and this in part explains the significant rise in ASIO’s budget allocation.

The work of the royal commission was challenging and confronting to ASIO, and some resented Hope’s apparent preference for university-educated employees over those who were less educated but still considered by old hands as ‘people who had been doing a good job’.67 The dominant culture Hope was confronting was described by one officer as ‘bar room bullies stuff. Unless you stood at the bar and drank beer for beer with them you weren’t in their club.’68 But many of the ASIO officers who gave evidence at the royal commission in fact complained about ASIO’s internal culture and management practices, while others were prepared to admit that the royal commission did not do any harm and in fact made a positive contribution to the reinvigoration of the Organisation. One thing the Royal Commission on Intelligence and Security showed was that ASIO had to be accountable.69

Grappling with legislative reforms

Throughout the period of the Fraser Government, the Prime Minister surprised the critics by following through on the reforms Whitlam had sought and Hope recommended. The key reform initiatives concerning ASIO that came into effect during the Fraser years included the establishment of a parliamentary committee, that is the Cabinet Intelligence and Security Committee; the ASIO Act 1979; and the Telecommunications (Interception) Act 1979.

The ASIO Act 1979 detailed more effective ministerial oversight. It was crafted to ensure an appropriate balance between individual rights and the public’s collective right to security. It came into effect in 1979, superseding the ASIO Act 1956. It also superseded the ASIO Act 1976, which covered interim provisions arising from reforms initiated during the Whitlam period.70 The new legislation made clear that ASIO officers had no authority to enter premises on the basis of police search warrants. A separate warrant from the Attorney-General was required that specifically authorised entry under the terms of the ASIO Act 1979—and ASIO officers occasionally had to be reminded of this distinction.71

The Telecommunications (Interception) Act 1979 complemented the provisions of the ASIO Act 1979 and was introduced in part to update the legislation concerning old communications technology covered in the Telephonic Communications (Interception) Act 1960.72 Additional collection means were recommended by the royal commission, relating to interception of telegrams, telex and other transmitted messages; the use of listening devices; mail interception; and entry and search of premises. Hope recommended the prohibition of these additional collection means without warrant and this position was endorsed. Clarrie Harders observed that the Director-General ‘has given a preliminary adverse reaction’ to these suggestions, but noted that omitting proposed provisions relating to mail and entry and search ‘would raise the question whether the whole or any portion of the Report recommended for publication should be published’.73

The Telecommunications (Interception) Act 1979 covered not just telephones but this expanded range of communications technologies, and more fully articulated the conditions in which communications interceptions could take place and the procedures to be followed.74 This meant there were now legislative provisions for intercepting communications via telex and subsequently facsimile as well.75 This step led to the development of a range of formal procedures to aid in accounting for ASIO’s actions.

Critics would contend that ASIO was responding with this new legislation to cover for the fact it had been collecting information illegally. This point, however, was never contested in court. ASIO maintained that telephone interception operations conducted before the 1960 Act were ‘conducted under appropriate ministerial authority and not illegal’.76

In hindsight, these legislative reforms are clear and relatively straightforward, but they were not introduced without considerable debate. By late 1978 and into 1979, the key reform bills had been extensively reviewed and cleared by the Permanent Heads Committee on Intelligence and Security. Woodward observed that debating the proposed legislation had proceeded ‘better than I had expected’, particularly as the official Opposition line was ‘a very reasonable one’ and the Government was ‘keen to keep the whole affair removed from party politics’.77 Woodward’s engagement with the Opposition Leader, Bill Hayden, mentioned earlier, certainly helped as well.

However, as is expected in a parliamentary democracy, this did not stop prominent Labor politicians from airing their concerns in Parliament. Senator Gareth Evans, who would later become Attorney-General in the Hawke Government, commenting on the draft Telecommunications (Interception) Bill, said there were ‘a number of defects’ in the way the legislation was framed. Evans was concerned that warrants could be issued for a period of six months; he thought this ‘just too long’ and suggested 90 days instead. He was also worried about the Director-General’s emergency powers to issue warrants, regarding this as ‘intolerable’. And finally, Evans was disturbed by the absence of any provisions requiring Parliament to be regularly informed of the warrants issued or at least the number of warrants issued annually.78 Labor MP Lionel Bowen, who would later succeed Evans as Attorney-General, echoed the concerns Evans had raised.79 These were valid concerns.

In the meantime, state politicians also sought to influence the crafting of the legislation. WA Premier Sir Charles Court, for instance, wrote to Fraser suggesting that state agreement would be necessary before a search warrant concerning state premises and records could be issued to ASIO. With input from Woodward, Fraser replied that this proposal could not be implemented: there were stringent requirements to be observed, and to add to them in this fashion could seriously impair ASIO’s ability to perform its mandated functions. Court also asked for an amendment to authorise the state police forces to intercept communications on a Commonwealth Government warrant. Fraser replied that such an erosion of privacy ‘could not, I regret to say, be accepted by my Government’.80 Such invasive powers would be kept to as few agencies as possible.

Another important piece of legislation with the potential to seriously affect the way the intelligence agencies worked was the Freedom of Information Act 1982. This outlined the rights of individuals to request access to documents from Australian Government ministers and most government agencies. As the legislation was being prepared and debated, Woodward argued that certain intelligence information must be exempted. He was concerned that some intelligence sources and various intelligence methods could be compromised, including human sources, who would be deterred from assisting should information collected by the intelligence community be disclosed to the public through forced publication of records. Furthermore, he argued, as a result of such disclosure, ‘The substantial volume of material received in confidence from our overseas intelligence partners could be compromised.’ Doubts about the ability of Australian agencies to preserve confidentiality could endanger the international intelligence exchanges that are of great importance to Australia, he argued.81

Woodward was also concerned that the Freedom of Information Act 1982 would place a huge administrative burden upon ASIO in dealing with applications for access to large files and documents, and with legal challenges to ‘the inevitable refusal of access’. He conceded, however, that the various exemption clauses—such as the disclosure of documents prejudicial to security, defence or international relations; revealing the identity of confidential sources; affecting physical safety of individuals; and regarding unreasonable disclosure of personal affairs—would give ASIO substantial protection.82

When it came to drafting the bill for the ASIO Act 1979, ASIO officers raised a number of concerns. Michael Boyle, an officer in the Headquarters Liaison Group in Canberra, for instance, was concerned the draft bill placed heaviest emphasis upon imposing restrictions on ASIO without clarifying responsibilities and functions. For instance, the bill placed responsibility on ASIO for reporting criminal matters to the police, but there was no corresponding obligation upon the police to consult or coordinate with ASIO in the exchange of relevant information or regarding the type of action to be taken on receipt of ASIO intelligence. Boyle was concerned that the security of sources or operations producing the information could be undermined.83

There was also discussion about how ministerial control of the Director-General should be expressed. A number of wording options were considered, and the Attorney-General, Senator Peter Durack, concluded that the best way was to say ‘the Organization should be under the control of the Director-General’, and that in the performance of his functions under the act, he ‘should be subject to the general directions of the Minister’ but the minister may not override the Director-General with regard to a question of whether intelligence concerning a particular individual should be collected or communicated, or concerning the nature of advice that should be given to a minister or department.84 This bolstered provisions from the ASIO Act 1956, which allowed the Director-General considerable discretion in exercising his powers in accordance with the law.

An important theme in the reports from the Hope Royal Commission was that ASIO should at all times comply with the law, but that existing law presented problems for effective intelligence collection. ASIO’s actions, while not illegal, up to this point had skirted on the edge of legality, sometimes operating without clear legal foundation. This left ASIO exposed to significant criticism from its detractors, despite the absence of any specific legislation barring its actions. This added considerable impetus to ensuring that the ASIO Act 1979 provided clear legal cover for its mandated activities.

In his report, Hope concluded that ASIO required certain specified powers of intelligence collection and that the law had to be changed if this was to be accommodated. The additions provided for by the new legislation included powers to enter premises to search for records; to use listening devices; and to open and inspect postal articles—subject to a warrant being granted by the Attorney-General upon request from the Director-General.85 Such warrants were subject to both the Director-General and the Attorney-General being satisfied that the facts of the case justified the issue of a warrant and that, if interception by ASIO of communications made to or from the service did not commence before a warrant could be issued and made available to the Attorney-General, security would or was likely to be prejudiced.86

Woodward’s responses

Woodward held a conference in late July 1978 with senior ASIO staff to discuss the possible time frame for the introduction of the new pieces of legislation, and the broad and specific impact of the changes affecting ASIO. The bill for the Freedom of Information Act contained 49 clauses. This bill, and the draft ASIO Bill, were, therefore, ‘somewhat daunting at first sight’. Woodward was keen, however, to stress that neither bill should be permitted to overwhelm ASIO officers. Woodward told his staff that ‘Reflection upon them will show that they mirror the society within which the Organization, and its officers live.’ Woodward went on to point out that Australia in 1978 was quite different from the Australia of 1956: ‘Generally speaking, society is better educated, more vocal and, all things being equal, more concerned with abstract matters such as “the liberty of the subject” in general and the “civil liberties” of the individual in particular.’ In that sense, he observed, ‘the legislative package should be seen as inevitable’. Woodward explained that this was a good thing not just for society but for ASIO itself.

Woodward recognised that some ASIO staff would be uneasy about this additional articulation of ASIO’s duties, but he was adamant in defending the new legislation. ‘There is no question but that ASIO can “live with” the ASIO Bill,’ he stressed. ‘The Bill should be seen as an aid in that it clearly states the functions and powers of the Organization and provides the means, through the work to be done by the Appeals Tribunal, whereby the bases for many of the past criticisms levelled at it will no longer exist.’87 Woodward’s actions were helping place ASIO on firm legal footing—a step that was seen as important as part of ASIO’s political rehabilitation as an Organisation worthy of, and enjoying, bipartisan support.

The new legislation had the overall effect of empowering officers with clearly defined parameters for their tasks. In summarising what the new legislation achieved, Woodward offered a number of examples. First, the definition of ‘security’ was explained so as to take in ‘modern phenomena’ such as terrorism. Secondly, it distinguished between ‘domestic’ subversion and ‘foreign’ subversion, to provide a line of demarcation that was helpful in addressing the concerns of ASIO’s critics. Thirdly, the careful definitions concerning ‘security assessments’ were intended to reduce the prospect of undue prejudice without compromising the governmental agencies concerned. Fourthly, the new legislation legitimised ‘certain operational practices which might, in the past, have given rise to unfortunate consequences had they “gone wrong” ’. And finally, it helped clarify and preserve the position of ASIO staff as permanent government employees. Woodward also hoped that the new legislation would ensure that the disruptive and invasive activities of protest groups such as the Committee for the Abolition of Political Police (CAPP), led by Joan Coxsedge, were curtailed if not stopped altogether.88

In reflecting on the implications for ASIO’s practices, he observed that ‘it is doubtful that the Bill will necessitate any significant variation to existing operational procedures’. But he stressed that ‘all reasonable steps should be taken to re-assure “agents” and “contacts” that there is nothing in the legislative package which will in any way affect their integrity and the confidentiality of their relationship with the Organization’.89 Security of these people and of ASIO would remain of paramount importance—as had been accepted by the Government since ASIO’s formation in 1949.

Other reforming legislation introduced during this period that would have an impact on the way ASIO conducted its business included the Ombudsman Act 1976 (under which the Ombudsman’s Office was established to handle complaints, conduct investigations, perform audits and inspections, encourage good administration and undertake specialist oversight tasks) and the Administrative Appeals Tribunal Act 1975, which provided for the Security Appeals Tribunal discussed in Chapter 8.

ASIO officers were concerned that as the legislation was due to come into effect, there would be an outburst of protests against the Organisation. After all, when similar legislation was passed in New Zealand, a series of demonstrations occurred in the lead-up to its final passage, with the main focus centred on the headquarters of the New Zealand Security Intelligence Service (NZSIS) in Wellington. New Zealand’s experience pointed to the merits of ASIO taking precautions, although in the end no protests occurred.90

Once the various pieces of legislation were in place, Woodward declared to his staff:

So far we’ve been able to defend ourselves against excessive public intrusion into the affairs of the Organization. We’ve been able to obtain exemption from the Ombudsman Act, we will be exempt from the Administrative Appeals Act and I am very confident that we can get exemption from the Freedom of Information Act.

This was the sort of matter that took a ‘great deal’ of ASIO’s time and resources to argue, but Woodward concluded by saying, ‘I think it’s time necessarily spent.’91

By the same token, Woodward could see the need to stress the requirements of propriety. The ASIO Act 1979 included a clause requiring that the Organisation’s work be limited to what was necessary for the discharge of its functions and that it remain completely free of bias towards any particular section of the community. To ensure the maintenance of standards of propriety, ASIO issued a number of documents to staff dealing with professional conduct. The publication of these documents reflected a determination to instigate reform, which Woodward applied throughout his term in office. The documents included a booklet about the role of ASIO, published in February 1979, which outlined the philosophical basis for ASIO’s existence and its responsibilities. Another booklet, on professional conduct, issued in June 1978 and reissued in April 1981, discussed the principles from which ASIO’s standards of professional propriety were derived. Woodward had made it incumbent on staff to read the professional conduct and security instructions upon entry to ASIO and annually thereafter.92 Once the ASIO Act 1979 and all other relevant legislation were enacted, new staff were also expected to read them and learn how they affected their duties.

Reflections

The appointment of Justice Edward Woodward and the publication of Justice Hope’s reports for the Royal Commission on Intelligence and Security profoundly changed the way ASIO functioned and was organised. It made ASIO more politically accountable and allowed it and its officers to better understand their role in a modern liberal democracy. Justice Woodward, reflecting on this experience afterwards, considered that ASIO was subject to what he called ‘overkill by way of supervision’ or by a surfeit of oversight. His views today may appear a little overstated, but at the time he was reflecting on a major transformation in the management and oversight of intelligence and security matters in Australia.

Hope’s royal commission had set out a demanding reform agenda for ASIO. The legislative reforms encapsulated in the ASIO Act 1979 and the Telecommunications (Interception) Act 1979 provided the Organisation with a more robust and detailed framework for the work the Government required it to undertake.

There were a wide range of implications arising from these reforms, and many internal adjustments, beyond alterations to the overall structure of the branches of ASIO, had to be made to make the changes work. The efforts to consolidate the reforms arising from the royal commission and the resultant legislation left Woodward with the great challenge of restructuring and refocusing the Organisation. This process is the subject of the next chapter.

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