Attorney-General George Brandis has warned that the Islamic State group may scatter and form a "diaspora" caliphate around the world after its defeat in the Middle East.
Senator Brandis has also told Fairfax Media that despite the military losses that have left its territorial control teetering in Iraq and Syria, the group poses no less threat to countries such as Australia, and he expressed concern about IS in the South-East Asian region.
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IS leader Baghdadi abandons Mosul fight
US and Iraqi officials believe the leader of Islamic State, Abu Bakr al-Baghdadi, has fled Mosul and is now hiding out in the desert.
He said he did not believe "anyone ever thought" that breaking up its territory in the Middle East would remove the IS threat.
Speaking as British authorities continued to probe possible IS links to the Westminster terrorist attack, Senator Brandis said that the idea of the caliphate – territory governed by its extreme interpretation of Islam – had been central to the group's ambitions and its worldwide appeal.
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But rather than just dispersing into a shadowy international terror network like al-Qaeda had been, it might cling on to a "diaspora" caliphate, including in parts of South-East Asia.
"The question that now arises is, particularly as west Mosul [in Iraq] falls and as al-Raqqa [in Syria] will undoubtedly fall, what becomes of ISIL?" he said, using an alternative acronym for the group.
"Does it reconceptualise itself as a more traditional or orthodox terrorist organisation, a bit more like al-Qaeda? Or does it displace its territorial ambitions from the Middle East to a diaspora elsewhere in the world?
"I suspect it will be a bit of both, but the latter will continue to be an important part of its conception of itself, which is very, very problematic."
He said ISÂ had declared what could be translated as "distant caliphates" such as parts of Libya, but had similar ambitions for sub-equatorial Africa, South Asia and South-East Asia.
He said it could also be regarded as a "metastasis" in that it would include returned fighters as well as new local adherents.
"And for us in Australia, of course, the area of greatest concern is South-East Asia," he said.
Senator Brandis said that despite the military losses that IS is suffering in Iraq and Syria, it had become no less dangerous to the west, including Australia, although its capacity to attract Australians to go to fight in the Middle East had "fallen away somewhat".
"I specifically do not say that the military defeat of ISIL on the ground in the Middle East has diminished the threat level in western countries for ISIL-inspired or encouraged or directed, localised attacks."
Asked what the international coalition had, therefore, gained through its military successes in partnership with Iraqi and other local forces, Senator Brandis said: "I don't think anyone ever thought that breaking up the caliphate would destroy the capacity of individuals now identified with ISIL to encourage terrorism in western countries."
Senator Brandis said counter-terrorism co-operation with Indonesia was "very good" but the next step was a "regional architecture" to fight terrorism. He said Indonesia and Singapore were enthusiastic and that officials were engaging with Malaysia and the Philippines.
"It's very important as well to talk about the Philippines because [the area] around Mindanao is basically a terrorist training base of the South-East Asian region."