Home Affairs and Intelligence will be driven by the dollars

The whole gang: Prime Minister Malcolm Turnbull announces the Home Affairs Ministry with Immigration Minister Peter ...
The whole gang: Prime Minister Malcolm Turnbull announces the Home Affairs Ministry with Immigration Minister Peter Dutton, Attorney-General George Brandis, and Minister for Justice Michael Keenan. Andrew Meares

The grainy footage was dramatic and deeply disturbing yet strangely reassuring. In the wake of the horrendous attack in Borough Market in London last month, CCTV footage emerged of an apparently unwitting man crossing a street in the middle of the chaos and falling into the path of three knife-wielding men who proceeded to viciously attack him. Almost immediately, a police rapid response car screamed to a halt and within seconds all three assailants had been shot dead.

The eight-minute response of the London security services was much remarked on at the time, and it emerged there are now cars and vans constantly cruising through the English capital's congested traffic ready to respond to such incidents. And indeed, the sudden eruption of a flurry of police BMWs roaring through London's streets from various directions has become a feature of daily life after the recent spate of terror attacks.

Do we have something similar? What exactly is the standard operating training for first-response officers in Australia? Unlike your average London bobbies, police in Australia carry Glocks.

Until a somewhat unbelievable trail of citizenship-induced disaster started hitting our politicians, national security and the government's overhaul of the its national security agencies had been dominating the conversation in Canberra and such questions might have been raised in the public debate. After all, for most voters, the issue of national security will ultimately come down to whether they feel safe in public places

Peter Dutton will head the new Home Affairs ministry.
Peter Dutton will head the new Home Affairs ministry. AAP

The national security UberLord

But the truncated public debate about the security overhaul was instead framed, in very political terms, on the elevation it represented for Peter Dutton who, it seemed, would become national security UberLord with the creation of the new Home Affairs portfolio.

Yet as the dust has settled and the political caravan has moved on, a few other issues have emerged about what is involved in the whole national security overhaul, and what may have prompted it in the first place.

These issues could loosely be grouped into those concerning the country's intelligence gathering apparatus, and those of the strategic response to critical incidents.

There has been lots of talk about terrorists and cyber security in the wake of the announcement of the creation of the Home Affairs portfolio.

But it seems the government's evolving thinking about what it needed to do in this space was driven by an unlikely and disparate collection of incidents.

Better co-ordination needed

These ranged from a prime ministerial frustration at trying to determine who was responsible for mapping and assessing the risks to our critical infrastructure in the wake of revelations that the Chinese had bought the Port of Darwin which, in turn, drew attention to the heavy foreign investment in our energy networks. Just as important, perhaps, were questions of possible foreign interference in our electoral processes, long before this became quite such an "in your face issue" in the wake of developments in the United States.

It seemed there was sometimes a gap between anyone in the bureaucracy knowing anything about such things and someone in the bureaucracy acting on the information or having a coherent strategy to respond.

In the wake of the Paris terror attacks in late 2015, there was a similar frustration in the national security committee of federal cabinet in trying to determine whether Australian police were trained in, or indeed had, a standard operating procedure for responding to such incidents.

The ambition underlying the national security changes announced by the Prime Minister last week, therefore, was to hopefully better align agencies to not just get greater policy coherence but a clearer delineation between the tasks of intelligence gathering, strategic policies, and operational effectiveness.

As the Independent Intelligence Review by Michael L'Estrange and Stephen Merchant said, their aim was "to provide a pathway to take those areas of individual agency excellence to an even higher level of collective performance through strengthening integration across Australia's national intelligence enterprise".

The new power in intelligence

In all the focus on the new Home Affairs portfolio, the all-powerful role of the new Office of National Intelligence (ONI) and its particularly powerful leader has been rather overlooked.

While it is hoped the new Home Affairs portfolio and department will provide structures that lead to better co-ordination, not just of agencies but their operational capacity, it is ONI – which will be in the Prime Minister's portfolio – that is likely to emerge in time as the real power in the bureaucratic game.

Why? Well, adopt the old journalist rule and follow the money.

Significant restructuring of any organisation ultimately becomes potent only if money is involved. And the Independent Intelligence Review has made significant recommendations on the funding of our intelligence community.

Keep in mind that this is a $2 billion-a-year industry – according to the review – and employs about 7000 people.

The review has recommended "new funding mechanisms to address capability gaps" – which will be in the hands of the director general of the new ONI – as well as "at least" a 50 per cent increase in the number of analysts working in the ONI from the present numbers working in the Office of National Assessments.

Driven by dollars

But it is the funding "mechanism" that seems most likely to drive the change in national security that we have heard so much about in recent weeks.

The review has recommended a "Joint Capability Fund", administered by ONI, be established "to support the development of shared capabilities, with the total amount in the fund being equivalent to the Efficiency Dividend levied on the intelligence agencies".

It is estimated this would accumulate about $370 million during the five years from 2017-18

An "Intelligence Capability Investment Plan" that identifies major capability projects during the four years of budget planning will be developed by ONI's director-general, with options that the funding be indexed at 1. 5 or 3 per cent real growth per year from 2018-19.

(For purposes of comparison, real annual growth in total government spending in this year's budget is forecast to grow 2.3 per cent in 2017-18 and 2018-19, before falling to just 0.9 per cent in 2019-20.)

In other words, the capacity to force intelligence agencies to change the way they work, and how they work with one another, will be driven heavily by dollars.

The government has so far given "in principle" support to all the recommendations of the L'Estrange-Merchant review but says there are still decisions to be made about specific recommendations. And you can be sure this one is one of those.

The biggest question in bureaucratic Canberra in coming months will be who will fill two very powerful new jobs as director-general of ONI and head of the new Home Affairs Department.

Laura Tingle is The Australian Financial Review's political editor

reports.afr.com