Australian Security Intelligence Organisation Amendment Bill 2023 [2023] AUSStaCSBSD 72 (10 May 2023)

• Australian Security Intelligence Organisation Amendment Bill 20231
• Availability of merits review2
• Internal review
• Adequacy of internal review
• Access to internal review
• External review
• Access to external review
• Adequacy of external review – broad discretionary power8
• Adequacy of external review – procedural fairness; broad discretionary power12
• Independent review
• Broad delegation of administrative powers or functions
• Broad powers authorising use of administrative powers or functions24

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Chapter 1

Initial scrutiny

1.1 The committee comments on the following bills and, in some instances, seeks a response or further information from the relevant minister.

Australian Security Intelligence Organisation Amendment Bill 2023^[1]

Purpose	This bill seeks to enable the Australian Security Intelligence Organisation to implement a consistent approach to issuing, maintaining and revoking Australia’s highest-level security clearances that ensures Australia’s most sensitive information, capability and secrets remain protected.
Portfolio	Home Affairs
Introduced	House of Representatives on 29 March 2023

Availability of merits review^[2]

1.2 Item 12 of Schedule 1 proposes to introduce Part IVA into the Australian Security Intelligence Organisation Act 1979 (ASIO Act) which deals with security vetting and security clearance related activities. Proposed division 3 of Part IVA provides a review framework for certain security clearance decisions and prejudicial security clearance suitability assessments. Broadly, subdivision A provides a mechanism for internal review, subdivision B provides a mechanism for external review through the Administrative Appeals Tribunal (AAT), and subdivision C provides for review by an independent reviewer. These types of review apply to different categories of individuals.

1.3 The committee considers that, generally, administrative decisions that will, or are likely to, affect the interests of a person should be subject to independent merits review unless a sound justification is provided. Generally speaking, the committee's preference is that independent review is available through the AAT. The committee expects any justification for excluding merits review to be set out clearly within the explanatory materials to the bill. The committee has questions in relation to all types of review provided for in the bill and outlines its concerns below.

Internal review

Adequacy of internal review

1.4 Proposed subdivision A of division 3 of Part IVA of the bill provides a mechanism for internal review. Proposed subsection 82H(1) provides for internal merits review for decisions to deny, revoke, or impose or vary a condition imposed upon, a security clearance. The explanatory memorandum explains that:

As a matter of practice the delegate would normally be at the same classification or higher than the original decision-maker. Given the operational nature of this requirement whether the alternate decision-maker is more senior or not may be determined on a case-by-case basis.^[3]

1.5 It is unclear to the committee why it is not a requirement that the individual remaking the decision be at least of the same classification level and why it is considered appropriate to determine this on a case-by-case basis.

1.6 The committee requests the minister's detailed advice as to whether the bill can be amended to include a requirement that internal merits review be made at least at the same classification level as the initial decision-maker.

Access to internal review

1.7 The committee further notes that internal merits review is not available for all classes of individuals. Proposed subsection 82H(3) provides that internal review is not available for individuals who are not Australian citizens or who do not normally reside in Australia, and are engaged or proposed to be engaged for duties outside Australia.^[4]

1.8 The explanatory memorandum explains that:

This limitation is necessary, reasonable and proportionate to achieve the legitimate objective of protecting Australia’s national security by ensuring that persons in these circumstances, noting the heightened risk that persons engaged in these circumstances may pose in relation to espionage, are not able to access sensitive information about Australia’s security clearance processes by engaging in merits review to exploit potential vulnerabilities.^[5]

1.9 While acknowledging there may be a heightened risk in engaging particular classes of individuals, the committee is unclear as to why the fact that an Australian citizen may not normally be resident in Australia is sufficient to deny them access to internal merits review. The committee is also unclear as to where non-citizens normally resident in Australia have access to internal merits review.

1.10 The committee requests the minister's detailed advice as to:

• why Australian citizens who are not normally resident in Australia do not have access to internal merits review under proposed section 82H; and

• whether non-citizens who normally reside in Australia have access to internal merits review and, if not, why this is considered necessary and appropriate.

External review

Access to external review

1.11 Proposed subdivision B of division 3 of Part IVA of the bill sets out the framework for externally reviewable decisions through the AAT. Proposed subsection 83(1) provides that a decision by an internal reviewer under paragraph 82L(1) to deny, revoke, or impose or vary certain conditions upon a security clearance in respect of a person who, immediately before the time the internal reviewer made the decision, held a security clearance or was a Commonwealth employee, is an externally reviewable decision. Proposed subsection 83(2) provides that a prejudicial security clearance suitability assessment given by the Australian Security Intelligence Organisation (ASIO) in respect of a person is also an externally reviewable decision.

1.12 However, under proposed subsection 83(3), a security clearance decision or a prejudicial security clearance suitability assessment is not externally reviewable in respect of individuals who are not Australian citizens or who do not normally reside in Australia, and are engaged or proposed to be engaged for duties outside Australia. The explanatory memorandum explains:

Non-Australians and non-residents being engaged or proposed to be engaged for duties outside Australia would not have access to external merits review for assessments or decisions. Merits review would be excluded, for example, for locally engaged staff at Australian embassies outside Australia where they required an Australian security clearance to perform their role. In those circumstances, in the interests of security, there should not be an obligation to afford a foreign national external review rights. However, SCSAs in relation to the employment of a non-citizens or non-residents inside Australia would be not excluded from notification and review rights. This is consistent with existing section 36(1)(a) of the ASIO Act.^[6]

1.13 The committee is concerned that Australian citizens who do not normally reside in Australia are not able to access external review in relation to a security clearance decision or a prejudicial security clearance suitability assessment, and considers that the explanatory memorandum has not adequately explained why this is not available.

1.14 Further, a decision is not externally reviewable if it is in respect of an individual who does not already hold a security clearance or is not a Commonwealth employee immediately before the time an internal reviewer made the decision. The explanatory memorandum explains:

The policy rationale for excluding external review for new applicants who do not hold a current security clearance or are not Commonwealth employees is that Australia is confronted by a security environment that is complex, challenging and changing. The threat to Australians from espionage and foreign interference is higher than at any time in Australia’s history. In this context, the threats are higher for new applicants who would not yet have a sufficient understanding of their security obligations or have not participated in security awareness training and are therefore less able to manage these threats. New applicants also bring a lower level of assurance, in that they have not previously undergone an organisational suitability assessment and do not have an existing track record as a Commonwealth employee.^[7]

1.15 While noting this explanation, the committee does not consider that it adequately justifies why a lack of understanding of security obligations or training is sufficient to exclude external merits review for this category of individuals. The committee considers that it would be more appropriate to explore alternative ways to ensure individuals who do not already hold a security clearance or are not already Commonwealth employees are made aware of and understand their security obligations.

1.16 The committee requests the minister's detailed advice as to:

• whether the bill can be amended to extend external merits review through the Administrative Appeals Tribunal to individuals who are Australian citizens but do not normally reside in Australia, do not currently hold a security clearance or who are not Commonwealth employees; and

• whether the bill can be amended to include a requirement that a process be developed to ensure applicants have a sufficient understanding of their security obligations.

Adequacy of external review – broad discretionary power^[8]

1.17 While external review is available in principle for some categories of individuals, the design of the review framework in the bill means that in practice some decisions remain unreviewable.

1.18 Under proposed section 83E, the minister may, in exceptional circumstances, issue a conclusive certificate in relation to a security clearance decision or security clearance suitability assessment, that is an externally reviewable decision, if the minister believes that it would be prejudicial to security to change or review the decision or assessment. The effect of a conclusive certificate being issued in these circumstances is that the AAT cannot review, or continue to review, such a decision.^[9]

1.19 Given the lack of guidance as to what constitutes an 'exceptional circumstance' or whether review would be prejudicial to security, the committee considers that the bill provides the minister with a broad discretionary power to issue a conclusive certificate. Where a bill contains a broad discretionary power, the committee expects the explanatory memorandum to the bill to address the purpose and scope of the discretion, including why it is considered necessary, and whether there are appropriate criteria or considerations that limit or constrain the exercise of any power, including whether they are contained in law or policy. The explanatory memorandum explains:

This reflects that decisions and assessments under Part IVA would generally impact Australian citizens and therefore a higher threshold is appropriate. This higher threshold is necessary to address scenarios where the foreign intelligence threat is extreme, or where the circumstances involved are so serious that it would not be in Australia’s security interests to enable external merits review.^[10]

1.20 The committee is concerned that this ministerial power is effectively unreviewable and does not consider that the explanation has adequately justified why it is appropriate and necessary in the circumstances for the power to exist. The committee considers that other provisions in the bill may operate to safeguard against some of the concerns outlined in the explanatory memorandum, for example the power to limit the amount of information that is disclosed to the AAT and the particular processes of the Security Division of the AAT in dealing with confidential material.^[11] At the very least, the committee considers it appropriate to include additional criteria or considerations that limit or constrain the exercise of the power, for example a requirement that the minister balance the extent of prejudice with the unfairness to the individual prior to issuing a certificate. Moreover, it is not clear why the criteria listed in the explanatory memorandum could not instead be listed as considerations within the bill. Namely, that the minister must consider whether the circumstances involved are so serious that it would not be in Australia’s security interests to enable external merits review.

1.21 The committee requests the minister's detailed advice as to:

• whether the bill can be amended to remove the power in proposed section 83E for the minister to issue conclusive certificates; or

• in the alternative, whether the bill can be amended to provide further guidance in relation to the exercise of the power. For example by, at a minimum, requiring the minister to balance the extent of prejudice with the unfairness to the individual prior to issuing a certificate; and

• whether a more detailed justification can be provided as to why this power is appropriate and necessary and what, if anything, is in place to constrain the exercise of the minister's power.

Adequacy of external review – procedural fairness; broad discretionary power^[12]

1.22 Proposed subsection 83A(4) seeks to provide that the minister may, by writing signed by the minister and given to the Director-General of Security, certify that the minister is satisfied that:

• the withholding of notice of the prejudicial security clearance suitability assessment in respect of the affected person is essential to the security of the nation; or

• the disclosure to an affected person of the statement of grounds for their assessment, or a part of the assessment, would be prejudicial to the interests of security.

1.23 A similar power is proposed in subsection 83C(6) which provides that, in relation to a security clearance decision, the minister may certify that the minister is satisfied that the disclosure to an affected person of the statement of grounds, or a particular part of that statement, would be prejudicial to the interests of security.

1.24 Further, item 28 of Schedule 1 to the bill seeks to insert proposed subsection 39BA into the Administrative Appeals Tribunal Act 1975 (AAT Act). Proposed 39BA outlines the new procedure in the Security Division of the AAT for the review of security clearance decisions or security clearance suitability assessments.

1.25 Proposed subsection 39BA(11) provides that the ASIO Minister may, by signed writing, certify that evidence proposed to be adduced or submissions proposed to be made by or on behalf of the Director-General of Security or the relevant body are of such a nature that the disclosure of the evidence or submissions would be contrary to the public interest because it would prejudice security or the defence of Australia. Where this certificate is given, the applicant must not be present when the evidence is adduced or submissions made, and a person representing the applicant must not be present when the evidence is adduced or submissions made unless the ASIO minister consents.^[13]

1.26 The effect of the minister's broad discretionary power to withhold notice or a statement of grounds is that an individual will have limited or no access to merits review as they will be unaware of the basis upon which the initial decision has been made. While the committee considers this approach may be appropriate in some circumstances, the committee considers that the explanatory materials for the bill have not adequately addressed why it is appropriate in this case. Where a bill contains a discretionary power, the committee expects the explanatory memorandum for the bill to address the purpose and scope of the discretion, including why it is considered necessary, and whether there are appropriate criteria or considerations that limit or constrain the exercise of any power, including whether they are contained in law or policy.

1.27 Further, procedural fairness is a fundamental common law right that ensures fair decision-making. Amongst other matters, it includes requiring that people who are adversely affected by a decision are given an adequate opportunity to put their case before the decision is made (known as the 'fair hearing rule'). The fair hearing rule includes not only the right of a person to contest any charges against them but also to test any evidence upon which any allegations are based. Where a bill limits or excludes the right to procedural fairness the committee expects the explanatory memorandum to the bill to address the nature and scope of the exclusion or limitation, and why it is considered necessary and appropriate to restrict a person's right to procedural fairness. The explanatory memorandum explains:

Subsection 83A(4) is consistent with existing practices in Part IV of the ASIO Act. Withholding notice of the assessment means the affected person would not be made aware that advice from ASIO was involved in making the decision by the other security vetting agency, and that may be appropriate where it is essential to the security of the nation.
The lack of notice of the PSCSA would not preclude the relevant security vetting agency that used the PSCSA to inform their security clearance decision from giving the affected person notice of their decision – for example, of a decision by that agency to deny the clearance. The effect of not notifying the affected person about a PSCSA is that they would not be able to access external merits review. However, subsection 83A(5) would provide a safeguard in that the Minister must consider whether to revoke a certificate 12 months after the certificate to withhold notice is given.
Depending on any risks associated with disclosing information in the statement of grounds, the Minister has the option to certify that the statement of grounds, in full or in part, be withheld from the affected person, if the Minister is satisfied that it would be prejudicial to the interests of security. This is critical in the protection of sensitive national security information that would be prejudicial to the interests of security if disclosed to the affected person.^[14]

1.28 The explanatory memorandum provides the same explanation in relation to proposed subsection 83C(6).^[15] No explanation is provided in relation to proposed subsection 39BA(11), other than that 'subsections 39BA(6) to 39BA(21) would mirror subsections 39A(6) to 39A(18) of the AAT Act to ensure consistency with the existing legislative regime...'.^[16]

1.29 The committee is concerned about the breadth of the minister's discretion to withhold the statement of grounds in whole or part. The committee considers that it would be appropriate to similarly include a requirement that the minister must consider the extent of the prejudice in light of the extent to which withholding information will have on the applicant.

1.30 The committee further does not consider that consistency with existing practices in Part IV of the ASIO Act is a sufficient justification, in itself, for excluding notice or a statement of grounds for a decision. Similarly, it does not consider that mirroring provisions in the AAT Act is a sufficient justification for limiting procedural fairness in this new scheme.

1.31 The committee also considers it would have been helpful for the explanatory memorandum to discuss any alternative ways that were considered to ameliorate the denial of procedural fairness, both in relation to the lack of a statement of grounds and the lack of ability to be present when evidence is adduced or submissions made in the AAT. In the absence of such a justification, the committee considers that it is likely not appropriate to deny procedural fairness in these circumstances, particularly where the effect of the certificates under subsections 83A(4) and 83C(6) is to effectively deny access to external review.

1.32 The committee requests the minister's detailed advice as to:

• whether the bill can be amended to require the minister to balance the extent of prejudice with the unfairness to the individual prior to issuing a certificate under proposed subsections 83A(4) and 83C(6);

• whether the bill can be amended to include additional mechanisms to provide for procedural fairness, or, at a minimum, ameliorate the denial of procedural fairness, without compromising national security; and

• whether a more detailed explanation can be provided as to what other mechanisms have been considered to redress the denial of procedural fairness and, if they are considered not appropriate to include in the bill, why this is the case.

Independent review

1.33 Proposed subdivision C of Division 3 of Part IVA of the bill seeks to provide for review by an independent reviewer. Under the framework introduced by the bill, independently reviewable decisions are decisions in respect of non-Commonwealth employees who do not hold security clearances to affirm or vary an internally reviewable decision or deny, revoke or impose a condition on a security clearance.^[17] These are decisions which are not externally reviewable by the AAT. Independent review is not available to a person who is not an Australian citizen or does not normally reside in Australia and who is engaged, or proposed to be engaged, for duties outside Australia.^[18]

1.34 An independent reviewer is a person engaged by the Attorney-General who has appropriate skills or qualifications to perform the role, holds the Commonwealth's highest level of security clearance, and is not a current or former ASIO employee or ASIO affiliate.^[19] For an independently reviewable decision to be reviewed, the independent reviewer must decide under proposed subsection 83EB(3) to review it. There are no criteria set out on the face of the bill that the independent reviewer must consider before they decide whether or not to review a decision.

1.35 After reviewing the decision, the independent reviewer must give the Director-General, in writing, the independent reviewer’s opinion as to whether the independently reviewable decision was reasonably open to have been made by the internal reviewer who made the decision.^[20]

1.36 The independent review framework set up in the bill is unlike other typical internal or external review mechanisms. The committee expects that the explanatory materials would explain how this framework would operate and why it is considered appropriate.

1.37 The explanatory memorandum states that:

The proposed model for independent review mechanism ensures that those persons who do not have access to external merits review in the AAT because they are not Commonwealth employees and do not have security clearances may seek further recourse independent of ASIO in respect of decisions made by an internal reviewer within ASIO.^[21]

1.38 The committee considers this to be a very brief justification which does not sufficiently explain why the independent review framework is set up as it is and why it is considered appropriate.

1.39 Unlike review under the AAT Act in which an external reviewer considers what the correct or preferable decision is, in this case the independent reviewer can only consider whether the decision by the internal reviewer was 'reasonably open'. The independent reviewer's consideration is also non-binding. Their opinion is given to the Director-General, who must, in as timely a manner as is possible, consider the decision and decide whether to take any action.^[22]

1.40 The explanatory memorandum provides no comment on why a different standard of review is applied under this framework to that set out under the AAT Act. It is therefore unclear to the committee as to why this standard has been adopted. Moreover, given that any decision made by an independent reviewer is non-binding, the committee is concerned that this approach may not be effective in preserving an individual's right to have appropriate review of a decision.

1.41 In relation to the independence of the independent reviewer, section 83EF does not contain any provisions to secure independence other than the requirement that current and former ASIO employees or affiliates are ineligible, that the Attorney-General must be satisfied they have an appropriate skill set and that they hold the Commonwealth's highest level of security clearance. Again, the explanatory memorandum provides no comment as to why these safeguards are considered appropriate in the circumstances and whether they adequately afford independence of the independent reviewers.

1.42 Further, under subsection 83EB(3), independent reviewers have a broad discretion whether to review an independent reviewable decision. The explanatory memorandum explains that:

The Bill does not stipulate criteria that the independent reviewer must consider when deciding whether to conduct a review of a security clearance decision in order to provide them with complete discretion in determining the value in undertaking a review on a case-by-case basis. This discretion will allow an independent reviewer to consider a wide range of factors when considering whether to undertake a review.^[23]

1.43 It is unclear to the committee from this explanation why it is appropriate to provide such a broad discretion to independent reviewers to determine whether they review a decision. The committee considers it would be appropriate, at a minimum, to require the independent reviewer to review an independently reviewable decision if requested to do so under section 83EB.

1.44 Given the limited justification in the explanatory materials for the independent review mechanism, it remains unclear to the committee why this form of review is being provided and how effective it would be. The committee considers it would be appropriate to extend external review in the AAT to this category of individuals, being non-Commonwealth employees and individuals who do not hold security clearances.

1.45 The committee requests that the minister provide a detailed justification as to why the independent review framework is necessary and appropriate, with particular reference to:

• why the standard for review is that an independent review consider a decision to be 'reasonably open' rather than the correct or preferable decision; and

• what safeguards are in place to ensure the independence of an independent reviewer.

1.46 The committee requests the minister's detailed advice as to whether the bill can be amended to remove independent review and instead provide for external review to the Administrative Appeals Tribunal for individuals who are non-Commonwealth employees and do not hold security clearances or, in the alternative, whether the bill can be amended to require an independent reviewer to review a decision if requested to do so under section 83EB.

Broad delegation of administrative powers or functions
Broad powers authorising use of administrative powers or functions^[24]

1.47 The bill provides for numerous delegations and authorisations of power to an ASIO employee or an ASIO affiliate who holds or is acting in a position in ASIO that is equivalent to or higher than a position occupied by a Senior Executive Service (SES) employee.^[25] For example, proposed section 82F(6) would allow the Director-General to suspend, vary or impose a condition on a person's security clearance in certain circumstances. Under proposed subsection 82F(6), this decision by the Director-General can be delegated to an ASIO employee or an ASIO affiliate equivalent to at least an SES position. An ASIO affiliate is defined in the ASIO Act to mean a person performing functions or services for ASIO in accordance with a contract, agreement or other arrangement.^[26]

1.48 Where a bill allows for broad delegation of administrative powers and functions, or provides broad authorisation powers, the committee expects the explanatory memorandum to the bill to address:

• the purpose and scope of the power, including why it is considered necessary;

• an explanation of who will be exercising the powers and functions, including whether they possess the appropriate training, qualifications, skills or experience; and

• if a delegation or authorisation extends beyond members of the Australian Public Service—why this is appropriate, what safeguards are in place to ensure that powers are delegated only to appropriate persons and whether there will be any impact on an individual's right to judicial or merits review if decisions are made by persons who are not government officials.

1.49 In relation to subsection 82F(6), the explanatory memorandum explains that:

Subsection 82F(6) would provide that the Director-General may, in writing, authorise a person for the purposes of subsection 82F(4) if the person is an ASIO employee, or an ASIO affiliate, who holds, or is acting in, a position in the Organisation that is equivalent to or higher than a position occupied by an SES employee. The effect of this is to provide a delegation floor to ensure that any persons authorised by the Director-General are of an appropriate level of seniority and experience. This will support administrative efficiency given the volume of security clearance decisions and assessments it is anticipated ASIO will need to make.^[27]

1.50 The explanatory memorandum either does not offer a justification or provides a similar justification to this example in relation to other delegations or authorisations within the bill.

1.51 While the committee acknowledges the necessity of administrative efficiency particularly given the expected volume of decisions and assessments to be made, it is unclear: why it is necessary and appropriate in all these circumstances to be able to delegate decisions to ASIO affiliates or provide authorisations; whether affiliates will be required to possess the appropriate training, qualifications, skills or experience; and what other safeguards are in place to ensure powers are only exercised by appropriate persons, particularly given the breadth of individuals who may be considered an ASIO affiliate.

1.52 The committee requests the minister's detailed advice as to why it is considered necessary and appropriate to delegate various powers in the bill to ASIO affiliates, or to authorise the use of various administrative powers. The committee's consideration of this issue will be assisted if the minister's response addresses whether affiliates will be required to possess the appropriate training, qualifications, skills or experience, and what other safeguards are in place to ensure powers are only exercised by appropriate persons.

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[1] This entry can be cited as: Senate Standing Committee for the Scrutiny of Bills, Australian Security Intelligence Organisation Amendment Bill 2023, Scrutiny Digest 5 of 2023; [2023] AUSStaCSBSD 72.

[2] Schedule 1, item 12, proposed division 3 of Part IVA. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(iii).

[3] Explanatory memorandum, p. 49.

[4] Proposed subsection 82H(3).

[5] Explanatory memorandum, p. 51.

[6] Explanatory memorandum, p. 56.

[7] Explanatory memorandum, p. 57.

[8] Schedule 1, item 12, proposed section 83E. The committee draws senators’ attention to this provision pursuant to Senate standing order 24(1)(a)(ii) and (iii).

[9] Proposed subsection 83E(2).

[10] Explanatory memorandum, p. 63.

[11] Item 28, proposed sections 39BA and 39C.

[12] Schedule 1, item 12, proposed subsections 83A(4) and 83C(6); item 28, proposed subsection 39BA. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(ii) and (iii).

[13] Proposed subsection 39BA(12) to the Administrative Appeals Tribunal Act 1975.

[14] Explanatory memorandum, p. 58.

[15] Explanatory memorandum, p. 62.

[16] Explanatory memorandum, p. 74.

[17] Proposed subsection 83EA(1).

[18] Proposed subsection 83EA(2).

[19] Proposed section 83EF.

[20] Proposed subsection83ED(4).

[21] Explanatory memorandum, p. 23.

[22] Proposed subsection 83EE(1).

[23] Explanatory memorandum, p. 22.

[24] Numerous provisions in Schedule 1, part 1, divisions 1 and 2. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(ii).

[25] See, for example, Schedule 1, item 12, proposed subsections 82F(6), 82G(4), 82J(5), 82L(9), 83A(7), 83C(8), 83EC(7) and 83EE(4) and Schedule 1, item 28, proposed subsections 39BA(22), 39B(12), 39B(13) and 39C(9).

[26] Australian Security Intelligence Organisation Act 1979, section 4.

[27] Explanatory memorandum, p. 48.