Australian spies hit a surprise snag as ACT laws against aiding and abetting crimes made some of their work potentially illegal, newly declassified documents show.
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Howard government-era cabinet documents, released on Wednesday by the National Archives of Australia, said the territory's laws dealing with conspiracy mistakenly undermined two of the nation's spy agencies.
ACT laws against abetting or advising an illegal act put officers of the Australian Secret Intelligence Service, and the then-Defence Signals Directorate, at risk of committing an offence when directing or supporting foreign intelligence gathering, the documents said.
While spies within Australia had to comply with the nation's laws, their work involved foreign law-breaking when collecting intelligence from overseas.
"Collection of foreign intelligence sometimes unavoidably entails breaking foreign laws, a situation long accepted as inherent to the task," the formerly secret cabinet documents said.
Officers were at "high risk" of committing an offence when directing overseas operations that broke laws in the foreign country, or would break laws in Canberra.
"This effectively makes such operations dependent on foreign laws," the cabinet documents said.
"Both agencies must carefully organise their operations to avoid possible breach of that law.
"That need, plus a degree of interpretive uncertainty about that law, has diminished the agencies' capabilities."
The documents, from June 1999, said ACT laws "significantly" impeded the operations of ASIS in gathering foreign intelligence, and DSD in intercepting signals.
Other states and territories had anti-conspiracy laws, but the ACT legislation applied most to the spy agencies because they were Canberra-based.
Howard-era foreign minister Alexander Downer, defence minister John Moore and attorney-general Daryl Williams told cabinet ministers new laws were needed to protect ASIS and DSD from the unintended consequences of ACT laws.
Cabinet documents showed the government's national security committee agreed to changes overcoming the legal barriers for spies "by conferring powers, protections and immunities" letting the agencies gather intelligence.
The committee also agreed to change laws stopping the DSD, now called the Australian Signals Directorate, and ASIS from accessing forms of intelligence "of considerable national security value" that had moved to the internet.
"Within a few years networks of interconnected computers - including the Internet - are expected to carry most of the world's information transactions," the cabinet documents said.
"Unless a legal basis is provided for such operations, DSD and ASIS consider Australia's ability to maintain and capitalise on the information edge it currently enjoys will erode as ever more targets move communications and information storage onto computer networks."
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The committee also agreed to laws making ASIS a statutory agency and increasing scrutiny by forcing the agency, and DSD, to hand over records of intelligence gathering and reporting activity involving Australians.
National security ministers later agreed in December 1999 to create a committee of MPs to oversee ASIS in addition to national security agency ASIO.
The decisions followed the inquiry by Gordon Samuels recommending in 1995 that ASIS be established as a statutory agency, and made accountable to parliament.
The existence of ASIS was a secret for more than 20 years and it wasn't referred to in parliament until 1975.
Laws making the agency's work public for the first time came into being in 2001. The size of its workforce remains a secret.
The National Archives censored part of the cabinet documents for national security reasons.