AUSTRALIAN SECURITY INTELLIGENCE ORGANISATION

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Section 1: Agency overview and resources

1.1 S

TRATEGIC DIRECTION STATEMENT

The mission of the Australian Security Intelligence Organisation (ASIO) is to identify and investigate threats to security and provide advice to protect Australia, its people and its interests in Australia and overseas. The mission underpins ASIO’s vision as being ‘the intelligence edge for a secure Australia’.

The Australian Security Intelligence Organisation Act 1979 (the ASIO Act) articulates ASIO’s role, function and powers as well as providing explicit operating parameters.

Part 1 of the ASIO Act defines security as:

(a) the protection of, and of the people of, the Commonwealth and the several States and Territories from:

(i) espionage;

(ii) sabotage;

(iii) politically motivated violence;

(iv) promotion of communal violence;

(v) attacks on Australia’s defence system; or (vi) acts of foreign interference;

whether directed from, or committed within, Australia or not; and (aa) the protection of Australia’s territorial and border integrity from serious threats; and

(b) the carrying out of Australia’s responsibilities to any foreign country in relation to a matter mentioned in any of the subparagraphs of paragraph (a) or the matter mentioned in paragraph (aa).

The threat of terrorism, particularly home-grown, remains significant—and has been further complicated with the increase in the number of Australians who choose to fight in foreign conflicts, potentially returning with an increased desire and ability to

conduct attacks on Australian shores.

ASIO may request that the Minister for Foreign Affairs cancel Australian passports in the interests of national security. Certainly this has been happening at an increased rate in 2013–14—mainly in an effort to disrupt travel to Syria.

Counter-espionage continues to be a priority. The ongoing leakage of information orchestrated by former US National Security Agency contractor Edward Snowden is an enduring example of the risk of the insider threat.

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ASIO resourcing in counter-espionage has continued to increase, reflecting the work required to identify the trusted insider. It also reflects the persistent risk posed by foreign intelligence agencies.

The use of cyber as a vector to conduct espionage is also a constant and growing threat. As a key contributor to Australia’s cyber defences, ASIO remains committed to developing the means required to protect both the Australian Government and Australia’s critical infrastructure from threats to national security. ASIO welcomes the establishment of the Australian Cyber Security Centre and will continue to work closely with other areas of government, as well as industry, in its ongoing development.

Visa security assessments continue to be a resource-intensive component of ASIO’s work. ASIO maintains a rigorous system to ensure security assessments are managed with care and diligence. The Independent Reviewer of Adverse Security Assessments has provided an additional layer of external accountability which has reinforced that level of rigor.

ASIO is focused on the outcomes of the legislative reviews and reforms being

undertaken by government. The reforms will enable ASIO, and its intelligence and law enforcement colleagues, to ‘catch up’ with technology—better equipping ASIO with the appropriate tools to respond to national security priorities. This should take place without changing the basic principles of fairness, proportionality and accountability.

ASIO will continue to support the national security legislative reform package in response to the May 2013 report from the Parliamentary Joint Committee on Intelligence and Security.

It is critical to balance ASIO’s ability to exercise its security intelligence role while ensuring that appropriate oversight and accountability measures are in place.

A range of measures exist, including a comprehensive suite of external checks and balances. Accountability mechanisms include a number of external reviews, oversight by the Attorney-General, an ongoing regime of inspections and inquiries by the Inspector-General of Intelligence and Security and the Independent Reviewer of Adverse Security Assessments, and ongoing appearances before parliamentary committees such as Senate Estimates.

Corporately, ASIO anticipates the formal handover (practical completion) of the Ben Chifley Building. This purpose-built facility will better enable ASIO to do its job in the short and long term.

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1.2 A

GENCY RESOURCE STATEMENT Table 1.1 shows the total resources from all sources.

Table 1.1: Agency resource statement—Budget estimates for 2014–15 as at Budget May 2014

Estimate of

prior year Actual

amounts + Proposed = Total available available in at Budget estimate appropriation

2014–15 2014–15 2014–15 2013–14

$’000 $’000 $’000 $’000

ORDINARY ANNUAL SERVICES¹

Departmental appropriation

Prior year departmental

appropriation² 193,702 – 193,702 195,614

Departmental appropriation³ – 390,373 390,373 417,024

s 31 relevant agency receipts⁴ – 16,367 16,367 17,237

Total ordinary annual services 193,702 406,740 600,442 629,875

OTHER SERVICES⁵

Departmental non-operating

Equity injections 5,227 368 5,595 5,227

Total other services 5,227 368 5,595 5,227

Total available annual

appropriations 198,929 407,108 606,037 635,102

Total net resourcing for agency 198,929 407,108 606,037 635,102 All figures are GST exclusive.

1. Appropriation Bill (No. 1) 2014–15.

2. Estimated adjusted balance carried forward from previous year.

3. Includes an amount of $33.179m in 2014–15 for the departmental capital budget (see Table 3.2.5 for further details). For accounting purposes this amount has been designated as ‘contributions by owners’.

4. Section 31 relevant agency receipts—estimate.

5. Appropriation Bill (No. 2) 2014–15.

1.3 B

UDGET MEASURES

Measures announced in the 2013–14 Mid-Year Economic and Fiscal Outlook (MYEFO) and other measures not previously reported in a portfolio statement are summarised in Part 2 of Table 1.2.

Table 1.2: Agency 2014–15 Budget measures

Part 1: Measures announced since the 2013–14 MYEFO ASIO has no new post-MYEFO measures.

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Part 2: MYEFO and other measures not previously reported in a portfolio statement

2013–14 2014–15 2015–16 2016–17 2017–18

Programme $’000 $’000 $’000 $’000 $’000

Measures

Efficiency Dividend—

a further temporary increase

of 0.25 per cent 1.1

Departmental expenses – (1,001) (1,969) (3,040) (3,061)

Total measures – (1,001) (1,969) (3,040) (3,061)

Prepared on a Government Finance Statistics (fiscal) basis.

Section 2: Outcomes and planned performance

2.1 O

UTCOMES AND PERFORMANCE INFORMATION

Government outcomes are the intended results, impacts or consequences of actions by the government on the Australian community. Commonwealth programmes are the primary vehicle by which government agencies achieve the intended results of their outcome statements. Agencies are required to identify the programmes that contribute to government outcomes over the budget and forward years.

ASIO’s outcome is described below together with its related programme, specifying the performance indicators and targets used to assess and monitor the performance of ASIO in achieving government outcomes.

Outcome 1: To protect Australia, its people and its interests from threats to security through intelligence collection, assessment and advice to

Government

Outcome 1 strategy

ASIO’s outcome supports the Australian Government’s policy aim of ‘A secure Australia in a secure region’.

The information provided in the ASIO budget statement has necessarily been limited by the need to observe the requirements of national security. This is consistent with current practice observed by ASIO in presenting its annual report, where all sensitive information is excluded in accordance with section 94 of the ASIO Act.

This budget statement contains broad information on appropriations and performance. Additional national security classified information is provided to the Attorney-General, the National Security Committee of Cabinet and the

Parliamentary Joint Committee on Intelligence and Security. This enables scrutiny of the detail of ASIO’s appropriations and performance information related to outcomes and programmes.

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Outcome 1 expense statement

Table 2.1 provides an overview of the total expenses for Outcome 1, by programme.

Table 2.1: Budgeted expenses for Outcome 1

Outcome 1: To protect Australia, its people and its interests from threats to security through intelligence collection, assessment and advice to Government

2013–14

Estimated 2014–15 actual Estimated expenses expenses

$’000 $’000

Programme 1.1: Security Intelligence

Departmental expenses

Departmental appropriation¹ 386,887 388,292

Expenses not requiring appropriation in the budget year² 56,891 65,097

Total expenses for Outcome 1 443,778 453,389

2013–14 2014–15

Average staffing level (number) 1,750 1,720

Note: Departmental appropriation splits and totals are indicative estimates and may change in the course of the budget year as government priorities change.

1. Departmental appropriation combines ‘Ordinary annual services (Appropriation Bill No. 1)’ and ‘Revenue from independent sources (s 31)’.

2. Expenses not requiring appropriation in the budget year are made up of depreciation and amortisation expenses and resources received free of charge.

Contributions to Outcome 1

Programme 1.1: Security Intelligence

Programme 1.1 objective

ASIO’s programme objective is to protect Australia, its people and its interest from threats to security through intelligence collection, assessment and advice to government.

Programme 1.1 expenses

ASIO’s expenses remain fairly constant over the forward estimates, with the exception of 2015–16. This decrease in expenses is due to a reduction in revenue from government. ASIO aims to maintain a break-even result.

2013–14 2015–16 2016–17 2017–18

Estimated 2014–15 Forward Forward Forward

actual Budget estimate estimate estimate

$’000 $’000 $’000 $’000 $’000

Annual departmental expenses

Departmental item 386,887 388,292 369,596 381,438 384,906

Expenses not requiring appropriation in

the budget year¹ 56,891 65,097 68,462 74,503 73,574

Total programme expenses 443,778 453,389 438,058 455,941 458,480 1. Expenses not requiring appropriation in the budget year are made up of depreciation and amortisation expenses and resources received free of charge.

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Programme 1.1 deliverables

There are four components of the programme, each providing a key contribution to the outcome:

• Security intelligence analysis and advice informs stakeholders of ASIO’s work in countering terrorism, espionage and other threats to national security. It includes strategic assessment and advice, threat assessment and advice, industry

engagement and advice, proscription-related advice, security assessment and advice and support to security intelligence-related prosecutions and litigation.

• Protective security advice enhances physical, technical, procedural, personnel and information security. It includes protective security risk reviews, Top Secret certifications, technical surveillance countermeasures, security equipment evaluation, protective security training and the Protective Security Policy Framework.

• Security intelligence investigation and capabilities fulfil ASIO’s intelligence collection requirements through all-source security intelligence collection, complex tactical investigations, analysis, and engagement with national and international partners. It includes counter-terrorism investigations and analysis, counter-espionage and foreign interference investigations and analysis, and border integrity investigations and analysis.

• Foreign intelligence collection in Australia includes tasks undertaken at the request of the Minister for Defence or the Minister for Foreign Affairs.

Due to national security reasons, ASIO does not provide details of its deliverables.

Programme 1.1 key performance indicators ASIO has two key performance indicators:

• the contribution of ASIO’s action and advice to the management and reduction of risk to:

– people and property

– government business and national infrastructure – special events of national and international significance

• the security of ASIO’s activities.

Achievement of these indicators will be monitored by:

• the level of government satisfaction as indicated by client feedback

• relevant client feedback on agency outputs in regard to quality and timeliness

• resource use against priorities and cost-effectiveness

• ASIO’s security performance

• maintenance of ASIO’s security integrity.

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Section 3: Explanatory tables and budgeted financial statements

Section 3 presents explanatory tables and budgeted financial statements which provide a comprehensive snapshot of agency finances for the 2014–15 budget year. It explains how budget plans are incorporated into the financial statements and provides further details of the reconciliation between appropriations and programme expenses.

3.1 E

XPLANATORY TABLES

3.1.1 Movement of administered funds between years

ASIO has no administered funds.

3.1.2 Special accounts

ASIO has no special accounts.

3.1.3 Australian Government Indigenous expenditure

ASIO has no Indigenous-specific expenses.

3.2 B

UDGETED FINANCIAL STATEMENTS

3.2.1 Differences in agency resourcing and financial statements

There is no material difference between the agency resourcing and financial statements.

3.2.2 Analysis of budgeted financial statements

Income statement

Total expenses are estimated to be $453.389m in 2014–15, an increase of $9.611m from 2013–14. The increase is primarily the result of increased depreciation.

ASIO’s revenue from government will decrease from $369.650m in 2013–14 to

$357.194m in 2014–15. This is due to the termination of ASIO’s direct appropriation for security assessments relating to irregular maritime arrivals and further efficiency dividends.

ASIO is expecting an operating loss of $13.000m in 2014–15. The loss is due to one-off rent and relocation costs associated with the move to the Ben Chifley Building.

Balance sheet

ASIO’s estimated net asset position is $445.119m in 2014–15, a decrease of $44.435m from 2013–14. The decrease is attributable to the completion of the Ben Chifley Building.

Capital budget statement

ASIO is estimating capital outlays of $76.166m in 2014–15, an increase of $13.778m from 2013–14, primarily relating to the completion of the Ben Chifley Building.

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3.2.3 Budgeted financial statements tables

Table 3.2.1: Comprehensive income statement (showing net cost of services) for the period ended 30 June

Estimated Budget Forward Forward Forward

actual estimate estimate estimate estimate 2013–14 2014–15 2015–16 2016–17 2017–18

$’000 $’000 $’000 $’000 $’000

EXPENSES

Employee benefits 213,861 217,691 217,229 218,719 219,819

Suppliers 173,141 170,716 152,482 162,834 165,202

Depreciation and amortisation 56,776 64,982 68,347 74,388 73,459

Total expenses 443,778 453,389 438,058 455,941 458,480

LESS:

OWN-SOURCE INCOME

Own-source revenue

Sale of goods and rendering of services 14,551 15,278 16,043 16,844 17,688

Other 2,686 2,820 2,961 3,109 3,265

Total own-source revenue 17,237 18,098 19,004 19,953 20,953

Gains

Other 115 115 115 115 115

Total gains 115 115 115 115 115

Total own-source income 17,352 18,213 19,119 20,068 21,068

Net cost of (contribution by)

services 426,426 435,176 418,939 435,873 437,412

Revenue from government 369,650 357,194 350,592 361,485 363,953

Surplus (deficit) attributable to

the Australian Government (56,776) (77,982) (68,347) (74,388) (73,459)

OTHER COMPREHENSIVE INCOME

Changes in asset revaluation surplus – – – – –

Total other comprehensive income – – – – –

Total comprehensive income (loss) (56,776) (77,982) (68,347) (74,388) (73,459)

Total comprehensive income (loss)

attributable to the Australian

Government (56,776) (77,982) (68,347) (74,388) (73,459)

Note: Impact of net cash appropriation arrangements

2013–14 2014–15 2015–16 2016–17 2017–18

$’000 $’000 $’000 $’000 $’000

excluding depreciation/amortisation

expenses previously funded

through revenue appropriations – (13,000) – – –

Less depreciation/amortisation

expenses previously funded

through revenue appropriations 56,776 64,982 68,347 74,388 73,459

as per the statement of

comprehensive income (56,776) (77,982) (68,347) (74,388) (73,459) Prepared on Australian Accounting Standards basis.

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Table 3.2.2: Budgeted departmental balance sheet (as at 30 June)

$’000 $’000 $’000 $’000 $’000

ASSETS

Financial assets

Cash and cash equivalents 12,632 13,587 12,956 11,844 12,412

Trade and other receivables 190,197 133,307 97,172 74,605 71,591

Other financial assets 3,011 3,162 3,320 3,486 3,660

Total financial assets 205,840 150,056 113,448 89,935 87,663

Non-financial assets

Land and buildings 253,475 237,369 230,388 208,854 190,329

Property, plant and equipment 85,632 93,502 84,473 94,644 76,753

Intangibles 29,863 49,283 55,187 53,629 53,531

Other non-financial assets 14,591 15,024 15,139 15,866 15,331

Total non-financial assets 383,561 395,178 385,187 372,993 335,944

Total assets 589,401 545,234 498,635 462,928 423,607

LIABILITIES

Payables

Suppliers 13,456 11,681 7,839 10,864 10,991

Other payables 8,556 9,118 7,711 9,127 9,393

Total payables 22,012 20,799 15,550 19,991 20,384

Interest-bearing liabilities

Lease incentives 1,935 1,548 1,161 774 387

Total interest-bearing liabilities 1,935 1,548 1,161 774 387

Provisions

Employee provisions 65,425 66,822 60,780 62,172 62,821

Other provisions 10,475 10,946 11,439 11,954 12,492

Total provisions 75,900 77,768 72,219 74,126 75,313

Total liabilities 99,847 100,115 88,930 94,891 96,084

Net assets 489,554 445,119 409,705 368,037 327,523

EQUITY

Parent entity interest

Contributed equity 601,446 634,993 667,926 700,646 733,591

Reserves 17,931 17,931 17,931 17,931 17,931

Retained surplus

(accumulated deficit) (129,823) (207,805) (276,152) (350,540) (423,999) Total parent entity interest 489,554 445,119 409,705 368,037 327,523

Total equity 489,554 445,119 409,705 368,037 327,523

Prepared on Australian Accounting Standards basis.

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Table 3.2.3: Departmental statement of changes in equity—summary of movement (budget year 2014–15)

Asset Contributed

Retained revaluation equity/ Total

earnings reserve capital equity

$’000 $’000 $’000 $’000

Opening balance as at 1 July 2014 Balance carried forward from

previous period (129,823) 17,931 601,446 489,554

Adjustment for changes in

accounting policies – – – –

Adjusted opening balance (129,823) 17,931 601,446 489,554

Comprehensive income

Surplus (deficit) for the period (77,982) – – (77,982)

Total comprehensive income (77,982) – – (77,982)

Transactions with owners Distributions to owners Contributions by owners

Equity injection—appropriation – – 368 368

Departmental capital budget – – 33,179 33,179

Sub-total transactions with owners – – 33,547 33,547

Estimated closing balance

as at 30 June 2015 (207,805) 17,931 634,993 445,119

Closing balance attributable to the

Australian Government (207,805) 17,931 634,993 445,119

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Table 3.2.4: Budgeted departmental statement of cash flows (for the period ended 30 June)

$’000 $’000 $’000 $’000 $’000

OPERATING ACTIVITIES

Cash received

Appropriations 373,803 414,147 388,550 384,298 369,204

Sale of goods and rendering of services 17,729 16,367 13,979 16,677 15,513

Other 3,196 1,224 2,929 2,749 3,029

Total cash received 394,728 431,738 405,458 403,724 387,746

Cash used

Employees 206,521 216,294 223,271 217,327 219,170

Suppliers 174,943 171,870 172,560 158,762 168,008

Total cash used 381,464 388,164 395,831 376,089 387,178

Net cash from (used by)

operating activities 13,264 43,574 9,627 27,635 568

INVESTING ACTIVITIES

Cash used

Purchase of property, plant

and equipment 62,388 76,166 43,191 61,467 32,945

Total cash used 62,388 76,166 43,191 61,467 32,945

investing activities (62,388) (76,166) (43,191) (61,467) (32,945)

FINANCING ACTIVITIES

Cash received

Contributed equity 47,539 33,547 32,933 32,720 32,945

Total cash received 47,539 33,547 32,933 32,720 32,945

financing activities 47,539 33,547 32,933 32,720 32,945

Net increase (decrease)

in cash held (1,585) 955 (631) (1,112) 568

Cash and cash equivalents at the

beginning of the reporting period 14,217 12,632 13,587 12,956 11,844

Cash and cash equivalents at the

end of the reporting period 12,632 13,587 12,956 11,844 12,412 Prepared on Australian Accounting Standards basis.

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Table 3.2.5: Departmental capital budget statement

$’000 $’000 $’000 $’000 $’000

NEW CAPITAL APPROPRIATIONS

Capital budgets—Bill 1 (DCB) 47,374 33,179 32,933 32,720 32,945

Equity injections—Bill 2 165 368 – – –

Total new capital appropriations 47,539 33,547 32,933 32,720 32,945

Provided for:

Purchase of non-financial assets 47,539 33,547 32,933 32,720 32,945

Total items 47,539 33,547 32,933 32,720 32,945

PURCHASE OF NON-FINANCIAL

ASSETS

Funded by capital appropriations¹ 165 368 – – –

Funded by capital appropriation—DCB² 45,881 58,443 32,933 32,720 32,945

Funded internally from

departmental resources³ 16,342 17,355 10,258 28,747 –

Total 62,388 76,166 43,191 61,467 32,945

RECONCILIATION OF CASH

USED TO ACQUIRE ASSETS

TO ASSET MOVEMENT TABLE

Total purchases 62,388 76,166 43,191 61,467 32,945

Total cash used to

acquire assets 62,388 76,166 43,191 61,467 32,945

DCB = departmental capital budget.

1. Includes both current Bill 2 and prior year Act 2 and 4 appropriations.

2. Does not include annual finance lease costs. Includes purchases from current and previous years’ DCBs.

3. Includes the following sources of funding: current Bill 1 and prior year Act 1 and 3 appropriations (excluding amounts from the DCB), section 31 relevant agency receipts and proceeds from the sale of assets.

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Table 3.2.6: Statement of asset movements (2014–15)

Other

property, Computer plant & software &

Land Buildings equipment intangibles Total

$’000 $’000 $’000 $’000 $’000

As at 1 July 2014

Gross book value 1,565 277,803 125,291 59,208 463,867

Accumulated depreciation/

amortisation and impairment – (25,893) (39,659) (29,345) (94,897) Opening net book balance 1,565 251,910 85,632 29,863 368,970 CAPITAL ASSET ADDITIONS

Estimated expenditure on new or replacement assets By purchase—appropriation

equity¹ – – 368 – 368

By purchase—appropriation

ordinary annual services² – 6,324 46,512 22,962 75,798

Total additions – 6,324 46,880 22,962 76,166

Other movements

Depreciation/amortisation expense – (22,430) (39,010) (3,542) (64,982)

Total other movements – (22,430) (39,010) (3,542) (64,982)

As at 30 June 2015

Gross book value 1,565 284,127 172,171 82,170 540,033

Accumulated depreciation/

amortisation and impairment – (48,323) (78,669) (32,887) (159,879) Closing net book balance 1,565 235,804 93,502 49,283 380,154 Prepared on Australian Accounting Standards basis.

1. ‘Appropriation equity’ refers to equity injections provided through Appropriation Bill (No. 2) 2014–15.

2. ‘Appropriation ordinary annual services’ refers to funding provided through Appropriation Bill (No. 1) 2014–15 for depreciation and amortisation expenses, departmental capital budgets or other operational expenses.

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3.2.4 Notes to the financial statements

Basis of accounting

The budgeted financial statements have been prepared in accordance with the Finance Minister’s Orders and Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board that apply for the reporting period. The financial statements have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets and liabilities at fair value or amortised cost.

Revenue from government

Amounts appropriated for departmental programmes for the year (adjusted for any formal additions and reductions) are recognised as revenue when ASIO gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it is earned.

Appropriations receivable are recognised at their nominal amounts.

Revenue from other sources

Revenue from other sources relates to other revenue received under section 31 of the Financial Management and Accountability Act 1997. This includes revenue for the provision of security assessments and protective security advice, proceeds on sale of assets, rental charges, and resources that are received free of charge.

Employee expenses

Employee expenses consist of salaries, leave entitlements and superannuation.

Supplier expenses

Supplier expenses include consultant, contractor, travel and administrative costs.

Assets

Assets are made up of cash, receivables, land and buildings, infrastructure, plant and equipment, computer software and other (prepayments).