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Australian Security Intelligence Organisation (ASIO) Director-General of Security Mike Burgess has praised the introduction of new powers such as those contained within Australia's encryption legislation to help the spy agency combat the new battleground that technology has created.

Delivering his first annual threat assessment since he took the helm of ASIO, Burgess said encrypted communications do damage to intelligence coverage in 90% of priority counter-terrorism cases.

"And that's just counter-terrorism. In the counter-espionage world we are dealing with even more sophisticated targets," he explained.

"The government recognises this dilemma as do senior executives in the tech sector.

"We need to work together to help organisations like ASIO and the police defeat the threats posed by malicious use of the Internet, while protecting the opportunities and freedoms it offers for all Australians."

See also: AFP vows to damage tech giant reputations if found obstructing law enforcement

According to Burgess, the right way forward is to be open about the need for balance between privacy and security. That also means balancing the importance of a free society with providing the "right response" to security threats.

"Technology should not be beyond the rule of law," the spy chief said.

Pointing to the Telecommunications and Other Legislation Amendment (Assistance and Access) Act 2018 (TOLA), Burgess said such "contemporary" legislation offers a clear case in point.

"The relentless advance of technology was outstripping our technical capabilities to monitor threats and protect our fellow Australians. Remember, encrypted communications impacts intelligence coverage in nine out of 10 priority counter-terrorism cases," he said.

"So we needed some changes in legislation to allow us to deal with the effects of that technology while still preserving the essential integrity and privacy of those communications for ordinary Australians."

With ASIO having previously disclosed it had used its TOLA powers, Burgess repeated what he told the Independent National Security Legislation Monitor last week, that the power was in fact accessed within the first 10 days of the law coming into effect.

"A clear indication of its significance to our mission," he said. "And I'm happy to report that the internet did not break as a result!

"The bottom line was this, these new powers helped ASIO prevent a real risk of injury to Australians."

Burgess conceded that TOLA doesn't solve the challenge, but said investing "judiciously" in technology and people would help fill the void.

"We are continuing to balance the need for new powers alongside privacy and other concerns to ensure that we can continue to deliver on our mission," he said.

"Having the right technology applied to the right problems is, of course, vital. But it is our people that have always been the critical element of our success and I am confident that by putting the right people with the necessary legal authorities onto the right problems we will succeed."

"Australia is currently the target of sophisticated and persistent espionage and foreign interference activities from a range of nations," Burgess reiterated Monday night.

"ASIO has uncovered cases where foreign spies have travelled to Australia with the intention of setting up sophisticated hacking infrastructure targeting computers containing sensitive and classified information."

Burgess said this has seen visiting scientists and academics ingratiating themselves into university life with the aim of conducting clandestine intelligence collection.

"This strikes at the very heart of our notions of free and fair academic exchange," he said.

According to Burgess, there are more foreign intelligence officers and their proxies operating in Australia now than at the height of the Cold War.

While he previously said that attempted recruitment was time-intensive, expensive, and risky, now, thanks to the internet, many can work from the safety of their overseas headquarters to launch cyber operations against Australian networks and "send thousands of friend and networking requests to unsuspecting targets with the click of a mouse".

"Many of the attributes that make social media so valuable also make it vulnerable," Burgess said.

"Critically, those same platforms then offer those hostile services a low-cost and easily disguised method to approach their targets and so we are working to help educate people on these threats."

Burgess said over the last few years, ASIO has consistently detected and regularly disrupted espionage operations in Australia.

"As an organisation, we have a lot of work ahead of us to ensure that we can meet the challenges of technology and data that are impacting our operations," he said.

"But I am confident that with the thoughtful and innovative plans we already have in place, we will be able to bring the right technology and the right people together to solve those issues."

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ASIO: Relentless advance of technology was outstripping our capabilities - ZDNet