Solutions for a Society Facing New Threats

The Hon Angus Taylor is the Minister for Law Enforcement & Cyber Security and the Member for Hume. He grew up on a up on a sheep and cattle property near Nimmitabel, NSW and graduated from Sydney in Law and Economics (for which he won the university medal). He won a Rhodes Scholarship to study for a Masters in economics at New College, Oxford completing a thesis on competition policy. In a speech to The Sydney Institute on Wednesday 6 June 2018, Angus Taylor outlined the vast challenge facing democratic government in combatting cyber crime, saying, “Our Cyber Strategy needs a similarly sharp focus. Practically speaking, ‘stopping the bots’ is every bit as important to Australians as ‘stopping the boats’. We need the same single-minded focus on this outcome, and so we are working ‘towards zero’.”

SOLUTIONS FOR A SOCIETY FACING NEW THREATS

ANGUS TAYLOR

​Thank you for having me here tonight.

Thanks particularly to The Sydney Institute, Gerard and Anne Henderson, for the invitation to address you all. We are all deeply indebted to The Sydney Institute for the wonderful role it plays in facilitating the national debate. You really do play an extraordinary role here in this country, not just in this city.

Tonight, I will talk about the national security and criminal threats we are facing in Australia, how they are evolving, and what we as a government are doing to address them. I believe we are facing now more serious threats, and a different kind of threat, than at any time since the Cold War.

Like some others in the room, my formative years were during the latter part of the Cold War. I remember well my fears for my family and myself when I first travelled the eight-hour trip from southern NSW to Sydney. The Soviets weren’t likely to drop the bomb on Nimmitabel – population 500 – but Sydney was a different story. We can laugh now, because it feels like a very long time ago.

Despite some close calls, the threat of mutually assured destruction played a big role in keeping the peace. That threat was real then, and it is real now, but the nature of those threats has changed dramatically, largely I believe as a direct and indirect result of new technology.

The direct impacts of modern organised criminal drag trafficking and money laundering, terrorism, cybercrime and online child sex offences are real – loss of life and limb, financial loss, and damage to communities. The impacts extend to households, towns, cities, businesses and even to the institutions that matter most to our way of life.

Perhaps the most dangerous threat is less direct – a collapse or a loss of trust. Trust in our institutions, in key organisations, in our values and culture, and trust in all arms of government and politicians. Information, trade and financial flows on the extraordinary scale of the modern world demand regular interactions between people and organisations who don’t know each other, or certainly don’t know each other well.

That requires an unprecedented level of trust. Why should I hand over money to an online vendor who I don’t know? Should I pay an invoice sent to my small business, which appears to be legitimate? Should I confirm my personal details in a phone call from someone claiming to be from my bank?

These are all examples where scammers have multiplied in recent years. A loss of trust, whether orchestrated or otherwise, has the potential to undermine the foundations of our modern world. American Political Scientist Francis Fukuyama, who was one of the first to write about social capital based on trust, put it well when he said: “Widespread distrust in a society imposes a kind of tax on all forms of economic activity, a tax that high-trust societies do not have to pay”.

Deliberately undermining trust is a time-honoured tactic of malicious politicians. Machiavelli wrote in ‘The Forest and the Trees’ that a military leader should try to divide the forces of the enemy leader into weaker parts, by making the opponent suspicious of the men he trusts.

The bad news is that widespread loss of trust is actually upon us. Only 26 per cent of Australians believe that people in government can be trusted – the lowest level since the Australian Election Studies began in 1969. According to the Lowy Institute, 48 per cent of young Australians don’t agree that “democracy is preferable to any other form of government”. The Scanlon Foundation has found low and falling trust extends beyond just government to political parties, trade unions, the criminal justice system, the family courts and the media.

I want to start by focusing on threats from outside of our system – from beyond our geographic, digital and legal borders, including criminals, hostile governments and terrorist networks. Unfortunately, as we all know, malicious actors have been on the scene for thousands of years. But in recent times their tool kits have changed. They now have a level of sophistication that we’ve never seen before. They are more global, better networked and more adept at using technology than we have ever seen in the past.

New technologies are the enabler, including highly secure encrypted coded telecommunications networks, money laundering operations capable of moving billions of dollars across the globe without detection, and markets for all manner of criminal tools on the dark web. Necessity is the mother of invention, and criminals are innovating in ways we couldn’t have contemplated just a few short years ago.

My message is very, very simple – responding to these threats is crucial if we are to deliver better and safer lives for our children and grandchildren. And that makes for a weighty responsibility for leaders to make tough decisions. The impact of these changing threats is very real at the coal face, and we have people working 24/7 to thwart them.

Where I live just outside Goulburn, and I’m talking about the town of Goulburn not just where I live, and in most other regional centres throughout Australia, twenty years ago serious drugs were not a major issue. Heroin and cocaine use was mostly confined to the capitals. The emergence of methyl-amphetamine, typically consumed as “Ice”, changed this. Local meth labs emerged to serve a fast-growing new, particularly regional, market. The impact was devastating, often taking hold in areas where multi-generational unemployment was at its worst.

Police have done a phenomenal job of taking out these local meth labs. But few anticipated the rapid emergence of global supply chains as an alternative. The incentive to import meth from another country coincided with sharp reductions in the funding to the then Australian Customs and Border Protection Service, in the final years of the previous Labor government. It was encouraged by one of the most profitable drug markets in the world.

So now most of the meth, most of the ice, consumed in Australia is coming from offshore, particularly from Asia. This is part of a trend to the internationalisation of crime with an estimated 75 per cent or more of Australia’s serious criminal targets living, or having links to, overseas.

Despite intercepting the equivalent of 40 per cent of the 8.4 tonnes of meth consumed last year, we know that if we take out a tonne of ice at the border as we did in WA late last year, a new shipment will quickly follow. These movements are enabled by global criminal groups that cross borders, ethnicities and traditional allegiances.

Australia’s most successful global industry, iron ore, took decades to build. Transnational criminal networks developed a global meth supply chain in a few short years. Meanwhile, ample volumes of readily available, relatively cheap, globally sourced drugs are undermining people’s faith in the future of some regional towns.

Increasingly, communications within these criminal networks are beyond the reach of traditional interception techniques. Earlier this year Australian law enforcement agencies, working with their North American counterparts, took down a sophisticated Canadian-based criminal enterprise called Phantom Secure. It is alleged to have specifically designed devices for the organised crime networks, supporting unrestricted, encrypted communications.

These tools allowed the criminals to “go dark” so they could evade law enforcement and obstruct justice while facilitating trade in narcotics. Five men were indicted in the US. The number of these devices used and sold in Australia is estimated to be well in excess of 10,000 – more customers than any other country in the world.

Global organised criminal groups require increasingly sophisticated cross-border money laundering networks, making heavy use of professional facilitators and even cyber currencies. We’ve seen the success of multi-agency operations such as Operation Acapella, a money-laundering investigation that saw the arrest of Pakistani national Altaf Khanani. Khanani was running an organisation facilitating the movement of illicit funds between Pakistan, the US, Australia and other countries. He is alleged to be responsible for laundering billions of dollars in organised crime proceeds each year.

The joint investigation involved the Australian Federal Police and other agencies partnering with international law enforcement agencies under the Five Eyes Law Enforcement Group. Our emphasis on disrupting money laundering – following the money – was underscored by the Commonwealth Bank settlement of $700 million on Monday. The highest civil penalty in Australian history.

We’ve also seen the growth in violent extremists exploiting the online environment to spread their propaganda. The internet is a powerful tool in the hands of terrorists – be it for recruitment and radicalisation, training, financing and coordinating attacks. Encryption technologies, coding data in particular, poses an increasing challenge for authorities.

Islamic State has proven itself adept at using social media and encrypted messaging to recruit and direct followers, including in Australia. Our security agencies work closely with technology service providers to take down violent extremist material. Meanwhile cybercrime is the ultimate in criminal use of technologies.

Few of us are untouched, with credit card skimming, identity fraud and other attacks increasing in quantity and impact. The Australian Cyber Security Centre estimates that the cost [of cybercrime] is $10 billion per year. The modern cyber attack is targeted and persistent, with thousands every second. In 2017, it was estimated the average time an attacker was on a system before they were discovered was 101 days. Imagine what could be done with three months of undetected access to a critical business system?

Cyber-enabled crime is also increasingly using the dark web to buy malicious code, stolen user names and passwords and purchase firearms and drugs. The vast majority of cyber attacks are coming from criminals seeking financial or other direct gain, but state-sponsored actors are now part of the mix.

For an emerging or struggling political regime, investing another billion dollars in a crack cyber team gives a far higher return on investment than a new major piece of military equipment. The Russians were able to shut down the Ukrainian electricity grid and banking system, forcing Ukrainian businesses to revert to cash transactions and paper-based accounting.

In recent months, the Australian government and our allies have called out the North Koreans, Iranians and Russians for conducting offensive cyber attacks which have impacted businesses and governments around the world, including organisations here in Australia. The truth is that a catastrophic cyber attack on our electoral systems, air traffic control, banks, electricity grids or telecommunication networks would undermine faith in activities absolutely central to our lives. And, of course, if we stop trusting those activities, these organisations and institutions, they fail.

In responding to these threats, we need to be better organised, more international and more adept at using technology than our adversaries. The formation of [the Department of] Home Affairs in December was a logical response to that. The change brings a broad range of national security, intelligence and law enforcement agencies into a single department, in the biggest restructuring of national security and law enforcement in over 40 years.

As part of that reform, we have established coordinator roles to shift beyond collaboration to truly integrated strategy. A single-minded focus will disrupt threats, but it will also build trust from the Australian community that the Government is getting the job done.

Let me illustrate with two examples from my portfolio, in Cyber Security and Transnational and Serious Organised Crime. The Cyber Coordinator role is an integral part of our $230 Million Cyber Strategy we launched in April 2016. We established similar roles in combatting the people smugglers and in countering terrorism, with crystal clear goals.

Famously, Operation Sovereign Borders had the clearest and most unambiguous goal in recent political history – “stop the boats”. Its lack of nuance was absolutely central, in my view, to its success. Despite derision from some quarters, it worked. And it worked because everyone involved, from the Prime Minister to public servants knew exactly how success was defined.

Our Cyber Strategy needs a similarly sharp focus. Practically speaking, “stopping the bots” is every bit as important to Australians as “stopping the boats”. We need the same single-minded focus on this outcome, and so we are working “towards zero”. That means making the best possible use of all available technologies and capabilities to work towards successful defence against cyber attacks 100 per cent of the time.

In practice, our digital borders need to be as safe as our physical borders. Transmission and storage of data needs to be like clean drinking water. We expect that if we turn on the tap, our water will be safe, as long as we don’t contaminate it ourselves. That means Australians who get the basic things right – strong passwords, up-to-date applications – should be able to avoid cyber attacks. We can only ultimately ask households and smaller businesses to do so much – governments, bigger businesses and even insurance companies need to do their bit to facilitate the hardening of networks and systems.

It makes sense to block websites, IP addresses and domain names when they are identified as malicious and criminal. It makes sense to strengthen the government’s gateways through the establishment and work of the Australian Cyber Security Centre, including a single place for people to go when they want to prevent and respond to cyber attacks. We need to systematically develop cyber defence strategies across all key sectors in the economy, as we are doing right now for the electricity transmission networks in response to the Finkel review.

A similarly sharp focus is needed for our Transnational Serious Organised Crime, and we have appointed as Coordinator the Australian Federal Police Deputy Commissioner Karl Kent to that role. His job is to work up goals and strategies for taking on the most serious and organised criminals in the world who are targeting and impacting Australia. This is not a job for the faint-hearted, but I know that Karl and our agencies are up for it.

We can’t allow organised criminal networks to avoid law enforcement because they work across jurisdictional boundaries, so Karl’s work will have a strong international focus. The recent arrest of Rohan Arnold and others in Belgrade – alleged to be behind a $500 million cocaine shipment – is the kind of work we do with international partners to disrupt these transnational criminal enterprises.

Arguably the most challenging issue we face in dealing with external threats – threats from outside the system – is the loss of access to critical data. More and more communication we do on our phones and computers is outside of traditional analogue voice networks, extending to messaging apps, websites and voice over IP. Within a few short years, almost all data – whether stored or transmitted – will be encrypted.

Encrypted data appears as completely unintelligible garble to all but the intended recipient, who has a privately held decryption key, so they can then use that key to translate it into something that you can understand. Already more than 93 per cent of Google’s services and data are encrypted, as are more than 84 per cent of the web pages loaded via their Chrome browser.

This is fantastic for cyber security, and the government welcomes it. And we believe that we need to strengthen [encryption] if our networks and communications are to be trusted.

With increasing risks of malicious network infiltration and a rising number of cyber attacks, it does matter that we have good encryption. But while encryption enhances our cyber security, it also poses a very significant challenge for our law enforcement agencies, as they lose access to intelligible data they need to conduct investigations, to gather evidence, to convict criminals and pre-empt crime and terrorism.

Few issues have vexed law enforcement agencies more than this one. They can’t get access to the data they need to stop crime and hold criminals to account. Ninety-five per cent of ASIO’s most dangerous counter-terrorism targets actively use encrypted messages to conceal their communications.

We need access to digital networks and devices, and to the data on them, when there are reasonable grounds to do so. These powers must extend beyond traditional interception if our agencies are to remain effective and pre-empt and hold to account criminal activity.

There will also need to be obligations on industry – telecommunications and technology service providers – to cooperate with agencies to get access to that data. Existing powers were established in an era of analogue communications when smartphones and the Cloud were science fiction. Well they’re not today, they’re real.

Now it’s sometimes argued that agencies should have privileged access to what’s known as a “golden key” – a special key where you can open up, you can decrypt the data. The tech sector has pushed back hard against this, saying that creating so-called “backdoors” or threats to the security of their devices and systems.

In the coming weeks, we’ll begin consultation on new legislation that will modernise our telecommunications intercept and search warrant powers. This legislation will not create “backdoors”. This government is committed to no “backdoors”.

It isn’t necessary to give law enforcement agencies access to a decryption key otherwise under the sole control of a user. We simply don’t need to weaken encryption in order to get what we need. This legislation is a major reform to law enforcement in Australia. It will ensure that we can continue to pre-empt and hold to account criminal activity. As criminals modernise, so must we.

My job is focused mostly on non-military threats beyond our geographic, legal and digital borders. But we have got to be realistic about threats from within our system, not just outside. For instance, as we saw today, lost control over consumer data threatens all aspects of our lives. Big data – Google, Facebook, Microsoft and Apple – have an important role to play here. If we can’t trust those handling our data, opportunities are lost.

In a modern context, we have got to trust and respect consumer data rights as we have always respected traditional property rights. We have a solid starting point in this country, with strong privacy laws, a new data breach regime, and the shift to a Consumer Data Right which I announced late last year, and is now being progressed by Michael Keenan.

Consumers need to control their own data, calling the shots at all times. Past and future reforms will support that. But at a more fundamental level, it’s threats to our most vital institutions that demand the most attention.

As Niall Fergusson rightly points out, a killer application for the success of the West has been its institutions, underpinning our democracy, providing the foundation for individual freedom of speech, association, fair trial, free religious expression and basic property rights.

These things, have paved the way for rational scientific thought, and unprecedented and previously unimaginable advancement. Historically, the natural defences for these institutions have been strong. We were taught the basics of our history in our schools, and we celebrated what is great about our institutions and our way of life. Unfortunately, this is waning.

The art of criticism is taught before kids have an understanding of the way our system works. We are teaching students to criticise before they understand. Universities have always had a special role in protecting our great institutions, for instance through the teaching of history and the application of the scientific method, but unfortunately some are abandoning the cause.

The campaign we have seen against the proposed Ramsay Centre for Western Civilisation is appalling. Of course, those who don’t believe in the value of teaching the benefits of western civilisation – warts and all – are free to argue their case, just as we are free to advance what we know are the benefits of that extraordinary heritage we have.

The worst of all possible worlds is a pairing of external and internal threats. We have seen this before, with Cambridge intellectuals teaming up with Soviet spies to undermine their own country during the Cold War. We saw it in the lead up to the Second World War when sympathy for Germany’s increasingly audacious program spread far and wide amongst the British elite – aristocrats, the highly educated, and the wealthy. They mocked people like Churchill who issued dire warnings. They sneered. They said he was mad – an attention seeking fear-mongerer.

Foreign espionage interference is not new, and nor is a fervour for radical change focused on undermining our core institutions. Meanwhile, despotic regimes, while imprisoning political opponents without trial, dismiss the West as the “dithering democracies”. They have scant regard for our values and freedoms. Our foreign interference legislation is focused on lessening the risk of all foreign interference. That includes offshore political donations and other covert influence that seeks to confuse and corrupt the strength and integrity of our nation and its people.

Of course, the politics of our universities is symptomatic of a broader affliction – a tin ear to political and economic outsiders. The struggle between insiders and outsiders in democracies has been around since the Roman Republic. But history tells us that an elite that stops listening is an elite that fails.

The left of the Labor Party, which seems now to be the majority of that party, has teamed up with the Greens in the obsession for eroding border protection. They share theological objections to mandatory sentencing for paedophiles and illegal firearms trafficking, and theological support for non-custodial sentencing for all offences. They want to shut down industries they don’t like, including coal, live exports and parts of intensive agriculture. They trade on encouraging victimhood at the expense of personal responsibility.

Yet I know from my electorate, most people, including in areas with lower incomes, lower education levels and higher unemployment, reject the propositions of the new Left. Australians typically see the world with clear-eyed common-sense. They want their children and grandchildren to be hard working and resilient, and they want them to strive for a better life and to respect others.

It’s time for politicians, business leaders and others to listen. And respond. Listen to the people who object to the new zeitgeist. Listen to people who know that safety and security are the first priority for any good government, and that this can’t be taken for granted. And, finally, listen to all Australians with respect, whether you agree with them or not.

We live in fortunate and remarkable times. At no time in history have we seen such prosperity, such stability, and opportunity. Without broad-ranging, unprecedented trust, none of this could have happened.

My simple message tonight is that the day we take the trust of the Australian people for granted, is the day we risk losing it. Regrettably, we now see clear signs of eroding trust in our system, in our leaders and in our institutions.

There are many, from both within and outside, who are happy to see this erosion of trust. Our job, as politicians and as citizens, is to protect and rebuild faith in what has made this country great. Only then can we endeavour, like our forebears, to leave our children and grandchildren a better world than the one we inherited.