But under the change, they could ask for a standing authorisation of up to six months to gather intelligence on people associated with listed terrorist organisations such as Islamic State or al-Qaeda, though there would be strict safeguards added. Review co-author Stephen Merchant, a former senior defence and intelligence official, said the Intelligence Services Act was written when overseas agencies such as the Australian Secret Intelligence Service had little involvement in producing intelligence on Australians and were "certainly not designed to cope with a situation where there are hundreds of Australians who are involved with Islamic State". He said the current system was too "cumbersome" for the fast-moving threat environment and the numbers of Australians involved with overseas terrorist organisations. "Now with the number of Australians involved with terrorist groups overseas, the expectation of the Australia public for the full resources of the intelligence community to be directed against those individuals to keep our citizenry safe is far greater," he said. He said he and co-author Michael L'Estrange in producing the review for the Turnbull government were "very much influenced by the emergence of what's known as the lone wolf attacks, with short notice, just one individual".

As well as ASIS, the change would also affect Australian Signals Directorate – Defence's cyber spies – and the Australian Geospatial Organisation – the spy outfit that studies satellite and other imagery. It would include spying activities on Australian soil but only if a person were communicating or involved with an overseas terrorist group, he said. A typical scenario might be one in which a Islamic State recruiter was directing a lone wolf attacker previously unknown to authorities to carry out an attack in Australia, Mr Merchant said. The spy agencies would be able to collect intelligence on the newcomer without going to the relevant minister for authorisation. Under the safeguards, people within the "class" would have to be involved with a proscribed terrorist organisation. The agency would have to keep a list of people in the class with a brief explanation of why they are on the list. The authorisation would be limited to six months. The agency watchdog, the Inspector-General of Intelligence and Security, could review the class and the intelligence related to it at any time and the list would be shared with ASIO. The relevant minister would have to consult the Attorney-General before approving the class authorisation. Currently ASIS can get such class authorisations but only "in support of Australian Defence Force operations". The change would expand those class authorisations to broader situations and to the other agencies but would still include supporting the ADF.

Mr Merchant declined to say what kind of ADF activity this might involve. But Jacinta Carroll, a terrorism expert with the Australian Strategic Policy Institute who has previously worked for both Defence and the Attorney-General's department, said: "This reflects the reality of ASIS actually supporting ADF operations in an unconventional operating environment in which Australian citizens are engaged as enemy combatants and are active supporters of proscribed terrorist organisations." She said the changes would not remove any of the checks and balances but recognised the fact that "we have a high number of Australians involved with terrorist organisations". Prime Minister Malcolm Turnbull said this week the government would consider the review's recommendations but said that "the government accepts the principles of the reviewers' recommendations as providing a sound basis to ensure Australia remains ahead of the threats". The review also calls for the creation of an Office of National Intelligence, built on the existing Office of National Assessments.

It would be better resourced and have more clout to co-ordinate as well as just analyse and assess intelligence, said Mr L'Estrange a former head of the Department of Foreign Affairs. This could create what the report called a "national intelligence enterprise". Mr L'Estrange said while there had been good examples of co-ordination in the past on areas such as people-smuggling and support of military operations, there was "significant scope" in particular for more joint activities between agencies and more integration and co-ordination. "The challenge here is to take the excellence at an agency level into a genuinely world-class community and I think that is the direction the Brits, the Americans in their own way, the Canadians, the New Zealanders are going and it's sensible for us to adapt it to our circumstances." Rory Medcalf, the head of the Australian National University's National Security College and a former intelligence officer, said the review was right to recommend more integration of intelligence priorities given "the boundaries between domestic and international threats are becoming extremely blurred". He said the new ONI could co-ordinate agencies not just in the targets of their spying but also in what capabilities were prioritised.

"Should we be investing more in ASIS and human intelligence? Should we be investing more in ASD and cyber and big data analytics? This will bring more objectivity to those decisions and less of the old-fashioned contest of influence of bureaucratic leaders," he said.