The Cabinet Files reveal national security breaches, NBN negotiations, welfare reform plans

Updated

Hundreds of top-secret and highly classified cabinet documents have been obtained by the ABC following an extraordinary breach of national security.

This was not a leak — here's what it took to unlock national secrets

The Cabinet Files is one of the biggest breaches of cabinet security in Australian history and the story of their release is as gripping as it is alarming and revealing.

It begins at a second-hand shop in Canberra, where ex-government furniture is sold off cheaply.

The deals can be even cheaper when the items in question are two heavy filing cabinets to which no-one can find the keys.

They were purchased for small change and sat unopened for some months until the locks were attacked with a drill.

Inside was the trove of documents now known as The Cabinet Files.

The thousands of pages reveal the inner workings of five separate governments and span nearly a decade.

Nearly all the files are classified, some as "top secret" or "AUSTEO", which means they are to be seen by Australian eyes only.

But the ex-government furniture sale was not limited to Australians — anyone could make a purchase.

And had they been inclined, there was nothing stopping them handing the contents to a foreign agent or government.

AFP lost hundreds of national security files

The Australian Federal Police (AFP) lost nearly 400 national security files in five years, according to a secret government stocktake contained in The Cabinet Files.

The Department of Prime Minister and Cabinet regularly audits all government departments and agencies that have access to the classified documents to ensure they are securely stored.

The missing documents are not the same files the ABC has obtained.

The classified documents lost by the AFP are from the powerful National Security Committee (NSC) of the cabinet, which controls the country's security, intelligence and defence agenda.

The secretive committee also deploys Australia's military and approves kill, capture or destroy missions.

Most of its documents are marked "top secret" and "AUSTEO", which means they are to be seen by Australian eyes only.

An email exchange between the cabinet secretariat and the AFP reveals the documents were lost between 2008 and 2013, while Labor was in government.

The exchange does not reveal any investigation by either the secretariat or the AFP into how the documents were lost, who lost them, or where they might be now.

It also does not reveal the nature, nor the content of the missing NSC documents.

Troop deployments in Afghanistan and Iraq, counter-terrorism operations, foreign relations and Australia's border protection were among the top-secret and sensitive issues decided in the five-year period.

The cabinet secretariat's general practice was to give up searching and write off lost documents if they could not be found after consecutive audits, according to another document in The Cabinet Files.

The AFP says it takes its responsibilities for handling cabinet documents seriously.

"More than 90 per cent of these documents were subsequently located or confirmed to have been destroyed," it said in a statement.

Classified files left behind in Wong's office

Nearly 200 top-secret code word protected and sensitive documents were left in a safe in the office of senior minister Penny Wong when Labor lost the 2013 election.

The 195 documents included Middle East defence plans, national security briefs, Afghan war updates, intelligence on Australia's neighbours and details of counter-terrorism operations.

These are not the same documents the ABC has obtained as part of The Cabinet Files, nor are they the same documents lost by the Australian Federal Police.

The sensitive documents found in Senator Wong's office should have been destroyed, according to a document in The Cabinet Files.

All the documents were security classified, with several marked "top secret" and code word protected, which is the highest level of classification in Australia.

The release of top-secret documents would cause "exceptionally grave damage to the national interest", according to the government's classification guide.

Senator Wong was the leader of the government in the Senate and a member of the powerful National Security Committee (NSC), which means she had access to the country's most secret and sensitive information.

The breach is revealed in a series of emails between the Department of Finance and the Department of the Prime Minister and Cabinet from late 2013.

The emails reveal security staff found the documents left in a B-class safe in the office after the election and oversaw their destruction.

Westminster convention stipulates cabinet ministers bear the ultimate responsibility for the actions of their staff, which means Senator Wong is ultimately responsible for the breach even if she did not personally leave the documents in the office.

The documents found in Senator Wong's office include:

Defence plans to protect the United Arab Emirates from Iranian hostilities

National security intelligence priorities

Counter-terrorism intelligence planning documents

Details of missile upgrades

Profiles of terror suspects

Issues with Australian Defence Force operations in Afghanistan

Deficiencies in Defence security vetting

Explore the full list of documents left in Penny Wong's office.

The office of the new prime minister, Tony Abbott, was notified of the security breach in October 2013.

The Department of Finance investigated the security breach but took no further action because they had "no proof of who left them there".

Senator Wong told the ABC she had not been made aware of the matter until the release of The Cabinet Files.

"This is the first time I have ever been made aware of this matter, which relates to a change of government over four years ago," she said in a statement.

"As a former cabinet minister who participated in national security meetings, a senior member of shadow cabinet and a current member of the Parliamentary Joint Committee on Intelligence and Security, I always take my responsibilities seriously."

Right to remain silent nearly removed under Howard

John Howard's National Security Committee (NSC) gave serious consideration to removing an individual's unfettered right to remain silent when questioned by police.

The powerful committee's debate on counter-terrorism laws came just after the arrest of Mohammed Haneef and is documented in files marked "secret" and "AUSTEO", which stands for Australian eyes only.

Dr Haneef was accused of providing assistance in the 2007 Glasgow terror attack, but amid huge public controversy, the allegations were later disproven and Dr Haneef was awarded compensation by the Australian government.

The cabinet documents reveal then-attorney-general Philip Ruddock pushed for a range of new offences while Dr Haneef was still under investigation.

Critically, one of the proposals was to modify the right to remain silent during a terrorism investigation.

"I would also like NSC to consider whether amendments should be made to a suspect's right to remain silent to allow a court to draw adverse inferences in a terrorism trial where an accused relies on evidence which he or she failed to mention when questioned by police," Mr Ruddock wrote in his NSC submission.

The proposal was supported by the Australian Federal Police and ASIO, but rejected by the majority of the senior ministers in the NSC.

Liberal MP Kevin Andrews is the only current politician who was a member of the NSC at that time.

Current ASIO director-general Duncan Lewis was then an adviser in the prime minister's National Security Division and along with a colleague, he argued strongly against Mr Ruddock's proposal.

"Implementing a new provision to allow adverse inferences to be drawn from a failure to mention something when questioned is likely to involve more risks than benefits and will engage lawyers much earlier on in any investigation," Mr Lewis wrote.

He also warned the raft of proposed changes would be controversial.

"Any strengthening of the counter-terrorism powers will attract significant media and public debate," Mr Lewis said.

A spokeswoman for Mr Howard told the ABC he did not comment on discussions in the NSC, but pointed out that no such change to the law was made.

The ABC has also contacted Mr Ruddock and Mr Andrews for comment.

Andrew Bolt consulted on changes to 18C

The divisive political commentator who breached section 18C of the Racial Discrimination Act was consulted when the federal government moved to change it, according to the draft legislation contained in The Cabinet Files.

The cabinet documents reveal Andrew Bolt was asked how to stop the act's "unreasonably restrictive" reach that led to the successful claim against him in 2011.

Bolt denies he was consulted on changes to the act.

"I was not consulted but was once told what had been decided," he told the ABC.

"I had absolutely no role at all in drafting legislation. Concerns I expressed about the ambit of the proposed changes had no effect."

The Federal Court ruled Bolt breached the act when he published an opinion piece about "white-skinned Aborigines" and their entitlement to welfare.

Justice Mordecai Bromberg found the articles were not written in good faith and contained factual errors.

Section 18C makes it illegal to offend, insult, humiliate or intimidate someone on the basis of their ethnicity, race or colour.

Bolt led the charge of conservative politicians and commentators campaigning to change it, arguing it inhibited free speech because the threshold was too low.

He was the only person specifically named as having been consulted.

The draft cabinet submission states:

"All points of view were canvassed including those of ethnic community groups, Indigenous leaders, leaders of the Jewish community, Mr Andrew Bolt himself and backbench members of the government."

The cabinet also considered extending discrimination protection on the basis of "sexual orientation, gender identity and intersex status", but ultimately decided against it.

Last year the Federal Government tried to strengthen the test in the act, so that it would only be illegal to "harass" someone on the basis of their ethnicity, but it failed in a late-night Senate sitting.

NBN Co's secret negotiation documents revealed

NBN Co's secret strategy for negotiating with potential investors reveals the initial lofty ambitions for the project Prime Minister Malcolm Turnbull has since labelled a "calamitous train wreck".

The 2009 strategy, a budget implications document and a plan for dealing with political attacks are among the trove of cabinet documents obtained by the ABC.

The documents reveal how desperate the then-Labor government was to have Telstra buy into the project on the government's terms.

"Telstra will initially approach the government with a number of proposals which the government will need to politely but firmly resist," one document reads.

"The strategy is … [for Telstra to] ultimately approach government to invest or use NBN Co's network on the government's terms."

The Government is still the sole owner of NBN Co, which is classed as an asset for budget purposes.

But with cost blow-outs and delays the Government is now facing the prospect of having to write it into the budget, rather than persisting with privatisation.

The negotiating strategy shows the initial plans for NBN Co were very different.

"The government does not need to rush into negotiations with investors making early offers," another document reads.

"The government should keep interested parties engaged through consultation, rather than negotiation."

Among the documents are the financing options presented to the cabinet in 2009.

It costs the project at $43 billion and outlines the plan to finance it to completion in 2017, a deadline long since abandoned.

It canvases options to pay for the project, including "Aussie infrastructure bonds" marketed to mum and dad investors on generous terms.

NBN Co declined to comment.

Abbott ignored advice, breached confidentiality

Former prime minister Tony Abbott ignored the advice of his own department and the Australian Government Solicitor (AGS) when he ordered confidential cabinet documents be handed to the home insulation royal commission.

Mr Abbott promised the controversial inquiry into Labor's home insulation scheme during the 2013 election campaign.

Once in office, his decision to break the century-old doctrine of cabinet confidentiality and hand over Labor's cabinet documents sparked the alarm of the opposition and past prime ministers of both persuasions.

At the time, the attorney-general said the decision was based on the advice of the AGS.

But documents show both the AGS and the secretary of the prime minister's own department warned Mr Abbott against it.

"We think it would be highly undesirable (and legally confounding) if the Commonwealth were to simply produce cabinet-related documents to the royal commission on the basis of a purported waiver of public interest immunity," reads the undated advice from Tom Howe QC, chief counsel at the AGS.

"We consider that producing cabinet-related documents to any court or tribunal … would not accord with legal practice and principle.

"We are not aware of the Commonwealth ever having taken such an approach in relation to cabinet-related documents."

Read the Australian Government Solicitor's advice on handing over cabinet documents.

The secretary of the Department of Prime Minister and Cabinet, Ian Watt, also warned Mr Abbott against handing over the documents in an unusually blunt and frank note sent to the prime minister and his chief of staff Peta Credlin.

"There is a longstanding and strong convention that deliberations and discussions within cabinet remain confidential and that one government does not seek access to the cabinet records of a previous government," the draft advice reads.

"This convention was reaffirmed by your government at its September 18, 2013 ministry meeting."

After the release of The Cabinet Files, Mr Abbott said his reasons for providing the documents to the royal commission were in the public interest.

"I did because it is the job of the government not just to passively and supinely accept public service advice," he said.

"It's the job of the government to do what it believes is in the nation's best interest.

"I thought we owed it to the country, we certainly owed it to the grieving parents of the four young men that were killed … to get to the bottom of it."

Committee was warned of home insulation 'critical risks'

Editor's note February 8, 2018: This story has been edited in response to concerns raised by Mr Rudd. The ABC did not intend to convey that Mr Rudd ignored warnings of critical safety risks at the time or that he lied to the royal commission, which made no adverse findings against him. The ABC unreservedly apologises to Mr Rudd for any harm or embarrassment caused.

A report prepared for a cabinet committee including Kevin Rudd, Julia Gillard and two senior Labor ministers warned about "critical risks" of the home insulation scheme months before the full rollout.

The infamous Energy Efficient Homes Package subsidised insulation as part of an economic stimulus package rolled out in response to the global financial crisis.

The scheme was beset with cost overruns, rorting, home fires, injuries and most tragically the deaths of four young installers in separate incidents from electrocution and hyperthermia.

After the young men died the stimulus package was discontinued in February 2010.

The Abbott government established a royal commission to see whether the failures of the scheme could have been prevented and whether the government was warned of the dangers.

At the time the document was prepared the royal commission found that the department identified three 'extreme' risks: getting the contracts done in time; fraud and other legal risks; and the political impact of failures.

In the end it was the deaths of the installers that brought the scheme to a halt.

The April 6, 2009 report warns of "critical risks" associated with the program but does not specify them.

"[The Department of Environment] has undertaken a risk assessment which reveals a large number of critical risks for the Energy Efficient Homes Package," the report reads.

"Many of these risks cannot be adequately managed in the lead-up to the July 1 start date..."

The Royal Commission found at around the time the document was prepared, the departmental view was that "risk of workplace health and safety issues lay with the employer and the States and Territories", not the Commonwealth.

There had been warnings in departmental meetings of safety risks, and as the scheme rolled out established companies tried to warn the government of the dangers.

But the key figures in the government, Mr Rudd and the responsible minister Peter Garrett, have always said those warnings never reached them.

Mr Rudd told the royal commission the rollout would have been delayed had cabinet been warned of safety risks.

"Right through until February 2010 ... each of the monthly reports said that the Energy Efficiency program of the government was on track," he said.

He said he did not know why public servants had not raised safety concerns.

In a written submission to the royal commission, Mr Rudd stated that he had only received two implementation reports, written in February 2009, and that he had "no record of receipt of others subsequent to that".

The implementation report from April, obtained by the ABC, was prepared weekly by the Office of the Coordinator-General for the Strategic Priorities and Budget Committee (SPBC).

Mr Rudd, his deputy Ms Gillard, then-treasurer Wayne Swan and then-finance minister Lindsay Tanner made up the SPBC, or the so-called "Gang of Four".

At the royal commission, when Mr Rudd was asked specifically about the risk assessment undertaken by the Department of Environment, he said: "I have no familiarity with that other than that I would assume that's the normal thing a department would do".

Mr Rudd has reaffirmed to the ABC that any assertion he was warned about safety risks was untrue.

"The Royal Commission into the Home Insulation Program had unprecedented access to cabinet material and made no adverse finding against Mr Rudd," he said in a statement.

"Any assertion Mr Rudd was warned about safety risks to installers, or failed to act on such warnings, is completely baseless and untrue, as determined by the commission."

Evidence presented at the royal commission shows a government determined to move as quickly as possible.

The bureaucracy was acutely aware of the potential for fraud as it struggled to devise a business plan in the space of a few months.

The commission found there was "a failure, until very late in the HIP, on the part of the Australian Government to identify and manage the risk to installers of injury and death".

The commissioner concluded the scheme was a "serious failure[s] of public administration".

The ABC has also contacted Mr Swan and Mr Tanner for a response.

Ms Gillard declined to comment.

Morrison asked ASIO to slow down asylum seekers' visas

Scott Morrison agreed his department should intervene in ASIO security checks to try to prevent asylum seekers from being granted permanent protection visas.

In late 2013, the then-immigration minister was rushing through changes that would prevent any asylum seekers who arrived by boat from ever being granted permanent protection in Australia.

The Department of Immigration and Border Protection advised Mr Morrison that up to 700 asylum seekers "must" be granted permanent protection under the existing legislation.

The minister was clearly concerned, requesting the exact number and advice on whether he could confer an alternative visa.

The department wrote back with a range of "mitigation strategies" and the minister signed up.

In an unorthodox move, Mr Morrison agreed his secretary should write to the director-general of security to request ASIO delay security checks so that people close to being granted permanent protection would miss the deadline.

The document states that if ASIO did not comply with Mr Morrison's request, 30 extra asylum seekers would likely be granted permanent protection each week.

It meant refugees about to start a new, permanent life in Australia would only be allowed to stay for three years.

He also agreed to reissue an order to the Administrative Appeals Tribunal and Refugee Review Tribunal to hear cases in a particular order to further slow down processing.

The initial order was sent to the two tribunals by former Labor immigration minister Brendan O'Connor months earlier.

The advice prepared for Mr Morrison notes that ASIO is not formally bound by the request, but the two tribunals are.

The secretary of the Immigration Department wrote to ASIO, but it is unclear whether ASIO complied with Mr Morrison's request.

The ABC contacted Mr Morrison and ASIO for comment.

Read the correspondence from Scott Morrison's office about permanent protection visas.

Razor gang considered welfare cut for under-30s

Tony Abbott's "razor gang" considered banning anyone under 30 from accessing income support in a radical proposal ahead of the 2014 budget.

The expenditure review committee, or razor gang, was made up of then-prime minister Mr Abbott, then-treasurer Joe Hockey and Finance Minister Mathias Cormann.

It requested then-social services minister Kevin Andrews look at how to ban "job snobs" from receiving the welfare payments.

In a document marked "protected", "sensitive" and "cabinet in confidence", Mr Andrews proposed three options to permanently or temporarily halt income support for job seekers under 30.

They included cutting off under-30s entirely, cutting off under-30s in areas with employment opportunities, and limiting income support to young people with a work history.

There was also an option to roll out an income-managed basics card to "lessen the harshness of the measure".

The most extreme proposal would have saved the government nearly $9 billion over four years.

But Mr Andrews, who is a strong factional ally of Mr Abbott, also anticipated a backlash.

The documents reveal he may have been responsible for killing off the plan.

In a draft letter to Mr Abbott and copied to then-employment minister Eric Abetz and then-human services minister Marise Payne, he expressed "significant concerns" about the razor gang's request.

"This is a fundamental change to Australia's universal social security system … it is not clear that there is a strong evidence base for this approach," he wrote in the attached proposal.

"Young people in financial hardship could experience homelessness, be driven to crime and other antisocial behaviour, family breakdown and possible criminal flow-on resulting from removing the social security safety net."

He noted that there was already a crackdown on youth welfare factored into the 2014 budget and suggested any further changes be part of a broader review of welfare.

The ABC contacted Mr Abbott, Mr Hockey, Senator Cormann, Mr Andrews, Senator Abetz and Senator Payne for comment.

Read the full list of proposals to halt income support for under-30s.

About The Cabinet Files

What's the big deal?

Cabinet documents like these are supposed to remain secret by law for at least 20 years. That's so senior ministers feel they can speak openly and frankly in the sanctity of the cabinet room.

Then why are you publishing them?

National security and the inner workings of our government affect the lives of all Australians. These documents reveal how key decisions have been made.

Crucially, they expose repeated security breaches of Australia's most sensitive and classified documents and a seemingly casual attitude of some of those charged with keeping the documents safe.

Can I see the documents?

We have published some of the documents, but not all. We've withheld documents if there are national security reasons, if the information is already public, or to protect the privacy of public servants.

How did you get them?

Journalism like this relies on brave confidential sources, and we'll protect their privacy at all costs. Suffice to say no-one broke any laws.

The documents were in two locked filing cabinets sold at an ex-government sale in Canberra. They were sold off cheaply because they were heavy and no-one could find the keys. A nifty person drilled the locks and uncovered the trove of documents inside.

Where can I send my own news tips?

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Credits

Reporting: Ashlynne McGhee and Michael McKinnon

Illustration and design: Georgina Piper

Development: Andrew Kesper

Digital production: Lucy Sweeney

Photography: Nick Haggarty, Marco Catalano, Jed Cooper and AAP photographers

Topics: government-and-politics, federal-government, defence-and-national-security, security-intelligence, australia

First posted