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New laws intended to target spies and protect against foreign interference in Australian lawmaking could deter whistleblowers in Australia's spy agencies from speaking out, the national intelligence watchdog says. In a submission to the parliamentary inquiry reviewing the new laws, inspector general of intelligence and security Margaret Stone has raised concerns the new offences might prevent her and her staff from being able to do their jobs. Prime Minister Malcolm Turnbull announced new laws to ban overseas political donations and target foreign spies in December, but in the second such submission this month, the inspector-general has flagged concerns the legislation will hamper her agency's ability to investigate issues in Australia's spy agencies. The new laws are designed to stop government employees from sharing classified information with foreign spies, but there is concern that legitimate reasons to hold such information are also captured under the legislation. The draft legislation will make it an offence to hold or share "inherently harmful information", which the inspector-general says will expose staffers at Australian intelligence agencies and officers at the watch-dog to the possibility that they have committed an offence by taking part in an investigation. Dealing with or communicating such information comes with a maximum penalty of 15 years imprisonment under the new legislation. While communicating information covered by the new laws to the inspectorate can be used as a defence, the inspector general is concerned the weight of producing evidence will discourage those with knowledge of wrongdoing from speaking up. "Exposure to criminal sanction, and the need to rely on a defence, may also cause staff within the agencies to hesitate when responding to requests for information by the IGIS," the submission says. "Almost all of the information that IGIS officials routinely deal with would fall within the proposed definition of 'inherently harmful information'", the submission says. There is also "potential for real or perceived misuse of the proposed offence and related procedural provisions concerning the classification of information," the inspector-general says. Targeted amendments to the bill are needed to safeguard the activities of the inspectorate, the submission says. It suggests exemptions similar to those in the ASIO Act would be enough to allow the agency to continue its work. It also flags the possibility that similar issues could arise for other agencies, like the Commonwealth Ombudsman. The head of the Strategic and Defence Studies Centre at Australian National University John Blaxland said the concerns of the inspector general should be carefully considered. "[IGIS] is very measured, a carefully calibrated body and person who operates mindful of the legislation and the spirit of the legislation," he said. "[It has] has enormous powers to inspect basically anything it wants within the intelligence community so its views need to be treated very very seriously. If it's making a submission the crafters of the legislation need to stand up and take notice of it." A spokesman for Attorney General Christian Porter said, "The standard process is that the Parliamentary Committee will consider the submission and deliver a report, after the delivery of that report is when the government considers a response to the issue and the Attorney General will follow this standard process".

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