It was dismissed as “nonsense” and “completely false”.

But Annika Smethurst’s report suggesting the nation’s surveillance agency, the Australian Signals Directorate, was seeking to broaden its powers to spy on Australian citizens without their knowledge was immediately referred for police investigation.

The home affairs boss, Mike Pezzullo, confirmed the referral shortly after the April 2018 story’s publication, during a Senate estimates hearing on 21 May.

But he simultaneously took a swipe at the News Corp political editor for running the “worst example of ill-informed reporting regarding home affairs”.

His minister, Peter Dutton, who had won the battle to establish a home affairs department, taking in Australia’s spy agencies, the AFP as well as border protection just a few months earlier, dismissed the report as “nonsense”.

On Tuesday, 401 days after Smethurst published her report, AFP officers raided her home as she was preparing to go to work, with a warrant to search her home, her phone and her computer. News Corp labelled the raid “outrageous and heavy handed”, and said Smethurst had complied with the warrant, but gave no further information outside of confirming her identity.

“News Corp Australia has expressed the most serious concerns about the willingness of governments to undermine the Australian public’s right to know about important decisions governments are making that can and will impact ordinary Australian citizens,” her employer said in a statement.

“What’s gone on this morning sends clear and dangerous signals to journalists and newsrooms across Australia.”

AFP officers spent the bulk of the day going through Smethurst’s home, as journalists, the National Press Gallery, Digital Rights Watch, the media union and politicians, including Centre Alliance, condemned the raid.

One Labor figure on @annikasmethurst raid: “bipartisanship on national security means we find ourselves in dangerous period where agencies can expand their powers beyond what’s required/necessary because ALP too scared to have an alternative, not even necessarily a weaker view” — Andrew Greene (@AndrewBGreene) June 4, 2019

The AFP confirmed the raid in a statement just after midday, but gave no indication of the potential crime. It later made clear, in a follow-up tweet, that the warrant was in response to “the alleged publishing of information classified as an official secret, which is an extremely serious matter with the potential to undermine Australia’s national security”, indicating Smethurst and News Corp were a target, not just the source of the leak.

Updated statement re. this morning’s warrants in Canberra. This warrant relates to the alleged publishing of information classified as an official secret, which is an extremely serious matter with the potential to undermine Australia’s national security.https://t.co/BfWkTYXQFN — AFP (@AusFedPolice) June 4, 2019

The government, with Labor, passed sweeping new anti-espionage laws in June 2018, but insisted exemptions had been put in place to protect journalists reporting on matters within the public interest.

Those laws are not thought to be retrospective. The Law Council, which stressed it could not comment on an individual case, said it was “possible for a journalist to be charged with an unauthorised disclosure offence” under the criminal code.

“Whether a defence might be available would depend on the individual circumstances of the case,” the Law Council president, Arthur Moses, said.

“One would expect that this defence is something that is carefully considered by any law enforcement or prosecuting authorities before the commencement of any proceedings against any journalist in respect of a contravention of section 122.4A of the Criminal Code Act 1995 (Cth).”

Section 79 of the Crimes Act, while rare, also lists “communicating or allowing someone to have access to prescribed information without authorisation with the intention of prejudicing national security” among its offences.

The AFP statement made clear any information it may have gathered in its raid of Smethurst’s property would not lead to any arrests “today”.

But the raid, coming just weeks after the Coalition was re-elected and more than a year after the story was first published, raised concerns over how public interest journalism could be threatened.

Smethurt’s report had understandably made waves. It pointed to correspondence between the defence secretary, Greg Moriarty, and Pezzullo, suggesting a proposal to allow the ASD to “proactively disrupt and covertly remove” domestic cyber threats, “by hacking into critical infrastructure”.

Under the proposal, which Smethurst reported she had seen, Dutton and the defence minister, then Marise Payne, would have sign-off powers to allow digital surveillance of Australian citizens without the need for a warrant, or the attorney general’s go-ahead.

Dramatic escalation of powers

The top-secret proposal, on documents which were labelled AUSTEO, which stands for Australian Eyes Only, suggested the new home affairs agency was seeking a dramatic escalation of spying powers, which had already been hinted at during the Snowden leak.

Under sections eight and 12 of the Intelligence Services Act 2001, the Australian Signals Directorate, previously known as the Defence Signals Directorate, cannot gather data on Australian citizens, with its mandate directed outside the nation’s borders.

It can assist the AFP and Asio with technical advice if the agencies have a warrant to investigate a person of interest related to national security investigations, including terrorism and organised crime.

The Snowden leaks revealed in 2013 the surveillance agency had offered to share raw metadata it had collected on Australian citizens with the nation’s allies, leading to concerns the agency was potentially acting outside of its legal, and operational, mandate.

In regards to Smethurst’s story, the denials focused around the suggestion, paraphrased in the April 2018 article, that the powers would allow the ASD to access Australians’ digital communications and bank records.

Following the report’s publication, Moriarty, Pezzullo and the director of the ASD, Mike Burgess, took the somewhat rare step of issuing a media statement disputing its contents.

“The cyber security function entails protecting Australians from cyber-enabled crime and cyber-attacks, and not collecting intelligence on Australians. These are two distinct functions, technically and operationally,” the statement read.

“In the ever changing world of cyber security as officials we should explore all options to protect Australians and the Australian economy.

“We would never provide advice to Government suggesting that ASD be allowed to have unchecked data collection on Australians – this can only ever occur within the law, and under very limited and controlled circumstances.”

Peter Dutton disputes Annika Smethurst’s report but has left wriggle room for change. Photograph: Dan Peled/AAP

Around the same time, Dutton also continued to dispute the report, but left wriggle room for change.

“We are concerned about threats to our banking system, by both state and non-state actors, both onshore and offshore. Not just our banking system, but our electricity grids. We’re worried about obviously foreign influence into elections,” he said in April 2018.

“But, as for some claim that there’s going to be some spying taking place on Australian citizens, it’s complete nonsense. If there was to be any look at ways in which we could try and address the cyber threat more effectively, it would be accompanied by the usual protections, including warrant powers either with the attorney general or with the relevant justice, whatever the case might be.”

“If we had a capacity to disrupt, for example, the live-streaming of children being sexually exploited, would we explore ways that we could do that within the law? Of course we would.”

The next month, in Senate estimates, Pezzullo also said discussions were ongoing.

“Without confirming or denying the existence or content of the specific documents which the correspondent claims to have seen, I can inform this committee that I have not proposed, nor would I ever propose, that ASD’s powers be expanded in the way described in this false reporting,” Pezzullo told the home affairs estimates committee on 21 May 2018.

“The only matter in issue, in terms of potential new powers and functions, as the minister for home affairs has since indicated, is whether ASD’s capabilities could and should be employed in the disruption of cybercrime where the whole, or parts, of the relevant cyber network are hosted on Australian telecommunications infrastructure,” he said.

“And secondly, whether ASD’s capabilities could and should be employed in the active defence of certain critical national networks.”

Falling foul of home affairs

Smethurst was not the only journalist to fall foul of home affairs on Tuesday. The Sydney radio 2GB and Sky News presenter Ben Fordham reported he had been contacted by officials from the agency in relation to a story he broadcast on Monday, reporting up to six illegal boat arrivals were thought to be en route to Australia.

Fordham had reported Dutton had admitted a week before “there could be a wave of illegal vessels headed for Australia after 20 Sri Lankan asylum seekers were sent back” and he had been informed by “a senior source” in the home affairs department that Dutton was in Sri Lanka “because ‘there could be up to six boats in play’.”

On Tuesday afternoon, Fordham said he had been contacted by home affairs officials wanting his help in finding the source of the leaked information he had broadcast.

My thoughts are with @annikasmethurst as her home is raided over a leak. I've been informed today I'm also the subject of a Home Affairs inquiry "which could lead to an AFP criminal investigation". It's related to this story - https://t.co/0A0Qm1tQwf More details now on @2GB873 — BenFordham (@BenFordham) June 4, 2019

“The chances of me revealing my sources is zero,” he told 2GB listeners.

“Not today, not tomorrow, next week or next month. There is not a hope in hell of that happening.”