''Many investigations require law enforcement to build a picture of criminal activity over a period of time. Without data retention, this capability will be lost,'' she will say, in a draft of the speech provided to Fairfax Media yesterday. She will also say technological advancement since the advent of the internet is providing increasing room to hide for criminals and those who threaten Australia's security. ''The intention behind the proposed reform is to allow law enforcement agencies to continue investigating crime in light of new technologies. The loss of this capability would be a major blow to our law enforcement agencies and to Australia's national security." But in an interview with Fairfax Media in mid July, Ms Roxon appeared to have a different view. ''I'm not yet convinced that the cost and the return - the cost both to industry and the [privacy] cost to individuals - that we've made the case for what it is that people use in a way that benefits our national security,'' she said. ''I think there is a genuine question to be tested, which is why it's such a big part of the proposal.''

Her apparent change of mind may be a result of conversations with the Australian Federal Police, who have long pushed for mandatory online data retention. Neil Gaughan heads the AFP's High Tech Crime Centre and is a vocal advocate for the policy. ''Without data retention laws I can guarantee you that the AFP won't be able to investigate groups such as Anonymous over data breaches because we won't be able to enforce the law,'' he told a cyber security conference recently. But Andrew Lewman, the executive director of the Tor software project, which disguises a person's location when surfing the web, challenges that view. In July he told Fairfax Media data retention impedes the effectiveness of law enforcement. ''It sounds good and something sexy that politicians should get behind. However, it doesn't stop crime, it builds a massive dossier on everyone at millisecond resolution, and creates more work and challenges for law enforcement to catch actual criminals. ''The problem isn't too little data, the problem is there is already too much data.''

Proposals 'characteristic of a police state' The proposals are being examined by the Joint Parliamentary Committee on Intelligence and Security to provide partial scrutiny of Australia's intelligence community. The committee has thus far received almost 200 submissions from the agencies, members of the public as well as civil liberties and online rights groups. In a heated submission to the inquiry, Victoria's Acting Privacy Commissioner, Anthony Bendall, dubbed the proposals ''characteristic of a police state'', arguing that data retention in particular was ''premised on the assumption that all citizens should be monitored''. ''Not only does this completely remove the presumption of innocence which all persons are afforded, it goes against one of the essential dimensions of human rights and privacy law: freedom from surveillance and arbitrary intrusions into a person's life."

ISP iiNet said government had failed to demonstrate how current laws were failing or how criminals and terrorists posed a threat to networks, and said asking carriers to intercept and store customers' data for two years could make them ''agents of the state'' and increase costs. A joint submission from telco industry groups argued it would cost between $500 million and $700 million to keep data for two years. It called for full compensation from the government's security agencies. The Australian Federal Police and the Australian Taxation Office were among the few supporting the proposal to retain telecommunications data. The ATO said the proposal would be consistent with European practices and that being able to access real-time telecommunications data would allow it to ''respond more effectively'' to attempts to defraud the Commonwealth. The AFP, in its submission, said interception capabilities were increasingly being ''undermined'' by fundamental changes to the telecommunications industry and communications technologies. It said telco reform was needed "in order to avoid further degradation of existing capability".

Through the use of case studies, the AFP argued that on numerous occasions it had been restricted by what it could do under current telecommunications laws, and said that many offences went un-prosecuted because of this. Costs may be passed on to consumers The AFP conceded that the volume of data and its retention by telcos for use as evidence for agencies presented "challenges", but didn’t disclose how such challenges could be tackled. Such challenges were highlighted in submissions. Mr Bendall said smaller ISPs, for instance, "may not be able to afford the data storage costs, and these costs may be passed on to consumers". "It would appear that public support for this type of proposal is largely absent," he said.

Users may abandon web Mr Bendall also said that data retention could "create an extreme chilling effect" not only on technology but on social interactions, many of which are now conducted solely online. "Users may move away from using online services due to the fear that their communications are being monitored," he said. "Simply put, the proposal could mean that individuals, due to concerns about surveillance, revert back to offline transactions. "If this occurred, it would affect existing efficiencies of both businesses and government," he said. The Australian Privacy Foundation was just as scathing.

"Too many of the proposals outlined ... would herald a major and unacceptable increase in the powers of law enforcement and national security agencies to intrude into the lives of all Australians," it said, adding that the discussion paper was "misleading, and probably intentionally so". Fears for journalist's sources It’s not just privacy advocates and telcos that expressed concern with the proposals, but the journalist union, the Media Entertainment and Arts Alliance. In its submission it said it was concerned that any expansion of interception powers and the powers of intelligence agencies had "the potential to threaten press freedom". "There is considerable concern about the power of police and intelligence agencies to intercept communications, a concern not given proper consideration in the terms of reference," the MEAA said. Online users' lobby group Electronics Frontiers Australia raised similar concerns to others but pointed out that one of the 40 proposed changes to national security legislation, which required people to divulge passwords, could lead to self-incrimination. It said should such a law be enacted it would undermine "the right of individuals to not co-operate with an investigation".

The lobby group also highlighted concerns with another proposal which would allow the Australian Security Intelligence Organisation to use an innocent person's computer to get into a suspect's computer. "The proposal that ASIO would be permitted to 'add, delete or alter data or interfere with, interrupt, or obstruct the lawful use of a computer' could lead to some very serious consequences," it said. Such consequences could include, it said, pollution of evidence, potentially leading to failures of convictions. It could also provide the means for evidence to be "planted" on innocent parties, it said.