Australia is facing an unprecedented level of foreign interference and espionage, worse than during the Cold War, ASIO has warned a Senate committee.

Appearing at a Canberra hearing examining proposed new laws to crack down on such offences, officials said adversaries were generally known during the Cold War, whereas there is a raft of unknown players today.

"Whilst (the Cold War) was obviously a very busy time in that particular period in history, our assessment is it's not on the scale which we're experiencing today," deputy director general Peter Vickery told senators on Wednesday.

"(Espionage and foreign influence) is not something we think might happen, or possibly could happen, it is happening now against Australian interests in Australia and Australian interests abroad."

Asked how concerned politicians should be about attempts to influence Australia's political systems, Mr Vickery said "everybody should be alive to the possibility of it happening at a local, state and federal level".

China expert Professor Clive Hamilton told the hearing three Australian publishers including Allen and Unwin chose not to publish his book criticising the Chinese government due to fear of financial retribution from Beijing.

"If an academic in Australia cannot publish a book critical of the Chinese Communist Party, where's free speech in this country?" Prof Hamilton said.

A large number of Chinese-Australians are living with a "low-level fear" because of Beijing's efforts to influence them through intimidation, coercion and persuasion, he said.

Prof Hamilton said he believed organisations supporting the Chinese government had engaged in a flurry of activity in recent months, including a sustained intervention in Labor's Bennelong by-election campaign.

"I think that was a manifest attempt to demonstrate how much influence pro-Beijing forces had in Australia," he said.

"Fortunately it didn't pay off but you can imagine what the political fall-out would have been had the previous member not been re-elected."

He said a Labor win would have been a huge victory for China.

"It would have been quite devastating. People would have read into that 'we mustn't do anything that appears to be anti-China'," Prof Hamilton said.

While Prof Hamilton says the draft laws are vital, media organisations fear the reforms could "criminalise" journalism and unfairly punish those who are leaked documents with up to 20 years jail.

Universities and the Catholic church are also worried they could be caught up in the changes, announced by the Turnbull government in December.

The attorney-general's department responded to claims the draft laws are too broad, and said it would not prohibit people from political debate but rather merely require registration if they were working with a foreign agent.

Officials insisted academic activity would only fall within the legislation if it was undertaken on behalf of a foreign principal and for the purpose of influencing a political process.

"Welfare advocacy by church staff or members as described in evidence yesterday would not in and of itself require registration," assistant secretary Anna Harmer said.