TONY JONES, PRESENTER: Today the Government announced what it describes as its newest security weapon, the National Facial Biometric Matching Capability. It's a system where photos taken of any citizen can be matched against existing databases which contain up to 100 million images to check identity. It works, we're told, because your face is unique, just like your fingerprints. The images can come from driver's licences, passport photos or security cameras in your local shopping centre.

MICHAEL KEENAN, JUSTICE MINISTER: Look, it keeps Australians safe by protecting their identity and it allows our law enforcement authorities to accurately and efficiently identify someone who might take their interest.

TONY JONES: Well there's no doubt this system, known as "The Capability", could be a powerful tool to catch criminals and run terrorists to the ground, but there are some key questions. How will it be used? Who will be able to access the database? And is it foolproof? In other words, could you be accused of something you didn't do because the system makes a mistake?

Well tonight, in the first of a two-part special, reporter Margot O'Neill takes a look at this new technology.

MARGOT O'NEILL, REPORTER: This is what facial recognition used to mean for police: mug shots of known offenders, the usual suspects.

Well you can put those mug shot books away. Now there's going to be a system called The Capability, short for the National Facial Biometric Matching Capability.

It'll allow law enforcement and other security agencies to quickly scan up to 100 million facial images which are held in various databases around Australia. And yes, you heard right: 100 million facial images. It'll ultimately cover every Australian citizen with a passport or a driver's licence. And, for many of us, obviously, it'll hold multiple images.

Including the Justice Minister.

MICHAEL KEENAN: Well it would be because I have photo identity documents. I have a passport and I have a driver's licence. ... Most Australians will have identity documents that do identify them using their face.

PATRICK GRAY, CYBER SECURITY ANALYST: This is a whole other league of creepy. This is a whole other league of invasive. And the fact that there's been no discussion around this is really weird.

MARGOT O'NEILL: The Federal Government says the proposed system will help combat identity fraud and identity theft, as well as terrorism and organised crime.

So how will it work? Facial recognition software identifies your most unique facial characteristics, especially around the eyes and the nose. It's called your faceprint and it's matched against a database of known individuals. The bigger the database, the more effective the system.

Because passports and driver's licences contain reliable and clear photos, they provide a perfect baseline for almost the entire adult population.

MICHAEL KEENAN: In the first instance, the Australian Federal Police and DFAT, the Immigration departments, will be the primary users, but if other people have a lawful use for this technology, then we could look at them accessing this information over time.

PATRICK GRAY: My concern is because there's no restriction on the way in which law enforcement can use this, it's gonna become a staple tool for law enforcement eventually. And, you know, they might not be saying - well, they might be saying, "We don't have plans to do this right now." It's the natural trajectory for a technology like this. I'm really curious to know what the threshold is before some police officer can take a photo of me on the street and then without my knowledge submit it to this system for identification. Do I have to be suspected of murder? Do I have to be suspected of disorderly conduct? Or can they submit a photo because I littered?

MARGOT O'NEILL: We asked state and federal police about their use of facial recognition. New South Wales, South Australia and Western Australia police didn't answer our questions.

Victoria Police said it uses facial recognition and has a database of 1.4 million facial images.

Queensland Police said it trialled the technology during last year's G20 in Brisbane. It also has a database of nearly 3.7 million facial images, although that includes some tattoos and artist drawings.

And the number of photos police could process through The Capability is set to escalate.

Northern Territory Police showed the ABC its recently-adopted facial recognition system. With a population of 240,000, the Top End already has a database of 100,000 facial images.

JOURNALIST: So you're going to try to match it to those 100,000 photos on the database?

NT POLICE OFFICER: Yep.

MARGOT O'NEILL: NT police are also using mobile CCTV and tablets and trialling body cameras to work with facial recognition.

Then there's the thousands of CCTV cameras around Australia. City Councils are rapidly expanding their use to deter violence and vandalism and the footage can help police catch offenders.

Sydney City Council says that its 100-odd cameras lead to about three police tip-offs every day. The problem is that the footage is often low grade and grainy, making it hard to get a clear picture. But that's all about to change. The cameras are getting an upgrade. From this, to this. New high-definition cameras will improve the quality of CCTV footage by 1,000 per cent, making identification day or night far easier.

MARK GREGORY, INTERNET SECURITY, RMIT: For the police and government, councils, they're aggregating all this CCTV and using much larger systems so that they're able to process many thousands of people, many thousands of faces in real time. And they're able to identify particular individuals or they're able to identify things that are unusual. Having CCTV and facial recognition doesn't mean that we're living in a police state. It means that we're using modern technologies to solve crime, terrorism and other problems in a modern way.

MARGOT O'NEILL: The Federal Government's facial matching capability won't use live CCTV feeds, but it will use stills. And despite big improvements in the accuracy of facial recognition, it's not foolproof.

ADAM MOLNAR, CRIMINOLOGY LECTURER, DEAKIN UNI.: I think we need to be concerned about the potential error rate of the technology. The FBI accepts a 20 per cent inaccuracy. So, that's one in five images that could be a false identification of an individual. The technology is notoriously problematic in uncontrolled environments, so with bad angles or bad lighting. And so this raises a lot of concerns about how false positives can unnecessarily impact an individual's life.

MARGOT O'NEILL: Do you think having such ubiquitous cameras watching us all the time, does it change the way society feels, the way people feel about it?

MARK GREGORY: I think for some people it will, especially if they're going to a protest or some sort of anti-government event or some other event that they're particularly involved with, then they're going to feel very much that they're being watched.

MARGOT O'NEILL: Which is why security, privacy and technology experts we spoke to believe there needs to be more public discussion about this quiet but dramatic transformation of police and government surveillance and identification capability.

PATRICK GRAY: Some, you know, creepy Orwellian system will be flagging the fact that you walked down that street at that particular time. Now this of course is not what's being proposed now, but, you know, surely we would like to have the conversation before we even arrive at a proposal like that.