The national intelligence watchdog fears new laws following the creation of the Home Affairs mega department could open its probes to accusations of political influence and expose the Attorney-General to perceived conflicts of interest.
Inspector-General of Intelligence and Security Margaret Stone has told a parliamentary inquiry that new legislation governing her agency following the portfolio's emergence will undermine her office's independence.
Under laws yet to pass federal parliament, Ms Stone argues the Attorney-General in taking responsibility for the IGIS from the Prime Minister's portfolio would join Malcolm Turnbull as one of two government figures who can compel the agency to investigate a security matter.
Ms Stone told the parliamentary inquiry into the bill that the new power would likely open the Attorney-General, who authorises warrants requested by ASIO, to a perceived conflict of interest.
"For instance, could a direction to undertake a particular inquiry be seen to divert the resources of this office from a review of ASIO warrants?" she said.
Urging MPs to reject the change, the former Federal Court judge said letting the Attorney-General as well as the Prime Minister compel the inspector-general to probe security matters would significantly intrude on her office's independence.
"Nevertheless, given the Prime Minister's position of overall responsibility for the national intelligence community, it is not inappropriate that this power should be retained. In the case of the Attorney-General, this consideration does not apply," Ms Stone said.
"The power of the Attorney-General to compel an inquiry would materially detract from the Inspector-General's ability to assure the public, as well as parliament, that the decision to conduct an inquiry is free from political influence."
The IGIS scrutinises the activities of ASIO, ASIS, the Office of National Assessments, the Australian Signals Directorate, the Defence Intelligence Organisation and the Australian Geospatial-Intelligence Organisation.
Ms Stone said her agency's independence, both real and perceived, was the "mainstay" of its efforts to maintain parliamentary and public confidence in intelligence agencies.
"Any compromise of the Inspector-General's independence will seriously limit the ability to present this office to the public and the parliament as being free of special interests or political concerns," she said.
As the newly-created Home Affairs ministry takes responsibility from the Attorney-General's portfolio for several agencies including ASIO and the AFP, the government wants the Attorney-General to be the "minister for integrity".
Australian Strategic Policy Institute senior analyst John Coyne said the government was yet to make the case for the Attorney-General's new powers to compel the IGIS to investigate.
"There needs to be a discussion of why this change is needed," he said.
While the Prime Minister and Attorney-General might be able to ask the IGIS to investigate agencies under the proposed laws, neither could determine the outcomes of inquiries, Dr Coyne said.
He warned the government's efforts to define the Attorney-General's role overseeing Australia's security arrangements under the Home Affairs shake-up should not undermine the independence of statutory agencies.
A spokesman for Attorney-General Christian Porter told Fairfax Media the government would consider the report of the parliamentary committee, which would examine the IGIS submission.
Ms Stone's comments come after free speech advocates raised fears press freedom would be threatened with the birth of the Home Affairs department.
In a Senate estimates hearing in October, its secretary Michael Pezzullo rejected portrayals that the department would be an undemocratic, unchecked "sinister behemoth".
"Power must always be exercised with legitimacy and never more so than in the performance of the security function of the state," he said.
A review of the intelligence watchdog last year recommended greater parliamentary oversight of the IGIS office, suggesting the Parliamentary Joint Committee on Intelligence and Security should be able to ask the agency to investigate particular spy operations. It also suggested beefing up the agency, which only had 17 staff members.
