Security - Recalculating the Bottom Line
Address to 'The Community Report' luncheon by
Australian Federal Police Commissioner
Mick Keelty
Monday 13 September 2004
12:30-2:15pm
(Yet to be checked against delivery)
Chief Executive of the State Chamber of Commerce, Margy Osmond; the Member for Hornsby, Judy Hopwood MP; Superintendent-Commander Peter O'Brien NSW Police Service; distinguished guests; ladies and gentlemen.
I'd like to begin by acknowledging the traditional owners of this land, the Gadigal people.
It is a pleasure to finally be with you here today for 'The Community Report' luncheon.
It is an engagement that seems to have been a long time coming after a previous date had to be postponed due to a commitment at Federal Parliament.
But it's an engagement I was keen to keep, because we hear a lot today about the importance of partnerships and working together to better secure our environment.
Effective law enforcement relies heavily on strong community relationships. So it is good for people from all corners of our community to come together and discuss issues that may help guide our approach for the future.
The topic I have chosen for my speech today is 'Security: Recalculating the bottom line'. It is a theme that encapsulates key 21st century challenges - not just in law enforcement but in business and beyond.
I also think it is an important topic for discussion at this point in our history.
It has just gone three years since the devastating September 11 attacks in the United States.
As we all know, a lot has changed since then, including:
- The emergence of security as a dominant feature on international political, social and economic landscapes.
- The discovery and disruption of key terrorist networks all around the world.
- And ongoing attacks, in places like Bali…(Australia's worst peace-time disaster)…as well as in Saudi Arabia, southern Philippines, Spain, Iraq - and most recently Beslan in Russia and outside the Australian Embassy in Jakarta.
To date, Australia's counter-terrorism responses have been largely law enforcement based. They have focused on frontline defences such as strengthening intelligence; the formation of counter-terrorism teams; new measures in aviation security; tough laws to track and prosecute terrorists; critical infrastructure protection; as well as improved interagency cooperation.
These responses have been vital and have provided the bedrock on which our environment is being secured.
But to build on this success, we need to be considering how we might be more strategic over the longer term.
Experts in the counter-terrorism field all seem to agree that this latest wave of terrorism will be with us well into the next generation. There is also a widely held view that terrorists - and those involved in organised crime - will take full advantage of new technologies and methodologies so they can threaten us in new ways.
So before I go on to discuss how we can - and are - working together to better secure our environment, I'd like to discuss more about the nature of the threat we are facing.
A Terrorism Perspective
Unless you haven't read a newspaper or listened to a news report over the past three years, you'll have a good idea that terrorism and security-related issues are at the forefront of the international agenda.
The ongoing level of concern was highlighted recently during the Athens Olympics, where security spending was in the order of $1.5 billion - five times higher than for the Sydney Games. This involved more than 70,000 security personnel (including AFP Federal Agents) - who outnumbered athletes by about seven to one! [1]
Although Australia is geographically isolated, there is no denying that the threat here is real. The Bali bombings in October 2002, Osama bin Laden's purported naming of Australia as a legitimate target and last Thursday's bombing outside the Australian Embassy in Jakarta, are sobering reminders of that fact.
But it is important to keep a sense of perspective.
A Threat Perspective
The problem with terrorism is that it is such an unpredictable phenomenon that can turn safety into chaos, in an instant. The complex and clandestine manner in which terrorist groups organise themselves and operate, means there is often very little warning of when the next strike will occur or who will be targeted.
And technology has given terrorists unprecedented capacity to strike from afar and at multiple points. We've already seen for instance, how mobile phones are being used to detonate bombs, allowing the perpetrators to carry out atrocities miles away from the scene of the crime - or potentially across borders.
Unfortunately, these factors can have a deep psychological impact in society, fuelling fear and instability. It is not always understood, but these are the most powerful weapons in a terrorist's arsenal and can have devastating consequences for business.
You might remember, at the time of the Bali bombings…hotel occupancy rates there dropped from 94 per cent, to single-digit figures in 24 hours and they have still not fully recovered. Imagine a similar occurrence here in Australia where tourism is one of our largest exports!
And our own evaluation of the economic impact of the Bali tragedy - which was conducted by the Centre for International Economics - estimated losses to be in the order of $3 billion. About $200 million of that was the cost of the emergency response, with much of the remainder arising from secondary losses such as in tourism, hospitality, transportation and other flow-on costs to industry.
Even the delay or cancellation of an aeroplane can prove costly, with British Airways estimating losses from transatlantic flights cancelled due to terrorist threats earlier this year, costing in the vicinity of $300,000 per flight. [2]
As we've come to realise, the only effective way to counter this is through a strong and cohesive community-wide response.
In the aftermath of September 11, a London Times editorial asserted that: "We are all counter terrorists now" and these words still resonate strongly today. [3]
Security is not something that police, governments or even the public sector can do alone. Strong public/private partnerships are critical.
Some important progress is being made in this regard and I'll talk more about this shortly. But first I'd like to discuss terrorism and security in a business context.
A Historical Perspective
Terrorism is not a new phenomenon for business.
Acts of terrorism have occurred for many centuries, and the practice of targeting business escalated midway through the last one.
In a regional terrorism paper published recently, David Claridge described how business has been regarded as both a lucrative source of funding as well as an easy - and growing - target for revolutionary acts.
He said:
"From bank and casino raids of the Uruguayan Tupamaros in the 1960s, to the kidnap of prominent industrialist Hans-Martin Schleyer by the Red Army Faction in 1977, and from the oil pipeline attacks by the Colombian ELN in the 1980s, to the attacks against the Central Bank and World Trade Centre in Colombo by the Liberation Tigers of Tamil Eelam in the 1990s. In each case, as terrorist groups became more sophisticated, they gravitated towards attacking infrastructure targets or economic sectors with considerable national significance." [4]
I guess the big difference we see today is that terrorists have broadened their focus even further to include 'softer' targets. These are often places where large numbers of unsuspecting and defenceless people gather; which are difficult to police; and can produce a most devastating impact.
While the current threat level in Australia is medium, the Australian Strategic Policy Institute recently said that: "if terrorists (do) strike us directly, it is likely that their targets will be Australian citizens and businesses rather than better protected government institutions." [5]
Therefore when we think about the job of safeguarding our people and property, you only need to consider the range of potential targets to get an appreciation of the magnitude of this task.
For instance:
- Our capital cities are home to more than 1600 tall buildings.
- Almost 8000 pubs and clubs operate nationally.
- There are more than 900 shopping centres and over 300 cinema sites in Australia.
- More than 180 major sporting stadiums.
- We have more than 2600 religious buildings.
- More than 260 licensed airports.
- Almost 800,000 kilometres of road and more than 40,000 kilometres of railway tracks. [6] ….and the list goes on!
Protecting all of these facilities and the people who use them, is clearly too big a job for one sector.
And it is estimated that about 70 per cent of Australia's critical infrastructure and 95 per cent of the built environment by value, are owned by the private sector and individuals [7] ….so you can see why the private sector is integral to community security.
Business and Security
It was interesting to note the results of a July 2003 survey [8], which revealed that only "4 per cent of major US firms had increased spending on security measures" since the September 11 terrorism attacks.
Disturbingly, analysts here in Australia said that we are unlikely to have done any better than our US counterparts.
Meanwhile, another survey found that 36 per cent of company directors confessed to not fully understanding the risks their companies faced; almost one-quarter said they had inadequate processes for handling risk and 19 per cent said their board had no risk management processes at all. [9]
These results remind us how important it is to learn from past experience and to take action that may help to prevent future attacks and minimise losses.
As Aldo Borgu from ASPI pointed out in the press on the weekend while commenting on the Jakarta bombings: "Terrorists learn from one another and they learn from their mistakes, most of the time better than we do." [10]
In this profit-driven age, the cost of better securing business might seem incompatible with broad business objectives such as revenue growth, profits and shareholder value. But taking the risk could prove too high a price to pay over the longer term.
As the Organisation for Economic Cooperation and Development has warned, the insurance sector - which lost an estimated US$30 billion to US$58 billion from September 11 - would be unable to withstand another comparable loss. [11]
Importantly, there are signs that the message is starting to get through here in Australia. Some companies - particularly in the finance sector - are reportedly broadening their triple bottom line approach - to add security reporting to their social, economic and environmental performances.
But strengthening security is not just about pouring money into new security measures.
There are many other ways that business can contribute to the security process, without placing pressure on the bottom line.
One of these is by sharing information and knowledge. Business is an excellent source of intelligence. The fact that most businesses are open to the public means they are in a powerful position to observe what is going on at the coalface.
Our shopping centres alone employ more than 475,000 people [12], who are in an ideal situation to observe suspicious activity and behaviour.
Business needs to be vigilant about reporting such activity to either local police or through the National Terrorism Hotline.
Last year, over 19,000 reports were received on the hotline and the AFP took follow up action on more than 500 [13]. The current figure is closer to 30,000 calls.
Small bits of information can be very valuable when trying to piece together information that will make our environment more secure.
The Joint Business-Government Advisory Group on National Security is another important new forum working to encourage dialogue on security-related issues.
The Group was formed after the Business-Government Forum on National Security in June. One of the main concerns raised by business leaders at that Forum, was that improved lines of communication with government were needed to help strengthen national security. The Group, therefore, provides an avenue for high-level advice and feedback.
The Group will also complement the work of the Trusted Information Sharing Network and the Critical Infrastructure Advisory Council, which are both key sources of information and advice to government on security issues relating to critical infrastructure.
The recent agreement for licensing regulations on hazardous materials such as ammonium nitrate, is another important security-related development involving industry. Ammonium nitrate is a chemical similar to that used in the Bali bombings.
The licensing system will be implemented by the end of the year and will ban access to ammonium nitrate, other than for authorised users.
The new control regime also makes it mandatory to report any loss, theft or attempted theft of ammonium nitrate and has recommended background checks for people seeking access to hazardous materials.
I believe the cooperation achieved with industry on this issue will go a long way toward ensuring these substances don't get into the wrong hands! And I applaud industry for the practical and responsive approach taken.
Over time, experience has shown that one of the most effective ways to stop terrorism is to cut-off funding.
Increasingly, terrorists - and those involved in organised crime - are using or hiding behind legitimate businesses to raise funds for their activities.
Through these businesses, they are laundering money and transferring funds between jurisdictions.
It is important therefore, for members of the business community to also monitor and report any unusual transactions or activities that may point to such activities.
AFP Response
I've talked a lot about the importance of shared responsibility in securing our nation, particularly in relation to business.
Now I'd like to give you an overview of how security has been recalculating the AFP's bottom line over recent times.
Since September 11 and Bali, our role has expanded significantly. Our budget has grown from $370 million in 2000/2001 to $911 million this financial year, and we have taken on a wide range of new responsibilities.
This has led to a number of strategic partnerships - some involving business - to strengthen the fight against terrorism and other forms of transnational crime.
Counter-terrorism is a business priority for the AFP and enormous resources are being devoted to tackling it across a number of fronts.
One of our prime areas of focus lies in capacity building offshore.
As many of you would know, a number of smaller nations in our region have been struggling under the weight of economic hardship, corruption and lawlessness.
From a security perspective, this has been a source of much concern as weak nations can become vulnerable to transnational crime - the effects of which can be felt by neighbouring countries over time.
To address this problem before it gets out of hand, the AFP has been engaged in a number of regional assistance missions - most notably to the Solomon Islands as part of a wider Pacific Islands force - where we have sought to restore law and order and plant seeds of prosperity for the future.
This operation has been underway for just over a year and has already achieved tremendous results, with thousands of weapons seized, corrupt police arrested and basic stability restored.
And significantly, all of this has been achieved without a single shot being fired.
We've also just farewelled the first contingent of personnel to Papua New Guinea. These officers are working to help boost the capacity of the Royal Papua New Guinea Constabulary and are part of the AFP's new International Deployment Group.
The IDG as it is known, is an innovation in regional policing and was formed on the back of success in peacekeeping and regional assistance missions to East Timor and the Solomons.
It will be a permanent structure that will enable us to adopt a more strategic planning and operational approach to regional assistance missions in the future. It also allows us to minimise disruption to our other work. Charity does begin at home after all.
In addition to regional assistance, the AFP's International Network - which now comprises 33 offices in 26 countries - is working on a range of initiatives to strengthen counter-terrorism and transnational crime-fighting capabilities among regional police.
This includes encouraging greater cooperation and information exchange between policing agencies, including through a series of formal Memoranda of Understanding. To date MoUs have been signed with countries such as Indonesia, The Philippines, Thailand, Cambodia, East Timor and Fiji.
The newly-opened Jakarta Centre for Law Enforcement Cooperation is another leading example of capacity building and cooperation at work.
This is a $38 million counter-terrorism facility funded by the Australia. The AFP is involved in providing training in areas such as investigations, criminal intelligence, forensics, financial investigations, threat assessments, prosecutions and counter-terrorism legislation drafting skills.
The Centre will also provide training in countering maritime crime - a real issue in the straits around Indonesia - as well as people smuggling, drug trafficking and trafficking of women and children for sexual servitude.
The private sector has been heavily involved in the construction of the facility and we are now examining ways for its continued involvement, possibly through sponsorship of training and other activities.
In addition, the AFP has also established a number of Transnational Crime Coordination Centres throughout the region to promote information exchange and streamline law enforcement responses.
On the national front, in partnership with State and Territory police, the AFP set up the Joint Counter Terrorism Teams - which act as a frontline defence against threats - as well as in counter-terrorism training, investigations, and we have people based at the National Threat Assessment Centre and on the Joint Counter Terrorism Intelligence Coordination Unit.
And we play a central role in relation to the development of national security policy, being regularly co-opted to both the Secretary's Committee on National Security as well as the National Security Committee of Cabinet.
A number of strategic public-private sector partnerships are also being forged across a range of our operations.
Today, the AFP is party to over 300 private sector contracts for the provision of services, and these are valued in excess of $350 million.
They include logistics support for overseas missions, as well as for IT security and the protection of people and property.
Business is also working closely with us on a number of crime-fighting innovations, to tackle crime growth areas such as high-tech crime.
Some of the major problem-areas for business in relation to high tech crime include denial of service - such as the recent extortion attempts involving Russian hackers who demanded large sums of money from business by threatening to paralyse their information systems - as well as viruses, worms and piracy and banking fraud.
We are currently working with the Australian Institute of Criminology to get an accurate figure on the true cost of all this to the national community each year, but estimates suggest it is in the billions.
The AFP-hosted Australian High Tech Crime Centre, now has more than 20 agencies on board - including representatives from the private sector - who are working to combat these crimes. Since the Centre opened in July 2003, it has experienced significant growth across all aspects of its operations.
Recently the Centre struck a landmark agreement with Australia's five major banks, as well as the Credit Union Services Corporation, the Australian Bankers Association, and companies such as Visa International and Mastercard, to form a banking and financial investigations team that will focus on arresting the growth in online banking frauds such as "phishing".
Industry is also assisting to combat the growing problem of identity fraud, which is now estimated to cost Australia between $1 billion and $4 billion annually.
Technological developments - such as skimming, scanners and the internet - have created a range of options for criminals to obtain or produce fraudulent identity documents that are high-quality, low cost and increasingly easy to access.
Our own AFP investigations have revealed the sale of complete identity packages - including drivers licenses, Medicare cards, passports and birth certificates.
In one recent investigation, an offender was found to have created over 50 fraudulent identities and was operating more than 30 bank accounts in false names!
These practices are increasingly being linked to organised crime and terrorist groups, and are very difficult for law enforcement authorities to track. They are resistant to many traditional policing approaches, with lines of inquiry often "leading to nowhere".
To help tackle the problem we've formed a special taskforce comprising expertise from 15 agencies, including the Australian Crime Commission, AUSTRAC, ASIO, the Department of Foreign Affairs and Trade, the Australian Customs Service, the NSW Crime Commission and the NSW Police Force.
Although the taskforce has been operational for just over a year, it has laid hundreds of charges and confirmed hundreds of false identities.
As the role between law enforcement and business increasingly overlaps, the AFP has developed a strong appreciation of the potential impacts of our decisions on commercial operations.
I have been meeting with business leaders to discuss this, including the negative collateral effects that can occur on other parts of the same business; or inadvertently advance the position of competitors - and in extreme cases, share prices.
While we must always uphold the law without fear or favour, police need to be aware of the potential impacts of the decisions that we make.
In recent times, we have also moved to implement mechanisms that improve transparency and accountability to our stakeholders.
These include regular client satisfaction surveys, international benchmarking of operations across a range of crime types as well as a series of cost-benefit analyses to measure the impact of our operations.
Looking at the return on investments from various AFP operations…fraud investigations are returning $6 for every $1 of taxpayers' funds invested; protection services are returning $4 for every $1; and AFP drug operations are returning over $5 to the community for every dollar spent.
And a new 'global' analysis of mainland AFP operations [14] is showing a return of $920.9 million to the community for every $315.1 million invested. This includes returns in areas such as drugs, fraud and proceeds of crime; but it is important to note that the figure does not include those AFP investigations which don't produce direct economic benefits but have significant social impacts - such as people smuggling, transnational sexual offences, intellectual property and environmental crime.
We are also working with the University of Queensland to develop a set of performance measures for our counter-terrorism operations and these are expected to be ready by the end of the year.
In relation to drugs, you may have heard that Australia has had considerable success by world standards in intercepting heroin and amphetamine importations over recent years.
In fact, the United Nations Drug Control Program has acknowledged that our heroin seizures had a significant impact on the heroin shortage that Australia experienced in 2001 and 2002.
The AFP, in partnership with the ANU, has done some groundbreaking research to show that intercepting the flow of heroin reduces its availability on the streets and leads to improved health and social outcomes.
Not only have we seen a substantial reduction in the number of heroin-related deaths, but the heroin shortage has been linked to a significant drop in crimes rates in some States. This has been felt particularly in relation to property crime.
From a business perspective, a report called Counting the Cost: Estimates of the Social Costs of Drug Abuse in Australia found the costs of lost productivity in Australia from illicit drugs, was in the vicinity of $990 million annually [15]. So these results could also have flow-on effects for business as well.
And finally, we are also working with industry to develop a national approach to stop precursor chemicals from being diverted for use in the manufacture of illicit drugs like amphetamines.
Conclusion
So, when we think about maintaining our security over the longer term, the importance of a strong and united front cannot be overstated.
A walk around crime scenes like Bali and Jakarta, serves as a powerful reminder that we must utilise all the preventative resources and defences at our disposal.
The devastation, the loss, the despair are too high a price for any community to pay.
But we are making significant strides here in Australia: new partnerships, greater cooperation and understanding, strong legislation and tighter security measures.
It is also important that we keep working hard to 'recognise different values and value the differences' in our community, so we can break down any social divisions that could potentially pose a threat to our security and way of life….It can be too easy to categorise groups and individuals, without fully understanding them.
Business has an important role to play in this process. By investing in partnerships - particularly with burgeoning economies such as China - we will not only help promote stability and prosperity over the long term, but deepen our understanding and appreciation of different cultures and beliefs.
When we see images like those that came out of Jakarta last week, it is easy to become despondent about what the future may hold.
But I believe we have much to be optimistic about. We should draw tremendous strength from the power of a united front and from the fact that everything we do today, will help make a better future for the generations to follow.
Thank you.
Footnotes
1. ABC News Online: Athens Security Spending Much Higher than Sydney, 14 July 2004.
2. Figure based on $US250,000 quoted by analysts in news report: Airline Industry Braces for Possible Impact of Terrorist Threats. Knight Ridder Press Agency. 3 Jan 2004. http://www.hotel-online.com/News/2004_Jan_03/k.BZF.1073324501.html
3. Claridge D: The Terrorism Threat to Trade and Commerce in Terrorism in the Asia-Pacific: threat and response. Edited by Rohan Gunaratna. Singapore. Eastern Universities Press. 2003.P50.
5. Jennings P: Terrorism and Australian Business - An ASPI Strategic Insight. Australian Strategic Policy Institute. P 1.
6. Yates A: Engineering a Safer Australia - Securing Critical Infrastructure and the Built Environment. Institution of Engineers, Australia, June 2003. P6
10. Borgu A: in Believe the terrorists: think tank by David McLennan. The Canberra Times, P4.
13. AFP Annual Report 2003-2004. P8.
14. McFadden M: AFP Economic and social goods 2003-04. AFP Research Note 8. September 2004.
15. Collins and Lapsley: Counting the Cost - Estimates of the Social Costs of Drug Abuse in Australia. 2002.