For the first time in its 47-year history, Australia’s Office of National Intelligence (ONI, previously Office of National Assessments [ONA]) is led by a woman: Kathy Klugman, senior diplomat and prime-ministerial adviser. Today’s deteriorating strategic environment means Klugman and ONI face significant challenges but also important opportunities. But responding effectively will require a boldness for which ONI/ONA is not renowned.

Klugman’s appointment was not uncontroversial, given her closeness to Prime Minister Anthony Albanese. But that’s unreasonable. Her predecessor Andrew Shearer, now ambassador-designate to Tokyo, was similarly close to the government that appointed him. In fact, in addition to Shearer, who worked for John Howard and Tony Abbott, several former ONA heads were senior advisers to prime ministers. These include Nick Warner (Howard), Peter Varghese (Howard), Alan Gyngell (Paul Keating) and Richard Maude (Julia Gillard). Klugman’s limited experience in intelligence is also not unusual. It’s akin to most of the recent directors-general, excepting Warner, who led the Australian Secret Intelligence Service for almost a decade.

Since its reinvention as ONI in 2018, the agency has had successes, not least in drawing together an otherwise disparate 10-agency national intelligence community (NIC) on innovation and technology issues. But even after seven years, ONI’s still trying to find its feet as the NIC’s leader, without all the tools (especially budget levers) recommended in the 2017 review that gave it life. ONI also remains subject to the gravitational pull of its role as provider of intelligence assessments directly to the prime minister, a critical function that nonetheless continuously draws it away from other responsibilities.

As Klugman begins her five-year term, what are the most important and pressing challenges and opportunities that ONI faces?

First, some context. Roughly speaking, ONI’s responsibilities are all-source intelligence assessment, open-source intelligence production and capability, and leadership of the NIC. The latter responsibility is broad: the NIC agencies span collection, analysis and effects functions; technical and human sources; and foreign, security, law enforcement, border and financial intelligence domains. So, the following priorities are ONI’s, not necessarily the NIC’s, or indeed those of intelligence globally. To note a single example, the continuing unfinished business of electronic surveillance law reform is vital but chiefly a task for the Department of Home Affairs.

In the leadership context, the priority issues facing ONI are:

1. Implementation of the Independent Intelligence Review (IIR). In Shearer’s statement on the IIR’s release, he said ONI would ‘drive initial implementation of key priorities identified in the review’ and ‘continue to ensure the NIC maintains its high performance, including on economic security, crisis warning and preparedness, and open-source intelligence.’ But since release, implementation has disappeared behind the Department of the Prime Minister and Cabinet’s closed doors. There’s an important role for ONI in building confidence externally that the IIR isn’t a dead-letter and that the challenges it presents—including how to fund national security technology development and incorporate economic security into intelligence work—are addressed effectively.
2. The effect on the NIC of the Bondi atrocity. The worst-ever terrorist attack on Australian soil has sparked a royal commission and independent review of NIC actions, while also raising questions around how security intelligence is governed within the NIC construct. Perhaps most significantly for ONI, an understandable elevation of counterterrorism efforts will exacerbate the existing challenge of strategic priority setting.
3. Reinvention of the interface between intelligence and policy. This was a central theme of the 2024 IIR and is critical to converting a ‘national intelligence community’ into ‘national intelligence power’ that informs, warns and empowers Australian decision-making and strategy at home and abroad. This task is made even harder by the lack of a national security adviser position in the Australian government—a position that is common in other countries. But it is a task in which ONI’s often-overlooked role in leading evaluation of NIC efforts to meet customer requirements can play an important part.
4. The need to marshal intelligence for action. This includes fostering NIC preparedness for future conflict (including deterrence) and emulating an ability to publicly use intelligence for effect, as in allied attempts to deter Russia’s invasion of Ukraine.
5. Limited leadership levers, especially to drive collective capability development, in a system still fundamentally shaped by portfolios. But this will require a new and nuanced level of assertiveness by ONI and recognition that sometimes the software of culture and leadership is more important than bureaucratic hardware.

Internally, ONI needs to:

6. Deal with ongoing US intelligence community dysfunction, specifically as it affects intelligence assessment sharing across the Five Eyes (the intelligence grouping comprising Australia, the United States, Britain, Canada and New Zealand). Sharing has been a long-standing alliance strength, with frank and credible views exchanged and incorporated, but is under question as the Trump administration publicly asserts control over the content of assessments emerging from US agencies and analysts.
7. Determine open-source intelligence’s future direction. The IIR endorsed the current federated model under ONI leadership but called for a second look by the next IIR. In the meantime, ONI needs to lead an integrated community of practice, within the strictures of an intelligence agency environment (complicating open-source work) and with burgeoning interest in autonomous OSINT functions across government, including outside the NIC.
8. Constantly compete for policymakers’ attention and precious time, including politicians and staff already drowning in information. The NIC (and ONI in particular) will need to determine how it can stay relevant and impactful.
9. Deal with the still-developing effects of AI on future analysis and production, as well as the consumption preferences of intelligence customers.
10. Embrace the director-general of ONI’s role as communicator. This will involve determining the right balance between transparency and secrecy while building and sustaining social licence, especially with a government notorious for prioritising message discipline over contestability.

Klugman can bring strengths to these challenges and opportunities. Her relationship with the prime minister, for example, is an especially firm foundation for efforts to reinvent the policy-intelligence interface across government agencies. She also brings fresh perspectives to old problems. But grasping the opportunity for a more front-footed leadership of the NIC will likely require a boldness not typical of ONI/ONA. Here’s hoping Klugman helps ONI embrace that change.