Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Towards the end of World War II, and in the opening stages of the Cold War, Australia was seen by other nations as a high-value target for sourcing valuable intelligence. Despite having significant access to sensitive information from the US and Britain, our domestic intelligence services were inadequate, and there was initially no enthusiasm for reform under the Chifley government.

Only after being presented with evidence of information leaving Australia through the Soviet embassy did the government begin to think about serious reform. Highly classified decrypts of Soviet diplomatic traffic which had been intercepted by the Allied signals intelligence organisation, most notably from an operation known by the cryptonym Venona, led to an overhaul of Australia's security apparatus and the formation of ASIO, with the primary purpose of investigating the extent of Soviet espionage in Australia. The new organisation became a point of disagreement within the adminis­tration, chiefly from Dr. Evatt, who would later preside over the anti-Communist split that shattered the ALP for the best part of a generation.

In their book Breaking the Codes: Australia's KGB network, 1944-1950, Desmond Ball and David Homer from the ANU describe in great detail the nature of information leakages from Australia and the discovery of the KLOD spy ring that was supplying sensitive documents, including Allied postwar strategy documents, to the Soviet Union. The Venona decrypts were proof of the inadequacy of Australian arrangements to prevent such breaches, but due to their sensitivity not even Prime Minister Chifley was initially briefed on their contents. A gulf occurred between Australia and the United States in particular when intelligence cooperation was cut off due to the government's unwillingness to believe change was necessary until some members of the cabinet were informed about the compelling nature of the Venona evidence.

Espionage was encouraged by the Soviet Union in all of its affiliated parties across the world. In 1930, the executive committee of the Comintern in Moscow advised its member parties that 'legal forms of activity must be combined with systematic illegal work' and that 'all legal parties' should 'immediately undertake measures to establish an illegal apparatus'. Breaking the Codes provides an interesting insight into the individuals involved in such operations. I would like to provide an overview of some of the principal characters and the degree of access that foreign agents managed to achieve. The organisation of clandestine networks in Australia was primarily done through the Communist Party. In particular, Walter Clayton, an organiser for the CPA and a member of their Central Committee, was to become the Soviet spymaster for a ring of agents including within the Department of External Affairs, and became known to Moscow Centre by the codename KLOD. As the Cold War set in, the CPA re-established underground networks in case the party was to be banned again, as it was for a period in World War II. Clayton had significant responsibility for this organisation and even established a network of safe houses, with CPA members volunteering their properties for this purpose.

Clayton's first informants were members of the CPA, their friends and family. Much of the information gathered from party members would have been innocuous but provided Russian intelligence with a picture of potential recruits with access to the more useful information they sought. These party contacts included prominent and public communists such as Katharine Susannah Prichard, an author of some notoriety. Miles Franklin, a contemporary of Prichard, described her loyalty to Stalinist Russia as:

For Prichard, this achievement of communism in Australia meant unquestioned dedication to the Soviet Union.

These were the days of people who believed in fostering revolution and furthering the interests of a totalitarian state in preference to their own homeland.

Some members of the CPA held positions with significant access to sensitive material. Two agents in the KLOD spy ring were employees of the Department of External Affairs itself, and were also members of the Communist Party, although they were very secretive about it. Ian Milner, codenamed BUR, found Marxism as a Rhodes scholar at Oxford and is said to have believed that Russia was 'the one power whose foreign policy was capable of leading to a just world order'. Ball and Horner described him as the 'foremost member of the group in terms of the strategic importance of the documentary material he supplied'. He was a covert communist recruiter throughout his time in academia before joining External Affairs in 1944. In the post-hostilities planning division, Milner had access to all the files on Australian and British postwar strategy and he began passing information on to KLOD in September 1945. Documents requested by Moscow Centre were borrowed from the department and photographed in the Soviet residency.

Milner fled to Czechoslovakia in July 1950, most likely after hearing that the heat was on after the interrogation of fellow traitor Jim Hall by MI5 in London. Hill, for a while a dual card carrying ALP and CPA member, was introduced to External Affairs and the post-hostility planning division by Milner. He began providing information to KLOD in 1945, primarily official telegrams received from the British Foreign Office. Both Milner and Hill worked for a time in the United Nations mission, which would have been a source of similarly sensitive strategic and political material.

Another very well placed Soviet asset was Alfred Hughes, codenamed BEN, who was the chief investigator in the counterespionage section of the security service and specifically tasked with monitoring 'subversive associations and the operations of the Communist Party'. Hughes was in a position to actively inform Soviet intelligence of operations against their assets and deliberately mislead or thwart the flow of accurate information to Australian authorities. Hughes also had connections to what appears to have been another nest of Soviet agents—the office of Dr Evatt, who was then the Minister for External Affairs—where he is said to have been a frequent visitor. A number of staff members in Evatt's personal office were associated with the espionage efforts of the Soviet Union, including typist Frances Bernie, the only individual to confess to engaging in espionage. The role and motivation of Evatt in particular has been extensively studied, such as in Dr Andrew Campbell's article entitled Dr HV Evatt: the question of loyalty, which I recommend as further reading.

These are just some of the relationships that could be regarded as improper, and it is likely that some of them are extreme. Minister Evatt and his departmental secretary, John Burton, believed they were contributing to ideals of greater understanding through the sharing of information—termed 'open diplomacy'—and neither had any love for the security services. Evatt was the most strident opponent to the establishment of ASIO and it has been noted that most progress in establishing that agency occurred when he was out of the country. He also famously tipped off the author Prichard in person about the fact that she was a person of interest to the security services.

The split in the ALP during Evatt's time as leader was motivated in part by the scale of communist activity within the party, despite it being well known that many were dual members or swore loyalty to the Bolshevik revolution not Australia and its democracy. The ALP Anti-Communist Party, later to become the DLP, was to prevent Labor returning to power for decades.

This is but a brief overview of the success of Soviet spies that led Australia to recognise counterintelligence as necessary in preventing the unwanted and undue medd­ling of Stalinist Russia in its quest to under­mine its geopolitical rivals. It exemplifies the fact that Australian communists had significant loyalty to the Soviet Union and swore fealty to that state as the prime sponsor of revolutionary activity.

Communism as an ideology was a vehicle for encouraging 'entryism', the political tactic of infiltrating an organisation in order to turn it to another altogether different purpose, and throughout the Cold War the ALP was a destination for many such efforts. I suspect the Greens political party understand the concept of entryism all too well. Communism in the ALP took many decades to eradicate and only truly perished with the fall of the Berlin Wall. There are even former ministers in Labor governments who are confirmed or highly suspected to have been dual card holders of both the CPA and ALP right up until the 1980s. I will seek to speak in more detail about such personalities next week.