The head of ASIO, Duncan Lewis, has signalled authorities are bracing for a heated political and community reaction to the return of Australians fighting with jihadist groups such as Islamic State, warning it will be a "polarising and a dividing" issue.
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Mr Lewis said on Tuesday night that he expected there would be fewer returnees than previously thought, even after the anticipated collapse of so-called IS caliphate in Syria and Iraq. Those who did return would present a security problem back in Australia but there were plans to manage their return, he said.
His remarks highlight that agencies are acutely aware that significant numbers of returns of foreign fighters will prompt questions about why they are accepted back into the country and what should be done with them once they are on home soil, especially if there is not sufficient evidence to prosecute them.
"Beyond the spectrum of public opinion, we can anticipate the effective and appropriate management of returning foreign fighters to be a polarising and a dividing issue in Australia," Mr Lewis told the Australian Strategic Policy Institute on Tuesday evening.
"We have plans in place - they are currently being executed - to accept the return of foreign fighters, but it will be a polarising matter."
There are now about 100 Australians fighting with IS and other Islamist extremist groups in Iraq and Syria. Mr Lewis said ASIO had "revised our expectations down" as to how many are expected to return home.
Mr Lewis, who was launching an ASPI collection of essays about the global terrorism landscape in 2017, said collapse of the IS "caliphate" would hasten an "exodus" of the terrorist group's fighters, as well as the women and children who make up their families.
The government has already made substantial changes to the law to tackle the problem of returning foreign fighters, including legislation to strip dual-national terrorists of their Australian citizenship and measures to make prosecutions easier. It has also created a new offence of entering a "declared area", including IS heartlands in the Middle East.
Attorney-General George Brandis told Fairfax Media that "it is likely that only a small number [of foreign fighters] may attempt to return to Australia".
"All returnees from the conflict zone will be assessed for the level of risk they present to the community," he said. "Any who are determined to have been fighting in the conflict, or to have been members of a terrorist organisation, will face the full extent of the law. As well, our agencies have robust powers of monitoring and surveillance to ensure community safety."
So far only one terrorist, the notorious Khaled Sharrouf, has been stripped of his citizenship, meaning he can never return to Australia. But Prime Minister Malcolm Turnbull is understood to have asked Immigration Minister Peter Dutton whether the law can be improved, based on lessons from its first use.
Mr Lewis said the dismantling of the caliphate - which is anticipated to happen this year - would not reduce the terror threat level in Australia.
"The threat domestically is not diminishing and this is of concern to me ??? The decline of ISIL in Syria and Iraq will not necessarily see the decline in Australia," he said, using an alternative acronym for the group.
Mr Lewis added that South-East Asia remained an area of concern for ASIO for terrorism.
Australian National University Indonesia expert Greg Fealy, who contributed a chapter to the ASPI report, said the threat in Indonesia was not as great as in the early 2000s when Jemaah Islamiyah carried out the Bali bombing.
But this would change if a large number of trained bomb-makers came back to Indonesia after fighting with IS in Syria or Iraq.
