A former intelligence analyst says the practice of paying cash to people smugglers is a recent and unhelpful development.
The Abbott government is facing calls to clarify reports Australian officials paid $US30,000 to people smugglers to return to Indonesia.
Independent MP Andrew Wilkie, a former officer with the Office of National Assessments, said he was aware of Australian involvement in "disruption operations" over a decade ago.
But this largely involved sharing intelligence with Indonesian authorities and encouraging them to take action against people smugglers.
"What I saw was sensible and legal, and more about steering Indonesian intelligence towards the smugglers," Mr Wilkie told AAP on Tuesday.
"This practice of paying smugglers large sums of cash - that is a recent thing."
Mr Wilkie said it was also counter-productive, as it gave people smugglers a new source of cash flow and legitimised their activity.
"It does turn our security services into an ATM," he said.
"This is a humanitarian challenge first and foremost as well as a law and order challenge."
There are reports agents of the Australian Secret Intelligence Service could have been involved, without breaking the law.
"It's not an offence under Australian law for ASIS to break the domestic law of another country," Mr Wilkie said.
It is understood ASIS began its anti-people smuggling efforts in mid to late 2001.
ASIS chief Nick Warner confirmed in 2012 his agents had "contributed intelligence and expertise leading to many significant, and unheralded, successes ... which have disrupted people smuggling syndicates and their operations".
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