Prime Minister Tony Abbott has flagged shifting the balance between upholding individual rights and ensuring community protection following a report into the Sydney cafe siege.
The report found the interactions of various government agencies with Sydney siege gunman Man Haron Monis were reasonable and at no point did he indicate he had the intention to commit a terrorist attack.
Bodies such as ASIO, immigration, police and Centrelink had repeatedly assessed that at no stage was Monis a danger to himself or the community, the prime minister told reporters in Sydney.
"Plainly, in their totality, the system has let us down," Mr Abbott said.
Hostages Tori Johnson and Katrina Dawson died when the 17-hour siege came to an end at the Lindt cafe in Sydney's Martin Place on December 16.
Mr Abbott and NSW Premier Mike Baird released the joint federal-NSW inquiry report on Sunday along with 17 recommendations for tougher immigration, bail and gun laws.
One of its main recommendations was to cross-check bail applications with the accused person's links with terrorist organisations or violent extremism.
Federal Opposition Leader Bill Shorten said it was not beyond the Australian parliament to get the balance right.
Questions remain about why Monis was out on bail at the time of the siege, despite facing accessory to murder charges and 40 sexual and indecent assault charges and why he was granted political asylum after fleeing Iran in 1996.
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