According to a Fairfax report quoting unnamed sources, the federal government could be planning to create a massive department similar to the United States Department of Homeland Security.
The report says the proposed mega-department would absorb Australia's domestic agency, the Australian Security Intelligence Organisation, the federal police and Australian Border Force among others.
The Prime Minister Malcolm Turnbull, who is in Indonesia on a state visit, has refused to comment.
"I'm not going to comment on that sort of, administrative, speculation about administrative arrangements."
Under the reported proposal ASIO would be moved from the Attorney-General's department and combined with other agencies under the Department of Immigration and Border Protection.
Several government ministers have joined the prime minister in describing the report as speculation.
But the idea has the support of Jim Molan, a former senior officer in the Australian Army who helped co-ordinate Coalition forces after the invasion of Iraq in 2003.
"It's a very logical thing. When you think of how the threat to all countries in the world, the terror threat to all countries in the world, has changed - the nature of it, the magnitude of it, the sophistication of it has changed. We should never take for granted that, although we're doing well now, we will always do well into the future."
The retired army general was also a Liberal senate candidate in last year's federal election, though he failed to win a seat.
Former Prime Minister Tony Abbott appointed him a special envoy on Operation Sovereign Borders.
Mr Molan says Australia has done well to avoid the large-scale terror attacks seen in the US and Europe, but warns against complacency.
"We've got a choice. We can either plan this well, implement it well, execute it well, with the smart people that we've got to do it. Or we can wait until we have the equivalent of our 9/11 as the Americans did."
The United States merged 22 agencies to create its Department of Homeland Security in the wake of the 9/11 attacks in 2001.
The objective was to improve the sharing of intelligence between all the different agencies.
But Labor MP Anne Aly questions whether there's any real problem with how Australia's agencies share their intelligence right now.
She says a new security mega-department would likely be more secretive, and less accountable.
"Well it certainly won't become more transparent. But that culture of opaqueness that we're currently seeing, and that we currently have, with Immigration and Border Control for example, as well as those other agencies that deal or have a remit in the counter-terrorism space, to me would be conglomerated, would be more concentrated."
Before she entered parliament, Dr Aly was a university professor specialising in counter-terrorism.
In 2015, she helped advise the US government on countering violent extremism.
She says the Rudd and Abbott governments considered the idea of restructuring federal agencies modelled on the US Department of Homeland Security, but neither ended up going through with it.
"A new big agency, similar to a Department of Homeland Security, would likely be less responsive and less agile because - think about it - big departments tend to be more bureaucracy."
The Abbott government's review of Australia's counter-terrorism machinery led to the establishment of the Office of the Counter Terrorism Co-ordinator.
That co-ordinator is meant to oversee the sharing of intelligence and data between the country's security agencies.
The Turnbull government is now conducting its own review.
Liberal senator Scott Ryan says the government will wait for that report to be handed down before it makes any changes.
"I'm not going to add to the speculation that's in this morning's press. I mean, the prime minister's commissioned a review. That review will come forward when it's complete. But it is important to emphasise to everyone how effective our security and intelligence arrangements are at the moment. Yes, it is a matter of constant vigilance, but we do have good cooperation."
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