There are a number of issues in play in the revelation that Defence has been spying on its own minister. All bear teasing out.

The most minor is that an old Canberra saw bears repeating — don’t bag your own department, no matter how gratuitously it drops you in it. Fitzgibbon was right to be furious at Defence’s stuff-up of the SAS pay issue, but giving public vent to his fury — in Parliament, and to journalists — was unwise. Bureaucrats can always find ways to embarrass Ministers they’re unhappy with, and in Defence there are many more ways than anywhere else.

Second is that this is only the most glaring example of conflict between defence ministers and their department. In 1999, John Moore successfully demanded his Secretary, Paul Barrett, installed by the Howard Government, be sacked. Barrett’s replacement, Allan Hawke, also fell out of favour and his three-year contract wasn’t renewed, with Hawke sent to Wellington as a pre-retirement gig (Barrett had also been offered the Wellington post).

However, the surveillance of Fitzgibbon — including the highly-secretive and virtually unaccountable Defence Signals Directorate hacking into his computer and stealing confidential information — started well before the SAS pay debacle, and points to bureaucrats out of control.

This isn’t the first time Ministers have been investigated by their own portfolio agencies. In an unrelated incident last year, the Australian Crime Commission had to scramble to apologise to Bob Debus when it was revealed staff had been keeping highly personal notes on their contact with him.

It smacks of the sort of antics Australian security services got up to in the 1960s when they provided the Coalition Government with a steady stream of gossip — much of it untrue — to be used against Labor in Parliament. Intentional or not, it suggests a reluctance on the part of some intelligence and law enforcement officials to accept the legitimacy of an ALP Government.

And if the rationale for DSD investigating its own minister was his friendship with a Chinese-born businesswoman, there’s a double standard at work. On that basis, Defence intelligence officials should have investigated the relationship between the then-Government — including Defence Minister Brendan Nelson — and Andrew Peacock, Australian representative of Boeing. The Howard Government decided to spend $16b on the Joint Strike Fighter project without any of the normal defence procurement processes, astonishing many defence analysts and the Defence Department itself.

A foreign company and a personal relationship with direct implications for Australia’s national security and the safety of our ADF personnel — surely that was worth investigating if Fitzgibbon’s relationship with Helen Liu is? Perhaps Defence and the DSD did investigate it. But if they did, they never leaked it.

There’s also an assumption that if a businessperson has links with China, or has a Chinese background (Liu has both), that immediately raises questions about their propensity to influence politicians.

This time last year, Crikey pushed hard on the relationship between Kevin Rudd, Wayne Swan and other ALP figures, and Chinese businessman Ian Tang and Beijing Austchina. Rudd had developed a close relationship with the company as it paid for much of his travel to China as Opposition foreign affairs spokesman.

The issue then was what Tang and Beijing Austchina expected from Rudd and Swan in return, and what they got, which included direct access to the Prime Minister and Treasurer after the election. There were also questions about Beijing Austchina’s business practices and its links with the Chinese Government.

There do not appear to be any comparable issues raised by Fitzgibbon’s relationship with Liu.

However, Liu isn’t the only connection between Fitzgibbon and Chinese business interests. According to the Parliamentary Register of Pecuniary Interests, his wife Dianne Fitzgibbon has held shares in Golden Tiger Mining, an Australian company with extensive mineral and oil exploration interests in China, and Industrea, a Queensland mining services company with significant clients in China. There is no information to suggest Ms Liu has any relationship with these companies.

Commercial links between Australian investors and companies and China are to be encouraged. China is one of our largest trading partners and the last great hope for Australia to avoid a deep recession. But this is the first time that Australia’s key strategic threat has also been one of our closest economic partners. Apart from the occasional dodgy Russian tractor and wheat sales, our Cold War economic relationship with the Soviet Union was derisory. But judging by what has happened to Fitzgibbon, it appears our intelligence services are having some difficulty processing that dilemma, which is exacerbated by the fact that, for whatever reason, the ALP has been far better at cultivating a relationship with Chinese business interests than the Liberals, and benefited from donations accordingly.

And then there’s Fitzgibbon’s future. George Brandis — speaking outside his portfolio responsibilities — today called for Fitzgibbon to be sacked, not on the basis of any wrongdoing, but because his relationship with the Defence Department had clearly broken down. Brandis wasn’t in Parliament in 1999, but presumably he would have made a similar call for his fellow Queenslander John Moore to also be sacked in similar circumstances.

Punishing Fitzgibbon would be to reward out-of-control elements within Defence and demonstrate that a minister can in effect be driven from his own portfolio if elements within it decide to do so. It would send an appalling signal about civilian and political control of a key portfolio and major industry. Elements within Defence who persist in the view that they are not answerable to politicians need to be removed, simple as that. Whether it’s a Liberal, Labor or any other kind of politician, and no matter how ill-suited they may seem to be for the job, ministerial authority and respect for it is critical and must be maintained.

Nevertheless, Brandis has a point. Fitzgibbon’s relationship with Defence is unlikely to recover, and it couldn’t have come at a worse time after he has lost a very able deputy in Greg Combet, and now has to handle procurement himself. Not to mention the minor issue of the White Paper. Even so, who has authority, record of achievement and aggression to tackle the biggest portfolio?

Julia Gillard doesn’t have much to do these days…