Jihadists returning from fighting alongside terrorists overseas are committed to trying to strike on home soil and Attorney-General George Brandis says its ''delusional'' to think otherwise.
Senator Brandis wants to boost the powers of spy agencies to deal with what he says is the growing threat of "home-grown terrorism".
"Anyone who thinks there aren't people in the West, including in Australia, who are committed to this course of action I'm afraid is delusional," Senator Brandis told ABC News Radio.
"It's a really insidious threat which often cannot be properly dealt with without the collection of intelligence, I'm afraid that's the reality of the world in which we live," he said.
Senator Brandis argues the Liberals are the best placed political side to introduce such powers because they are naturally on the side of the individual and not the state.
There has been intense focus in recent days on two Sydney men who have fought alongside terrorists in Iraq and Syria.
Arrest warrants have been issued for Khaled Sharrouf and Mohamed Elomar who have posted images on social media that appear to show them posing with decapitated heads and standing over bloodied bodies.
Up to 60 Australian nationals may be fighting overseas in similar circumstances, according to ASIO, and the Attorney-General says authorities know of "a number of individuals" who have returned home "intent on prosecuting jihad domestically".
He said under the current laws, it's difficult to prove alleged crimes carried out overseas and flagged possible changes to the laws that define terrorism, to make it illegal to promote a terror act.
Another proposal "under active consideration" by cabinet is a plan to store logs of a person's internet and telephone activity, including the time, location, sender and receiver and possibly specific internet addresses accessed.
The communications alliance has warned the impost could cost the industry $500 million to $700 million dollars.
Opposition Leader Bill Shorten says he supports the boosting of national security powers but says customers should not have to pay an "internet tax".
"I am concerned if after we have got a GP tax, after we have got a petrol tax that we get an internet tax," he said, adding it would constitute a "trifecta" of new taxes from the Coalition which promised no new taxes before the election.
