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The announcement of the inquiry came as Labor pushed for a motion in parliament to scrutinise anti-terror laws in light of the rising threat of far-right extremism.
The home affairs minister, Peter Dutton, has included Islamic extremism in the terms of reference, arguing the inquiry should focus on extremist ideologies no matter where they come from.
Dutton asked the inquiry to look at the motivations, objectives and capacity for violence of extremists, as well as how they operate and spread their messages online.
Dr Debra Smith, a researcher at Victoria University focusing on violent political extremism, said the current counter-terrorism framework was developed in a period of a “different threat complex”, and it was time to rethink the government’s approach.