Prime Minister Tony Abbott has warned Australia cannot let down its guard against homegrown terrorism or risk "truly sickening" acts of barbarity like those in Iraq playing out at home.
Mr Abbott discussed a proposed raft of new counter-terrorism laws with Islamic groups today as global outrage mounts over the beheading of American journalist James Foley in Iraq, saying the "hideous" act committed by an allegedly British terrorist highlighted the unique threat posed by homegrown jihadism.
"This is not just something that happens elsewhere," he told reporters in Melbourne. "It could happen in countries like Australia if we relax our vigilance against terrorism and potential terrorism here on our shores."
About 60 Australians are fighting with the Islamic State - the terrorist outfit responsible for Mr Foley's beheading - and other extremist groups in the Middle East. About 100 more are involved in support networks for these organisations, AAP reports.
Mr Abbott says Indonesian terrorist group Jemaah Islamiyah has sworn allegiance to the Islamic State, and that indicates the potential for increased terrorist activity in the region.
The terrorist network once sought to establish its own regional Islamic state, before proceeding to orchestrate attacks on Western targets including the Bali bombings in 2002 that killed 88 Australians.
The Australian government is gravely concerned about the risk these people pose if they return home trained in terrorism, and wants to spend $A600 million beefing up security, AAP reports.
It has also proposed new legislation to give security agencies greater powers to access telecommunication data and to detain and jail people working with terrorists overseas.
Islamic organisations worry that Muslims will be unfairly targeted, but Mr Abbott has stressed the laws are aimed at terrorists and won't single out one community group.
However, some Islamic groups boycotted a meeting with the prime minister in Melbourne, an act Mr Abbott called "petty" and foolish.
"You can hardly complain that people aren't talking to you then when you offer them a talk, say 'Sorry we're not coming'," he said.
Sydney's Muslim community will meet tomorrow to discuss alternatives to the anti-terror laws and fears they are being pushed into rubber-stamping the measures.
Labor leader Bill Shorten expressed support for the laws but said civil liberties and multicultural values must be protected. "We can't take our safety for granted," he told reporters.