While applauded by democratic countries such as the United States, the scheme contributed to the souring of relations between Australia and China, which felt targeted by the new regime.

The committee found that given the scheme’s “significant flaws”, it will require “substantial reform if it is to meet its original intent and justify the compliance burden and resources required to administer it”.

“Much of the evidence provided to the Committee in this review has argued that the Scheme’s operation has been constrained, its effectiveness has been limited, and its implications are inhibited transparency outcomes despite a high regulatory compliance burden,” the committee found.

Turnbull said last year that it was absurd former prime minister Kevin Rudd was required to declare his interviews with the BBC while no representatives of the Chinese Communist Party’s United Front Work Department had registered their activities.

Among 14 recommendations for reform, the committee called for the legislation to be updated to allow the secretary of the Attorney-General’s Department to register individuals who should be listed under the scheme but have not done so themselves.

The committee also called for the definition of “foreign principal” to be expanded to capture a wider range of companies and governance and management structures.

All current and potential exemptions to the scheme should be reviewed to ensure they are operating as intended and are not being exploited for the purpose of covert malign influence, the committee found.

Governments traditionally adopt the recommendations of the committee given its expertise on security matters and culture of bipartisanship.

A spokesman for Attorney-General Mark Dreyfus said the committee had “concluded there are significant flaws in the scheme and that substantial reform is required if it is to meet its original intent”.

“It is clear the scheme has failed and has not achieved what the Coalition said it would when it was introduced in 2018.

“The government will now carefully consider the PJCIS recommendations.”

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Committee chair Peter Khalil said: “The committee was satisfied that the scheme’s objective of shining a light on both legitimate and malign foreign influence activities in our society remains worthwhile and necessary.”

“Nevertheless, given the significant flaws in the scheme, the committee considers that substantial reform is required if the FITS is to meet its original intent and justify the compliance burden and resources required to administer it.”

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