The gunman identified as Yacqub Khayre was shot dead yesterday following a stand-off with police which lasted for more than an hour at serviced apartments on Bay Street in Brighton, 11km south-east of Melbourne's central business district.
Critical operations police then arrived and took control of the scene as Yacqub Khayre, 29, held a female escort hostage inside an apartment.
Malcolm Turnbull questioned how the man with links to terror, was out on parole before killing one man and injuring three police officers while holding a woman hostage.
"(If) parole decisions need to be made for someone on a terrorist watch list, we want the experts in our national security agencies to be directly involved in the decision making process", Mr Andrews said in a statement.
Meanwhile the police are still investigating IS's claims of the terror attack and are also trying to find out whether Khayre acted alone or had accomplices.
Khayre's home in the Melbourne suburb of Roxburgh Park, where he lived with his mother, was being searched by police on Tuesday.
The Islamic State (ISIS) terror group claimed responsibility for the violent incident.
He had previously been accused of involvement in a 2009 terror plot to attack an Australian army base, and although he was acquitted of those charges, three of his associates were jailed for 18 years.
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Victoria Police Chief Comissioner Graham Ashton says police did an "outstanding job" and he has confidence in the way they handled the situation.
"I think the public are entitled to expect that people who present that level of danger to the public, and who have a terrorism background, there should be a presumption against bail or parole except in a very clear case", Senator Brandis said.
Mr Andrews said he has received advice from Victoria Police that there are 20 Victorians now part of a deradicalisation program, including people who have served their sentences but are not on parole, some who never went to prison and some that are now behind bars.
ISIS claimed responsibility for the attack.
She was unharmed and he was killed in a shootout with police after he burst out of the building.
"He appears to (have been) in the wrong place at the wrong time", Comm Ashton said. Three people were convicted of conspiracy for that plot, which police thwarted before it could be executed.
Victoria Police Assistant Commissioner Andrew Crisp said police were also probing reports of a phone call made to the Channel 7 newsroom by someone referring to the Islamic State.
The prime minister described Monday's attack, which left Khayre dead, as a shocking and cowardly crime.
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