Ali Khalif Shire Ali told a forum that ASIO attempted to recruit him because they suspected he knew Farhad Jabar, the 15-year-old boy who shot dead a police employee in Parramatta, and other extremists.

The 'Innocent Until Proven Muslim' forum was held in Melbourne on November 14, 2015 - six weeks after Jabar killed Curtis Cheng.

Mr Ali, who told the forum his name was Ali Shire, and was 18 at the time, said the intelligence agency first approached him at home when his parents were out.

He said they were persistent, organising a meeting at the Werribee Nando's, and constantly calling him, including while he was at class at Swinburne University.

Once, he said he was ignoring an agent's phone calls while waiting for a train, when he received a text message, telling him to look to his left. The agent was standing further along the platform.

"I thought I was in 007, some movie," he said.

"He's like Ali, we know you're a good guy, trying to get me on their side, and we know you've got knowledge of things that are happening.

"We want you to go out in the community."

Eventually they offered to pay him $200 for every meeting, he claimed, after he told them to "get lost".

He said had spoken to a lawyer by this point, after he had told his sister what had gone on.

After he continued to ignore their approaches, the agent told him they would stop "harassing" him, Mr Ali said.

A woman who states that she is Mr Ali's sister also speaks on the video, but cannot be seen as she is listening from a separate room.

The forum had been organised by Government Intervention in the Muslim Community.

Mr Ali, 20, lives with his parents and silbings in Werribee and for at least the last three months had been doing work experience at a computer store in Footscray.

A neighbour said he was part of a "beautiful family".

His father Khalif tirelessly drove a taxi so that Mr Ali and his brothers and sister could get a private education and move from their commission house.

Khalif Ali had hoped his son would eventually return to university and find work in the computer industry.

But Mr Ali was arrested by heavily armed police on the footpath of Synnot Street not far from his home, in front of shocked bystanders on Monday afternoon.

He was charged with terrorism offences 24 hours later and faced Melbourne Magistrates Court where he was remanded in custody.

Police allege he was plotting to shoot and kill as many people as he could at Melbourne's Federation Square on New Year's Eve and had tried to buy an automatic rifle to carry out the attack.

Victoria Police deputy commissioner Shane Patton said the man, an Australian-born Muslim with Somali parents, tried to buy an automatic firearm through "face to face interactions" but was ultimately unsuccessful.

"The potential of the attack is catastrophic. This is a person who has expressed an intention to try and kill as many people as he could. It's horrendous," Mr Patton said on Tuesday.

He said police had been monitoring Mr Ali since the beginning of the year and it was an accumulation of evidence that prompted his dramatic arrest.

"The meetings where he's requested and tried to source and obtain a firearm are exactly why we arrested him [on Monday]," Mr Patton said.

Mr Ali was allegedly in possession of an al-Qaeda guidebook, although police describe him as a sympathiser with rival terror group Islamic State.

With Mr Ali in custody on Tuesday, police searched his family's home and seized several items, including a large framed picture.

Khalif Ali spoke briefly to reporters outside and denied his son would have harmed anyone.

"He's very innocent," he said.