The public service kept secret details of contracts worth $30 billion in 2014 with most of it wrongly protected from scrutiny or "misreported", the Auditor-General has found.
The level of "inappropriate use" of confidentiality clauses by departments spending vast sums of taxpayers' money is growing, the auditors found, and public servants need to get tough with suppliers who try to cloak their deals with government in secrecy.
The auditors looked at more than 41,000 contracts reported to the Senate by four departments worth $216 billion and found $30 billion worth had information withheld due to "confidentiality clauses".
But in 80 per cent of those cases, the secrecy clauses were inappropriately applied or had been misreported.
The Audit Office found agencies using flimsy pretexts for keeping secrets, deploying phrases like "commercial-in-confidence" and "protection of Commonwealth material" which are both specifically excluded from the rules.
The auditors found few examples of public servants applying serious scrutiny to the demands for secrecy from their private sector suppliers.
While the use of secret clauses in contracts is declining, the instance of misreporting or inappropriate use of confidentiality clauses is growing, the auditors found.
"The results of this audit of the Senate Order indicate that there continues to be a high degree of inappropriate use and misreporting by entities of the types of confidentiality provisions and reasons for their use," the audit report states.
Departments are required to provide the Senate twice a year with lists and details of all contracts worth more than $100,000.
But the auditors looked at four departments, Finance, the Prime Minister, Social Services and Department of Veterans' Affairs and failed to find a single contract listing that fully complied with the Senate rules.
"For the four entities examined in detail by the ANAO, none of the contract listings fully complied with the Order's publishing requirements," the auditors' report noted.
Finance emerged as the most secretive outfit, reporting secret clauses in nearly 10 per cent of its contracts.
The Audit Office is concerned about the consequences for transparency of all the secrecy.
"Confidentiality provisions in government contracts can impede accountability and transparency in government purchasing," the report notes.
"Transparency in procurement activities is achieved through appropriate reporting of procurement activity, and the use of confidentiality provisions in contracts only where justified."
The office made three main recommendations urging departments and agencies to take a case-by-case approach to requests for secrecy and to establish new quality assurance procedures for their reports to the Senate.
The ANAO also wants the Finance Department to issue revised guidelines for agencies to follow before they try to impose confidentiality clauses on their deals with suppliers.
In its response to the audit, Finance said it would work to have its bureaucrats make greater use of the "confidentiality test" a checklist they are supposed to apply when contractors or suppliers are pushing for secret clauses.
"The confidentiality test plays an important role in assisting entities in complying with the Senate Order," Finance wrote in its official response.
"In addition, Finance supports entities implementing case-by-case assessments of claims of confidentiality and documenting reasons."
Both DSS and Veterans Affairs said they had already introduced new quality assurance measures into its procurement systems to better control the use of confidentiality in contracts.