The Defence Department could hide the results of audits into billions of dollars in military spending by using the same excuse the federal government has in suppressing parts of a report into a $1.3 billion spend on armoured vehicles, an inquiry has heard.
In September, Auditor-General Grant Hehir released a redacted report on the government's purchase of 1100 Hawkei light protected vehicles, with large sections missing regarding whether the procurement of the vehicles from Thales Australia represented value for money.
After a request from Thales Australia, Attorney-General Christian Porter issued a certificate which suppressed the information both on national security and commercial interests grounds.
At a hearing on Wednesday, defence officials said national security was invoked to redact the section of the report because the Hawkei vehicles were considered a sovereign industrial capability.
Sovereign industrial capabilities are critical, government-controlled technology, skills and infrastructure.
The committee heard that the vehicles were one of ten Defence procurement projects to be classed as a sovereign industrial capability in April this year, meaning that similar grounds could be used to request a redaction on audit reports concerning Defence's biggest spending projects, including the $50 billion project to replace Australia's Collins Class submarines.
The Auditor-General said around half of his office's reports in the defence area covered projects classed as sovereign industrial capabilities.
The Joint Committee of Public Accounts and Audit deputy chairman, Labor's Julian Hill, said the evidence given by Defence showed the issuing of the certificate set a concerning precedent.
"The precedent that's been set by such an unexpectedly broad use of the power raises questions about the ability of the parliament and the media and the taxpayer to scrutinise tens of billions of future defence expenditure, including submarines and future ship building, because all of those are on the sovereign capability program, and the Auditor-General stated about half of their future work program relates to matters on that program," Mr Hill said.
"There’s no oversight or scrutiny if a government wanted to gag a value-for-money conclusion on the most expensive defence program ever and that's enormously concerning."
There was no question the Attorney-General had the power to issue such certificates, but whether he should have in this case was still in question, Mr Hill said.
"What this unexpectedly broad action has revealed is the lack of accountability and oversight and potential for serious misuse of this power in the future in relation to much larger expenditure."
The inquiry heard the Auditor-General had worked through national security concerns with Defence in the process of finalising the report, but that the department later raised the concerns after Thales had made its request for a certificate, after finding more sensitive information months later.
Since the certificate was issued, both Home Affairs and the Australian Criminal Intelligence Commission have signalled to the Auditor-General that they too could request redactions of sections of reports into their procurement projects.