Government contractor Thales applied to the attorney-general to have information removed from an auditor-general's report that was critical of a $1 billion deal it had with the Defence department.
Last month Auditor-General Grant Hehir published his analysis of Defence's procurement of Hawkei light protected vehicles, with sections of the report redacted due to a certificate issued by Attorney-General Christian Porter.
The sections were redacted under a clause in the Auditor-General Act which could block publication of information that would prejudice security, defence or international relations, or would "unfairly prejudice the commercial interests of any body or person".
In a submission to a parliamentary inquiry into the issuing of the certificate, the Attorney-General's department revealed the contractor made the request to redact parts of the report on January 5 this year, claiming that the company's commercial interests would be unfairly impacted.
The certificate blocking the publication of parts of the report was the first ever to be issued under the act, although the Attorney-General's Department said a similar certificate was issued in 1987 under previous legislation.
The company, whose contract with Defence for the vehicles is worth more than $1 billion, also started proceedings on January 29 against the auditor-general in the Federal Court, which granted a temporary order to prohibit the publication of some information in the report. The case was eventually dismissed in July with consent from both parties.
Mr Hehir said the certificate process, which took more than six months, lacked transparency and had been used not to prevent particular information being published, but to suppress his analysis and part of his audit opinion.
"The certificate went further and required the auditor‐general to omit analysis by the ANAO [Australian National Audit Office] and part of the auditor‐general’s audit conclusion relating to the audit objective, which was to assess the effectiveness and value for money of this acquisition," the auditor-general said in his submission.
It was also unclear how the information omitted from the report related to security, defence or international relations of the Commonwealth, the auditor-general said, explaining how the audit office had worked through the report with Defence regarding sensitive information.
"The certificate creates uncertainty in all future audits of Defence acquisition and sustainment – which represent a major portion of the ANAO’s annual audit effort in the Defence portfolio – and potentially other audits of government acquisition."
The parliamentary committee was warned about the prospect of the incident setting a precedent.
"It would be of concern if this certificate set a precedent for government to regularly suppress elements of an auditor‐general’s conclusion and [Australian National Audit Office] analysis in a public report, particularly where the conclusion and analysis contain information that is not otherwise protected from public disclosure," the auditor-general said.
It could also set a precedent that would restrict independent examination of government spending, " by limiting the auditor‐general’s independent and public reporting to the parliament on the procurement and sustainment activities of Commonwealth entities, particularly but not solely in the defence context".
The auditor-general, and representatives from the Attorney-General's and Defence departments will front a committee hearing on the matter on Friday morning.