Parliamentarians are pushing for a legal review to buttress the independence of the Auditor-General following an unprecedented exercise of powers by Attorney-General Christian Porter.
Key members of the Parliament's Joint Committee of Public Accounts and Audit Committee are urging the Auditor-General Act 1997 be reviewed after Mr Porter used a provision regarding sensitive information to force the Australian National Audit Office to censor the findings of its investigation into a $1.3 billion defence contract.
Committee deputy chair, Labor MP Julian Hill, and committee member Senator Rex Patrick, said the Attorney-General use of section 37 of the Act to prevent the ANAO from publishing its conclusions was concerning and warranted a review of the legislation.
"That was the first time ever that any government in the history of the Commonwealth had gagged the Auditor-General to prevent him from expressing his conclusions about the value for money of a government contract, and the government has never adequately explained itself," Mr Hill said.
Auditor-General Grant Hehir first sounded the alarm in 2018 after Mr Porter issued a section 37 certificate directing information in an audit of the Thales contract to build more than 1000 light combat vehicles be omitted from the final report, including its conclusions.
Mr Hehir said the Attorney-General's "unexpectedly broad" interpretation of his powers posed an "ongoing risk" to his independence and the work of the Australian National Audit Office.
The audit's aim was to assess the contract's effectiveness and value for money.
A parliamentary inquiry found the audit did not disclose any classified national security information but Thales Australia launched legal action to have the report blocked. When that failed, the company asked the Attorney-General to intervene, Senator Patrick said.
The Attorney-General based his intervention on the grounds that sections of the report would affect "sovereign industrial capability".
But the Auditor-General told the inquiry that, "the work undertaken in this audit wasn't unusual ... nor were the conclusions drawn from it".
Senator Patrick said Mr Porter had "exercised his power improperly".
The Centre Alliance senator is embroiled in legal action to obtain a copy of the full audit report, which was submitted to the Prime Minister's office.
He is also planning to subpoena Mr Porter to appear in court to explain his reasons for forcing the Auditor-General to censor his findings.
The push to review the Auditor-General Act comes amid heightened attention on the role of the ANAO after it published an explosive report detailing political bias in the allocation of grants to sports clubs in the lead-up to the last election.
The government has claimed that all projects awarded grants were eligible for funding.
It commissioned a report from Department of Prime Minister and Cabinet secretary Phil Gaetjens, who backed the claim, contradicting the Auditor-General's findings.
But at a Senate committee hearing last Thursday, senior ANAO official Brian Boyd refused to back down and said the audit found 43 per cent of projects awarded grants were ineligible by the time funding agreements were signed.
Mr Hill said he believed the Auditor-General Act would be examined by the Public Accounts committee later this year.
"I think it's time that we reviewed the Act to ensure that the Auditor-General has the power that is needed to undertake independent audits," he said.
"In an era of declining trust in institutions and politicians the Auditor-General's role is more important than ever. His power and resources to scrutinise executive government without fear or favour are critical."