Auditor-General Grant Hehir has labelled the suppression of his report on a $2 billion arms deal last year by the Attorney-General the most significant issue in his time in the job, and called for a review of the overarching legislation of his role in this parliamentary term.
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Mr Hehir said the suppression by Attorney-General Christian Porter of sections of his report into the Defence Department's procurement of Hawkei armoured vehicles from Thales Australia represented a serious risk to the independence of his office.
"The possibility that further work of the Auditor-General is subject to certification of this nature poses an ongoing risk to the work of the ANAO and the independence of the Auditor-General," Mr Hehir said in the agency's annual report.
Mr Hehir said the suppression was the most significant issue he'd dealt with in his time in office.
"It is the role of the Auditor-General to provide independent, accurate and complete information to the parliament to promote accountability and transparency in the public sector, particularly in areas of high materiality," Mr Hehir said.
"With the completion of its inquiry into this matter, the Joint Committee of Public Accounts and Audit listed a number of considerations to be taken into account during the next review of the Auditor-General Act 1997.
"With reviews historically taking place approximately every 10 years, it would be timely for a review of the Act to take place during the 46th Parliament."
The last review took place in 2010.
Under section 37 of the Auditor General Act, the Attorney-General can issue a certificate to suppress information in audit reports for reasons including endangering national security and negatively impacting commercial interests.
However the Thales case was the first time such a certificate has been issued in the 20-plus years since the legislation had been brought in.
A parliamentary inquiry discovered no national security information would have been published in the audit against the wishes of defence.
Instead, the suppression was ordered because of the alleged impact on "sovereign industrial capability" and commercial interests.
Thales had already been provided with extracts of the report relating to the company, had requested an injunction in the Federal Court and twice applied for information to be removed under this clause under section 37 of the Auditor General Act to protect its commercial interests.
Ultimately, the audit office could not determine whether the contract had been value for money because of the interference.
The audit office spent $223,000 on legal fees because of the case.
The saga is listed as one of the reasons why the audit office operated at a loss last financial year.
During their probe last year, the public accounts committee called for a similar inquiry for any future certificates issued.
