As has been noted by the Australasian Council of Auditors-General, where confidentiality clauses do exist, they do not override legislative provisions that require information to be included, and they do not themselves limit the capacity of the Auditor-General to report to Parliament, where that capacity is protected by legislation.182 Further, it is the duty of Auditors-General to advise Parliament on those matters that have been identified in the audit process about which Parliament should know that. That duty, more than any other, distinguishes the public sector audit from its private sector equivalent.183
However, as is the case with parliaments, despite the legislative access and reporting powers that may exist, it appears prudent for audit institutions to be sensitive to the need to respect the confidentiality of genuinely sensitive commercial information. In March 2000, the Victorian Public Accounts and Estimates Committee concluded an inquiry into commercial-in-confidence material and the public interest.184 That inquiry arose because the Victorian Auditor-General had brought to the attention of the Parliament that commercial confidentiality had become an issue of some contention between government agencies and his office. Agencies claimed that some information the Auditor-General wished to include in his reports to the Parliament was commercial-in-confidence and therefore could not be published. This issue had arisen, for example, in the context of a May 1999 performance audit on Victoria's prison system, including the introduction of privately-operated prisons. The Committee reported that:
This presented a number of difficulties for the Auditor-General because he then had to decide whether these claims were legitimate and, more importantly, whether or not disclosure of such material was in the public interest.185
Legislation precludes publication by the Commonwealth Auditor-General of information that, if disclosed, would, among other things, be contrary to the public interest for reasons including unfair prejudicing of commercial interests of any body or person. Those reasons are more fully described in section 37 of the Auditor-General Act 1997.186 The ANAO has found that, almost without exception, audit reports can explore the relevant issues without disclosing commercially sensitive information. In this way, the Parliament can be confident it is informed of the substance of issues which impact on public administration. It is then up to the Parliament to decide the extent to which it requires additional information for its own purposes.
The message here is that external scrutiny (whether by Parliamentary Committees or Auditors-General) is an essential element in ensuring that public accountability is not eroded, by default, through the increased involvement of the private sector through arrangements such as PPPs. Just as it is incumbent upon public sector agencies to ensure they have a sound understanding of the commercial nature of any contract, private sector entities need to recognise that public accountability may require actions on their part not usually required in commercial dealings. Handled properly, this need not deter private sector participation.
The Senate Finance and Public Administration References Committee has reported that it believes that public accountability should be seen as a condition of doing business with government, observing that:
If this is applied consistently, all contractors will face the same demands for openness, that is, there will be a level playing field.187