A royal commission led by Commissioner Virginia Bell into the Bondi terror attack is facing potential limitations on its scope due to the Albanese Labor government's assertion that certain cabinet decisions are confidential.

The inquiry may be blocked from examining whether the government directed intelligence agencies to reduce resources allocated to counter-terrorism in the years leading up to the attack that resulted in 15 deaths.This development raises concerns about the extent of the government's promised full cooperation with investigations into the incident.

The royal commission has confirmed that the confidentiality claim would impact not only public disclosure but also the commissioner's own deliberations on the matter.

Critics, including some opposition figures, argue this could hinder a thorough examination of national security decisions prior to the tragic event at Bondi.

The situation highlights ongoing tensions between maintaining cabinet confidentiality and ensuring transparency in inquiries following major security incidents.

As the commission continues its work, the outcome of this confidentiality dispute could significantly influence the depth of findings regarding pre-attack intelligence and funding priorities.

This case underscores broader debates in Australian politics about balancing security, accountability, and governmental transparency in the aftermath of terrorism.