Yes, I think the principle is very sound. Obviously there are occasions when the state needs make investigations in the background to which it would not be appropriate to alert the citizen, such as cases of fraud or crime, but as a general principle I think it's right.
That's partly why I like the Estonian system. Estonian citizens can see which departments and officials have been accessing their records, and if they feel that wasn't appropriate, they can request an explanation as to why their records have been accessed by either a particular official or by a government department. I certainly believe that would be a very good way to go.