The ability of the government to consult experts and stakeholders on draft legislation, sometimes on a confidential basis, is important to the practice of good governance. What PwC did wrecked this process.
The Greens are not always wrong. On what should happen to PwC, they’re absolutely right. Following revelations a PwC tax partner breached confidentiality agreements and shared information on the government’s legislative proposals to benefit the firm and its clients, Greens senator Barbara Pocock said PwC should be prohibited from government work.
Peter Collins, the partner involved, has been deregistered as a tax agent by the Tax Practitioners Board for two years. An appropriate punishment for PwC itself would be a ban on the firm receiving any federal government contract for at least three years. Over the past few years Labor has been all too willing to make an example of big corporates who have breached their “social licence to operate”.
PwC is now in the same category as the likes of Westpac (breaking anti-money laundering laws), AMP (charging dead people for financial advice), and Rio Tinto (blowing up a sacred site). And it wasn’t just a regular run-of-the-mill tax issue PwC was dealing with. It was the ALP’s bete noire – tax-minimising global corporations.
A year ago, Jim Chalmers as the shadow treasurer announced with great fanfare a Labor government would “ensure multinationals pay their fair share of tax” because Australians were “losing out on funds that should be available to vital services like Medicare, aged care and child care”.
The ability of the government to consult with experts and stakeholders on draft legislation, sometimes on a confidential basis, is important to the practice of good governance. What PwC did wrecked this process and will have repercussions for years.
If ever there was a case for throwing the book at a firm, this is it. So far, there are no signs of the Albanese government showing any inclination to do so.
As this newspaper reported earlier this year, on budget night next week PwC will host a $5000-a-head dinner for the Federal Labor Business Forum. As was also reported, PwC likewise held a $1500 dinner with ex-PwC employee Matt Kean before the NSW state election.
Last year financial year, PwC was paid more than $383 million by the federal government. Over the past two years it’s been paid $537 million. In laymen’s terms, that is more than half a billion dollars of taxpayers’ money. Last year, the total spend by the federal government on the big five consulting firms was just over $2 billion.
If politicians must serve a cooling-off period before taking another job after politics, a similar rule should apply to public servants.
Crony capitalism doesn’t do justice as a description of the government/consulting industrial complex successive Labor and Liberal governments have allowed to grow. (To be precise, it’s an intermeshing web of relationships created by bureaucrats themselves under the nose of their ministers to allow public servants to cycle their careers through the revolving door of departmental and then consulting work, and vice versa.)
The Community and Public Sector Union is not always wrong either. This week at a Senate inquiry scrutinising the government’s use of consulting services, the union’s assistant secretary, Michael Tull, was correct when he said replacing public servants with consultants had damaged the capability of the public service. The former public service commissioner, Andrew Podger, said consultants “tailor their work in order to ensure that they get future business”. If politicians must serve a cooling-off period before taking another job after politics, a similar rule should apply to public servants.
A speech by the then-CEO of PwC, Luke Sayers, to the National Press Club in 2014 is interesting in retrospect. Collins, his then fellow partner at PwC, signed his first confidentiality agreement with Treasury the previous year.
Sayers talked about how “morality and ethics needs to form part of the debate as tax laws are reviewed and changed”, and “we support the broad direction of the seven OECD actions [on multinational tax], particularly those that promote transparency and accountability in the global tax system”.
In 2016 after Donald Trump was elected US president, Sayers sent a letter to PwC’s 7000 Australian staff offering them counselling if they were concerned or upset by Trump’s victory.
In light of what we now know about what was then happening at PwC, maybe the firm’s bosses will reflect on how maybe they should have spent less time being woke and been more awake to issues closer to home.
This article was originally published in The Australian Financial Review on or about 4 May 2023 and was written by the author in their capacity as a contributor for that publication. It has been republished on the IPA website with permission. The views expressed are those of the author alone.