Who said accounting is boring? Certainly not the green eyeshades at PricewaterhouseCoopers (PwC), who are having a very interesting week.
Late on Wednesday night, the federal Treasury announced it had referred PwC to the Australian Federal Police over the firm’s tax leaks scandal.
Treasury secretary Steven Kennedy put up a public statement explaining that PwC Australia’s former head of international tax, Peter Collins, “improperly used confidential Commonwealth information” and that “the Treasury has referred the matter to the Australian Federal Police to consider commencement of a criminal investigation”. Ouch.
That revelation in turn prompted observers to ask what sort of relationship PwC has with the Federal Police, given the AFP is now going to be investigating it. And… yes, the AFP is currently paying PwC for various services. According to publicly available tender data, the AFP has contracted the firm for millions of dollars’ worth of strategy, software… even auditing.
That then prompted Greens Senator David Shoebridge to ask Australian Federal Police Commissioner Reece Kershaw whether there might be any conflicts of interest there, given that his old colleague Mick Fuller now works for… yep, you guessed it, PwC. Kershaw had received a text from Fuller, he admitted. “He’s disappointed with what’s occurred, as in the conduct, not of him, of course, the firm.” Kershaw hadn’t put in a conflict of interest declaration about this.
That wasn’t the last bad news for PwC this week, though. We also learned from Finance Department secretary Jenny Wilkinson that she’d directed PwC to stand down any of its staff who might be involved in the tax leaks “from all existing and future contracts under the management advisory services panel”. PwC is also conducting its own investigation headed by Ziggy Switkowski.
It’s the latest low-light in a rolling scandal that has shaken the global accounting giant. The CEO of the Australian arm of PwC, Tom Seymour, has been forced to resign — it turns out he was named in the emails sent out to PwC colleagues by Collins — and the big bosses of the global firm are getting worried. The Australian franchise of the partnership initially covered up the gravity of the tax leak, with the breadth of the unauthorised disclosures only coming to light after an adverse finding from the Tax Practitioners Board was handed to Senate estimates.
While the imbroglio has chiefly embarrassed PwC, it’s also brought welcome attention to the role and ethics of professional services firms and consultancies. Policymakers and the general public are finally waking up to the scope of the influence of the big firms, which deliver more and more of the core functions and services of the Commonwealth government. It’s a bit like the famous scene in The Godfather when the delusional, defiant guy wakes up covered in blood from the severed horse’s head in his bed. We’re all soaking in it.
Consultancies and professional services firms ramify deep within the apparatus of the Australian state. A recent report by the Australian National Audit Office revealed that consultancy contracts were worth billions across the decade to 2022, with PwC taking home $424 million across 1135 contracts. The other big three — EY, Deloitte and KPMG — booked another $840 million. McKinsey and Boston Consulting also got in on the act. On a broader level, a recent audit by the Department of Finance found that outsourced labour cost the Commonwealth $20.8 billion last year — the equivalent of 53,900 full-time staff.
The use of consultants is now embedded in the infrastructure of government itself. This is a world of clubbish power, impunity, greed and an absence of boundaries. PwC’s tentacles are everywhere: for instance, Josh Frydenberg and Dan Andrews turned up to the 50th birthday party of Luke Sayers, Collins’ Australian boss at PwC at the time of the tax leak. Since exiting the firm, Sayers has gone out on his own, inking lucrative contracts as a solo consultant.
Professional services firms have moved well beyond providing management expertise or strategy tips. They now supply critical infrastructure that the Australian Public Service appears to be unable to deliver via public capacity. A good example is payroll. German software giant SAP provides much of the backend of the public service’s pay and HR systems, including payroll functions, “software as a service”, data analytics and basic IT.
No one seems to have asked why SAP should be running most of the Commonwealth’s pay functions. One reason is that the Big Four firms keep recommending it. Services Australia, for example, has issued a number of large contracts to the Big Four firms to support the federal government’s SAP-driven integration of its enterprise resource planning (GovERP) systems. The Digital Transformation Agency, supposedly on the cutting edge of Commonwealth technology provision, currently has a $117 million contract with SAP for plain vanilla “computer services”.
The love (you could call it “tender-ness”) goes round and round. SAP Australia has a knees-up that it calls its “partnership awards”, which are handed out to the major consultancies year after year. Deloitte won the grand SAP partnership award in 2022. Unsurprisingly, ex-Deloitte CEO Punit Renjen has succeeded SAP founder Hasso Plattner as the company’s chairman. Ironically, while SAP provides much of the tech stack underlying the Australian Taxation Office, SAP paid no company tax on $1.15 billion in revenue in 2020-21. Did PwC get a partnership prize from SAP? Oh, you bet it did.
The federal government’s massive consultancy bill, paid to a tight network of collaborating firms, tells us something important about the contemporary state: many of its most important functions have been outsourced, from the software to pay people to the running of offshore prisons. The outsourcing extends well beyond the nuts and bolts of the functioning of the public service, to the design of crucial policies and programs at the very heart of political programs.
The feds entrench this dominance by frequently asking the Big Four to review government policies and programs. Who could forget PwC’s $1 million payday for not submitting its “end-to-end” review of robodebt? Another example of how deep the rot has set in was in this week’s Senate estimates testimony, when Tanya Plibersek’s Environment Department admitted that the modelling it was relying on to design a new “biodiversity market” was done by none other than… PwC.
Australia’s reliance on professional services firms and global proprietary digital infrastructure carries with it significant risks. The APS appears hopelessly reliant on the Big Four and their tech partners for their supposed expertise embodied in a highly specialised shadow labour force.
As economists Mariana Mazzucato and Rosie Collington have recently argued, the dependency on the corporate sector to deliver core public services isn’t good for the public service, digital sovereignty, or democracy itself. A good start for Public Service Minister Katy Gallagher would be to adopt most of the recommendations of the “APS Inc” parliamentary inquiry, especially those that mandate direct public employment and greater consultancy transparency.
The PwC scandal is most likely just the start. The big consultancies are riven with conflicts of interest, and boast networks that reach the very top of Australia’s corporate and political elites. There are surely many more ethics bombs ticking in filing cabinets. Without wholesale reform, Gallagher risks pulling back the sheets to discover further unpleasant surprises.
Yes, the reliance on consultants is that bad. There have been warnings and scandals before with no consequences, and it will be a surprise if anything much changes this time, though change is desperately needed.
Several years ago there was a similar turning point in the UK after alarms were sounded about its government’s out-of-control spending and reliance on consultants. So the government contracted consultants to advise on reducing its dependency on consultants. Guess how that turned out?
Like when the US Army had to update its manual on how to deal with external contractors. They contracted the job out to an external contractor.
Oh goody! The AFP (aka the LFP Liberal Fed Pol) are investigating. Enough said. Nothing to see here. I’m not saying Labor is completely innocent with their wheeling and dealing but the interdependence between the Coalition and big businesses is detrimental to Australia’s democracy.
We have an Australian Public Service (admittedly it has been hollowed out over the years by governments) who are responsible for public administration, policy and services of the various departments of the Government of Australia. Why are we paying private companies to do the APS job? The billions of dollars of taxpayers money could be better spent on services that actually help Australians instead of big business.
I suspect the Higgins enquirey will only deepen suspicions of an improper relationship between the AFP and the Liberal/National Parties.
In much the same way that the LNP is the Political arm of He Who Must Not Be Named, the AFP handle the enforcement side………………..
Who to blame for the gutting of the Australian Public Service?
No Hercule Poirot required there…………………..
………….since 2013 Commonwealth annual spending on Consultants TRIPLED (to $1.2 billion)
………….since 2013 Commonwealth annual spending on Labour Hire DOUBLED (to $730 million)
…………..Public Service jobs were cut by 13,312.
Now what happened in 2013 I wonder?
One wonders what Joe Hockey and all the other “leaners”set up with the consulting firms after he became treasurer and then ambassador.
Agree, would rather this CONsultancy money go to middle income Australian wage earners in the public service than to the partners at the Big Four Profiteers and their tax-dodging pals in global mega-tech.
Incestuous relations writ large. Service standards from Centrelink have been severely degraded.
Slavery styled third party Contracting; mental and financial coercion under the freedom provided by The Social Services Act which permits discrimination.. Yep.. Human Rights Commission and a NEW commission detailing the individuals’ incidences of abuse; Job Services and its new labels blaming being unemployed on the victims and Lowe is calling for more so why the cruel “mutual” ( read not mutual) Obligations.. making older women work in aged care and domestic cleaning in strange homes forced into indenture angel care roles and the blood poorly delivered “Training”.. irrespective on ones’ prior educational credentials or working life and lived experiences… Nup all that collect is data and sell on that, they take autonomy and personal licence and dignity.. It is criminal
There were warnings about this sort of crap years and years ago.
But of course, a relative whisper of ‘stop drinking the koolaid’ was lost as people queued for a go on the neoliberal koolaid waterslide.
Even today, people like my boss will tell you with a straight face about the benefits of privatisation. I guess the inherent cynicism of knowing the price of everything and the value of nothing, together with the comfort of being squarely in the middle of the herd, is more rewarding to many than actually having a clue…
Imported modus operandi from the US, not necessarily the GOP, but their policy influencers via authoritarian ideology masquerading as libertarian or freed & liberty, from government, for hollowed out smaller govt., smaller budgets, lower taxes, fewer services, less democracy and transparency; clearing the way for top end of town policies.
US writer Thomas Franks wrote directly in ‘The Wrecking Crew’ (2008) Wiki:
‘argues that certain elements of the Republican Party intentionally dismantled the government by many means, including turning public policy into a private-sector feeding frenzy. Frank describes the state of the federal government of the United States as analogous to a large group of privatized pigs feeding at the public trough, which was brought on by the privatization schemes engineered by the Republicans.’
Yeah and remember that nong our Morrison’s ex finance minister ( when Morrison wasn’t moonlighting that month) said that he loved Margaret Thatcher.. Trickle down orthodoxy.. black and white … seeing one side of the economy without the whole society being of value in every sense of the meaning “Value” … Why import 1.5 immigrants lying saying we need “skilled workers” .. No we do not that is why our university sector is so popular with students from other lands as Australian have great educations and we do not need prima facie skilled workers for that reason alone.. Guess what it has everything to do with keeping wages low and housing high and great investment for their mates and their mates using unemployed as work for the dole in aged care and cleaning services.. Where are the manufacturing, smart jobs in government with requirements such as empathy, honesty, wide array of tertiary skills .. give us those jobs and we would be happy to work for gratis for 3 months if training was current and it was valuable in any objective way
And being a relative small economy Australian assets are vulnerable to sell off to the international investment consortiums fact it is happening and its on a ever increasing momentum out the door; To hear RBA confuse the causes of inflation with a flat myopic response such as its important to stop employment because we need to stop people buying food and housing to live!!! Failing on one of the other RBA role’s objective reason to exist… fail
“his old colleague Mick Fuller now works for… yep, you guessed it, PwC.”
Un-effing-believable.
Pull back the sheets … then look for cash hidden under the matress, rip up the carpets and check under the floorboards too – then evict ALL these thieving rent seekers from OUR parliament house.
And Morrison’s old next door neighbour and garbo.
NSW Commissioner of police that ‘didn’t need to interview’ either present federal Shadow treasurer, Angas Taylor or Clover Moore in regard to their ‘nothing to see here’ clearance of Taylor’s ‘interesting’ public interpretations of Moore’s Sydney council’s travel expenses?
See if you can follow his bouncing balls in his 4 Corners cameo re the Ruby Princess….
Is that where the Custom’s Officer, allowed a plague ship to dock in Circular Quay and gave it a clean bill of health and then allowed it to unload its infected hoards into Australia??
The inquiry did not interview either the Sydney Harbour pilot who boarded the ship in full PPE or the Harbour Master who was bullied into allowing the ship into Sydney Harbour or the Custom’s Officer who declared the ship disease free and allowed the passengers to disembark for parts unknown.
That bouncing ball.
And those phone calls – who knew what when…
MICK FULLER: So you’ve really got to go back to the 6th of March when the Federal government and endorsed by the New South Wales State government endorsed tighter on passenger ships coming into New South Wales waters and that was all about mandatory reporting of COVID-19 like symptoms.
People have symptoms and symptoms is coughing, temperature and flu-like symptoms, so I guess what it comes down to is if someone had the flu then from my perspective, based on the escalation of the Australian government and the State government, that should have been someone classified as having COVID-19 like symptoms.”…
ELISE WORTHINGTON: Just before 7 pm the ship’s port agent was dialing 000.
MICK FULLER: it was a seventeen minute 000 phone call from a Carnival employee to New South Wales Ambulance and they were trying to book two ambulance to take off two passengers who had both presented with upper respiratory issues and they both had secondary health issues, one to do with a heart issue and one to do with lower back.
ELISE WORTHINGTON: And did they report there was a risk the patients could have COVID 19?
MICK FULLER: Certainly, in that phone call that was obvious to me that they were concerned about that and personal protection equipment was mentioned, masks et cetera and symptoms, people with the flu.
So, there was certainly enough concern in that phone call that meant that the ambulance officer who took the call escalated to their supervisor because of their concerns.
ELISE WORTHINGTON: That Ambulance supervisor called the NSW Port Authority to warn that a ship was “coming in with some coronavirus patients on board”
ELISE WORTHINGTON: The Harbour Master emailed staff on duty, “under the circumstances we’ve now received from NSW Ambulance please deny the booking”
MICK FULLER: That then caused the port authority to have concerns with the Ruby Princess and actually asked them to stop their progression into Sydney Harbor….
ELISE WORTHINGTON: So, what does that say to you?
MICK FULLER: Well, it says to me a couple of things is that ,was there an honest response from the ship, whether that’s a captain, the doctor or the crew in relation to the health of the ship as it was coming into the port of Sydney?….
MICK FULLER: “So, I reviewed a number of 000 phone calls between the Port Authority, between New South Wales Ambulance, radio transmissions between the Port Authority and the ship, email transmission between the Port Authority and the ship.
What I was looking for was evidence around COVID 19 like symptoms on the ship that would have clearly rated the ship to a medium or high-risk classification.
At no time did I find COVID 19 like symptoms mentioned anywhere in any of the paperwork from Carnival or the Ruby Princess.”….
MICK FULLER: We’ve conducted two coronal searches of the ship which means police in full PPE have gone onto the ship to collect evidence
ELISE WORTHINGTON: The Police Commissioner directed the homicide squad to investigate.
MICK FULLER: We’ve taken the black box we’ve taken multiple mobile phones along with medical records.
MICK FULLER: I felt that there were unanswered questions that the death toll from the Ruby Princess was rising, not just in New South Wales but across Australia and the world.
So, for mine was there criminal negligence in relation to the way that this matter was handled, that contributed to the deaths of any of those people.
Two patients on-board, presenting with Covid symptoms (as Fuller detailed) – the ship communicating to authorities what was happening – wanting two ambulances kitted out – the ship was allowed to disembark passengers (while the Covid suspect patients were unloaded away from view) – Fuller reviewed “a number of phone calls” between players (who had already been deemed to have been talking in Covid), looking for “evidence”, to arrive at a classification, but found no mention in paperwork, later : but apparently there was little doubt, and a lot of concern, in those phone calls he spoke about, as it was happening?
Well most ex chiefs get a gig at the big 4 because they have contacts and no current chief will sign off until an ex from a big4 blesses it
Lovely little set-up
Apparently best practice according to the auditors
Take everyone involved or suspected of being involved passport.
The company providing technical support and hardware to the Tax Office pays no tax on a $1.15 billion profit. You couldn’t make this stuff up. Joseph Heller would be watching Catch 22 come to life.
It was actually revenue rather than profit but maybe not a great deal of difference between the two
Yes like the poor aged care homes amassing huge housing development stocks but putting the onus on running costs as separate or the Job Providers investments in their often 3rd party company owned but remove the corporate veil and due some due dilligence; Ok too hard then employ older women who have lost their jobs after 50 despite all their experience no one wants to employ ? Why? What are the big boys scared of?