The Times Australia
The Times World News

.

the PwC scandal should be ripe for the National Anti-Corruption Commission's attention

  • Written by Michelle Grattan, Professorial Fellow, University of Canberra
the PwC scandal should be ripe for the National Anti-Corruption Commission's attention

By coincidence, the furore around the consultancy firm PwC is raging just as the National Anti-Corruption Commission is gearing up for its start of business on July 1.

The PwC scandal, involving the use of confidential government information for financial gain, would seem an ideal probe for the NACC to cut its teeth on.

Despite this, Anthony Albanese sounded less than enthusiastic when asked by Greens leader Adam Bandt in question time this week whether he would make a referral. The police were already looking at the matter, the PM said, “so it’s gone well beyond the step that the member suggests”.

Regardless of whether the government (or anyone else) refers the matter, a decision on whether to look at PwC’s behaviour will be totally up to the NACC, which is headed by Paul Brereton (formerly of the Afghanistan war crimes inquiry). It’s an independent body and can undertake inquiries on its own initiative.

Meanwhile the Senate estimates hearings – which delve deeply into government processes – have already done a pretty good job laying bare the outrageous behaviour by the consultancy firm, although there are a lot more names to be made public.

At its heart, the PwC affair is simple, a stark example of improper behaviour by a firm taken into the government’s confidence. PwC was consulted by the Abbott government on its planned tax avoidance legislation and was privy to confidential information. It then used the knowledge obtained in discussions with Treasury to tell clients how to avoid the crackdown.

While what happened is simple, the questions arising from this egregious breach of confidentiality and ethics – which Treasury has referred to the Australian Federal Police – are less so. The affair has far-reaching and complex implications, obviously for PwC – the Australian arm of which is now on its knees – but also for government (including the public service) and how it relates to outside consultants.

In her open “mea culpa” letter this week, Kristin Stubbins, the acting chief executive of PwC Australia, listed three ways the company had “failed”. PwC had breached confidentiality, had poor governance, and had a culture at the time of “aggressive marketing” in its tax business that allowed inappropriate behaviour.

Read more: Word from The Hill: PwC scandal, McGowan quitting politics, PM's trip to Singapore and high inflation figure[1]

Obviously there is always the potential for conflict of interest for firms that, on one hand, consult with government and, on the other, advise clients who are dealing with the actions of government. The question some ask is: can this dual role be tenable in one firm?

On another front, what’s happened has underscored how dependent the federal government has become on outside consultants, particularly the “big four” consultancy firms.

PwC is like a giant octopus reaching into officialdom. As canvassed in the Senate hearings this week, it is an external auditor for the Treasury, and it also undertakes work for the Reserve Bank. It deals with a large slice of defence procurement.

Under the Morrison government, ministers such as Stuart Robert were always urging the use of outside consultancies, rather than the bureaucracy, to give advice or undertake reviews. And in ministerial appointments to various agencies and the like, people who’d worked in these firms were often favoured candidates.

Read more: PwC scandal shows consultants, like church officials, are best kept out of state affairs[2]

Notably, the Coalition has not shown great interest in pursuing the PwC affair. In contrast, Labor senator Deb O'Neill has been a bulldog in chasing material, and Greens senator Barbara Pocock has carried the issue for her party.

In opposition, Labor strongly condemned the Coalition government’s extensive contracting-out of work that public servants would once have done. In office, Labor is now cutting back on outsourcing and beefing up the bureaucracy.

Even so, the recourse to outside expertise can’t be avoided entirely. Some issues (including relating to taxation) require tapping into non-government specialists. So stronger belts and braces will still be needed.

The government already has some initiatives under way to strengthen protections. Treasury is working on what more might be needed.

Treasurer Jim Chalmers is particularly angered by the breach of faith, not least because of the importance he puts on consultations in developing policy. Such an approach is undermined by any risk of those consulted misusing their access.

While PwC is a totally black-and-white case, there can be shades of grey in the issue of access to confidential information and government thinking, which can give recipients an inside run, even when financial advantage isn’t involved.

Read more: Consultants like PwC are loyal to profit, not the public. Governments should cut back on using them[3]

To an extent, the fallout from the PwC affair will itself provide a degree of protection for the future. Whatever the outcome of the police inquiry, the huge reputational and financial damage to the firm will be a powerful deterrent to such behaviour by others.

PwC itself will have difficulty getting much fresh government work for the time being. Finance Department Secretary Jenny Wilkinson reminded the public service last week that ethical considerations must be taken into account in awarding contracts.

On Wednesday Reserve Bank Governor Philip Lowe told an estimates hearing the bank was not ditching present contracts with PwC, but would not enter into new contracts with it until it had made a “satisfactory response”, which included “complete transparency and accountability for those involved”.

So how far should the government go in punishing PwC? Once the present crisis has passed should there be a moratorium for a specified period on the use of the firm?

Simon Longstaff, director of The Ethics Centre, suggests a temporary moratorium on government contracts while the firm gets its house in order. This time in purgatory would be followed by a period in which the firm would have to demonstrate (according to an independent assessment) that its culture underpins a genuine commitment to the public interest as a condition of obtaining contracts. This special requirement would fall away once the basis for trust had been re-established.

Barbara Pocock wants the book and more thrown at PwC. She has urged a ban on any new government contracts being awarded to the firm until it has re-established trust – “which is likely to be quite some time” – plus the termination of any existing contracts where there is a conflict of interest.

Pocock also says the NACC should investigate the extent of involvement of PwC operatives and the roles and slow action of staff at the Australian Taxation Office, the Treasury and the Taxation Practitioners Board. This should be in addition to the police investigation.

Whether or not the NACC takes up the PwC case, what’s happened there reinforces the argument for the anti-corruption body.

Read more https://theconversation.com/grattan-on-friday-the-pwc-scandal-should-be-ripe-for-the-national-anti-corruption-commissions-attention-206867

Times Magazine

Understanding ITIL 4 and PRINCE2 Project Management Synergy

Key Highlights ITIL 4 focuses on IT service management, emphasising continual improvement and value creation through modern digital transformation approaches. PRINCE2 project management supports systematic planning and execution of projects wit...

What AI Adoption Means for the Future of Workplace Risk Management

Image by freepik As industrial operations become more complex and fast-paced, the risks faced by workers and employers alike continue to grow. Traditional safety models—reliant on manual oversight, reactive investigations, and standardised checklist...

From Beach Bops to Alpine Anthems: Your Sonos Survival Guide for a Long Weekend Escape

Alright, fellow adventurers and relaxation enthusiasts! So, you've packed your bags, charged your devices, and mentally prepared for that glorious King's Birthday long weekend. But hold on, are you really ready? Because a true long weekend warrior kn...

Effective Commercial Pest Control Solutions for a Safer Workplace

Keeping a workplace clean, safe, and free from pests is essential for maintaining productivity, protecting employee health, and upholding a company's reputation. Pests pose health risks, can cause structural damage, and can lead to serious legal an...

The Science Behind Reverse Osmosis and Why It Matters

What is reverse osmosis? Reverse osmosis (RO) is a water purification process that removes contaminants by forcing water through a semi-permeable membrane. This membrane allows only water molecules to pass through while blocking impurities such as...

Foodbank Queensland celebrates local hero for National Volunteer Week

Stephen Carey is a bit bananas.   He splits his time between his insurance broker business, caring for his young family, and volunteering for Foodbank Queensland one day a week. He’s even run the Bridge to Brisbane in a banana suit to raise mon...

The Times Features

Metal Roof Replacement Cost Per Square Metre in 2025: A Comprehensive Guide for Australian Homeowners

In recent years, the trend of installing metal roofs has surged across Australia. With their reputation for being both robust and visually appealing, it's easy to understand thei...

Why You’re Always Adjusting Your Bra — and What to Do Instead

Image by freepik It starts with a gentle tug, then a subtle shift, and before you know it, you're adjusting your bra again — in the middle of work, at dinner, even on the couch. I...

How to Tell If Your Eyes Are Working Harder Than They Should Be

Image by freepik Most of us take our vision for granted—until it starts to let us down. Whether it's squinting at your phone, rubbing your eyes at the end of the day, or feeling ...

Ways to Attract Tenants in a Competitive Rental Market

In the kind of rental market we’ve got now, standing out is half the battle. The other half? Actually getting someone to sign that lease. With interest rates doing backflips and ...

Top Tips for Finding the Ideal Block to Build Your Home

There’s something deeply personal and exciting about building your own home. You’re not just choosing paint colours or furniture, you’re creating a space that reflects your lifes...

The Home Buying Process Explained Step by Step

Buying a home is a thrilling milestone, but it can also feel like navigating a maze without a map. With paperwork, finances, and decisions at every turn, understanding the home-b...