Over a ten-year period, the main four consulting firms boosted their federal business by 400% while steadily making donations to the major political parties that have a significant impact on key government project choices.
According to a recent analysis of the major consulting firms, PwC is currently the largest donor of the group, contributing $2.1 million to federal political parties between July 2012 and June 2022. When KPMG ($1.1 million), EY ($565,000), and Deloitte ($572,000) are included in the total, their combined donations have totalled $4.3 million over a ten-year period.
The disclosures come as senators were ready to question government officials this week about their employment of PwC following allegations in January that the firm exploited private material from its Treasury consultations to help customers lessen the impact of impending tax changes.
According to research by the Centre for Public Integrity, the overall contract value increased from $282 million a decade ago to $1.4 billion last fiscal year, sparking controversy over the size of the public business given to the big four.
The Department of Defense accounts for about half of the total value of PwC’s current contracts with federal ministries and agencies, according to a separate investigation by the Parliamentary Library that was commissioned by the Greens.
According to Greens Senator David Shoebridge, the contracts likely contained confidentiality clauses, but experience demonstrated that PwC failed to safeguard Australian secrets.
“There needs to be an urgent review of what Defence information PwC has access to, if that information is secure, and what can be done to terminate these contracts in the national interest,” he said.
The controversy surrounding PwC has prompted Treasury to review how it communicates information to the private sector about potential tax regulations, as well as wider discussions about the government’s reliance on consulting firms to perform advisory work that the public service formerly performed on its own.
The problem is how Peter Collins, a former partner of PwC, obtained knowledge on secret tax policies from Treasury officials during a consultation to assist in the drafting of the laws, only to share the information with private customers in a way that would have allowed them to circumvent those regulations. Treasury is considering taking additional action.
Acting PwC CEO Kristin Stubbins stated last week that the company was “committed to learning from our mistakes” and recruited Ziggy Switkowski, a former Telstra CEO and NBN chair, to evaluate the company’s governance and culture. Tom Seymour, the organization’s former CEO, will resign from the partnership on September 30.
The major four corporations supported Labor and the Coalition depending on which party was in power, according to a Centre for Public Integrity report that will be presented on Monday. The investigation looked at political donations from 1998 onward. The Coalition received 52:48 percent of the funds.
“The big four’s persistent donations to both major parties show that their donations are unrelated to any ideological goal or end sought, but are rather focused on currying favour with whoever may be in power,” it says in the report.
“This trend in bipartisan donations has been observed among other large industries in Australia and is characterised by some as a form of ‘state capture’. In this sense, such donations are not bona fide attempts to genuinely support a cause, but to create a sense of interdependency.”
According to the study, former Labor national secretary Noah Carroll joined KPMG, former Coalition minister Jamie Briggs joined PwC, and former Coalition cabinet minister Christopher Pyne joined EY after leaving government.
Contrary to their contracts, the major four’s donations have not significantly increased; according to the study, the gifts were $388,000 in 2013 and $520,000 in 2022.
Han Aulby, executive director of the Centre for Public Integrity, claimed that the big four frequently “make a bet before each election” over which side to support.
“These companies are having an undue influence through donating millions and hiring former ministers not long out of office. This is paying off – their contract volume has increased 400 per cent,” Aulby said.
“We need to stop outsourcing the public service. There should be a cap on consultancy budgets for each department, and the Australian Public Service staffing limit should be removed.”
According to the Parliamentary Library’s analysis, PwC currently holds $220 million in federal contracts, all of which are with the Department of Defense.
One of PwC’s 52 ongoing contracts with the Department of Defense is for $8 million in data exchange and analytics and another is for $19 million in IT components.
The scope of the contracts, according to Shoebridge, “places a serious security risk in the heart of the Australian Defence Force” and paints a “disturbing picture” of a force that is excessively dependent on private consultancies to carry out basic work.
The growth of the AUKUS nuclear-powered submarine program, in which PwC has said it intends to play a significant part, he claimed, will only make the issue worse.
Defence, according to sources with direct knowledge, has not voiced any concerns to PwC regarding the firm’s work for the department, which necessitates security clearances and strict respect to confidentiality rules. For comments, we reached out to PwC and the Department of Defense.