According to a recent report published by a senate inquiry, the Australian government should be obligated to disclose all consulting contracts valued at over A$2 million ($1.33 million). Additionally, these contracts should include a provision that requires consultants to act in the best interest of the public. The inquiry was initiated in response to the leak of confidential tax plans by PwC, a global consulting firm.
The report also recommends the establishment of a public register of conflicts of interest for consulting firms. Furthermore, it suggests a revamp of the regulations for large partnership-based organizations that currently fall outside the scope of corporate laws and regulatory oversight.
These recommendations represent the initial measures aimed at strengthening the regulations governing the hiring of consulting firms by Australian government departments. The need for stricter rules was highlighted in 2023 when it was revealed that a former partner at PwC had shared confidential tax proposals to secure business from multinational companies seeking to restructure their domestic tax arrangements.
Senators Deborah O’Neill and Louise Pratt, representing the governing center-left Labor party, stated in a report that the PwC tax leaks scandal and subsequent ethical failures exposed at other major consulting and audit firms have severely damaged Australians’ trust in the integrity of corporate Australia.
The inquiry focused on contract procurement, but future investigations will delve into the underlying ethical issues within the Big Four Firms and the need to address structural challenges in the sector, the senators added.
A spokesperson from PwC stated that the organization will review the report but declined to provide further comments.
According to the report, the Australian government spends over A$1 billion annually on consulting services, which is the highest relative to the size of the economy worldwide. The majority of these contracts are with PwC, EY, KPMG, and Deloitte.
According to the report, although the spending has not resulted in improved public service efficiency according to certain measures, it has raised concerns regarding transparency and value for money. As a solution, the report suggests that the finance minister should be obliged to provide biannual statements that disclose details of consulting contracts exceeding A$2 million. These statements should include information on the contract’s monetary value, subject matter, and any conflicts of interest that arise during its execution.
Furthermore, the report highlights that organizations with a partnership structure are not held accountable to Australian corporate law or the Australian Securities and Investments Commission. Consequently, these organizations sometimes struggle with governance. To address this issue, the report recommends a thorough review of the legal frameworks governing partner organizations with over 100 partners.
Please note that the exchange rate is currently $1 = 1.5040 Australian dollars.