Wednesday, March 15, 2023

Rivals (privately) hope consulting inquiry focuses on PwC


Rivals (privately) hope consulting inquiry focuses on PwC

Edmund TadrosProfessional services editor

Senior partners at major consulting firms privately hope that the new Senate probe into conflicts of interest at Australia’s largest firms focuses on PwC’s damaging tax leaks scandaland blames it for putting the entire sector under the spotlight.

The rival operatives, who spoke on condition of anonymity, say the leaks scandal gave the Greens and the Labor government an excuse to scrutinise their public sector work yet again.

Major consultancies Accenture, Deloitte, EY, KPMG and PwC entered into federal contracts worth $2 billion in FY22. 

The inquiry, which will be heard by the Finance and Public Administration Committee, was approved last Thursday after a push by Greens senator Barbara Pocock. The last major inquiry into the sector was shut down by the Morrison government in 2019 without issuing a report.

The official focus of the inquiry is about unethical behaviour by consultants engaged in lucrative federal government work. The committee is accepting submissions until April 21 and intends to report by September 26.

“Clearly, the inquiry is directly related to recent Tax Practitioner Board reports [about PwC],” one senior consulting insider at a rival firm said.

Committees, inquiries, reviews

Another senior advisory insider said the inquiry would likely focus on PwC, and predicted the senators would not deeply explore Defence’s extensive use of consultants.

Defence is by far the largest user of consultants from the five major firms Accenture, Deloitte, EY, KPMG and PwC. Defence entered into contracts worth about $700 million with those five firms in 2021-22 – more than a third of the Commonwealth total of $2 billion that year.

The Australian Financial Review has been separately told that the inquiry would likely examine PwC’s tax leak, the firm’s robo-debt work for the Morrison government and that government’s decision to hire McKinsey to work on its net zero economic modelling in 2021.

The inquiry will happen as the federal government examines a way to cut its $2 billion annual consulting bill as part of a plan to beef up the skills and capability of the public service.

Other reviews and investigations have also highlighted growing concerns about the Commonwealth’s use of consultants, including the high cost of external advisers and the associated frequent cost overruns, and the deskilling of the public service.

‘Consultants provide external expertise’

Officially, representatives from KPMG, Deloitte and EY welcomed the inquiry.

Senior KPMG partner Paul Low said the firm would support the “important work of the committee”, and noted the important assistance that external consultants provided the government.

“KPMG is proud to support the world-class work of the Australian Public Service and will work constructively with the Senate inquiry,” said Mr Low, the firm’s head of infrastructure, government and healthcare advisory.

He said that “the pace and scale of change facing the Australian community” meant the government would continue to “require specialist skills and capabilities from the private sector to complement the resources within the public service in delivering complex, time-challenged projects.” 

Deloitte chief executive Adam Powick also said his firm was happy to contribute to the inquiry, and would highlight the value that external experts bring to the public service.

“We are happy to constructively participate and contribute to the inquiry,” Mr Powick said. “We believe that consultants that focus on providing expert independent advice and client outcomes will still be critical to helping the government achieve their ambitious agenda.”

An EY spokeswoman said the firm would “actively participate” in the inquiry.

“We believe we have an important role to play, to assist in fostering ideas and debate in the development and formation of policy,” she said. “Management of potential conflicts of interest and independence is, and always has been, of utmost importance to EY. As external events come to light, we take the review and revisit our structures and processes.”

She said EY had pre-emptively reviewed its existing Commonwealth contracts to ensure there were “no issues of non-compliance” when the details of PwC’s tax leak emerged.

PwC declined to comment.

Find out the inside scoop about Accenture, Deloitte, EY, KPMG, PwC and McKinsey. Sign up to our weekly Professional Life newsletter.

Edmund Tadros leads our coverage of the professional services sector. He is based in our Sydney newsroom. Connect with Edmund on Twitter. Email Edmund at