The terms of reference for the senate inquiry into the government’s use of consulting practices, such as the major accounting firms, have been released.

The inquiry, which has been referred by the senate to the Finance and Public Administration References Committee, will examine a range of associated issues.

This includes the management of conflicts by consulting firms, what measures exist to prevent breaches of contracts and other unethical behaviour by consultants, and the management of risks in the public sector that arise from engaging consultants.

The inquiry was called following revelations that a former partner at PricewaterhouseCoopers (now PwC), Peter Collins, lost his tax registration for breaching confidentiality agreements that required him to not disclose the details of government consultations on multinational tax law changes.

An investigation by the Tax Practitioners Board (TPB) into the Collins case found information obtained during consultations conducted by government bodies on tax matters was shared with partners and staff within the tax division.

TPB representatives told senate estimates that there may have been between 20 and 30 people involved — domestically or internationally — in the discussions related to confidential information.

TPB chief executive officer Michael O’Neill told senate estimates that other people involved have not been sanctioned.

“The action by the TPB is based on the facts and the evidence we have available to us,” O’Neill said during the estimates hearing in February.

“As we mentioned before, there are certain sanctions that are available to us in the Tax Agents Services Act, and, based on the evidence, the board has made the sanction decisions it had available to it.”

PwC was also hit with a disciplinary sanction that requires it to upgrade internal tracking of conflicts of interest as well as ensure people are trained on how best to manage conflicts.

Interested stakeholders have until April 21 to lodge submissions with the committee secretariat. The committee has a reporting deadline of September 26.


Government consultants are not the gods of their own imagination

The Rebel Accountant 
Taxtopia: How I discovered the injustices, scams and guilty secrets of the tax evasion game 

It’s worse than you think. Whenever there’s a Pandora/Panama/Paradise Papers drop, our most cynical suspicions are exceeded. The world is divided between ordinary schmucks paying tax and the ultra-wealthy, who will do anything not to. But how do they do it? Taxtopia by The Rebel Accountant promises to expose the mechanics of tax avoidance and help us schmucks save some money.

The author’s anonymity is to avoid legal repercussions. Given how candidly he describes his extensive career in Britain and Australia, it’s a wise move. Clients run the gamut of the ultra-wealthy: a Russian oligarch with a $1.1 million bathtub, Succession-like playboys on yachts, plummy-mouthed English prats and a boorish Aussie who tears off his shirt in a casino.

Most schemes are a form of white-collar three-card monte that rely on dizzying circularity. But instead of cards, it’s loans, dividends and shares shuffled through loopholes into shelf companies and tax havens. One example, “The Dutch Sandwich”, is named after Starbucks, which split itself into two companies – one domiciled in the Netherlands, the other in Britain. The first owns the brand, the other makes the coffee, and the coffee-maker leases the brand to operate at a deductible loss. As a result, Starbucks paid no tax in Australia for 12 years.

Sardonic humour softens Taxtopia, but the implications are infuriating as the cost-of-living squeezes ordinary people ever harder. London mansions owned by shelf companies help oligarchs escape stamp duty. This has hoovered up so much real estate that house prices soar even for normal people.

While the author wrestles with the ethics of helping the rich get richer, his colleagues never seem to care. Some excuses, such as a company’s fiduciary duty, are old hat. Others involve academic shadow play such as modern monetary theory, which claims that state taxes aren’t actually for building hospitals or paying teachers but for managing inflation. This book shows how accountancy is byzantine by design and how its complexity justifies the fees. Accountancy also obscures how even progressive taxes are gamed to hit the poor the hardest. The author’s solution is simplification. Scrap all taxes except those on individuals’ increasing wealth, offshoring and products that are bad for health or the environment. This is his Taxtopia.

If you hope to join the ultra-rich by reading this book, forget it. It’s a small club with huge bouncers and an eye-watering admission price. It is, however, a fascinating tour from a masked insider. Just have a punching bag handy, if you can afford one.

Hachette, 368pp, $34.99