This time last year, we marvelled at the chutzpah of PwC, getting flamed in parliament even as it prepared to host the Labor Party’s budget night dinner.
The optics were atrocious, and surely the last thing treasurer Jim Chalmers needed as he sold his budget. Still, it took until the day before its delivery for PwC to quietly bow out, ceding its naming rights to Visa, which has retained them for this year’s $5000-a-head budget night event.
Relinquishing the branding rights (Labor got to keep the money) was said to be PwC’s decision. In other words: the Labor Party didn’t kick it out. Clearly, political parties don’t lightly let these kinds of sponsors go.
A year on, that hasn’t changed. PwC, true, is still in the sin bin, having shortly after formally and publicly ceased its long-standing habit of political fundraising last July. But instead of following its lead, all its rivals are now back in the game.
Labor senator Deborah O’Neill said PwC’s political donations had nothing to do with its poor conduct. Alex Ellinghausen
This will come as a relief to major party operatives, who for the briefest period struggled to find suitably swanky venues in which to host various events. Like EY’s Sydney boardroom, which hosted Angus Taylor at a $1100-a-head fundraiser in November. EY donated $227,853 in the FY23.
Or Deloitte, whose FY23 donations totalled $177,126 and whose Sydney partners’ office was the site of a $1500-a-head fundraiser with NSW Labor Treasurer Daniel Mookhey last month.
The odd one out here has been KPMG, which last year paused its donations (of which it gave $163,200 in FY23) as it reviewed its political activity.
That pause is now completed, with KPMG announcing last week it had decided to maintain the status quo. That is, no cash donations, but “balanced”, in-kind support to Australia’s “major” political parties, no doubt in the form of membership, ticket purchases and sponsorship.
The major consulting firms hold there to be no link between political donations and the procurement of government business.
In their telling, attendance at fundraisers (or their direct sponsoring of such events) – is about understanding government policy, a chance to meet politicians, but never to influence them – commenced from a mixture of good intentions and tradition.
Of course, these firms are for-profit enterprises, who wouldn’t collectively spend the better part of $1 million for no reason. We wouldn’t even discount the possibility they’ve assigned some pointy-headed data analyst to come up with the return on investment on this kind of thing. After all, that’s a core business!
Notably, not much of that money flows to the campaigns of the minor parties, which take a notably more jaundiced view of the practice.
Greens senator Barbara Pocock, for example, has called on all who seek government contracts to be banned from donating to political parties, lashing “how deep the tentacles of the big four consultancy firms reach into our systems of governance”.
On this, Pocock markedly differs from her customary alignment with Labor senator Deborah O’Neill, who despite spending much of the past few months bashing the consultancies, sees nothing contrary about her party simultaneously taking their money.
PwC’s decision to cease donations, O’Neill said last year, was “entirely a matter for [it]”, and had no bearing on “the kind of misconduct which has been the subject of public discourse in recent months”. Donations, she added, assists “the funding of political campaigns to communicate with the Australian people”.
The message was clear as daylight for those tuned to listen: Labor has no issues with the consultancies giving it money, no matter how antagonistic it seems. In the long-run, one would be naive to think that message won’t overcome even PwC’s newfound reluctance to engage in all things party-political.
PwC’s partners, for what it’s worth, are still keeping a toe in the water, sometimes spotted at political fundraising events implicitly representing the firm. Explicitly their attendance, we’re assured, is on their own dime. They’re not even allowed to expense their tickets (we did check), so the donation ban unambiguously holds. For now.
Myriam Robin is Rear Window editor based in the Melbourne newsroom. A Rear Window columnist since 2017, she previously reported on financial markets and media.Connect with Myriam on Twitter. Email Myriam at myriam.robin@afr.com
Big four consultants ‘commoditised’, says fast-growing boutique firm
Big four advisory services have become “commoditised” and clients are increasingly seeking tailored advice from specialist firms, the founders of fast-growing challenger ESG and climate advisory firm Rennie Advisory say.
Rennie Advisory, which has flagged ambitious growth targets and is eyeing an expansion into Asia, recently passed the 50-employee mark and appointed former senior EY partner Tim Eddy as its new chairman.
Former EY managing partner of operations Tim Eddy is Rennie Advisory’s new chairman. Eamon Gallagher
The firm, founded in 2021 by husband and wife Matthew and Simone Rennie, is one of a number of smaller firms capitalising on a client flight from the big four by offering specialised advice at a discount to the cost of the global behemoths.
Despite a tough advisory market, which has caused the top firms to lay off hundreds of consultants, smaller firms continue to grow and gain market share.
Mr Eddy, who also holds directorships at Racing Victoria and Western Sydney Airport, said consulting clients were demanding sector-specific expertise from advisory firms, and were no longer concerned about gaining the imprimatur of a big four firm.
You pick your advisers because you think they are going to do the best for you. Now, among clients, there’s a much more open mind as to who you might want to use,” he said.
Specialist firms benefit
Federal and state governments’ post-PwC rejection of big four consultancies has accelerated a trend towards boutique firms in public sector work. But the technical and cross-disciplinary nature of environmental consulting, driven by the competing demands of the energy transition, has also allowed specialist firms in the energy sector to compete with the big four.
Matthew and Simone Rennie both have broad experience in the energy sector.
Mr Rennie, the former head of EY’s energy advisory business, said clients were facing more complex problems as they confront changed expectations on ESG and look towards the energy transition.
“Clients have always fundamentally wanted their problems solved. But these problems tend to go across different areas of expertise, so it’s really important to have the right people to solve the problem,” he said.
“What clients don’t want is commoditised advice. There’s a certain amount of that when you’re at [a large] scale, but our hope is that by setting up in a bespoke, values-driven way, we can avoid some of those pitfalls.”
The “bespoke” scale was also part of a pitch to future employees, said Ms Rennie, a former manager at the Australian Energy Market Operator. The smaller scale exposed young consultants to higher-level work earlier than if they were warehoused in one of the large consulting firms, she said.
Pollination Group is the best-known firm in the growing environmental consultancy sector, and Rennie Advisory, backed by a significant equity investment from Pemba Capital Partners, hopes to replicate the green bank’s rapid growth.
Mr Rennie said the capital injection from Pemba would help fund new acquisitions.
Law firms have also sought to capitalise on client demand for energy transition advice, which is proving to be a reliable source of billings amid a generally flat professional services market. Energy partners have led promotions at the law firms as spin-off advisory practices are expanded rapidly.
Having surpassed an initial goal of reaching 20 employees, Rennie Advisory’s next target is expanding its four Australian locations, employing 300 staff and opening offices in the Asia-Pacific.
Partnership structure
Rennie Advisory, like many new advisory firms, is structured as a company, dispensing with the traditional partnership structure that has been widely criticised in the wake of the PwC scandal as out of date and unsatisfactory for governance purposes.
Mr Rennie said a company structure was essential to ensure good governance and drive the strategic growth of the firm.
“One of the shortfalls in a partnership model is the diversification of leadership responsibility. It’s becoming more difficult for those models to continue to uphold consistency of values, quality and structure all the way down through the firm.” he said.
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Maxim Shanahan is a professional services reporter at the Australian Financial Review. Email Maxim at max.shanahan@nine.com.au