Sunday, December 31, 2023

Luke Sayers had millions of reasons to hire Mathias Cormann

Mathias Cormann - OECD boss in PwC scandal

Luke Sayers had millions of reasons to hire Mathias Cormann Under Mathias Cormann’s oversight, government spending on consultancies swelled nearly four-fold.

Myriam RobinRear Window editor

When the OECD tapped Mathias Cormann to become its secretary-general in 2021, the nimble Luke Sayersdodged yet another bullet. Not that we knew it before Sayers’ answers to Senate questions on notice last week, revealing how close his firm, Sayers Group, came to hiring Cormann as a partner.

Sayers has spent much of the year repeatedly emphasising how little he knew about the tax leaks scandal, which occurred while he led PwC but came to light only after he left.
But he would have become an even bigger target if such a claim had been made while his eponymous consulting firm possessed in its ranks a man under whose watch the federal government’s spending on consultants ballooned.
Mathias Cormann is Secretary-General of the OECD, but he came close to working for Luke Sayers’ epynomous consultancy. Nathan Laine
After all, what better symbol could there have been of the revolving door between the government and those whose revenues rely on staying in its good graces? Sayers would never have heard the end of it!
Clearly, his talks with Cormann were far from idle. The politician came close enough to working for Sayers Group that he was given (since-relinquished) equity in the business.
If Cormann had been announced, few would have been shocked. It’s hard to imagine a more perfect coda for a man whose parliamentary career coincided with a nearly a four-fold increase in outsourcing to the big four consultancies, including the one that was, until 2020, led by Sayers.
When the Coalition came to power in 2013, government spending with Deloitte, PwC, KPMG and EY stood at less than $400 million a year. By the time the Coalition lost power, it stood at $1.4 billion a year, with most of that increase coming before Cormann bowed out of politics at the end of 2020.
As the minister in charge of the powerful Finance Department, which sets the rules for government contracting, Cormann bears no small amount of responsibility for this.
Looking specifically at management advisory services tendered by the Commonwealth, these jumped from $44 million in FY13 to $606 million in FY22, according to an analysis of AusTender data conducted by non-profit organisation The Centre for Public Integrity. That’s an annualised increase of about 30 per cent in key strategy work increasingly done by those outside the public service.

Furious unions

Another analysis, conducted by The Canberra Times in 2018, found that labour contracting of all types at the 18 largest federal government departments grew from $318 million to more than $730 million in the five years to 2018.
Figures such as these enraged public sector unions and integrity advocates (who point out that consultants are far less accountable for their advice and decision-making than bureaucrats).
However, Cormann never saw the growth of outsourcing as a problem. As he argued in response to repeated Labor attacks on the issue, outsourcing was cost-efficient, and when coupled with the government’s public service efficiency dividends, redundancy rounds, staffing caps and similar initiatives, ultimately beneficial for taxpayers, despite external consultants billing far more than public servants.
It’s also exceedingly enriching for said consultants, naturally – though that part is usually left unsaid.
As it was, Cormann was a politician of uncommon competence whose post-parliamentary ambitions extended far higher than ending up as a mere Australian consulting partner. But if the OECD role hadn’t worked out, how seamlessly he would have slotted into his plan B.
After years of articulating the consultant’s value proposition when he wasn’t being paid to do so, imagine how well he would have done it if he was.