The PwC scandal is outsourcing’s inevitable outcome.
It is the free market at its most rampant. Not satisfied with the enormous amount of money it earned from massive outsourcing contracts, giant consultancy PwC has been accused of using the information from its work for the Federal Government to help its private-sector clients avoid millions of dollars in tax.
In 2017, a partner with PwC, Peter Collins, is alleged to have used confidential data obtained from the Federal Treasury to advise clients how to minimise paying tax in Australia. It is estimated this cost the Federal Government about $180 million a year.
Since this was revealed, PwC has gone into damage control, suspending partners and making plans to “ringfence” its work for the public sector away from its private sector clients.
Various levels of government in Australia have at hand a way to help PwC “ringfence” its public and private sector work. They can simply refuse to have anything to do with the tainted company for at least five years. Across the country, passing a law banning PwC from government consultancy work would not only be excellent policy, it would also be a hit with voters disgusted that while they pore over every deduction they make come tax time, here is a company that has ripped public money away from public services.
Without a hefty penalty, there is no incentive for this company and its contemporaries to play by the rules.
A temporary ban should just be the start of the clean-up. The revelations may expose a company with a rotten culture, but they are also proof of what happens when all three levels of government outsource the operations of state to a handful of big firms.
As Sydney Morning Herald economics columnist Ross Gittins, himself a former employee of an accounting behemoth, said, “The great experiment of finding out whether it’s better for public services to be delivered by the private sector than the tea-drinking public servants has been a resounding failure.”
While I’m sure coffee consumption is more prevalent in our overworked membership than tea, Mr Gittins otherwise nails it. The shift from the delivery of public services from a professional, impartial Public Sector to a far-less-accountable firm such as PwC
leads to more secretive decision-making. It is poor value for money for the taxpayer. And at its most extreme, as we have now seen, it leads to misuse of information.
The big four consultancy firms: EY, PwC, KPMG and Deloitte; have thrived through the neglect of the Public Sector in both the federal and state jurisdictions. Stagnant wages, job cuts and disrespect, particularly from the Liberal National Coalition, has made it easy for the consulting firms to attract disgruntled
Public Sector workers and their expertise.
The governments have created a void to be filled by consultancies for top dollar. In just the five years to 2022, the NSW Government awarded PwC a staggering $1 billion in contracts.
Little wonder the big four consultancy firms are also massive donors to the major political parties.
This is a nationwide problem, but Chris Minns can at least start cleaning up his own patch. He and his ministers need to start looking through their books, finding out where consultants are replacing the work of Public Sector workers. He needs to restore incentives for high-quality staff to remain in the Public Sector with good wages and conditions freed from political tomfoolery such as wages caps and efficiency dividends that never seem to be applied to outsourcing.
NSW has an excellent, professional Public Sector. Our state doesn’t need the help of consultants, it just needs a State Government that respects its own workers.