Government eyes tougher response to PwC scandal

·3-min read

Major consultancy firm PwC could face government action after federal Labor signalled it was considering steps to clamp down on unethical behaviour.

The government is considering certain measures following a high-profile tax scandal involving PwC that has rocked trust in the "Big Four" consultancy firms.

Asked if the government should ban contracts with PwC until the firm showed it had cleaned up its act, Treasurer Jim Chalmers said he would have more to say on its "inexcusable" behaviour.

"Corporate Australia, for the right reasons, wants to be consulted on changes that impact them," he said on Monday.

"And I want to do that too ... Part of the character of this government is consultation."

In January, a now former PwC partner was caught sharing confidential federal government tax policy information to drum up business.

The partner shared Treasury information on measures to bolster tax laws, including rules stopping multinationals from lowering their tax bill by shifting profits from Australia to other jurisdictions.

PwC's CEO has since stepped down and the firm has announced an investigation into its governance, culture and accountability led by former Telstra boss Ziggy Switkowski, who sits on a number of corporate boards.

The government has already taken steps to strengthen the Tax Practitioners Board to stamp out unethical behaviour. 

But the federal Greens wants Labor to ban such contracts and its senators are using the latest round of parliamentary committee hearings to grill government departments about their work with the beleaguered firm.

David Williamson, a deputy secretary from the Department of Prime Minister and Cabinet, said a ban on contracting with the firm had not been imposed.

"However, one of the criteria ... relates to ethical behaviour and certainly we would bring that to bear in any contemplation of engaging PwC," he said.

Cabinet minister Penny Wong said issues of confidentiality and procurement practices had been raised in the wake of the PwC breach.

The Greens have also taken aim at the $220 million in contracts the firm has with the Department of Defence.

"We know that PwC can't be trusted with tax information," Greens senator David Shoebridge said on Monday.

"Why is it the Albanese government and Defence believe they can be trusted with the deepest secrets of Australia's defence establishment?"

The tax information scandal has also revived interest in the public sector's reliance on Big Four consultancies.

Centre for Public Integrity research shows the volume of contracts with PwC, KPMG, EY and Deloitte has surged 400 per cent in the past decade.

In 2021/22, the public service contracted $1.4 billion with the four firms.

Centre executive director Han Aulby said the public service had been hollowed, opening the way for the Big Four to make millions from government contracts.

Dr Chalmers said there had been a "troubling explosion" in labour hire and contracting at the same time as the public service had been reduced under the previous government.

The centre's research also found consultancies had donated a combined $4.2 billion to the major parties between 2012/13 and 2021/22.