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The big four consulting firms have increased their federal business by 400 per cent over a decade while donating steadily to the major political parties that shape big decisions on government projects.
A new study of the consulting giants concludes that PwC is now the biggest donor of the group, giving $2.1 million to federal political parties from July 2012 to June 2022, and when KPMG ($1.1 million), EY ($565,000) and Deloitte ($572,000) are added to the tally, their combined donations have reached $4.3 million over a decade.
The big four consulting firms have increased their federal business by 400 per cent over a decade.
The findings come as senators prepare to interrogate federal officials this week over their use of PwC, after revelations in January that the firm used confidential information from its consultations with Treasury to help clients curb the impact of looming tax laws.
With debate raging over the scale of the federal business awarded to the big four, the Centre for Public Integrity has found that total contract value has swollen from $282 million a decade ago to $1.4 billion last financial year.
A separate analysis by the Parliamentary Library, requested by the Greens, found the current contracts held by PwC with federal departments and agencies are now worth $453.7 million, with the Department of Defence making up almost half the total.
Greens Senator David Shoebridge said the contracts probably had confidentiality requirements, but history showed PwC did not protect Australian secrets.
“There needs to be an urgent review of what Defence information PwC has access to, if that information is secure, and what can be done to terminate these contracts in the national interest,” he said.
The row over PwC has led to an examination within Treasury of the way it shares information with the private sector on proposed tax laws, while sparking broader debates about the government’s reliance on consulting firms to do advisory work the public service used to do itself.
At issue is the way a former PwC partner, Peter Collins, gained information from Treasury officials on confidential tax policies in a consultation to help draft the laws, only to share the information with private clients in a way that could help them sidestep those laws. Treasury is reviewing whether to take further action.
PwC acting chief executive Kristin Stubbins said last week the firm was “committed to learning from our mistakes” and named former Telstra boss and NBN chair Ziggy Switkowski to review the firm’s governance and culture. The firm’s former chief executive, Tom Seymour, will retire from the partnership on September 30.
The Centre for Public Integrity analysis, to be released on Monday, checked political donations from 1998 onward and found the big four firms supported Labor and the Coalition according to which side held office. The donations we 52:48 per cent in favour of the Coalition.
“The big four’s persistent donations to both major parties show that their donations are unrelated to any ideological goal or end sought, but are rather focused on currying favour with whoever may be in power,” it says in the report.
“This trend in bipartisan donations has been observed among other large industries in Australia and is characterised by some as a form of ‘state capture’. In this sense, such donations are not bona fide attempts to genuinely support a cause, but to create a sense of interdependency.”
The report notes that former Coalition cabinet minister Christopher Pyne joined EY after leaving government, while former Labor national secretary Noah Carroll joined KPMG and former Coalition minister Jamie Briggs joined PwC.
The donations from the big four have not increased dramatically, in contrast to their contracts; the analysis found the donations were $388,000 in 2013 and $520,000 in 2022.
Centre for Public Integrity executive director Han Aulby said the big four tended to “make a bet before each election” on which side to back.
“These companies are having an undue influence through donating millions and hiring former ministers not long out of office. This is paying off – their contract volume has increased 400 per cent,” Aulby said.
“We need to stop outsourcing the public service. There should be a cap on consultancy budgets for each department, and the Australian Public Service staffing limit should be removed.”
The analysis by the Parliamentary Library shows that $220 million in current federal contracts held by PwC are with the Department of Defence.
PwC’s 52 current Defence contracts include a $19 million deal to provide information technology components and an $8 million contract for data sharing and analytics.
Shoebridge said the scale of the contracts painted a “disturbing picture” of a military that was overly reliant on private consultancies to do basic work and “places a serious security risk in the heart of the Australian Defence Force”.
He said the problem will only become more serious with the development of the AUKUS nuclear-powered submarine program, in which PwC has indicated it wants to play a major role.
Sources familiar with Defence said it had not raised any concerns with PwC about its work for the department, which requires security clearances and adherence to strict confidentiality requirements. The Department of Defence and PwC were approached for comment.
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