Deborah O'Neill (NSW, Australian Labor Party) Share this | Hansard source

I rise to make a contribution on the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023. This bill aligns with the Albanese government's measured and careful improvements to the Australian financial and taxation system to ensure that it works as intended for all Australians. The bill also advances the interests of ordinary Australians and helps ensure that their retirements are secure. Schedule 1 makes a technical alteration to enable ASIC to approve applications to register the same relevant provider when the relevant provider has an existing registration in force. This tidies up the existing legislation that resulted in accidental compliance breaches by financial advisers. It also allows the corporations regulator, ASIC, to use assisted decision-making processes when processing and considering applications for financial advisers to be registered. The use of assisted decision-making processes, including computer automated and computer assisted decision-making, must be carefully monitored. This particular part of the bill will enable ASIC to deliver a high standard of service in an effective and efficient manner.

Schedule 2 creates the building blocks for the implementation of sustainability reporting standards in Australia. This reflects the reality of our changing climate and our altering financial industry towards environmental sustainability governance priorities, looking more broadly than at mere profit to see the impacts of investment on the sustainability of the planet. This movement is already underway. However, there remains an issue in that there is no definition of what sustainable investment looks like, leaving some investors scratching their heads when trying to decide how best to invest their superannuation. The schedule will partially implement the 'Restoring Treasury's capability on climate risk and opportunities—modelling and reporting standards' measures from the October 2022-23 budget. As sustainability reporting in Australia is currently undertaken on a voluntary basis, the proposed sustainability standards would provide general guidance, assisting relevant industries to prepare systems and processes for eventual transitions to mandatory climate-related financial disclosures. The objective of this is to ensure entities provide Australians and investors with greater transparency and accountability in relation to their climate related plans, financial risks and opportunities.

Schedule 3 of this bill, which is of particular importance to me, increases the independence and effectiveness of the Tax Practitioners Board to ensure high standards of ethics and competency in the tax profession and streamline the regulation of tax practitioners. Schedule 3 of the bill amends the Tax Agent Services Act 2008 to increase the independence of the TPB via a special account. This will provide the Tax Practitioners Board with the ability to control its own budget and manage its regulatory functions. It recognises that the TPB has distinct functions and powers, separate from the ATO. It will support tax practitioner and community confidence in the TPB's regulation of the profession. These changes will implement recommendations from the final report of the Tax Practitioners Board review and ensure high standards in the tax profession, enhancing community confidence in the regulation of tax practitioners and the integrity of the system as a whole.

The chamber will be well aware of my ongoing investigation with colleagues in this Senate into the government audit and consulting sector. It was the TPB that finally investigated and took action against Mr Peter-John Collins of PwC Australia and rightfully brought the spotlight to the murky affairs of PwC both in this nation and overseas. While the ATO and the AFP were hamstrung by limited legislation, the TPB actually did the hard yards. I personally, as an Australian, want to thank them for that work. As I speak, the Australian Federal Police are continuing their investigation into PwC and the actions of Mr Peter-John Collins. But it was the Tax Practitioners Board that did the hard work. It is the TPB's insistence and constant pursuit—as evidenced in the recent ATO time line provided in response to my questions on notice—that has led us here today. I welcome the increased financial independence of the TPB from the ATO. A strong and independent TPB is in Australia's national interest.

The amendments seek to address an identified gap in the regulation of tax services. The introduction of the proposed new obligations under the TPB Code of Professional Conduct for tax practitioners would regulate and, importantly, prevent disqualified entities from providing tax agent services, providing a further barrier to those nefarious actors who outwardly attempt to be credible while simultaneously providing dodgy services to clients.

This comes alongside the recent announcement by the Treasurer, Dr Jim Chalmers, to raise the penalty for firms promoting tax exploitation schemes to $780 million. This changes the calculus for those who would engage in disreputable behaviour and tax exploitation schemes: from a slap on the wrist to, suddenly, a business-ending punishment. It's crucial that when government seeks to engage external experts with vast industry knowledge for support in crafting legislation, such individuals will not betray that trust, nor will they use the information against the Commonwealth of the country to which they owe service simply as citizens.

Taxation collection and dispensation is crucial for Australia to pay its bills, to fund hospitals, to fund our schools and to strengthen our military. When actors limit this possibility, national security is at risk. When Peter-John Collins and PwC partners advertised tax exploitation to multinational firms all over the globe, our national security was at risk. Tax and audit are so important to how the Australian financial system operates. Without proper and measured advice on the financial facts of a firm, trust in the system falters, with negative consequences for everyone, especially workers whose future is tied up in superannuation. This stuff—about tax and about these financial matters—actually really matters to Australian people.

We know that the big four companies—PwC, Deloitte, KPMG and EY—audit 96.5 per cent of the top 200 companies in Australia, or 193 out of 200. Their impact is significant. Their reach is large. Hardworking Australians who see parts of their pay cheques going towards their retirement deserve the very best information for operating in the financial market in which their retirement savings are being invested, either directly by them through an SMSF or indirectly through a retail or industry fund.

The market is responding to the challenges that are now a matter of public record with regard to the big four auditing companies. Westpac Group recently announced that it is no longer appointing PwC, a firm who, through its previous iterations and under the banner of PwC, has audited Westpac since 1968. That's an extraordinary period of time for one audit company to be with a particular company of the scale of Westpac. Previous iterations of the Parliamentary Joint Committee on Corporations and Financial Services—on which I serve with Senator Scarr and Senator Barbara Pocock, who are both in the chamber and who know how important the work of those parliamentary committees are—recommended a review of how long these large audit companies should stay as the external auditor for any of the companies that they are engaged with.

PwC and other consulting firms, we've seen, treat the taxpayer funds that they are receiving in great volume with contempt. KPMG, a firm that is at pains now to point out how it's not PwC, has itself been caught directly misleading the Senate. They claimed on notice not to be mapping public servants by their power ratio or how likely they were to select KPMG as a consultant. However, recently an org chart of Transport NSW which categorised senior public officials scoped out by KPMG staff, who described them as 'sponsors' of KPMG work, suddenly appeared in a hearing. 'Sponsors'—that's how KPMG sees some members of the public service and taxpayers' funds, as a bank to be tapped for their personal profit. It's contemptuous and it's just wrong.

Recently I also heard very concerning testimony from Mr Luke Sayers, the well-connected former CEO of PwC. He was the CEO when the Project North America scam and the legal professional privilege cover-up took place. Mr Sayers is certainly well connected. He counts the former Treasurer Josh Frydenberg as a good friend. According to his evidence before us, his new firm, humbly known as Sayers Group, counted the former finance minister Mathias Cormann as an investor. But it has come to the attention of the committee in recent hours that Mr Cormann no longer has shares in Sayers Group, and the documentation to clarify that is available on the F&PA committee website. Apparently, he was potentially going to be a partner, but, since Mr Sayers gave us evidence, the status of Mr Cormann's investment seems to have changed. Sayers—the company and the man—has already amassed millions of dollars in government contracts. Sayers is the same man who Mr Ziggy Switkowski, in his review of PwC, stated had tolerated 'aberrant behaviour' from those who brought in large revenues. Mr Sayers did that in his role as the CEO of PwC Australia over nearly a decade. I'm very concerned—and I put that on the record here in this chamber—that Sayers Group is considered a trusted adviser to government, given Mr Sayers's long association with PwC during the period that is of sufficient concern to warrant an ongoing Australian Federal Police inquiry.

Through my work as the Chair of the Parliamentary Joint Committee on Corporations and Financial Services and as a substitute member of the Senate Finance and Public Administration References Committee, I pursued every lead and scrutinised every aspect of these secretive firms, and I have taken very seriously the evidence provided to me by whistleblowers who have said, in so many of the submissions to me in confidence, that they ended up leaving the audit sector because they had witnessed practices that they simply couldn't live with anymore. 'I had to leave because my conscience wouldn't allow me to continue in this firm,' was one of the most common sentences. What I fear I am finding, with my colleagues, is a system that not only is rife with conflicts of interest but has built its business model on conflicts of interest. Audit and consulting firms infect firms and spread to every vessel. Indeed, just yesterday, concerns that I raised some time ago about information being used with regard to the Honda dealerships were the subject of an article by Jessica Sier in the AFR. The conflict-of-interest concern lingers over so many of these entities.

In the language of Mazzucato and Collington, we see these large companies employing a model known as 'land and expand'. What many whistleblowers have reported to me is that these large audit firms will start with their very best staff and soon swap those staff out for inexperienced members, thus undermining the quality of the work that can be done. It's a classic bait-and-switch move. Even worse, in some cases the best absolutely never show up. Instead, the firms choose to churn through an endless supply of graduates who are overworked and underpaid. One only needs to read the ghastly accounts that are embedded in the Broderick report into EY to know the suffering that these companies impose on their staff. There is much, much more to do in this investigation.

This corporatocratic style of government that relies on profiteering firms to do our core functions is coming to an end. I commend the Minister for Finance for her recent announcement that all external consultancies will be removed from core Public Service work, and I look forward to continuing this work with my colleagues in the government.