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

I'm proud of the work that we've done as a parliament—in particular, the work of the Parliamentary Joint Committee on Corporations and Financial Services—in getting to grips with the egregious and unethical behaviour in the consulting sector that we uncovered and reported on in our report to which the government has responded this week. I want to take the opportunity, in particular, to thank Deputy Chair Alex Hawke, Senator Paul Scarr and Senator Barbara Pocock for their dedication across party lines to the monumental task that unfolded before us.

I'm proud that ordinary Australians are now alive and alert to the ethical failures of the big four accounting, assurance and tax advice providers in this country and globally. I've said many times in this place that these big partnerships that morph between being Australian and being international entities as much as it suits them provide the financial information verification that ensures the proper functioning of the financial markets of our country. What they do, how they act and what they say and produce have an impact on the superannuation earnings of every Australian—every single one of us and every cent of the $4 trillion under management.

The fact is that the government is paying close attention to these issues and to the work of the committee. It is unusual in this place that a government responds to the findings of a committee over the course of the inquiry, but that is exactly what happened in the case of this inquiry. There has already been significant response and action in response to what we uncovered, and I'm pleased to say that, as a result of the hard work of the PJC, there's a body of work in this report that will stand the test of time. I stand by it and I stand by all of the recommendations. It is a tool of guidance not only for our nation but for all democratic nations across the globe confronting similar practices in the financial sectors in their sovereign nations. Indeed, you can name the UK, China and South Africa as countries that have really suffered in huge economic terms as a result of the failure of these entities.

Let us never forget how PWC's monetisation of confidential government information brought the entire sector into disrepute. It has significantly altered the way that government conducts procurement already and how we engage with those consulting firms. We know that this inquiry has significantly altered the landscape for those firms and how they conduct themselves when it comes to their work with government and the corporate sector. Our scrutiny through all the tools of parliament will continue.

So shocking were the actions and the accompanying contemporary emails from PwC employees celebrating the 'hustle', as they called it, and the 'intelligence' that the government had to respond immediately to what we found. Tax promoter penalties were significantly expanded, hundredfold, to in excess of $780 million, with enhanced power for the Australian Taxation Office and the Tax Practitioners Board to break the business model of deception that was embedded in their previous action.

As seen in the government's response, Treasury has consulted on the regulation of accounting, auditing and consulting firms with the regulation of partnerships, conflicts of interest, the role of regulators and competition of the audit sector. That consultation and scrutiny needs to continue, and the government, having noted the recommendations, now has considered and almost unanimously agreed a road map for further action. Having noted all 40 recommendations, this government is committed to the continuing vigilance and necessary change.

Our Joint Committee on Corporations and Financial Services continues our vigilance. We'll be hearing for the second time from the leaders of the public accounting bodies next month in what I can assure Australians will be regular and ongoing scrutiny of their quasi-regulatory responsibility for professional standards in the finance sector.

The findings of the committees of the Senate and the parliament more broadly through the two major inquiries were quite frankly egregious. Let's remind ourselves of the lowlights. Deloitte failed to disclose conflicts of interest in two separate cases with the Australian National Audit Office and the Department of Home Affairs where the firm was advising the government on its tender process while also subsequently consulting to one of the bidding companies. Ernst & Young possessed an enormously inadequate cultural environment that was recorded in the landmark Broderick report. KPMG engaged in mass power mapping, sharing internal resources of how power was distributed in government departments with classifications for how inclined public servants might be at the time towards the consulting firms, even going so far as to call relevant officials 'sponsors'—such contempt.

Ironically and pathetically, KPMG Australia was slapped with a $615,000 fine for widespread cheating on an integrity exam. In that instance it was only because the American PCAOB had the grit to issue the penalty; it was unobserved here in our own country. Then there was PwC, a firm that held itself out as an arbiter of the corporate ethics and professional standards but was revealed to be engaging in basic double-dealing. A senior partner given privileged access to confidential government information, Peter-John Collins, returned to PwC Sydney and plugged our national secrets into a process at PwC Global. Peter-John Collins's goal was to create the saleable product for PwC Global at the expense of his fellow Australians. He did that without any correction from his seniors. He did that to financially and professionally benefit himself and his hundreds and hundreds of largely unregulated partners—including the then CEO of PwC Australia, Mr Luke Sayers, and the then head of tax, Mr Tom Seymour, who went on to become the next CEO.

Corporate ethics, governance and accountability start at the top. When you have a 1,000-plus partnership model that encourages sales at any cost, you end up with leaders like Luke Sayers and Tom Seymour, and you get the international fix-it operators like Kevin Burrowes, parachuted in at massive cost to clean up the mess. I regard each of these men, chosen to lead PwC, as having had significant moral failings. Mr Burrowes, the fixer brought in by PwC Global in response to the Peter-John Collins scandal, blatantly misled the Senate, deliberately failing to reveal the portion of his salary that he receives from PwC Global for the work that he does for that part of the network. A mere $1.2 million—oh to be in a situation where you could forget that was your annual salary from the global entity! He simultaneously runs PwC Australia and earns $2.4 million per year for that work. He's a $4 million man serving two masters—his partners in PwC Australia and his partners in PwC Global. What a conflict of interest!

Work continues everywhere on these matters. Our committee, within government, has revealed and worked alongside government on this issue. I want to acknowledge the efforts of the media in unearthing so much of this. I note also that an AFP investigation into matters related to this professional failure saga goes on. This is not over. Serious cultural and ethical failings will always expose themselves. Indeed, much is revealed over time. Denial does not offer a fig leaf in this situation.

I also note PwC's most recent failures in audit, with Corporate Travel Management and Camilla. These problems cannot be allowed to continue. They suggest a continuation of the deterioration of the core function of these vital entities. Their failures result in serious implications for shareholders and participants in the financial markets—that's every Australian who works and has superannuation invested.

Many whistleblowers, whom I want to thank, bemoaned the failures that they observed daily in their workplaces. There are wonderful, ethical people—people of hope—who are counting on us to continue this work. They want to serve the sector. They want to serve the community and they want to be proud of the work they do in our country. It's a shame not enough of them are listened to, celebrated in their sector or reach leadership positions.

I stand by every word and recommendation in the Ethics and professional accountability report. It's a detailed and accurate account of ethical failure at scale. It's a noteworthy report, a significant contribution to public knowledge for public good. It is a revealing guide to the breathtaking ways in which major partnerships that provided the audit, assurance and consultancy services to major companies and to governments abused the trust they had once rightfully earned and held. No-one can unsee what the committee revealed. A fundamental trust has been breached.

As the eyes and ears of our fellow Australians, who send us here to work on their behalf, I ask all senators and members to commit to continue our work together with the Assistant Treasurer, the Attorney-General, the Treasurer, the Minister for Finance and the heads of every government department to ensure that the road map to improvement—accepted by the government without rejection of a single one of 40 tripartite recommendations—continues to be considered and informs further necessary action in the national interest to build on the significant work already undertaken in the course of the committee's inquiry and since the delivery of the report. I seek leave to continue my remarks later.

Leave granted; debate adjourned.