Barbara Pocock (SA, Australian Greens) Share this | Link to this | Hansard source

I move:

That the Senate takes note of the document.

I will also be referring to the government response on the final report of the Finance and Public Administration References Committee's Inquiry into the Management and Assurance of Integrity by Consulting Services. I want to thank colleagues, particularly Senators Colbeck and O'Neill, for their work on these inquiries. It was a big job, and we worked very collectively and cooperatively on it. It is rare that you see tripartisan recommendations in this place on such a large body of work, which makes Labor's incredibly woeful response to the two consultant inquiry recommendations, to me, all the more disappointing.

Australians are tired of seeing the same story play out over and over again. First, there's a massive scandal. In this case, it's PwC deliberately monetising confidential Treasury information. We cannot forget that this was one of the most shocking breaches of public trust in recent memory. PwC made millions of dollars in fees, and staff gloated in internal emails about their success. Next, an inquiry is announced and evidence is gathered. Between the two inquiries, we held 22 public hearings and received 144 submissions. Australians paid attention. We unearthed a tidal wave of malpractice, poor governance and structural failures. We asked serious questions about integrity, influence and the hollowing out of the public sector. Our reports were issued, with clear road maps for how reform needed to unfold. Between them, the two inquiries made 52 evidence-based recommendations, which were agreed by Labor, the Liberals and Greens. Then, just when the public expects decisive action, the government shrugs. It issues a short response and quietly moves on. That is not accountability. It is not leadership, and it is not good enough.

What good is the Labor Party if our community and our Senate go through all of that work and then it simply makes tiny steps towards progress? What is a Labor government for if not to deal with such a significant failure of governance and integrity in our community? This is a government of gestures. When it comes to critical reform in response to a crisis like this, it shrugs; it gestures. Despite a truckload of evidence and comprehensive recommendations, the government is once again choosing to tinker around the edges. Instead of committing to the kind of wholesale reform we need, the government's response is to fob off our reports with tiny baby steps that nowhere near meet the scale of the crisis.

Let me remind everyone what these inquiries found. They laid bare systemic problems in the way that federal governments engage with consultants. They showed that successive governments have allowed a massive and unchecked expansion of the consulting industry inside the heart of decision-making. They raised serious concerns about conflicts of interest, revolving doors between public office and private profit, and horrible workplace cultures, rife with bullying and sexual harassment, where profit and earnings are king. They showed that audit quality is in decline, with ASIC calling for concerted action from both Deloitte and KPMG to lift their game.

There is no shortage of scandals that these inquiries uncovered. Who can forget KPMG's systemic power mapping of government department staff? They were colour-coded, laid out to a person, named and graded for their land-and-expand potential. Then KPMG lied about it. They said they didn't do it, but there were the maps that proved that they misled the Senate. People who charge millions for their work, people who ask for your watch to tell you their time—we need to do better, and these scandals were multiple.

What about the scandal around the then CEO of PwC, Luke Sayers, who was paid $30 million—an astronomical amount of money—for his eight years at PwC, through the years of scandal and deceitful monetisation of confidential information? This is a man who could not recall any crucial conversations with the ATO and who looks to have experienced more damage from an intimate photo scandal than from his serious failures in management and leadership at the top of PwC. PwC's unwillingness to provide the Senate with key documents was symptomatic of its problematic engagement with the various committees and the many hearings.

There's been a vast array of ethical failures, unchecked conflicts of interest and a lack of regulation in the consulting and auditing sector. The scandals have been frequent and global in nature, and yet what have we seen in response from this Labor government? There's review after review, no urgency and not enough meaningful action. I'm hearing from whistleblowers and witnesses who gave evidence to our inquiries in good faith that they're incredibly disappointed at Labor's quiet retreat from what is really needed here. There's no clear commitment to end the practice that allowed this situation to arise in the first place. The recommendations were tripartisan. If the government genuinely wanted to clean up the consultancy sector, it would support its own Labor senators' recommendations. Instead, their response has failed to meet the moment. It's one thing to have shared outrage. It's another to ensure that the tax leak scandals never happen again.

We have the evidence of the consultancy sector ripping off the public and taxpayers and we have clear recommendations. So when will this government act? The government noted all 40 recommendations in the second report. They noted them. There has been no action in structural reform of the kind that is clearly recommended, laid out in these reports; no action on stopping the revolving door; no action on holding PwC or Luke Sayers truly accountable; no action on conflict of interest or banning political donations from contractors; no independent regulator of the consulting sector—and the list goes on.

Six months ago, I stood in this chamber and expressed my outrage at the government's decision to allow PwC to rebid for government contracts. It was a decision that Senator Colbeck, Senator O'Neill and I strongly opposed. We wrote a joint letter arguing that we saw no meaningful justification for giving PwC the green light while significant investigations remained ongoing. Regardless, they were let back into contracting to the public sector. What a shame. What a shocking failure of governance by the Labor government. This was gutless. It was a gutless decision, so far from the standard that Australians face in their own workplaces and community for their own behaviour.

The government's refusal to clean up the unethical practices rife across the consulting sector is the reason why I introduced a bill to this parliament to ban unethical contractors. It's not enough to have a code of conduct. There have to be consequences. As any parent of a small child knows, there must be logical consequences for behaviour. Unless there are, kids repeat it. People with bad ethics in the consulting sector certainly do. We have to close the legal loopholes that allow government contractors who behave unethically to get away with it. They are laughing all the way back into public consulting and all the way to the bank.

The government response reiterates that the government is aiming to 'reduce the government's reliance on contractors and consultants and rebuild capability within the APS'. This is coming from a government that spent more on consulting firms than the Morrison government. The recent biannual consultant spending data shows that, in the last six months of last year, the government had committed to spending over $600 million in contracts worth $2 million or more. Is this the behaviour of a government that is truly reducing its reliance on outsourcing?

The Greens will continue to push for real reform. We want to see real reform, real transparency, real accountability. We will not accept a system where public policy is shaped behind closed doors by those with the deepest pockets and the best access. Australians deserve a government that works for them, not one that looks the other way when the warning signs are flashing red. What are you for, Labor? Not just for the scandal—you must be there for the action. When confronted with two of the most damning inquiries into consultant influence ever conducted by this parliament and probably internationally, the government has chosen inaction dressed up as responsibility. We need a government willing to legislate real safeguards, not tinker with voluntary guidelines and endless reviews—not gestures.

The Greens have been clear about what meaningful reform looks like: having cooling-off periods to stop the revolving door; banning firms who make dirty political donations; having an independent regulator in the consulting sector; and rebuilding a strong, independent, well-resourced public sector. Instead, these government responses send a message to consulting firms that business will continue as usual, even when the status quo has failed. Well, meaningful reform would have upset powerful interests! And that's what we must do if we're going to see the real change that these reviews ask for.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to 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.