Tales of Australian Democracy

by Hungry Charley



The corporate grab of public funds continues to rise

28 Januray 2020

As the nation undergoes perhaps the worst hit to its resilience with ongoing water shortages, a bushfire catastrophe, accompanied by declines in GDP through unprecedented losses to agriculture, tourism, business, biodiversity and timber resources, major accounting firms are reaping the benefit of our privatised public sector to the tune of 100s of millions of dollars.

The Big Hand Out

The names are very familiar, KPMG and Price Waterhouse Coopers (PWC), two of the biggest accounting firms in the world, are now playing increasing roles in this cash drain, securing contracts for Australian Government services at a rate that is mind-boggling. The biggest beneficiary of our Government’s desire to ‘cut red tape’ is KPMG securing 596 contracts from various Commonwealth departments since the 1st July 2018, amounting to between 1-2 contracts per day.

KPMG has received in lucrative contracts with the Defence Department in the last 18 months a reliably estimated amount of around $200 million. As Defense Department contract, constitute approximately 50% of all contracts awarded in this time, it is estimated that in total, around $400 million have been dished out to KPMG in contracts in the last 18 months. PWC has also done well, receiving five contracts in the last 18 months amounting to some $1.6m.

The services these firms are providing are more than just accounting and auditing, but increasingly they are seen as advisors on management and implementation of policy. Services provided by these firms are now described as ‘management advisory services’, ‘research programs’, ‘project’ or ‘strategic planning’ and ‘administration’, arguably tasks which could be undertaken by the departments themselves. Much of this has come at the expense of public investment in our government departments, for while we are supposedly in a ‘surplus’, departments are seeing less and less of the public pie.

CSIRO has seen 1000 jobs slashed since 2017. If we look at the Department of Environment and Energy (DEE), it has received cuts to public expenditure to the tune of 25% and a loss of 60 out of 200 staff in their conservation and biodiversity division. As a result, threatened species recovery plans have been abandoned, oversight over environmental assessments reduced with a Minister making determinations based on poor evidence. We only have to see the decision regarding the Carmichael Mine with the unresolved questions regarding impacts on water resources to understand the consequences.

PWC, who service the DEE, have received $2. 2 million in contracts over the last five years, at the same time the department was massively defunded. What is noticeable is that while contracts formerly were restricted to accounting and audit services, in October 2018 a contract was awarded for the provision of ‘specialised or professional skills’ to undertake a ‘fuel cost benefit analysis’. This contract was for $275,000. While most contracts are open to the public to view, this particular contract has been deemed to be too sensitive for public scrutiny, rasining many questions on how it has affected government policy in this area.  Has this information fuelled the Government’s recent calls for greater hazard reduction burning? Our Government does not want us to know.

Not to mention the incredible $434.2 million given to the private Great Barrier Reef Foundation to ‘improve the resilience’ of our Reef, for which the Foundation claims it has awarded only $22 million in grants since the lucrative deal was signed, without tender. It should be no surprise that both KPMG and PWC are ‘foundation supporters’ in this venture, which is looking more like a corporate cash cow as time goes on.

Questionable Track Record

Perhaps equally concerning is the questionable track record these firms have with regard to flight capital to offshore secrecy jurisdictions. Both named in the Panama Papers as being prominent in servicing the tax haven sector, PWC has been named as a key player in widespread tax evasion activities, while KPMG has been exposed undertaking tax fraud in Angola and the US. Questions still remain unanswered in Canada following actions undertaken by the Canadian Government while investigating the extent allegations of KPMG’s tax fraud in that country (see video below). The Canadian example highlights the pull of these global firms among various elites around the world. It seems Australia is no exception.

But what of the transparency of this incredible cash handout to these firms. Putting aside what actual services are being provided and how much this replicates what could be done internally by the various departments, has there been a transparent tender process?

Contracts undertaken by KPMG, which are all listed on the AusTender website, claim most have been subject to ‘open tender’. Even though most of the tenders awarded to KPMG have been ‘open tenders’ and not subject to any kind of confidentiality, it is extraordinary how so many contracts could be awarded in such a short space in time and h9w many concurrent contracts they have.

PWC, also named in the LuxLeaks revelations, seem to have gone from strength to strength on the international accounting stage, but is now also undertaking extra-accounting activities.

The October 2018 contract for PWC to undertake a ‘fuel cost benefit analysis’ for the DEE, as mentioned, was a ‘Limited Tender’ and no surprise that there were ‘No submissions or value for money submissions (were) received’ according to the website. Why the Government deemed that this contract was subject to confidentiality, neither the terms of reference or the results of the analysis are publicly available, is a mystery. Perhaps this data will be made available during the mooted inquiry into the bushfire crisis, particularly as the contract was finished before the latest fire season started, but this seems unlikely. But without a doubt, the government was well aware of potential bushfire issues well before the last disastrous season and was undertaking analysis. Has this PWC analysis fuelled the Government’s recent calls for greater hazard reduction burning? Our Government does not want us to know.

As the usual voices, particularly the Institute of Public Affairs, still cry out for further cuts to Government ‘red tape’, we see these calls repeated by our political representatives, not the least our Prime Minister and Treasurer who are now arguing for further cut-backs.

Having sat over a systematic gutting of the public sector over recent years, one wonders how much further it can go and what additional services will be privatised. But the pattern is clear.