Senators on various committees have expressed outrage about how consultants have nestled their way into government departments, won numerous engagements and generally found a clever way of turning consolidated revenue into their own.
It’s a theme that has dominated the past year across several senate committees and estimates. That doesn’t, however, mean the consulting world was the only focus. Somebody mentioned t-shirts and a hotties list…
Power mapping or not power mapping?
How do accounting and general consulting firms know precisely who in the public services holds the key to the cupboard where the contracts are kept that deliver the moolah?
The senate committee looking into government consulting processes and procurement wanted to see whether firms used power mapping — a way of illustrating the relationships between public servants inside the department and with external parties — to gather intelligence, and their minds were preoccupied with how people work out who wields power.
KPMG chief executive Andrew Yates found himself at the pointy end of a series of questions from senator Barbara Pocock when he fronted the committee on September 27 — the day of the big PwC Switkowski reveal — for a second appearance on this very issue.
Pocock and senator Deborah O’Neill had both been looking at the issue of power mapping — O’Neill had sent firms Questions on Notice asking them how they knew who was who in the public service zoo.
KPMG said it did not engage in the practice of power mapping in its response to O’Neill’s Question on Notice but that was not the end of the matter.
O’Neil might have sent out the questions, but it was Pocock who got a leaked KPMG document that looked like a “power map” of folks in the NSW Department of Transport.
Power maps are a bit like an organisational structure that is used by consulting practices to document their intelligence on government departments they are engaged with or seeking to engage with for consulting projects.
Yates and Pocock had an exchange of words during the hearing about “power maps” and whether what Pocock had produced — hey presto! — at the right moment during the hearing was, in fact, a power map.
Yates disagreed with Pocock’s assertion it was a power map, and Pocock disagreed with Yates, and the KPMG Australia supremo ended up receiving a letter from Colbeck for his trouble asking for clarification of the firm’s evidence.
“The committee is of the view that your response to the answer to question on notice and the existence of the document described during the hearing are contradictory,” Colbeck said.
“I ask that you review the answer to the question on notice dated 9 August 2023 and the Hansard transcript from the hearing on 27 September 2023 (both attached) to explain the discrepancy and apparent attempt to mislead the Senate and respond to the committee in writing by COB 26 October 2023.”
Yates did write back to Colbeck and said the firm believed the evidence provided in writing and verbally to the committee was not contradictory, and that the document presented to the committee by Pocock wasn’t a power map because it lacked features such as ranking or influence of individuals within a department.
“The document presented to KPMG representatives at the Inquiry on 27 September 2023 was from 2021 and related to a specific engagement. This showed the client’s organisation chart, then categorised the strength of KPMG’s relationship with individuals identified in the chart,” Yates’ letter says.
“Assessing strength in this context is important to ensure we are meeting our clients’ objectives and is a critical ingredient in providing tailored and quality advice.”
Guessing games
Accounting firm PwC’s release date for the Switkowski report that painted a rather bleak picture of the accounting behemoth’s innards was the subject of guessing games and fishing expeditions on September 26 — a day before the firm actually let the report loose into the wild.
Colbeck asked the TPB chairman Peter de Cure whether he had been given a copy of the Switkowski report.
De Cure’s response?
“Not as yet. We’ve been advised that we can expect to see it tomorrow.”
Was the TPB briefed on its contents?
“No”.
PwC released the Switkowski report, and its response to the Switkowski recommendations the following day but a further document — a statement of facts related to the tax leaks saga — was released by the firm later along with a video of the PwC chief executive Kevin Burrowes making a public statement.
Conference in Paris? Oui, oui!
Accounting firm PwC held a global tax conference in November 2019 in Paris and ATO second commissioner Jeremy Hirschhorn got an invitation to present.
The firm wound up coughing up $12,000 to get Hirschhorn to Paris, accommodate him in Paris and then fly him back to Australia.
Committee members got a little curious about the travel arrangements given that 2019 conference was somewhere in the middle of all of the fracas over tax matters between the ATO and PwC.
Pocock threw a few questions at Hirschhorn during senate estimates in October about the PwC global tax shindig.
“So you attended the conference in November 2019, and a few months earlier, in August 2019, you met with Luke Sayers, then CEO of PwC, to discuss a range of ATO concerns — quite a serious set of concerns and a serious meeting, no doubt. It wasn’t the only one,” Pocock said.
“You had three of them related to PwC conduct, and you suggested that Sayers review the internal emails related to the tax scandal and the misuse of confidential government information.”
Hirschhorn was also asked by Pocock whether he thought is was appropriate for him to attend the global tax conference of the firm he was in the process of quizzing over tax matters during the same time.
The second commissioner had no hesitation in declaring that, yes, his attendance was not a bad idea.
“It was a very important conference for us to present at. There has been much testimony that we were worried about PwC Australia providing aggressive tax advice and tax structures in relation to the Australian tax system,” Hirschhorn said.
“You could see PwC Australia as the supplier of that aggressive tax planning, but where was the demand? The demand was PwC International and PwC’s international clients. I gave two speeches. One was a very robust speech to the Australian firms on the supplier side.”
Pocock was unconvinced.
“What message do you think was sent to PwC when they paid for you to be there? I think it sends a message that says: ‘We’re friends. Thank you for bringing me.’ If you are going as a tax official from the Australian public sector, having your fees paid for by a multinational who you are in dispute with—you were in dispute with them at the time—and they pay for you to go to Paris, Mr Hirschhorn, it doesn’t pass the pub test,” Pocock said.
“It just doesn’t stand up.”
Travel problems and the ASIC chair
Hirschhorn’s travel itinerary back in 2019 might have gotten one committee member excited but senator Andrew Bragg was interested in some more contemporary travel arrangements from the corporate regulator.
Bragg has a thing for asking Joe Longo, the chairman of the Australian Securities and Investments Commission questions and he didn’t take kindly to Longo’s absence during the senate estimates run in October.
He used the social media platform X — formerly known as Twitter — to advertise his displeasure at finding out the chairman was not going to be present for a bit of prodding from the Coalition senator.
“On the eve of ASIC’s appearance at senate estimates, I have been informed the ASIC chair will not attend.,” Bragg said.
“This is bizarre and emblematic of ASIC’s attitude towards parliamentary oversight. The bottom line is the scrutiny will not stop until ASIC gets better at law enforcement.”
ASIC deputy chair Sarah Court went into bat to explain that the chairman was overseas at a twice-yearly face-to-face meeting with his peers from other regulators across the globe when Bragg decided to poke and prod his way on the matter of the ASIC chairman’s absence.
Longo attended a committee hearing a week or so later, and he provided an account of his overseas work to the committee chaired by senator O’Neill that was in direct response to Bragg’s interrogation.
“I wanted to start by briefly mentioning ASIC’s international work as I understand there was some interest in my international responsibilities in senate estimates last week,” Longo said.
“ASIC has an important role in international cooperation relating to supervisory and enforcement work and information sharing to inform our action against misconduct and that of our international counterparts.
“ASIC participates in bilateral and multilateral arrangements to enable it to obtain public and non-public information from regulators and law enforcement agencies. This assists our regulatory functions which include investigation, licensing, surveillance and research matters.”
Speaking of Sayers…
The former PwC supremo, Luke Sayers, did front the parliamentary committee to cop questions from the Colbeck, O’Neill and Pocock triumvirate but it got off to a curious start about seating arrangements.
Sayers asked Colbeck what chair he should plonk himself on.
“You sit where you are comfortable, Mr Sayers. We’ll still hit you,” Colbeck fired back.
Old commissioner mates network
A recurring theme during 2023 was the issue of the public service revolving door where public servants would go into the private sector and then be contracted to conduct reviews of government agencies.
Nowhere was this more prominent than in the debate surrounding the AFP’s use of PwC for work that became more controversial when the agency was given the task of investigating the confidentiality breach by federal Treasury.
AFP chief commissioner Reece Kershaw got in a tussle with Australian Greens’ senator David Shoebridge over his past relationship with Mick Fuller, the former NSW chief commissioner of police who had joined PwC as a partner.
Kershaw and Fuller had text exchanges that Shoebridge was keen to explore in light of revelations that an investigation into the tax leaks scandal was going to unfold.
It was revealed during the year, however, that contracts the AFP had with PwC had been wrapped up — leaving no further conflict that was real or perceived between the investigation and any ongoing contract work with the firm.
Betts’ t-shirt and other, less savoury matters
Jim Betts is the secretary of the Department of Infrastructure, Transport, Regional Development, Communications and the Arts and he was in the spotlight a little during 2023 during senate estimates.
A notable point of tension was his choice of fashion, as Betts wore a t-shirt that was designed to show some solidarity with Indigenous staff. It got raised by National Party senator Bridget McKenzie in the context of impartiality — there was a referendum on incorporating a Voice to Parliament due later in the year.
Betts clarified his position at estimates.
“[To] the extent that that symbolises anything, it symbolises solidarity with the Aboriginal community in Australia and with Aboriginal and Torres Strait Islander staff members within my own department,” Betts said.
The t-shirt matter found its way up the food chain at the Australian Public Service Commission, and APSC head honcho Gordon de Brouwer told senate estimates he and Betts had a yarn about the fashion choice.
“[Betts] was very clear that his intention was not to act inconsistently with the impartiality requirement,” de Brouwer explained.
“He was also clear that he was sorry if there was any misunderstanding around his position around impartiality that would have come from those circumstances.”
The National Party senator had another rabbit hole down which she wanted to proceed with Betts related to whether there was a thing called the “hotties list” being kept by male members of a graduate cohort.
Betts explained the reference for McKenzie’s benefit.
“This relates to allegations made within our graduate program about concerns some female grads had that certain male members of the graduate cohort had assembled a degrading list of women that assessed them by their so-called hotness, which is a disgusting phrase that I hate to have to mention,” Betts said.
“Confronted with the concerns that had been expressed by our female graduates, I assembled that graduate cohort and, as I said, reminded everybody of the need for respect in the workplace.”
What there an actual list as alleged?
“We were unable to substantiate the existence of such a list, which doesn’t mean it doesn’t exist,” Betts said. “It just means that we were unable to substantiate it, notwithstanding the fact that we got independent external investigators to assist us in our inquiries.”
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