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'Unaccountable': Accounting firms secure lucrative government contracts

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Cartoon by Mark David/@mdavidcartoons.

While Australia bleeds, corporate multi-nationals are ripping us off blind, none more so than the major accounting firms.

As the nation watches its environment undergo perhaps the worst hit to its resilience with ongoing water shortages, a bushfire catastrophe, accompanied by declines in our gross domestic product (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 hundreds of millions of dollars.

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. It has secured 596 contracts from various Commonwealth departments since the 1st of July, 2018, amounting to between one to two contracts per day.

How much money KPMG has received in lucrative contracts in this period is uncertain, as there are simply too many to tabulate in a short time by this author alone. However, Defence Department contracts to KPMG in the last 18 months amount to around $200 million. It is estimated that in total, around $400 million have been dished out to KPMG over this same period. PWC has also done well, receiving five contracts in the last 18 months amounting to some $1.6 million.

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 1,000 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.

Has this information in turn fuelled the Government’s recent calls for greater hazard reduction burning?

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.

Perhaps equally concerning is the questionable track record these firms have with regard to flight capital to offshore secrecy jurisdictions. Both were 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 U.S. Questions still remain unanswered in Canada following actions undertaken by the Canadian Government while investigating the allegations of KPMG’s tax fraud in that country. 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?

Most contracts undertaken by KPMG, which are all listed on the AusTender website, claim most have been subject to "open tender". In other words, the Government has been issuing tenders and awarding contracts at a rate of at least one per day, just for those taken up by KPMG.

Some contracts may be grouped and so KPMG may be awarded a number of contracts at once, though this is not yet clear. 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.

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 was a "limited tender" and ‘no submissions or value for money submissions (were) received". This contract is also subject to confidentiality regarding its input and output. In other words, neither the terms of reference or the results of the analysis are publicly available. 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. This also suggests that the Government was aware of potential bushfire issues well before the last disastrous season.

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. This Government is not a fan of the public service. It is not a fan of public accountability. As the environmental and GDP crisis in this country worsens every day, one wonders where their allegiances really lay.

David Paull is an Australian ecologist. You can follow David on Twitter @davesgas.

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