PwC has faced further consequences as it has been prohibited from offering any new tax advice to the NSW Government. The decision comes in the wake of a confidentiality breach that has marred the firm’s reputation and integrity.
The NSW Treasury secretary has implemented a series of measures, including the temporary suspension of PwC from taking on new tax engagements. The integrity scandal unfolded when a former partner, Peter Collins, was deregistered for sharing confidential Commonwealth briefings on multinational tax reform with partners and clients. This incident has prompted a federal police investigation into Collins’ alleged conduct.
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A report by the Auditor-General in March exposed that NSW agencies had spent over $1 billion on outsourced advice between 2017 and 2021. However, the report revealed that these agencies lacked proper systems to manage and evaluate consultant performance, leading to an over-reliance on PwC and other Big Four consulting firms. This over-dependence on a few consulting firms posed strategic risks to the government.
Although PwC has stated that no staff implicated in the Collins matter have worked on NSW government engagements, the firm will not be allowed to enter into any new tax advice contracts until further notice. Existing engagements, however, will not be affected by this decision.
Under the directive from Treasury Secretary Michael Coutts-Trotter, PwC will be required to confirm on a monthly basis that no staff member involved in the Collins matter, who breached confidentiality or misused information, is engaged in NSW government projects. Furthermore, conflict of interest and confidentiality terms in all professional services contracts will be reviewed to identify and address potential vulnerabilities. This review was initiated following the auditor-general’s report.
In response to the breach and the broader issues with hiring consultants, the Labor Party has pledged to overhaul government rules regarding the engagement of consultants. Additionally, they have proposed imposing substantial fines on individuals and organizations found to unlawfully breach government confidentiality.
Expressing her disappointment over the breach, NSW Finance Minister Courtney Houssos stated, “As additional evidence comes to light, we will continue to toughen our regime and protect the NSW community from this behaviour.”
The tightening of regulations coincides with an upcoming parliamentary inquiry where Auditor-General Margaret Crawford and the head of the state procurement agency will face questions regarding the utilization of consulting services. The inquiry will explore various aspects, including “consultant shopping” and the negative public policy outcomes that have resulted from such practices.