PwC has been banned from advising the New South Wales government on tax for at least three months and asked to ensure none of its staff working on state contracts were implicated in the federal tax leaks scandal.
The scandal has also triggered a review of conflict of interest and confidentiality provisions used in contracts by the state government, which spent around $1 billion with consultants over the last five years.
The response – recommended by the state’s procurement agency and accepted by the Treasury – follow a commitment from the Minns government to impose multi-million dollar fines and shadow bans on consultants and advisers that breach government trust.
At a New South Wales parliamentary inquiry into consultants on Thursday, officials said the short-term, limited ban was a proportionate response while investigations continue at the federal level.
But Greens MP Abigail Boyd was unconvinced, doubting the response — which is limited to tax advise work — matched the alleged serious breach of trust, unethical behaviour and potential lost revenue.
“To me that does not sound like a proportionate response to what’s gone on,” she put to officials.
State Treasury deputy secretary, commercial, Sonya Campbell — who chairs the NSW Procurement board on behalf of the Treasury secretary and worked for PwC before joining the public service — said it was necessary until investigations are completed and a wider ban would be “reducing the market” for the government.
“These big consulting firms provide a diverse range of services to government agencies,” Ms Campbell told the inquiry.
“And by, I guess, singling out a particular one when all of them would probably have historical issues in the past, you know, is thereby reducing the market that we would have for what might be services that are needed, so we think it’s a proportionate response.”
Ms Campbell said her prior employment with PwC was not a conflict of interest and that the specific recommendations to impose a short-term ban on the company was made by the executive director of NSW Procurement, not herself.
“I think my experience working for PwC is reflective of many people across the public sector who have worked for consultancy services [and] now work for government. And there is a reason why we work for government. But I think if there was any perceived conflict of interest, then I would remove myself from that decision making.”
The recommendations will be reviewed pending the outcome of Commonwealth inquiries and a criminal investigation into PwC and its former partner Peter Collins over the tax leak scandal by the Australian Federal Police.
Finance minister Courtney Houssos has also backed the response as proportionate but left open the option to expand it based on findings from the federal inquiries and the wider review of consultancies by the state Parliament.
“I was appalled by the breach of trust that occurred with the Federal Government,” Ms Houssos said.
“As additional evidence comes to light we will continue to toughen our regime and protect the NSW community from this behaviour.”
A report by the state’s Auditor General released in March showed New South Wales government agencies broke procurement rules, failed to manage contracts and increasingly used only a handful of global giants while handing more than $1 billion to consulting firms over five years. $57 million of this spend went to PwC.
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