Government chucks in $22.2m to boost regulators after PwC scandal

The government will further boost regulatory resources in the wake of the PwC scandal.

The federal government has revealed it will pump $22.2m, plus another $1.1m per year, into government departments in the wake of the scandal surrounding PwC Australia.

In a note to the Mid-Year Economic and Fiscal Outlook, the government revealed it would hand Treasury, Finance, the attorney-general, and the Australian Taxation Office millions more in funding.

The government said the extra funding was aimed at lifting the standards of the departments and increasing their powers, coming after several recent announcements to bulk up regulators and massively increase penalties for tax breaches.

PwC has been under siege after the firm’s former head of international tax Peter Collins was banned from practising by the Tax Practitioners Board last year after he was found to have misused confidential information.

Mr Collins, who is facing investigation by the Australian Federal Police, was found by the TPB to have distributed confidential government tax briefings to colleagues within the firm so PwC could frontrun new tax laws.

The MYEFO documents note the government would hand out $10.4m in extra funding to regulators in the 2023-24 financial year, followed by $8.1m next year.

This will slide to $2.4m in the 2025-26 financial year and $1.2m in 2026-27.

This funding is in addition to a $30m allocation in the 2022-23 budget to bump up the powers of the TPB and improve Commonwealth procurement practices.

The government noted the latest funding boost would “strengthen the integrity of the tax system, increase the powers of regulators and strengthen regulatory arrangements to ensure they are fit-for-purpose in response to the misuse and unauthorised disclosure of confidential information”.

“The government is focused on addressing shortcomings in governance and regulation related to these services that were highlighted by the misconduct in the PricewaterhouseCoopers matter,” the MYEFO papers noted.

The funding boost comes after the government moved to boost the powers of the ATO and TPB.

“The government has introduced legislation to strengthen the tax promoter penalty laws to deter and penalise tax advisers and firms who promote tax avoidance; remove limitations in the tax secrecy laws that are a barrier to regulators responding to a breach of confidence;

extend protections to whistleblowers when they make disclosures to the Tax Practitioners Board; and enhance the TPB’s investigation powers,” the MYEFO papers noted.

The government moved on Sunday to beef up the TPB’s penalties, lifting potential fines for the big four accounting firms to $782.5m for egregious conduct breaches.

Assistant Treasurer Stephen Jones also flagged plans to launch reviews into tax practitioner registration, as well as the TPB and ATO’s investigative powers, and frauds in the tax and superannuation systems.

Originally published as Government chucks in $22.2m to boost regulators after PwC scandal