NSW bans PwC from future tax work, as inquiry prepares to examine the use of consultants

The NSW government has banned PwC from future tax contracts as the consulting sector braces for a state parliamentary inquiry.

NSW Finance Minister Courtney Houssos is appalled by PwC’s breach of trust. Picture: David Swift

The NSW government has banned crisis-stricken consultancy firm PwC Australia from obtaining new taxation contracts, as the fallout from the scandal snowballs.

NSW Finance Minister Courtney Houssos said she was “appalled” by the breach of trust in which one of PwC’s partners helped multinational clients avoid tax by sharing confidential federal government information.

Ahead of Thursday’s start of a parliamentary inquiry into the state government’s use of consultants, Ms Houssos announced PwC would be temporarily suspended from receiving new taxation work under the government’s professional services scheme.

The NSW government hauled PwC in for a meeting on June 1, and NSW Procurement demanded that the firm reveal if any partners working on state work were involved in the tax scandal.

“As additional evidence comes to light, we will continue to toughen our regime and protect the NSW Government from this behaviour,” Ms Houssos said.

“I was appalled by the breach of trust that occurred with the federal government. As additional evidence comes to light we will continue to toughen our regime and protect the NSW community from this behaviour.”

However, PwC’s existing contracts with the NSW government will not be affected.

The moves by NSW come as the Minns government considers a number of scandals involving the consulting sector that took place under the previous administration.

Ms Houssos noted the state’s Auditor-General “has already found that NSW does not procure and manage consultants effectively”.

“The inquiry will also inform our Comprehensive Expenditure Review which is identifying savings, including on the government’s on consultants,” she said.

The announcement comes just weeks after Ms Houssos announced multimillion-dollar fines for businesses and organisations which were caught disclosing confidential government taxation information.

NSW Finance Minister Courtney Houssos. Picture: David Swift

The moves from NSW follow similar diktats from the federal Department of Finance, which put in place new rules in May requiring departments to consider if consultants they were engaging for works had links to “adverse findings”.

Finance also ordered PwC to stand down all partners at the firm working on government jobs who had received confidential tax briefings leaked by the firms’ former head of international tax, Peter Collins.

PwC has benefited from largesse from governments and the NSW government spent $77m in contracts on the partnership in the 2021-22 financial year,

Ms Houssos said existing conflict of interest and confidentiality terms for all professional service engagement as part of the P&MS scheme would be reviewed and strengthened as part of the moves.

PwC will be required to pledge that no staff member found to have breached confidentiality or misused information as part of the commonwealth Treasury scandal would be involved in any work undertaken for the NSW government.

However, the NSW government warned that it might take further action against the firm as investigations PwC and the consulting sector by the Australian Federal Police, Tax Practitioners Board, Senate and the NSW Legislative Council run their course.

The NSW upper house inquiry will hold the first of two public hearings on Thursday, considering the use of consultants across the public sector, and “management of and measures to prevent conflicts of interest, breaches of contract or any other unethical behaviour.”

Submissions will close on July 17.

The inquiry will hear from several senior public servants in the NSW government, including the Auditor-General, members of the Department of Health, the NSW Treasury Secretary, and the NSW Procurement executive director.

Inquiry chair and Greens MLC Abigail Boyd. Picture: Gaye Gerard

Inquiry chair and Greens member Abigail Boyd said the move to strike PwC from future tax contracts was “the very least” the government could do.

“Let’s not imagine this is the end of the matter,” she said. “What we have here are systemic problems and we will need far more dramatic reforms if we’re to see a restoration of the integrity of our public sector.”

The AFP’s investigation into PwC is still under way, after federal Treasury Secretary Steven Kennedy referred the firm and Mr Collins.

The TPB has also indicated it will scrutinise the firm to determine which other partners and staff in PwC’s tax practice may have had knowledge of the use of confidential information or who failed to report Mr Collins’ conduct.

PwC has faced repeated calls to name the staff and partners who had knowledge of the confidentiality breaches.

PwC is understood to have assembled a list of at least 63 names using a colour-coded format to determine their potential exposure to the breaches.

But PwC has refused to reveal the names on the list, which it supplied the Senate last week, other than four former partners who it claims were involved in the confidentiality breaches.