Disgraced consultancy given deal to run government ‘ethics' training

From Schwartz Media. I'm Ashlin McGee. This is seven am. If you're a public service head honcho, when you were picking a firm to run ethics training, would one of the big four private consulting firms be your first pick. They've rightly been under pretty intense scrutiny in the media around in the Senate, which will today release a report

At the Senate Estimates Committee hearing for the Department of Prime Minister and Cabinet last week, one of the key witnesses was the people from the Australian Public Service Commission.

I declare open this hearing of the Senate Finance and Public Administration Legislation Committee into the twenty twenty four to twenty five budget estimates.

Today we begin and I was watching the proceedings of this committee. Barbara Pocock, the Green Senator, was doing the questioning. She's always someone that I'm interested in following because she's very forensic in her questions.

And when she asked.

A fairly routine question of the Public Service Commission, have you got any new contracts with any of the big four consultancies?

And they said yes.

They revealed that they had engaged KPMG Australia to run an Ethics of Leadership course for the Australian Public Service Academy.

Does the Commissioner have any active contracts with any of the big four consulting firms at present?

So? Have you familiar to take you once?

So currently we have one active contract with KPMG. They're delivering our leadership program delivery support service for the.

Academy, and which is quite extraordinary when you look at the kinds of things that KPMG has been accused of over the last four to five years, not just here in Australia but around the world. When I spoke to Barbara Pocock after the committee hearing, she told me just how shocked she was. Barbara Polclock said to me that this is the type of public service contract that big four firms dream about.

Commissioner, why do you turn to an external consulting firm to teach leadership inside the APS?

Doctor manages, I will come back, but thank you.

Too, m sure, And then the subject matter really flawed me. The idea that you would get someone like KPMG to run a course on ethics of leadership left me feeling, you're quite stunned. Why would she turn to KPMG to talk about ethics?

Conflict of interest would be a topic they know a lot about. Yeah, tragically, Why you would bring a firm in like APMG, with its track record in this country and internationally, to teach anything to do with the ethics of leadership is shocking proper position to me.

Judging from the way that the APSC people were responding to Senator Pocock's questions, I got the sense that they were a little bit embarrassed about what about the contract that they'd signed, That they were embarrassed having to explain the detail.

They just looked to me a little bit sheeapish about.

It, just curious about the KPMG contract. It is teaching to supply leadership training in the academy.

Yes, and I can speak a little bit more about that.

So, as you would know, many of these firms have many different functions, different parts. The Australian Public Service Commissioner, Gordon de Brewer, he stepped in to help explain the context around this contract. The minister representing Prime Minister and Cabinet in this instance, Katie Gallagher, the Minister for Finance. She jumped in pretty quickly to try and explain that well, there was an open tender process here surrounding the awarding of this contract.

And I got the feeling that she was just a bit defensive as.

Well, that they could see just how this actually looked in the cold hard light of day, because they've.

Gone through they've gone through, you know, a proper procurement process, so I think, and I'm trying to just get some information. But when it was when I was looking at it, there was an argument around why it was important to have an external facilitator or an external person.

In estimates week there's so much going on that everyone just missed it. You know, what made this a kreme de la creme contract wasn't that it's a one point three million dollar contract. It's the fact that it puts KPMG in front of three hundred top public servants and how they can use that as a kind of farming opportunity.

That's what Barbara Pocock taught me.

This is a way for them to find out who's doing what and who's good, who's not, who's worth recruiting, who can help them win news business, to create a brand new power map, if you like, based on what they learned from running this course.

And they call this power mapping, don't they when they look at the most influential people in an organization? Tell me about that.

One of the things that got Barbara Pocock into the headlines last year was her questioning of the KPMG Australia Chief Executive Andrew Yates.

The hand side record, could you police state your full names and the capacity in which you appear today?

Andrew Yates, I'm the CEO of KPMG Australia, And.

She'd asked him whether KPMG engaged in this practice known as power mapping, where big four consultancies draw maps of who's who in the different government departments and they work out which public servants they can use to help win new buses business and Andrew Yates strenuously denied.

He said, no, are you responded to a question about power mapping and you responded unequivocally that KPMG Australia does not engage in powermapping, mapping or any other similar practice.

You recall an answer I do, Senator.

Yeah, And then she was able to hold up a power map which had KPMG Australia It's brand on the slide.

Mister Yates, I now want a tender a document that's been provided under privilege, so I'll ask that it be circulated.

You know this slide showed that KPMG had done very detailed sort of power mapping in the New South Wales public service.

Can you see that it displays in a high level of detail dozens of public servants, including.

Your photos, Yes, Senator.

Do you see the box is called relationship.

Strength, mister Yates, Yes, Senator.

There appears to describe in those six categories the strength of the relationship between particular public servants and the KPMG partners and KPMG itself.

Do you agree, yes, Senator Andrew Yates was put in a very difficult situation having his evidence directly contradicted in that way, and he immediately tried to backtrack and obfuscate and said that, no, this looked like a power map, but it wasn't a power map. Senator, given I've just seen this document, you need to give me a few moments just to respond to that more broadly, because.

We could get caught up here.

In a definition about what constitutes of power map.

I don't need to.

Certainly, he used all kinds of other euphemisms to try and sort of get himself out of it, but it wasn't very convincing, and I think he left that committee hearing feeling very embarrassed about his testimony.

So, Jason, this type of incident isn't an isolated incident for KPMG, but it's also not an isolated incident for the consulting industry as a whole. It's been in the spotlight heaps over the past couple of years. Talk me through some of the greatest hits for the Big Four.

The incident that got everyone talking about the Big four consultancies and the way they engage with the Australian Public Service. In Canberra was the revelation that the Tax Practitioners Board had taken action against a senior partner at PwC Australia back in twenty sixteen, and that person had used that inside knowledge. He'd helped the Treasury write these new tax laws and then he'd gone back to PwC and said this is what the Australian Government is going to do.

Avoid that new law.

And then they used the inside information to attract new clients and help them avoid paying this new law that would be coming into force. So this was an incredible breach of trust that PwC had engaged in. Not only had they done that, but they then tried to cover it up. That information was then leaked to the Australian

Government after the break, will the government wheeled a big stick or a wil to let us leave when it comes to a crackdown on the consulting giants.

Jason.

Today a Senate committee will table it's long awaited final report into consulting services provided to the federal government. We've already had a bit of a taste in the interim report that was released last year, but well, today's recommendations signal any kind of major crackdown on the consulting industry.

I think the Senate inquiry is going to recommend new ways to regulate the consulting industry. One option is to say that big four firms are not allowed to do both auditing and consulting, that the conflicts of interest within firms that do both of those things auditing and consulting are impossible to resolve.

They're going to have to split because.

They can't manage the potential conflicts of interest and we've seen that happen time and again with consulting firms.

The government says it's already taken steps to curb the influence of consulting firms in politics, talk me through what it's done, and I guess is it enough.

Perhaps the biggest revelation of the last twelve months have been the extent to which the Australian public service has been hollowed out, so people leaving the public service and going to work for the Big Four and taking all their expertise with them.

And this government.

Back in May twenty two, when Anthony Albinezi came into power, one of the first things that they committed to doing was rebuilding the public service. And I think the committee report that we're going to see released later today is going to suggest ways in which the Commonwealth can strengthen the public service to keep the focus on rebuilding the expertise that the public service has and holding on to

So Jason, given how much consulting has changed the face of the public service in the way that the public service works, can you imagine a world in which the government or governments wouldn't rely on consultants.

I think one of the first things that Tony Abbott tried to do when he became Prime Minister back in twenty thirteen, he said, well, we're going to cut costs. One of the biggest costs is the Australian Public Service, so we're going to just spend less on public service advice. But of course once they started to make those cuts, the government has started to realize that it wasn't getting the kind of advice it needs to function, and so

It was spending on advice by outsourcing it.

And having outsourced some of the key functions of the public service has weakened the quality of government that we have become used to since federation. I think we need to go back to the model that served us so well for the first one hundred and twenty years, and that is a strong, independent public service. And it's not just the quality of government that we're getting, it's the value of our taxpayer dollars. We don't want to be using taxpayer dollars to make a small group of consultants

Jason.

Thanks so much for your time.

Thanks, Ashlyn, it's always great talking with you.

Also in the news today, Federal Opposition leader Peter Dutton says he'd be committed to reaching their zero by twenty fifty, as required by the Paris Agreement, despite announcing his campaign to overturn Labour's twenty thirty target. He colected at a press conference yesterday, Dutton said that progress on climate didn't have to be quote linear, and therefore claimed reducing emissions by forty three percent by twenty thirty wasn't necessary to