Other politics
PwC – the quest for blood may distract from serious problems in the public service
Je weniger wissen die Leute davon, wie Gesetz und Würste gemacht werden, desto besser schlafen sie nachts.
That statement, attributed to Otto Bismarck, translates as “The less people know about how policies and sausages are made, the better they sleep at night”.
We are still in the dark about sausages, but we are becoming enlightened about the policy-making process. Policies are made by highly-paid consultants, employed by firms whose prime commitment is to profit, rather than the public purpose.
The media are giving the PwC scandal a great deal of cover, particularly as the possibility of criminal charges arises. Few things make for more popular TV appeal than the sight of a handcuffed executive, in an Italian suit, being pushed into the back of a police car to start serving his sentence.
But this is about more than one rogue consulting firm. It is about the entire way in which public policy is developed in Australia. In a Conversation contribution – PwC scandal shows consultants, like church officials, are best kept out of state affairs – Carl Rhodes of the University of Technology, Sydney likens the position of consultants to the position of the church in earlier times:
The power of the modern consultants to influence government is akin to the influence Church officials once wielded. The danger of particular private interests taking precedence over public ones is striking, as the tax scandal illustrates.
The press has been captured by the finding that executives of a consulting firm have used information, provided under conditions of secrecy, to help its clients avoid paying tax. That’s hardly surprising: it’s how the whole tax advice industry works.
More surprising as described by Neil Chenoweth in the Financial Review – What the Senate needs to ask the ATO, Treasury on PwC tax scandal – and by Senator Deborah O’Neill on ABC Breakfast – ”It’s contemptuous” Senators dig deeper into PwC scandal – is that the Australian Tax Office became aware at least five years ago (perhaps seven years ago) that PwC “tried to profit from confidential Treasury information obtained by former partner Peter Collins”. The ATO was bound by privacy laws from reporting to the police that a law may have been broken, and the police claim that they had insufficient evidence to pursue a case – but that doesn’t explain why they didn’t find extra evidence. Greens Senator Barbara Pocock, speaking on ABC Breakfast, suggest there has been a multi-institutional go-slow on dealing with PwC’s behaviour.
Rhodes’ likening the situation to the power of the church is apt: the seal of the confessional comes to mind as an analogy. A clerk in the court of Charlemagne may have discovered some malfeasance by the local bishop, but exposing it would have been a career-limiting and life-limiting move.
Even now that we know about the PwC scandal, the government seems to be arguing that the big consulting forms are so embedded in the public service, often on long-term contracts, that the relationship would be almost impossible to undo, as if they have become too big to fail. This in spite of Labor’s pre-election promise to bring back to the public service work that had inappropriately been handed to consultants.
Rhodes’ article provides another comparison with the situation in medieval Europe. The people hanging around the monarch were not the most schooled: their task was political, and their tenure depended on their capacity to flatter the monarch. The church, however, “was a source of advisers who could read, write and add up numbers”.
He could be describing the public service in Australia – not the creative and dedicated public service built from the Department of Postwar Reconstruction in the 1940s, and sustained by the Menzies government, but the politicized public service shaped by the Howard government in more recent times.
As the public service became more politicized many public servants, skilled in policy analysis, found that their abilities weren’t wanted. The well-paid jobs went to the flatterers who could write speeches with a partisan spin for the minister, and help the minister ward off criticism from journalists, auditors and the opposition. Those with policy or analytical skills were taken up by consulting firms, where their pay was higher, where their skills were recognized, and where they enjoyed more professional respect than they had in the public service. They need to be brought back to the public service, motivated by the opportunity to work for the public purpose, rather than working to enrich the partners of consulting firms and helping multinational firms avoid paying tax.
Transparency, please, on infrastructure
In 2014, when he was the Opposition’s infrastructure spokesperson, Anthony Albanese presented to Parliament a motion to require Infrastructure Australia to perform a cost-benefit analysis on all projects costing $100 million or more.
The Coalition government blocked the motion. It wasn’t going to allow economic evaluation to get in the way of its pork barrel projects.
Last week Independent MP Allegra Spender – one of the high-profile Teals – moved almost exactly the same motion. In established form the Coalition and Labor combined to defeat the motion. David Crowe, writing in The Sydney Morning Herald – Dutton and Albanese unite to block teal transparency demands on $120b of projects – reports that the Greens and independents in the House of Representatives – Kate Chaney, Zoe Daniel, Helen Haines, Dai Le, Monique Ryan, Sophie Scamps, Rebekha Sharkie, Zali Steggall, Kylea Tink, Andrew Gee and Andrew Wilkie – voted to support the amendment.
Defending the government’s decision to oppose the motion, Infrastructure Minister Catherine King offered the pathetically lame defence that some information was too sensitive to be released.
Peter Martin, writing in The Conversation about Spender’s motion, reminds us that when last in government Labor wasn’t exactly forthcoming with economic analysis of major projects and policy initiatives. But he sees a sliver of hope in the government’s establishment of an Australian Centre for Evaluation, an initiative pushed by Assistant Minister for Treasury Andrew Leigh, who has a strong economic reputation as a professor of economics. Martin explains that the Centre “will be tasked with examining whether government programs work, and doing it before they are rolled out”.
The demise of Spender’s bill reminds us that “bipartisanship” is not always a political virtue. It also reminds us that once in office, political parties find a comfort in going along with the practices of the government they have displaced: it’s easy that way.
Neither Labor nor the Coalition have read the message from the 2022 election, even though, as Crowe points out, there are many voices in Parliament repeating it.
The Commonwealth should confine its infrastructure spending to projects with national importance. That is not to suggest it should withdraw from financing infrastructure: our interstate road and rail systems are in desperate need of modernization. If the Commonwealth withdrew from funding football stadiums, repairs to local roads, intersection improvements, sporting facilities – projects that should be the responsibility of adequately-funded state and local governments – it could get on with the job of providing the nation with a proper rail and highway system, in line with proper cost-benefit analysis.