There is a problem when businesses, whose goals and interests do not align with those of the government or the public, are funded by the public to do government work.
There is a problem when Australian businesses, which not only avoid their own tax obligations here in Australia but encourage others to do the same, profit heavily from doing government work.
And then there is the PwC scandal — the love child of outsourcing and tax avoidance. This scandal makes it abundantly clear there isn’t just a problem or two with the system or a kink in the hose; there is a very real and urgent need for a complete overhaul of government outsourcing.
But I’m not here just to point fingers.
The CPSU has developed two very clear policy propositions that address the issue at the core of this scandal: transparency (or lack thereof).
The first is putting an end to the wasteful outsourcing of public sector work by rebuilding the APS and bringing this work back into the hands of the public service.
The moment public sector work leaves the hands of public servants, government oversight is significantly diminished and the capacity for information and influence to be misused is inevitable.
Having private companies such as PwC, Accenture and KPMG undertake public sector work not only undermines the capability of the APS but also costs a lot more than it needs to. These arrangements also drastically reduce transparency and accountability and inevitably lead to conflicts of interest.
The second CPSU proposal is that the government amends commonwealth procurement rules to prevent contracts from going to businesses that are not willing or able to demonstrate they are meeting their tax obligations here in Australia. The CPSU believes tax avoidance should be a deal-breaker when it comes to government contracting. Quite simply, huge multinational businesses raking in taxpayer funds and taking profits offshore should not benefit from government contracts.
The reality is, however, that many companies living off government contracts pay no or minimal income tax. The ATO’s eighth corporate tax transparency report, released in November last year, confirms this. For example, Big Four consulting firm KPMG, which receives substantial government work, had a total income of $203.7 million but paid no income tax. Ignite Limited received $93.2 million (80% of its income) from government contracts, according to Austender, yet paid no income tax in the same financial year.
So why do we still give government contracts to private businesses whose profits head offshore to avoid tax contributions that could be going towards better infrastructure, health, education, and public services?
There is no clear answer.
But the damage it has done and continues to do is significant.
The Albanese Labor government must deliver on its commitment to rebuilding the public sector. This means not only ending the widespread outsourcing but also ensuring the APS once again leads the way on wages and conditions. It cannot all happen overnight, but a lot can happen this year.
The government can push agencies to bring outsourced work back in-house. Work has started to this end but looking around the APS, there is much more to do to reduce expensive consulting and labour-hire arrangements.
APS staffing needs to be rebuilt to ensure there is the capacity and capability in-house to deliver for communities in our cities and our regions. This means increasing job numbers and converting insecure roles within the public sector to permanent and ongoing employees.
Service-wide bargaining with the CPSU must start on time and deliver fair pay raises and conditions for the APS, so the public sector can better attract and retain employees and be a model employer.
Making the public sector a bigger and better place to work so that it can start to take back the important work that we’ve seen previously outsourced to businesses like PwC is good public and economic policy.
Unlike its predecessors, the current federal government has at least acknowledged that the existing over-reliance on outsourcing is an issue and has begun taking steps to address it. However, the PwC scandal must serve as a reminder to the government that there is still much more to do.
Opinion by Melissa Donnelly published 2 February 2023 in the Mandarin