PwC gives bludgers a lesson in corporate welfare

by | Sep 27, 2016 | Government, Lead Story, Tax

newgraph

Source, Geordie Wilson

Story by Michael West and Geordie Wilson

The numbers are staggering. The Big Four accounting firms have picked up at least $2.6 billion in fees from the Australian government over the past ten years.

Last Tuesday before the National Press Club, the Minister for Social Services, Christian Porter, unveiled a PwC report which put Australia’s “future lifetime welfare cost” at $4.8 trillion. No matter they confected the highest number they possibly could to scare the daylights out of people, when it came to those dastardly welfare bludgers, the die had been cast.

The Murdoch press and the TV ran long and hard with welfare bludger stories. The narrative was in train. It was lifters and leaners all over again. All that was needed was the imprimatur of a Big Four accounting firm to ennoble the assault on poor people.

“The messaging is that if you are a pensioner, you are a bludger too, an old bludger.”

This is not to say welfare reform should be ignored. There is fat in the system; and entrenched welfare dependency which passes from generation to generation. But there there is more fat elsewhere.

When it comes to leaners look no further than PwC itself which has picked up $759,736,134.06 over the past ten years from the Commonwealth; almost $760 million in taxpayer money for doing reports – providing advice, paper shuffling.

Let’s not forget Ernst & Young, which banked $525,064,685.80 for writing stuff, and Deloitte with its $415,773,994.86, the lowest of the Big Four leaners but nonetheless a leaner par excellence.

It is KPMG though which takes first prize in the corporate welfare stakes, strapping on $934,351,772.48 of the taxpayer’s finest, clipping almost $100 million a year, leaning like a test rugby pack.

All four have been big donors to the major political parties. All four are the architects of global tax avoidance. All four, while sermonising to government on tax policy, are busy advising their multinational clients how to skulk out of paying tax.

Oligarchs of the Treasure Islands

If there is a welfare system out of control, it is the corporate welfare system. The “future lifetime welfare cost” – to borrow PwC’s frilly metric – of the Big Four’s tax chicanery dwarfs the cost of those darned dole bludgers. We might as well just independently estimate it at a gazillion right now … on a PwC “future lifetime” basis.

Others have fairly made the point that there is some good stuff in this report, and surely there is. It’s just that the double standard at play is so profound that it is hard to take seriously.

As George Rozvany, the former Big Four tax lawyer and head of tax for insurance giant Allianz Australia, pondered this week, “What made PwC such an expert on welfare bludgers anyway? Maybe somebody at PwC knows somebody who has a relative on welfare, or they might pass one on the way to lunch”.

Another annoying thing about the welfare narrative, not the PwC report per se, is that it bundles up aged pensioners, families and the disabled in one swoop. The messaging, whether intended or not, is that if you are a pensioner, you are a bludger too, an old bludger.

Looking at the actual numbers, rather than a “future lifetime” number, the social security budget this year has the aged at $63 billion, families at $37.6 billion, the disabled at $33.4 billion and the unemployed at $10.5 billion.

Clearly, old bludgers, family bludgers and disabled bludgers are far more egregious bludgers than those garden variety dole bludgers.

A couple of points on the Big Four corporate welfare figures: these are Commonwealth figures only. We are yet to get to the states. Stay tuned. It is a frightening proposition.

The federal statistics are available through the Australian Government’s procurement information system. Through the online application ‘Austender’, published commonwealth contract notices can be searched. We did a search by Australian Business Number (ABN) of all contracts in the ten years from September 1, 2006.

The payments to each of the Big Four individually within each contract were then totalled manually. Unfortunately, or conveniently, depending on your perspective, the website doesn’t provide totals.

The only subsidiary business number that was included in the search was that of Deloitte’s Access Economics. As the Big Four global partnerships operate with multiple associated entities in more than 100 jurisdictions, the actual amounts handed out in contracts over the previous ten years may be far higher if other entities have been awarded contracts too.

  • Co-author Geordie Wilson is a student and policy consultant based in Perth @Geordie__Wilson

 

 

ABOUT THE AUTHOR

Michael West

Michael West

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

2 Comments

  1. Avatar

    Inter generational welfare is a result of the government abandoning full employment.

    • Avatar

      Great article. Did you double check all of KPMG Australia’s ABN numbers were run through the procurement database, capturing all of their contracts? Did you find it interesting that KPMG has (still current?) a $5m contract auditing the Victorian Independent Broad-based Anti-Corruption Commission? I wonder if this will result in a conflict of interest when I lodge an IBAC complaint about corruption within a government agency, which I experienced as initiated by and to cover up corruption in KPMG.

Tax Haven Weather

Video Channel

The West Report

Boomers & Millennials

Boomers & Millennials

Tax Dodgers

Support Us

subscribe to michael west media

Revolving Doors

Revolving Doors

[ Click to find out more ]

Michael West Email

Get Our Weekly Newsletter

Unsubscribe anytime.

Thank you! We'll also confirm via email.

Pin It on Pinterest

Share This