Political donations work. Four of the world’s most powerful institutions and largest political party donors have once again treated the people and the parliament of Australia with disdain.
PwC, Deloitte, EY and KPMG were invited to appear before the Senate Inquiry into the Political Influence of Donations whose hearings concluded this week. All four declined.
Chairman of the committee of inquiry, Greens leader Richard Di Natale, offered this comment:
“Both political parties are treating the Big Four auditors as a protected species, shielding them from scrutiny over political donations. From the banking royal commission to tax avoidance and the wilful hollowing out of the public service, the corporate takeover of public services and public revenue is threatening the proper functioning of government. This has got to end.”
Not only are the Big Four global accounting firms among the most lavish donors to both the Liberal and Labor parties, they are the biggest winners of government consultancy mandates, racking up more than $2.6 billion in fees for providing advice to government over the last decade.
And rising. The value of their government consultancy gigs has doubled since the Coalition was elected. This is just the federal government. Advisory work for state governments is also a large source of income for the Big Four, perhaps just as large as federal taxpayer income in toto.
The timing of this latest Big Four affront to the will of parliament – they were called to appear but not compelled to appear as such would require a majority of votes – is ironic as the Australian Electoral Commission (AEC) unveiled its annual party donations data this week. Of the $207 million in political donations, the Liberals got $107 million, Labor $71 million, Greens $16 million and Nationals $12 million.
The Big Four, who have won almost half-a-billion dollars from taxpayers in consultancy work since 2013, donated more than $800,000 to the Liberal and Labor parties.
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One key message to emerge from the donations inquiry has been that “other” is a very large source of income for Australia’s political parties. That is, most corporate funding is secreted into companies controlled by political parties. It is often hidden.
As this story by politics lecturer Lindy Edwards attests the major parties only disclose a fraction of their income as donations. Edwards: “Over the last decade, the major parties have routinely only transparently disclosed 10-20 per cent of their incomes as donations.
“There is another 20-35 per cent of party incomes that falls into a grey area, where accounting enables them to conceal the source of the money. Then there is another 50-70 per cent of party incomes the public knows absolutely nothing about.”
Just as mysterious as the political parties’ corporate vehicles are the opaque partnership structures of the Big Four. They are only required to publish a revenue number, not even a number on how much income they derive from governments. Collectively, the four firms posted $7 billion in revenues in 2017 in Australia: EY was up 10 per cent to $1.63 billion, Deloitte up 15 per cent to $1.76 billion, KPMG up 10 per cent to $1.5 billion and PwC up 10 per cent to $2.12 billion.
Globally, their combined revenue last year was $168 billion. If it is good enough for these four firms to orchestrate global tax avoidance, win hundreds of millions of dollars a year in government mandates – while thousands of public servants are shown the door; while it is good enough for them to pontificate to government about policy while concealing their own financial affairs, surely then it is good enough, when asked by Australia’s parliament to appear before an inquiry, for them not to respond with “get stuffed”.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.