Health Department secretary Brendan Murphy has ruled out new contracts with the firm, but there’s $25.2m still on the books.
The scandal-plagued accounting firm PwC has 25 current contracts with the Department of Health and Aged Care, seven of them initiated this year, worth a total of $25.2 million.
Speaking at the Senate Estimates hearing on Thursday, outgoing department secretary Professor Brendan Murphy said the department was “seeking assurances” from PwC that nobody involved in the current scandal is part of the DoHAC contracts.
One contract that was signed after the company’s conflict of interest breaches were revealed on 23 January is a review of indexation methodology with the Independent Health and Aged Care Pricing Authority (IHACPA), worth almost $400,000.
That contract is one of four PwC has with the authority. The biggest, worth over $8.7 million, was work involved in the aged care pricing framework for 2023-2024. Another is the Australian non-acute hospital service review, worth $5.4 million. Another, which is about to expire, was for technical and analytical support in the development of a “national efficient cost for 2023-2024 for public hospital services”, that had a value of approximately $565,000.
Former IHACPA CEO James Downie, who was in the job from June 2015 to June 2022, joined PwC as a partner in September 2022, according to current CEO Professor Michael Pervan.
PricewaterhouseCoopers’ Australian affiliate is subject to a police investigation for allegedly misusing confidential government tax information for commercial gain. According to Guardian Australia of the scandal, in 2015, former PwC adviser Peter Collins, the international tax chief at the Australian affiliate, was helping the Abbott/Turnbull federal government design tougher multinational tax laws.
“Australia’s treasurer at the time, Joe Hockey, was concerned about the rise of opaque structures such as the ‘double Irish Dutch sandwich’ that involved sending profits through one Irish company, then to a Dutch company, and back to another Irish company in a tax haven,” said the Guardian report.
“Collins, who had signed confidentiality agreements with the Australian government, fed intelligence on the government plans to PwC personnel both in Australia and abroad. The firm used that information to give more than a dozen US companies an early warning of the changes, netting additional fees and potentially depriving Australia of tax revenue.”
Which of Mr Collins’ PwC colleagues received the information and what they did with it will be central to the police investigation.
Professor Murphy told the Estimates hearing that the DoHAC was “certainly not intending to undertake new contracts” with PwC, at least until “the matter is resolved”.
“We are seeking a range of assurances in regard to the existing contracts that none of the people [implicated in the tax scandal] are involved in the existing contracts,” he said.
“At the moment, we have some existing contracts, and I’ve received assurances that none of the people involved in these issues have been involved in any of our work, certainly over the last two years, and we believe ever, but we are seeking further assurances going back five years.”
Mr Charles Wann, chief operating officer of the DoHAC, told the hearing that if PwC tendered for any future procurements, the department was obliged to consider it.
“Under current arrangements, we would have to assess that based on its merits, but we would absolutely take into account guidance from the Department of Finance, particularly around ethical conduct and past conduct in relation to that confidentiality, non-disclosure, conflict of interest and the like.
“We would absolutely have to take into account the conflict-of-interest issue,” he said.
The seven contracts initiated this year are worth $8.5 million. PwC represent 3% of all the DoHAC’s consultancy contracts, and 10% of their value.
According to InnovationAus.com, PwC earned $228 million from federal government contracts in the 2020-21 financial year, up from $191.9 million in the previous year. PwC was paid $1m a month for their work across 2021 during the covid vaccine rollout.
The company will be paid $8.7m to collect “sensitive commercial data from aged care providers while helping the Australian government set new service prices, despite simultaneously charging the industry for advice on pricing”, according to the Guardian.
According to its website, PwC has directed nine of their partners to “go on leave effective immediately”; have “ringfenced” their federal government business to “minimise conflicts of interest and enhance governance”; will appoint two independent, non-executive directors to its governance board; and will publish and independent review report and recommendations in full.
Nine health-related projects – not necessarily federal government contracts – are listed by PwC on its website:
- Patient-centric admissions at St John of God Health Care
- Helping the Breast Cancer Network of Australia with “a backlog of technology issues”
- Integrated infrastructure at the new Footscray Hospital in Melbourne
- Helping Western Sydney LHD “provide a new model of care in the fight against covid”
- Planning and delivery project management services across the redevelopment of the Westmead Health, Research and Education Precinct
- Transforming Qudos Bank Arena in Sydney into a mass vaccination hub in “just nine days”
- Scoping and development of a national digital mental health framework
- One of five partners in Western Sydney Diabetes
- Collaboration with the University of Sydney to create mental health technology InnoWell, which helps “medical professionals and health providers to “better connect with and monitor the people who use their service”.
This story was updated on Friday afternoon to include details of the IHACPA contract signed after 23 January.
