Federal government IT contracts are rigged in favour of multinational technology companies, with PwC’s leak of confidential government tax information making it harder for local companies to compete, local cloud provider Vault Cloud has claimed.
Vault Cloud’s CEO, Rupert Taylor-Price, told a Senate inquiry into the influence of international digital platforms on Wednesday that whole-of-government technology supply agreements had excluded Australian tech companies, with 100% of them given to multinationals.
“This is the equivalent of a banking licence. It’s the ability to go and do business with government in a seamless and free fashion, without the confines of a tender and value-for-money assessments or an individual procurement basis,” he said.
“There are no Australian companies that have these whole-of-government agreements. The government has effectively orchestrated a system where big technology companies can come in and sell to government – and small companies would commonly describe the barriers to entry for government as insurmountable for Australian technology companies.”
Taylor-Price pointed to the scandal involving embattled consultancy firm PwC sharing confidential government information with multinationals to help them avoid new tax changes, and said the whole system had been set up to work against local companies.
“We’re running full rates of taxation on Australian businesses, yet big tech today [is] largely untaxed as it goes forward. And I’m sorry for the cute comment, but then the government invites PwC, that tax adviser, in and provides all the sensitive information around how they intend to tax them in the future, and then hands that information across to those organisations,” he said.
“It is effectively a rigged game.”
He said there needed to be more regulation of the industry to make it easier for customers to move their business out of the cloud services of one giant company and into another. He also said donations from multinational tech companies to Australian political parties should be banned.
Taylor-Price’s comments were echoed by consultant Rob James, who was previously the chief information officer for TPG and chief technology officer for Qantas. James told the inquiry it was difficult for local cloud service companies to compete with Amazon Web Services, Microsoft and Google.
“In reality, it’s a pseudo-duopoly between Microsoft and Amazon. They have the lion’s share of the marketplace here … For the most part, you’re probably seeing about a 60% to 70% share between both Microsoft and AWS.
He said it was hard for smaller companies to negotiate a good price for services with the big players.
“Larger public sector organisations that do have some buying power, that’s less of an issue, but for the small to medium sector that does become a challenge. And if we just reflect on how the behaviour used to occur with local datacentre providers, it was quite competitive because you would have large players in the sector as well as the smaller providers of technology to organisations that needed computer or storage or network capabilities,” he said.
The Tech Council of Australia, whose members include AWS, Google and Microsoft, told the inquiry its members both big and small had not raised issues of competition.
“Most of my members are Australian companies … and generally they’re trying to innovate in an existing traditional market structure,” the CEO, Kate Pounder, said.
“I think the view there is: our competition frameworks are pretty strong, particularly with respect to areas like merger and acquisition laws, and I haven’t heard any sort of requests for changes, and what I have heard is a request to not change them.”
