As if PwC didn’t have a bad enough year, the embattled firm has been drawn into the robodebt scandal.
Fearful of any more bad press, PwC has acted swiftly after the robodebt royal commission highlighted that the firm was paid $853,859 for a report it never delivered.
PwC has said it will repay the money in full — which would mean a roughly 0.03% hit to its annual revenue of $2.6 billion — and has also parted ways with a partner who gave evidence to the commission.
To be fair to PwC, it appears the consultancy had been fully prepared to deliver the report, which had been pitched by the Department of Human Services (DHS) in January 2017 as an external process review of the robodebt scheme.
But a mysterious direction from then-DHS secretary Kathryn Campbell in June 2017 to PwC saying it didn’t need to finalise the report meant the consultancy was off the hook. Instead, it distilled its work into a PowerPoint presentation to ministerial staff, and proceeded to bill the government for the full amount.
It appears that by April 2017, the government’s half-hearted interest in the report had become something of an in-joke at PwC.
“A number of PwC staff began referring to the document as the ‘notreport’, ‘non-report’, and other variations on that theme,” the royal commission report said. “One email said ‘Attached is the latest version of the DHS report (or not report, whatever you want to call [or not call] it).'”
The PwC report, before it was scrapped, was “a Word document which comprised almost 100 pages”, the royal commission found, meaning each page would have cost taxpayers about $8500.
The PowerPoint presentation was just eight pages. That would mean each slide was worth more than $100,000.
The Sydney Morning Herald revealed last week that acting PwC chief executive Kristin Stubbins has promised to repay the fee in full.
“Following the findings of the royal commission review into the robodebt scheme, we do not feel it would be appropriate to retain the $853,859 fee for work carried out for the DHS on this matter,” she said. “We have made representations with the minister’s office and will take the necessary steps for these fees to be returned.”
Crikey’s sister publication The Mandarin reported a PwC partner had been pushed out just hours after the royal commission report was issued last Friday.
“A PwC partner who testified to the royal commission was asked to exit the partnership and is no longer with the firm,” Stubbins told the publication.
The royal commission report said Campbell had been the one to hire PwC to look into robodebt, a welfare clawback scheme that unlawfully used a shoddy formula to incorrectly claim recipients owed the government money.
Campbell also monitored PwC’s work, including “personally attending presentations”.
Yet she was also the one to let PwC know the report wasn’t needed anymore.
“The commission finds that on or about June 6 2017, Ms Campbell communicated to [PwC partner Terry] Weber that the report was not to be finalised and provided to DHS. Despite the importance of that indication from DHS, it does not appear to have been documented at the time,” the royal commission report said.
“As detailed above, the report was far more extensive and critical of the scheme’s failings than the PowerPoint presentation; it revealed that it would not deliver the projected budget savings, that it was producing a significant percentage of inaccurate debts, and, crucially, that the online process had been a failure.”
So why would Campbell have axed the report?
“The rational inference is that although the report was contracted for and all but finalised, Ms Campbell formed the view that its detail as to the deficiencies of the scheme was damaging and that it would be better for the department’s reputation, and her own, if it were not produced,” the royal commission concluded.
According to a PwC “transparency report” issued for the 2022 financial year, the firm reported $2.6 billion from its Australian operations in that period. That represented a 21% growth in profit.
