Interview with Hamish Macdonald, RN Breakfast

31 May 2023

HAMISH MACDONALD: Over the last decade the use of consultants in the public sector has skyrocketed, creating what's been described as a shadow workforce. Jane Hume is the shadow finance minister. I spoke to her a short time ago. Welcome back to the programme 

JANE HUME: Thanks, Hamish. Good to be with you. 

HAMISH MACDONALD: Senator, in 2018 the ATO reported it significant concerns over PWC’s attempt to block it from learning more about the tax leak scandal to federal police in July 2020. Those allegations were referred to the Tax Practitioners Board. Treasury is talking about the fact that secrecy provisions prevented them from telling the relevant ministers. Is that as it should be, in your view?

JANE HUME: Well, Hamish secrecy provisions are there and privacy provisions are there for very good reasons. Now, whether those privacy provisions manifested in the best outcome here is for others to say. But I don't think we should throw the baby out of the bathwater. We want to make sure that people have trust in the ATO. Trust when they give information to agencies that it will be kept private. But look, this will all be fleshed out. It will all be fleshed out in two inquiries. One by the AFP, there has been a reference made to them already, and the other by a Senate references inquiry and I don't want to preempt exactly what that particular that references inquiry will find my colleagues. Right across the chamber, we'll be investigating this issue I would imagine very thoroughly along with others to do with the PwC scandal.

HAMISH MACDONALD: For the record, though, as I'm sure our listeners will want to know, your government didn't know about these issues?

JANE HUME: No. As far as I know, the government didn't know about those issues. 

HAMISH MACDONALD: Should, though, is it a better scenario, though, if they could have been raised with the Treasurer, with the finance minister, with the relevant ministers at the time? 

JANE HUME: And that's exactly, I would imagine, the issues that will be fleshed out by this inquiry because this has been a loophole, if you like. But that said, privacy provisions, particularly when you're dealing with government agencies, are really important to engender trust. Now, as I said, there are a number of processes underway. We've seen what happens, you know, in recent times when there's ongoing media commentary into matters that relate to criminal proceedings. So I think we should be very careful about being part of that commentary that might impact other proper processes. 

HAMISH MACDONALD: Of course. But what I'm trying to understand and help our listeners understand is what you mean by the importance of privacy provisions, given what this has led to. Well what do you mean by that? Why is it so important, given what has happened with the taxpayers dollar? 

JANE HUME: Well, privacy laws are there for a reason, and they're imposed upon agencies for a very good reason, too. However, I think that, you know, everybody across the parliament would agree that something has gone wrong here. When there is a contract however, between a provider and the Commonwealth, that the terms of an agreement have to be upheld, and that includes the ethical standard that the community would expect from the provider. Now that's really at the crux of the issue with PwC. We know that governments can't do everything on their own. They're always going to refer to expert advice somewhere along the chain. That's just a reality. But when it partners, when government partners with private enterprise, it's everybody's expectation that those partners will act ethically, They'll act within the terms of their contract, and most importantly, that they'll act within the terms of the law. That's the failure that's occurred here. 

HAMISH MACDONALD: Your government's use of contractors and consultants in the previous financial year to 2022 cost the budget almost $21 billion. Why consultants a better use of that money than public servants who don't have the same possible conflicts of interest? 

JANE HUME: Well, again, I think you're conflating two issues. The PwC issue was in fact not a procurement contract for consultants. It was simply seeking a Commonwealth Department seeking expert advice. That happens all the time and we'll continue to happen. So we want to make sure when that happens, that those partners, those people that are being consulted, act ethically, act within the terms of their contract, act within the terms of the law. The issue of consultants is a very different one. And again, the Commonwealth still can't do everything on its own. There will always be, and I think the Treasurer said it yesterday, there will always be opportunities or necessity to appoint contracts, whether that be consultants or other experts in the field. 

HAMISH MACDONALD: Why are they two different issues, given that these businesses offer those range of services when they are doing government work? I mean, isn't that the point of this, that they may have access to privileged information?

JANE HUME: And by far and away at 99.9, 9% of the time, they may well have access to that information and they behave within the terms of their contract, within the terms of the law, and they act ethically and they may provide a service that government simply can't supply themselves. The Commonwealth can't be expected to be an expert in everything. But this particular issue was one individual that was sought for expert advice. It wasn't a procurement contract. 

HAMISH MACDONALD: Respectfully, Senator, given those privacy provisions that we've been discussing, you couldn't possibly know that, could you? 

JANE HUME: Well, no, we can't. But that's the expectation. That's the community expectation. That's the Commonwealth's expectation. And I think that it's a fair and reasonable expectation. Now this particular incident is really disturbing, but it will be fleshed out by the AFP. There are going to be inevitably criminal, potentially criminal proceedings. It will be fleshed out by a Senate references inquiry to see what changes need to be made from a Commonwealth perspective to ensure that when expert advice is sought, that it's done, that the privacy provisions sorry, that not the privacy provisions that the, you know, disclosure provisions around that are much tighter, that people that we deal with act ethically and that they act within the terms of the of their appointment. 

HAMISH MACDONALD: Acknowledging what you have just pointed out, which is that the government and even public officials have said that there will always be a place for contractors and for consultants. But your government actually allowed contracts for the big four firms to rise from $282 million to $1.4 billion over a decade. Why were you so keen on them to do this work instead of the public service? 

JANE HUME: Well, because the public service can't do everything. You know, running the Commonwealth is a very complicated and increasingly so complicated task. There are some things that the private sector can do better than the public sector. That's the best way to spend taxpayer money to make sure you get the most efficient outcome. Now I can't speak to individual contracts. Obviously, there were plenty of them across government and there remains is plenty of them, Hamish, and there will remain plenty of them. But I think that there is a public expectation that governments will spend their money in the most efficient way, but they will do it when they partner with external consultants. They'll do it with a very tight terms of their contract and that those partners will act with within the law. 

HAMISH MACDONALD: On other matters, the RBA Governor, Philip Lowe, has reportedly told parliamentarians in a private briefing that wage rises above 2%, a 3% without a corresponding offset via a productivity increase, would be inflationary. Is that your view? 

JANE HUME: Well, I wasn't in that private briefing with the RBA Governor. He will appear in front of Senate estimates today and I'll be in that room and I would imagine that issue will be prosecuted further. But I think most importantly, what people want to hear from Dr Lowe and his RBA colleagues is just how long interest rates will be higher as a result of inflation. And that's something that has been prosecuted throughout Senate estimates last week and this week, inflation being persistently higher and for longer potentially because of policy decisions that are being made by the Government and the RBA. Which policy commissioned the RBA review, which was commissioned by the Government which has a recommendation there that says that the RBA is now expected to comment on the use of fiscal policy and potentially that's something that we can pursue today with Philip Lowe. Whether fiscal policy, where governments budgets, the Government's budget is doing what it can to lower inflation because unless you can do that, Hamish, well then if your fiscal policy is working at one speed and your monetary policy is working at another, interest rates will continue to rise. It's like having one foot on the accelerator, one foot on the brake and that's a terrific way to, brake the engine. So we'll get to ask Philip Lowe some questions today about what it is that government could do to make his life a bit easier so he doesn't keep having to push up interest rates, which disproportionately affects low income people. But more importantly, higher interest rates and higher inflation affect all Australians. 

HAMISH MACDONALD: That's the Shadow finance Minister, Jane Hume speaking to me there.