ceo pay ratio financial planning

The big global accounting firms — the architects of multinational tax evasion and systemic conflicts of interest in financial transparency — cemented their place as Australia’s major political donors in 2017-18, an analysis of the Australian Electoral Commission’s political donations data shows.

The Big Four — who reap billions of dollars from taxpayers via government contracts — now rival the once unchallenged mega-donor, the financial services sector, in the size of their largesse to the major political parties. In 2017-18, they combined to give just over $900,000 to Labor and the Coalition, up from $830,000 in 2016-17 — a remarkable increase given there was no federal, Victorian or NSW election during the year. In 2015-16, ahead of the federal election called by Malcolm Turnbull, they only gave around $690,000.

The finance sector, consistently the biggest industry for political donations, has given around $1.7 million in total to both sides every year in recent years, with 55-60% going to the Coalition. In 2017-18, it again gave $1.68 million in total. However, that covers not merely the big banks (except NAB, which stopped donating two years ago) but major insurance companies, foreign banks, Visa (a major donor that gave around $100,000 to the Coalition and $60,000 to Labor) and lobby groups like the Financial Services Council and, now, the Australian Bankers Association, which began donating in 2017-18 (wonder why). So on a per company basis, the Big Four are now the dominant political donors.

Even though its donations actually fell in 2017-18, PWC is still the biggest, handing around $180,000 to the Coalition and over $100,000 to Labor, but Ernst and Young has been increasing its donations every year and handed over $100,000 to each side in total, while KPMG gave over $130,000 to the Coalition and $70,000 to Labor; Deloitte gave over $95,000 to the Coalition and around $86,000 to Labor.

Many of these donations flow not to the federal branches of the parties but state branches — understandable given the companies rely on state governments as much as the Commonwealth for consulting work. PWC, for example, gave over $17,000 to South Australian Labor, $17,000 to WA Labor, over $40,000 to the ACT Liberals and the Victorian Liberals. Ernst & Young gave $33,000 to Queensland Labor ($33,000, like $27,500, is a GST-type number, suggesting it was a “purchase” of a fundraising forum membership), around $40,000 to WA Labor and $24,000 to the Victoria Liberals.

The surge in Big Four donations comes at a time of increasing pressure on them. The extent to which they are co-conspirators in multinational tax avoidance has drawn increasing attention internationally and locally — Michael West has been assiduous in exposing how the big audit firms are complicit in massive tax avoidance. 

And the major conflicts of interest between the consulting work that generates tens of billions for the Big Four world-wide and their auditing role is continuing to attract attention, with three of the four in the UK now agreeing to cease combining audit and consulting work and ASIC recently releasing another report identifying how “the provision of non-audit services to clients raised concerns about the appearance of independence being compromised” in major audits here.

Labor is also threatening to cut back on the lucrative flow of public service contracts to the Big Four, bringing services back in-house that have been de facto outsourced by fake cost-cutting by successive governments — public service funds are cut and public servants retrenched, only for large firms to be brought in to do similar work more poorly and for a higher cost.

Like the finance industry, the Big Four seem to think their best means of heading off regulation that will curb the lucrative flow of revenue from tax avoidance advice, conflicted auditing and public sector contracts is to pump money into the major political parties in the hope they won’t move against such big donors. That worked for several years for the finance sector, which bought political protection from the Liberals. But in the end nothing could buy off the outrage about the abuses of the banks. The same fate may yet befall the Big Four.

What do you make of the big four firms increasing their political patronage? Write to [email protected] with your full name and let us know.

I subscribe to Crikey because I believe in a free, open and independent media where news and opinions can be published that I can both agree with and be challenged by.

As a Crikey subscriber I always feel more informed and able to think more critically about issues and current affairs – even when they don’t always reflect my own political viewpoint or lived experience.

Jess
Singapore

Join us and save up to 50%

Subscribe before June 30 and choose what you pay for a year of Crikey. Save up to 50% or, chip in extra and get one of our limited edition Crikey merch packs.

Join Now