It's not just tax. How PwC, KPMG and other consultants risk influencing public health too

Concerns about the use of private consultancy firms advising government – such as PwC, KPMG, Deloitte and EY – has led to a Senate inquiry.

Until now, much media interest has centred on PwC’s advisory role to the Australian Tax Office while also advising private clients on tax matters.

But such companies also advise government on health issues. And there’s growing concern about the potential for conflicts of interest and undue influence on health policy.

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Contents

How do these firms consult on health?

Private consultants offer a range of health services and advice to government. These include contracts about electronic health systems, policy, taxation, program design and evaluation, improving hospital performance, and health sector restructuring. Firms also develop major public and private health-care initiatives.

There might be an argument for engaging external consultants when that expertise does not already exist in the public service. However, when consultants are engaged more widely, we have potential problems.

For example, we’ve raised concerns about KPMG’s involvement in the National Health and Climate Strategy, which aims to prepare the health system for the impacts of climate change. The firm also advises the fossil fuel industry.

Senator Barbara Pocock, Greens spokesperson for finance and the public service, shares our concerns:

KPMG’s work on the National Health and Climate Strategy is the latest worrying example. This is core public service work that should be conducted by a robust public sector where there is no risk of a conflict of interest between a consultant with a fossil fuel client list and the public interest.

Pocock is also concerned about KPMG auditing aged care facilities for government at the same time as charging others for advice on audits and accreditation. The firm says it has launched an internal inquiry.

The use of consultants to government has been noted at the state level too. New South Wales is running its own public inquiry, including looking into how consultants are used in health.

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What are the concerns?

1. No scrutiny

Contracts between consultancies and government, and advice that arises, are not easily publicly available. So we cannot say if we’re getting good advice. There’s the risk consultants give answers government wants to hear, instead of the “frank and fearless” advice from public servants.

Then there’s the issue of whether that advice, or contracted service, provides value for money.

University College London economist Mariana Mazzucato refers to the extensive use of commercial consultants to government in her book Big Con. She says neither theory nor evidence show private sector consultancy is more efficient and cost effective than what the public sector can provide.

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2. Conflicts of interests

There’s the risk of conflicts of interest, as we’ve highlighted above. This arises, for instance, when firms have both government clients, and private sector ones, and information is shared.

There are also conflicts of interest in the revolving doors phenomenon. This is the term used for staff movements between consultancy firms, government departments, revenue authorities or corporate regulators.

This has been well-documented for the tobacco industry, among others.

3. Impact on health policy

Consultants have extensive influence over health policy due to recurring government contracts. Such influence includes supporting a neoliberal policy agenda. This promotes small government, and puts profits above the public’s wellbeing and public interest. This risks influencing health outcomes.

For instance, our own research in South Australia points to policymakers outsourcing government functions to private firms being a factor in increasing health inequities.

Changes to the public sector since the 1980s have resulted from the adoption of “managerialism” or the growing reliance on professional managers and business models. This leads to a decline in evidence-based health policies and helpful collaboration between different sectors, and a shift away from addressing health inequities.

One example is the millions of dollars paid to private consultancies during the COVID pandemic. This did not prevent numerous failures in the rollout. Delays increased the risk of critical health impacts including outbreaks and community lockdowns. The secrecy around these contracts is unacceptable.

4. Impact on the public service and governance

A government audit showed outsourcing to consultants in 2021–2022 was equal to the cost of paying 954 full-time public sector staff. This, and other forms of outsourcing, forms a so-called “shadow public service”.

When governments rely on private firms, knowledge and expertise are lost from the public service.
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When governments rely on private firms, knowledge and expertise are lost from the public service. This makes it hard for governments to plan ahead to reduce long-term health policy problems. Consultants shaped by the neoliberal environment tend to offer solutions that are likely to stress more privatisation and use of consultants, as Canadian research has shown.

How can we fix this?

These firms hold power due to their expert knowledge and insufficient regulation. So we need strong commitment by the major political parties to:

reinvest in the public sector to foster the skills for planning long-term health policies in the public interest

ensure full transparency over contractual arrangements and remove “commercial in confidence” legal clauses when consultants are used

manage conflicts of interests transparently, especially when private firms advise both industry sectors and governments

ban political donations from firms with extensive government contracts to avoid undermining principles of accountability.

Read more:
PwC scandal shows consultants, like church officials, are best kept out of state affairs

In a nutshell

While commercial firms can make a positive contribution to society, they can potentially increase ill health, inequity, and harm to the planet via the advice or services they provide.

For as long as consulting firms act as a “shadow public service” in Australia, health and equity will continue to be undermined. This must change.