Paul Scarr (Queensland, Liberal Party, Shadow Assistant Minister for Multicultural Engagement) Share this | Hansard source

Or No. 12! In doing so, I would, at the outset, like to give my heartfelt congratulations and acknowledgement to my fellow committee members, including not only Senator Barbara Pocock, who we just heard from in relation to her contribution to the committee, but, in particular, Senator O'Neill and her outstanding leadership, as chair of the committee. I say 'outstanding leadership' in particular because Senator O'Neill was absolutely resolute in her leadership of the committee in requiring PwC, and others, to provide the evidence which the committee needed to do its work for the good of the nation. I think, from my perspective, that represents the very, very best traditions of this institution and I think Senator O'Neill should be deeply congratulated and acknowledged for that contribution.

In relation to the 40 recommendations, I'll make a few comments with respect to the vast majority of the recommendations which the coalition members on the committee strongly agreed with and then I'll provide a small number of reservations for the record.

In relation to the recommendations which we agreed with, the first fundamental recommendation was that PwC should not be given any government consultancy work until all the investigations in relation to PwC's activities in this regard have been satisfactorily completed. PwC has demonstrated that it has undertaken appropriate remedial action to address the concerns that arose during the course of this inquiry and previous inquiries, and I fully support that recommendation.

At one stage during the committee hearing, Mr Burrowes, the current managing director of PwC, opined that he wished the committee were considering other things in relation to the future of the accounting assurance industry. I say to PwC, including its current leadership, that I wish we could too but PwC are the ones who put us in this position—and they shouldn't forget it. It is absolutely outrageous behaviour. From my perspective, having the philosophy I have, it's a great shame that the committee had to inquire to the depth that we had to in relation to the activities of PwC and consider a whole raft of recommendations, which will necessarily mean that there's a regulatory burden imposed upon those who have done the right thing. That is a great shame and something which PwC should reflect on.

The other point I would like to make about PwC is that this will be held up for years to come as an example of how not to respond to a parliamentary inquiry and how not to deal with a crisis of confidence in relation to a major world-leading organisation. I was aghast at some of the failures of PwC in the course of this inquiry—their failure to provide full, complete and accurate information at the earliest opportunity. Even at the end of the inquiry's deliberations, there was still key evidence which had been withheld from the committee on the basis of legal professional privilege asserted overseas in circumstances where that privilege was in favour of PwC. It was within their control to waive that privilege so the committee could have received all the evidence which the committee sought. PwC chose not to provide that information to this committee, and that should be noted and should be a cause for deep reflection for PwC.

With respect to the recommendations more generally, I fully support the recommendation that large multidisciplinary accounting firms should have an increased obligation to provide reports and transparency and report as to how they are meeting governance requirements in relation to the need to have independent directors. The reason for this is the materiality of their role in the functioning of Australian society. PwC audits many public interest entities, the performance of which is of key importance to all Australians. With that, I believe, comes an obligation for open and transparent reporting and also the implementation of appropriate corporate governance procedures.

The other point I want to make—and I would like to echo Senator Barbara Pocock's comments in this regard—is that we should avoid a situation where the members of key regulatory and disciplinary bodies have an ongoing financial interest in the bodies which they regulate. That should be a no-brainer. So I absolutely support the recommendations in that regard, and there are a number of other recommendations, the vast majority of which I do support, that are contained in the report.

I do have a few reservations, and I should say that, under Senator O'Neill's leadership, we did our best to agree to everything we could agree to, we exhausted those avenues in good faith, and differences of opinion were deeply respected throughout the course of the inquiry.

I have reservations about the 400-partnership cap, particularly in the context where the cap had been increased to a level of 1,000 and now this place is recommending bringing it down to 400. I can envisage a quagmire of complications in how you get from, say, 600 or 700 partners down to 400 partners. No doubt there are many junior partners and many staff of the big accounting firms who are on the partnership track, and, if changes like that were imposed upon the industry, it would cause all sorts of disruption and complication with respect to those organisations. Personally, with the transparency provisions and the corporate governance reforms, I would like to see what we can achieve through operational separation of the audit and non-audit functions of the large accounting firms. I would like to see how that plays out first before we look at taking such a drastic regulatory action.

I will end my comments there, but I would like to also put on the record my thanks to the secretariat for their outstanding job. This was very complicated evidence and material that we received, and I think the secretariat did an outstanding job. With that, I commend the report to the Senate.