Pay Day: Christopher Pyne’s Defence bonanza a fee fillip for EY

by Michael West | Jun 27, 2019 | Government

It dwarfs all other government spending. It is secretive. A huge chunk of it does not even go out to tender. The lion’s share goes to foreign multinationals who pay no tax in Australia. It is defence spending. Michael West reports on the explosion in defence spending which has tripled to more than $60 billion in one year since the Coalition took office, and since Christopher Pyne became Minister for Defence Industry on July 19, 2016.

Christopher Pyne switched up portfolios from Defence Industry to Minister for Defence on August 28 last year, a role in which he remained until April this year.

Just two months out of Cabinet, and with well over $100 million a year in Defence fees already going to global consulting firm EY, Christopher Pyne and EY announced yesterday the former minister was signing on with the firm to “ramp up its defence capabilities”.

The response on social media was immediate and rabid, forcing EY straight into defence mode, insisting just three hours later that Pyne would not be lobbying the government on behalf of EY and its clients. Centre Alliance Senator Rex Patrick called on Prime Minister Scott Morrison to censure Pyne for breaching the code of ministerial standards, tweeting:

“Mr Pyne has current knowledge of the broadest affairs of Government and intimate details of every significant matter in respect of the Defence portfolio. He cannot un-know what he knows when forming up advice for EY. Inappropriate and a new test for Scott Morrison”.

When Christopher Pyne headed up Defence Industry in 2016, this was the first year in which government spending on defence surpassed all other agencies combined at 57 per cent of all contract fees. It was even higher the next year at almost 60 per cent.

What sort of contracts are we talking about here? Advice. EY billed the government $17.2 million in one contract for “change management services” for the Department of Defence.

The chart below shows the Big Four global accounting firms fees over the two years 2016-17.

Source: Greg Bean’s analysis of Austender data

Defence is by far the biggest item of public spending, yet it attracts almost no media attention, partially because of the secrecy, also because both major parties are loathe to be wedged on national security and so never make a fuss about it – even as billions are being squandered on questionable projects with very little visibility or accountability.

The ABC attempted to shed some light on it two weeks ago, obtaining documents which showed the Government was keeping its “projects of concern” hidden from the public. The documents it found using Freedom of Information, were heavily redacted on “national security” grounds.

Apparently, taxpayers who fund this mountain of government expenditure do not deserve to know how their money is being spent.

Source: Greg Bean, analysis of Austender data

Since 2004, and up to 2015, the Department of Defence spent (according to contracts in AusTender) $5 billion to $21 billion. Then, in 2016, it tripled to almost $60 billion and has continued at two to three times pre-2016 spending rates for the last three full years. According to data analyst, Greg Bean, running this year at $16.5 billion for 5.5 months, it will end up at around $36 billion by year’s end.

“That’s at this rate,” says Bean. “It’s just a simple projection of current trend so it’s primitive, but still not trivial.”

Defence spending keeps spiralling as embarrassed government blocks data




The figures from this story are sourced by data analyst Greg Bean who has conducted extensive work on the AusTender database. You can follow Greg on Twitter @GregLBean

Analyist Greg Bean

KPMG: the Big Four darling of Defence

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Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.

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