Treasurer Jim Chalmers is appealing to corporate Australia to consider nation-building a part of business, as he unveils measures to prevent a repeat of professional services giant PwC’s misuse of government information for private-sector gain.

Chalmers mused this week on issues of corporate conscience and the relative roles of government and business in shaping Australia’s future, as PwC and the airline known as the “national carrier”, Qantas, wrestle with reputational damage arising from accusations of prioritising their own bottom lines at the wider community’s expense.

Outlining proposed legislative changes to dramatically increase penalties for companies promoting tax-evasion schemes, strengthen investigative agencies’ powers and boost regulators’ ability to pass information to prescribed disciplinary bodies, Chalmers said punishment was only part of the equation.

“What we’ve also tried to do on the other side of the ledger, is to try and work out what do we want from our country and what role does corporate Australia play in that? ”
the treasurer told a Walkley Foundation audience in Sydney on Wednesday.

He outlined a series of objectives – harnessing technology, transforming energy use and making better use of human capital – and said government had to work more closely with business to meet them.

“I spend a lot of my time doing stuff that doesn’t get that much coverage – thinking differently about climate risk disclosure, thinking differently about payments reforms, all of these sorts of things – so that we get the kind of economy which is more likely to
give us the kind of country that we need.
To join up the kind of country that we want with the kind of economy that we want, rather than see them as competing,” he said.

Chalmers insisted there was “absolutely nothing” to suggest profit and building a better country for the next generation were mutually exclusive.

He said a shift in mindset was needed. “We’ve been seen to make this choice, you know – do the right thing by the environment or the economy, profitable companies or well-regulated ones, strong society or strong economy,” he said. “All of those dichotomies are rubbish. They’re rubbish.”

Chalmers said the best outcome was for companies to be profitable, with opportunities created whereby people are “earning a decent enough wage that they can provide for their loved ones... If we can find a way to align all those sorts of objectives, to line them up neatly, then we should try and do that.”

His comments came as Qantas published its 2023 annual report and revealed the steps its board was taking, and more it is considering, to penalise senior leaders including former chief executive Alan Joyce and his successor Vanessa Hudson for the reputational damage the airline has suffered. Among them is the option to withhold $10.5 million of what would be a $23.6 million package of final-year salary and bonuses to be paid to Joyce. The board has not ruled out retrieving bonuses already paid, putting the total slice of Joyce’s final remuneration that could be subject to clawback or penalties at $14.4 million. Joyce exited the airline earlier this month, two months ahead of his scheduled retirement after 15 years in the job.

Qantas is battling a cascading public relations disaster sparked by astronomical post-pandemic airfares, schedule disruptions and substandard service, restrictive rules on passengers claiming flight credits, revelations that it sold tickets on cancelled flights, allegations of using largesse to garner favourable treatment and a High Court finding that it illegally sacked 1700 workers.

PwC has also taken steps in response to government and public opprobrium after The Australian Financial Review revealed early this year that senior figures in the partnership used confidential consultations on a planned multinational tax avoidance crackdown in 2015 to help existing clients sidestep their tax obligations, and to recruit more. The public outcry at the behaviour saw PwC remove its chief executive and seven other partners and eventually jettison the government services arm of its business for $1.

On Wednesday, the treasurer unveiled four pieces of draft legislation as part of the government’s response to the PwC scandal.

The proposed changes would increase the existing penalties for promoting tax-avoidance schemes and extend them to “significant global entities”, including partnerships, explicitly making all partners liable for a contravention by any one of them, regardless of who was directly involved.

The government is proposing to allow tax agent regulator the Tax Practitioners Board (TPB) to publish more information about its decisions and sanctions and make it publicly available for longer.

It also wants to introduce a process to vet and prescribe certain professional accreditation and disciplinary bodies to better allow the ATO and the TPB to pass on information when a breach is suspected.

A fourth change would permit these tax regulators, along with the Australian Charities and Not-for-profits Commission (ACNC) to share whistleblower information more effectively. This would extend existing whistleblower protections to add the TPB and the ACNC to the organisations that can lawfully receive such information. The government is accepting public feedback on the proposals until October 4.

“We understand that Australians are justifiably filthy about what happened at PwC,” Jim Chalmers said of the measures. Cracking down on “dodgy behaviour” was a key part of that.

“We want to make sure that what happened at PwC doesn’t happen again. We want to be able to consult the private sector when it comes to changes which impact them, and in order to do that we need to rebuild trust and confidence that that consultation is treated the right way.”

Chalmers’ call for big business to think differently about the part it plays in the Australian community is effectively a plea to reimagine the concept of corporate social responsibility and reflects a growing public dissatisfaction with attitudes to customer service and the public good across multiple sectors.

This week saw the first hearings in an inquiry into price gouging and unfair pricing practices, commissioned by the Australian Council of Trade Unions in response to burgeoning cost-of-living pressures. Chaired by former competition watchdog chief Professor Allan Fels, the inquiry is focusing on the extent of price gouging on household essential items, its disproportionate impact on particular cohorts of workers and vulnerable groups, and the impact on the mental health and wellbeing of essential workers. Fels will examine how prices are set and whether there may be padding at points in the supply chain.

The inquiry follows research by the OECD suggesting corporate profits have played a significant role in pushing up inflation in Australia and elsewhere. Fels has said the federal government should consider beefing up the powers of the Australian Competition and Consumer Commission to police pricing practices and strengthen the legislation governing them.

Ahead of his first hearing on Thursday, Fels indicated he plans to include an examination of the price of air travel and the role of limiting services and restricting competition in driving prices up. A separate parliamentary inquiry is examining the government’s decision to reject an application from Qatar Airways for extra landing slots in Sydney and Melbourne.

Qantas’s annual report, published two weeks later than scheduled, on Wednesday, follows the ACCC’s announcement on August 31 that it was beginning Federal Court action against the carrier for selling thousands of tickets to cancelled flights, and the September 13 High Court ruling against it over the workers sacked during the pandemic.

“As we move through our recovery, management and the Board are acutely aware of the need to rebuild your confidence in Qantas,” chairman Richard Goyder wrote in his message to shareholders. “We’re also conscious of the loss of trust that has occurred because our service has often fallen short of expectations, compounded by a number of other issues relating to the pandemic period.”

The report revealed the board had decided to cut executives’ short-term bonuses by 20 per cent and withhold them for an undisclosed period in light of the court proceedings. This includes a $2.2 million short-term bonus due to Joyce, which is being withheld pending more information about the implications of the ACCC court action. The decision was made after the board increased the weighting it gave to customer focus among the criteria on which the short-term bonuses are based. Other criteria include its group financial results, workplace and operational safety and climate action. It revealed it had further used its discretion to downgrade the customer target outcome rating to zero.

The board is also considering withholding another $8.3 million long-term bonus, which forms part of a $21.4 million package otherwise due to Joyce. His total final-year payout including the short-term bonus would total $23.6 million.

Goyder told ABC Radio on Thursday that he had not considered stepping down. “I absolutely take responsibility for things as chair, as Alan has done as CEO,” he said. “None of us can go through life without making mistakes but the intention was always to… do the best by all our stakeholders.”

He defended Joyce’s remuneration, which shareholders had approved previously, but he acknowledged the airline had to think about its obligations to other stakeholders, and especially to customers. “I think we need a reasonable dose of humility now.”

Speaking on the ABC earlier on Thursday, Fels suggested Qantas shareholders should consider using the so-called “two strikes” rule that triggers a spill of all board positions if at least 25 per cent of shareholders vote to reject its remuneration report at two consecutive annual general meetings.

“In general, there is much to be said for bonuses but also, they’re very risky. They can be rigged, get out of hand and be totally disproportionate, and that’s the responsibility of the board and the chair. They’re in charge of that and if they’ve done a bad job, they should be subject to [a vote for] re-election.”

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