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Michael Walker: In business, bigger does not mean better

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The PwC scandal illustrates how powerful corporations exercise their power directly or indirectly over local affairs. Photo: Unsplash.com
The PwC scandal illustrates how powerful corporations exercise their power directly or indirectly over local affairs. Photo: Unsplash.com

The PwC scandal, in which one of the world’s top consulting firms misused Australian government information to help multinationals avoid tax, has been in the news in recent months.

What does it reveal about the state of governance in Australia, from the perspective of faith and the social doctrine of the church?

Ninety years ago, Pope Pius XI exhorted Catholics to value subsidiarity, which he described in his encyclical Quadragesimo Anno.

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“It is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organisations can do,” he wrote.

In other words, our instinct should be to allow action to happen at the level closest to the people affected.

When Pius wrote this, fascism was on the rise in many countries, including his near neighbour Mussolini in Rome. Fascists sought to eradicate intermediary organisations and have all social and economic activity directed by the state.

What’s different in today’s context, compared to 1931, is that the risk of an all-powerful state is rather remote. We have more to worry about today from powerful corporations that exercise power directly or indirectly over local affairs.

The PwC scandal illustrates how deep this runs. It is the alarming result of a shrunken public service outsourcing its core functions (in this case, the design of the tax code) to private companies, who are motivated by profit and not by public interest.

It also shows how the involvement of big companies can make a complete mockery of the process of governance: on the one hand, taking public money to do the government’s job, then, on the other, shopping their insider knowledge to other companies who were happy to learn how to avoid the new regulations they were drafting.

While it is particularly egregious, PwC treating government regulation as nothing more than a business opportunity is not exceptional. Recall the 2021 spat between the Morrison Government and Google and Facebook, who threatened to leave the country in retaliation if they were regulated.

Or the 2010 furore over the Minerals Resource Rent Tax, in which big mining companies outspent the Gillard Government and forced it to water down the tax until it collected just $120 million, instead of the $3 billion originally put forward.

Times have changed, at least in Anglophone countries, where the role of the state has steadily diminished in recent decades. Decision-making in remote corporate head offices should be at least as concerning as big government.

Worse, corporate consultants are being asked for their opinions instead of affected members of the public. That should be the job of civil society groups, but they struggle to find volunteers because the average Australian is “too busy with work” and trying to pay their bills.

Catholics in the business world don’t have to fall in line with the free-market ideology that prevails around them, and could challenge themselves by asking whether they can adopt a more subsidiary approach in keeping with the church’s social doctrine.

How can big corporations decentralise decision-making? For one thing, they would devolve decision-making to local people and allow them to act creatively in meeting people’s needs.

It is also hard to see how profit maximisation could be a goal of such an organisation; service delivery would be its priority and profit would be a means to an end, rather than an end in itself.

This is easier to do when you’re still a small business, much harder in a huge corporation that’s well down the path of empire-building. This is a conversation Australians need to have, though, as we live in an era where the big just keep getting bigger.

We need to support small enterprises and the absolute least that government can do is stop feeding the growth of big players like PwC, by outsourcing their own work to them.

Yes, to establishing or promoting enterprises that operate closer to the people they serve. Yes, also, to rebuffing the efforts of very large voracious companies to gobble up the functioning of government itself as just another business opportunity to increase profits. Governments need to govern.

Michael Walker is a social justice facilitation for the Archdiocese of Sydney.

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