NSW government working with KPMG on stamp duty reform

17 January 2021 Consultancy.com.au 3 min. read

The Government of New South Wales has come under fire for handing a $5 million contract to KPMG, as it weighs up reforms to its property taxation system. The move seems to have rubbed critics the wrong way as it enables private companies to profit from changes aimed at improving the public’s chances of getting on the property ladder.

New South Wales (NSW) has seen record-breaking price growth in recent months, in spite of the global pandemic, and Australia entering a recession for the first time in almost three decades. Amid this growth, the state has been plotting a landmark change to its property tax system, with reforms to stamp duty aiming to make home ownership more attainable for Australians.

In late 2020, NSW Treasurer Dominic Perrottet announced the state government would open for public consultation a property tax model, which the Treasury claimed would overhaul a centuries-old stamp duty system that adds $34,000 to the upfront cost of buying the average home in New South Wales.

KPMG working on stamp duty reform in New South Wales

While the state recorded a historic $16 billion deficit in the wake of the coronavirus outbreak, the Government said the stimulus measure will inject as much as $11 billion into the state’s economy over four years, with the potential to lift living standards by around $3,300 for the average household.

While the reforms themselves were met with bipartisan support in the NSW state legislature, the NSW Government has now been accused of overspending on the tax reform, by paying millions of dollars to a private sector consultant. A $5.5 million contract was handed to Big Four firm KPMG to design the tax plan. A NSW Treasury spokesperson said the work being performed by KPMG complements the government’s own capabilities.

“The use of consultants to supplement the core skills of Treasury for a unique and major reform is an effective use of public resources,” said the spokesperson. “Treasury will evaluate the need for ongoing assistance from the consultants beyond March 2021. If additional assistance is needed, a separate competitive request for proposals will be issued.”

However, Shadow Treasurer Walt Secord said that senior public servants are bemused as to why NSW Treasury cannot carry out the work themselves. The six-month contract, which began on September 1st 2020, was published on the Government's e-tendering website in November, and described the role of the consultancy as an expert responsible for management functions, communications, economic modelling and implementation of the project.

Critiquing the posting, Secord added, “Shouldn't NSW Treasury have the expertise in the people inside the department already? This is simply putting work to the private sector which could be and should be done by the public service… One of the theories put forward by public servants is that the government wanted to have market research and community attitude tests conducted outside of government, so they could fall outside of freedom of information (GIPA) laws.”

Work conducted by consultants for Treasury is subject to the Government Information (Public Access) Act 2009. However, there are exclusions in the act that prevent the public release of documents, including the operation of Cabinet confidentiality.