DSS response: $10m welfare report helping to build actuarial valuations expertise in government

By The Mandarin

Friday February 24, 2017

Big ticket reports from the top accounting firms don’t always come across to the public as value for money or in their interest, as recently explored in Michael West’s story “Australia’s march towards corporatocracy” earlier this week. But value can come in a variety of forms.

One of the examples in West’s story should be corrected, the Department of Social Services argues, as the full scope and originality of the work was not disclosed in the article. Nor did it disclose the expertise building that will enable the department to conduct future work of this kind in-house.

Serena Wilson, deputy secretary for social security, writes:

In particular, Mr West states: “The crowning jewel in this cuff-linked fee-fest was a payment of almost $10 million, or $75,000 a page, for PwC to write its report on the future burden of welfare costs”. This statement significantly misrepresents the arrangements between the Department of Social Services (DSS) and PricewaterhouseCoopers (PwC).

DSS has entered into an agreement with PwC to provide actuarial analysis to support the Priority Investment Approach. While the value of the agreement is of the order of $10 million, this covers not one but four iterations of actuarial valuations, over the period 2015 to 2018. This includes an extensive range of detailed and specialised data and statistical analysis activities to support the production of the four annual valuation reports.

I note also that the services provided by PwC include the transfer of knowledge, models and support materials to DSS to enable the Department to build its expertise to conduct future valuations in-house.

Actuarial analysis of welfare is entirely new to Australia and requires a critical mass of professional actuarial expertise that is not currently available within the public sector. PwC demonstrated through a competitive tender process that they had the skills, experience and capabilities needed to perform this task, and that their bid represented value for money.

Your article also implies that the advice prepared by PwC was not independent I would like to point out that the advice in the report is Prescribed Actuarial Advice as defined in the Code of Professional Conduct issued by the Actuaries Institute, as specifically referenced in the Baseline Valuation Report.

I would also like to point out that the Investment Approach is not about reducing support for those most vulnerable in our community as your article implies. It is about using the best available evidence to ensure vulnerable Australians have the opportunity for a better future; helping people to live independently of welfare and reducing intergenerational welfare dependence.

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