It’s a joke as old as the consulting industry itself that you hire consultants to give you the answer you want.
That adage rings true, it seems, at illustrious big four firm EY.
EY’s Steve Brown seems to have missed a significant message. Ryan Stuart
Its partner Steve Brown dropped a report for client Master Builders Australia in the midst of the federal election campaign, claiming that Labor’s plan to abolish the Australian Building and Construction Commission – watchdog of the militant Construction, Forestry, Maritime, Mining and Energy Union – could cost the economy $47 billion in lost productivity on worksites.
Master Builders jumped on it, the Coalition jumped on it, even the media got on board.
There was just one issue – on others’ reading, the mercenary economist’s numbers didn’t stack up.
Research by University of Sydney economist Dr Phillip Toner showed Brown relied on just 49 respondents from the 350,000-plus businesses that make up the construction industry – and two-thirds of those had never or rarely experienced industrial action on their sites (Brown disclosed these limitations in his report).
The responses of these 49 people to hypothetical scenarios formed the backbone of Brown’s work, Toner (who was commissioned by the CFMEU) opined, making it “effectively anecdotal, empirically empty, and useless”.
Data from the real world – meaning the Australian Bureau of Statistics, not a hypothetical universe – also contradicted his claims that the ABCC had driven up construction productivity, according to Toner, as it showed output per hour worked in the sector since the watchdog was created actually fell by 6.3 per cent.
Now, large consultancies traditionally stay out of the politics of election campaigns. Doing so is verging on a political necessity; no one wants to anger the incumbent and risk slowing the $2 billion gravy train of public sector work that comes their way annually.
This was particularly true during this year’s federal election campaign, as Labor – which Roy Morgan had up 54.4 per cent to the Coalition’s 45.5 per cent on a two-party preferred basis at the time Brown finished the report – had pledged to slash government consulting spends.
But that’s a message that Brown, who worked at boutique consultancy Cadence Economics during the 2019 federal election (doing research, again for Master Builders, disputing Labor’s negative-gearing policies), clearly missed.
Some of his fellow EY partners are unimpressed with this lapse, and his superiors were apparently unaware the Master Builders work was under way until it hit the press.
It’s not the first time Brown has twisted numbers for a client, either.
His economic assessment of an open-cut coal mine in Rocky Hill, NSW, for Gloucester Resources in 2019 was slammed by a NSW judge as incorrect and lacking “evidentiary foundation”, plus totally at odds with government guidelines.
Brown compared the average mining wage with the average non-mining wage as part of his mental acrobatics to get the client the answers it wanted, even if that meant the Land and Environment Court ultimately rejected the company’s mine approval application.
The piddling issue of government guidelines didn’t stop Brown using the same methodology for British mining and energy company SIMEC Group last year in its quest to expand the Tahmoor coking coal mine south-west of Sydney.
That work “wildly overstated” the economic case for the Tahmoor mine, an Australia Institute researcher opined, using calculations that were “unorthodox” and “plainly wrong”.
The saying goes that no one ever got fired for hiring McKinsey. Well, it seems that no one ever won an election – or a mine approval – by hiring EY either.
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