Department of Finance secretary Jenny Wilkinson gives statement on PwC matter after it was referred to AFP

Ms Wilkinson faced senators the day after the Treasury department released a statement revealing it had referred a matter involving the firm's treatment of confidential Commonwealth information to the Australian Federal Police.

In January, media reports alleged PwC Australia's former head of international tax, Peter Collins, had shared privileged information on the Australian Taxation Office's multinational tax avoidance strategy to staff at the firm.

Treasury said it had taken the step after emails that the Tax Practitioners Board tabled in Parliament in early May highlighted "the significant extent of the unauthorised disclosure of confidential Commonwealth information and the wide range of individuals within PwC who were directly and indirectly privy to the confidential information".

Appearing in an estimates hearing on Thursday, Ms Wilkinson gave details of how the government would move forward with procurement and its engagements with the consulting firm.

"I would begin by stressing that I consider PwC's abuse of confidence and trust with the Treasury and PwC's subsequent handling of this breach to be a very serious issue," she told senators.

The Finance secretary said PwC had agreed to remove personnel "directly involved in or who had knowledge of the confidentiality breach from all existing and future contracts under the Management Advisory Services Panel, at least until the review by Dr Switkowski of PwC governance, culture and accountability is complete".

The firm has also agreed to a recommendation that "those personnel not be involved in any other Commonwealth contract", Ms Wilkinson said.

READ MORE:

But these actions drew scrutiny from Labor senator Deborah O'Neill and Greens senator Barbara Pocock, who questioned how the department could enforce this without knowing the names of the individuals involved.

"So given the low level of trust at the moment with PwC, have they advised you of all of the names of people whose identity is redacted in the 144 pages of emails, and the additional list of people to whom you've just alluded?" Senator O'Neil asked finance officials, referring to a broader range of people who may have received information.

Deputy secretary Andrew Jaggers responded that the department would not request the names, in light of the referral to the AFP, for consideration of a criminal investigation.

"We have had to be very careful to engage on this matter that does not prejudice any other investigations which are being taken into this specific matter," finance secretary Jenny Wilkinson said in response to questions from Senator Pocock.

Senator Pocock also questioned why the government would not ban contracts with PwC in the wake of the referral.

Senator Gallagher said because the information shared with PwC was done through stakeholder engagement, rather than through a contract arrangement, the government couldn't ban PwC.

"That's not the advice that we have, that you could just go out and ban one organisation from all contracts within government, because of a matter, that potentially, will be investigated by the police that happened under a different set of arrangements," she said.

As at May 16, the government had active contracts with PwC worth $255.2 million.

The department has developed clauses to terminate contracts for material breach, which will enable it to take stronger action if an incident such as this occurs again.

"On the 19th of May, finance updated the Commonwealth contracting suite and ClauseBank to include template clauses which will enable the Commonwealth to terminate a contract for material breach of contract if an adverse event occurs, including an event which is outside a specific contract," she said.

"Finance is also preparing updates to other finance-led, whole of government panel arrangements to include these clauses."

The department has also reminded all officials involved in procurement "they must consider the previous behaviour including the ethical conduct of an organisation when undertaking value for money assessments", while a Supplier Code of Conduct is also in development.

"I consider that these actions are an appropriate and considered response to the matter based on information that is currently available and the options that are available under current legislative arrangements," Ms Wilkinson said.

"These actions deliver a clear message to suppliers that unethical behaviour will not be tolerated, whether it occurs as part of a procurement arrangement or as part of another arrangement with government."