The Department of Prime Minister and Cabinet paid $1.3 million through recruitment firms to the company at the centre of what is allegedly one of the largest tax frauds in Australian history, a Senate estimates committee has heard.
On Tuesday night, the committee was warned of a government-wide payroll exposure to Plutus, the company that allegedly defrauded the Tax Office of $165 million in just 11 months, after a directive from the Department of Finance for all government agencies to check their books.
The committee heard the Department of Prime Minister and Cabinet had 11 information and communications technology contractors paid through the company allegedly run by Adam Cranston, the son of the Australian Taxation Office Deputy Commissioner Michael Cranston.
"During the course of the day we have confirmed the number that we now understand have been affected are 11," said the department's chief financial officer, Charlotte Tressler.
"That may continue to grow through the rest of the week as we make further inquiries."
The contractors were brought into the department through a variety of recruitment agencies including Hays, one of the world's largest labour hire firms. The government has said it has no oversight over how third parties pay their contractors.
"This sort of throws up another broader systemic issue," said Labor senator Penny Wong.
"What other procedures are in place to ensure that external providers are not companies that are under investigation by the ATO?" she asked, before inquiring if there were any contractual arrangements to ensure companies "don't skim off the tax office".
"We really do not have visibility of the payroll arrangements of the companies with whom we contract," said Deputy Secretary Elizabeth Kelly.
Labor senator Doug Cameron has called for a government-wide overhaul of contracting practices in the wake of the alleged tax fraud.
"Are we getting value for money?" he asked on Wednesday.
Mr Cameron, who raised concerns about Plutus prior to last week's police raids, said he identified at least six government departments that had contracts connected to the payroll company, including the Department of Immigration and Border Security, the National Disability Insurance Scheme, and the Department of Defence.
"If I can look at Plutus and in couple of days come to the view that I need to make a formal complaint to the Australian Securities and Investments Commission, what are these government departments doing, why haven't they been undertaking due process?"
Ms Kelly said PM&C secretary Martin Parkinson had been told about the issuing of Australian Federal Police search warrants on May 15, two days before the news broke of the investigation and charges.
ATO Deputy Commissioner Michael Cranston was charged on May 18 with abusing his position as a public official for allegedly accessing restricted information on an ATO audit for his son, but police do not believe he was involved in the alleged fraud.
He is due to appear in Sydney's Central Local Court on June 13.
His son, Adam Cranston, 30, and his daughter, Lauren Anne Cranston, 24, have also been charged along with six others following an eight-month investigation.
On Wednesday, the tax and revenue committee met with the Australian National Audit Office as part of an inquiry into taxpayer engagement with Australia's taxation system.
Committee Chair Kevin Hogan said in the wake of the tax fraud being investigated by the ATO, the committee would consider the ability of the ATO to identify traders in the black economy and collect revenue as payroll systems go electronic.
All federal government departments are due to release details of their exposure to Plutus by Friday.
