MELBOURNE — The Australian Labor Party is pushing for comprehensive legislation requiring internationally operating mining giants to be transparent in their financial dealings with governments and communities. At the Australian Council for International Development 2017 National Conference in Melbourne on October 31, Rep. Matt Thistlethwaite, shadow assistant minister for treasury, made his pitch to the development sector, which has long criticized the secrecy surrounding how Australian mining companies operate abroad.
The Extractive Industry Transparency Regime — part of Labor’s platform ahead of the next election, which is up to two years away — will require large Australian oil, gas, and mining companies to meet international best practices for tax transparency. Under the planned legislation, companies will begin reporting payments to governments from July 2020, with reports including royalties, dividends, bonuses, fees, payments for infrastructure improvements, and production entitlements, as well as taxes on income or profits of companies. Payments must be disclosed if they are made to any national, regional, or local authority of a country including a department, agency, or state-owned enterprise.
For the purposes of the new legislation, large Australian oil, gas, and mining companies will meet at least two of three criteria: a balance sheet total exceeding 50 million Australian dollars ($38 million); a net turnover on its balance sheet date exceeding 100 million Australian dollars ($77 million); and an average number of employees in excess of 250.
The announcement was met with strong support from ACFID CEO Marc Purcell. “Our members have campaigned extremely hard to improve revenue and tax transparency and I would like to pay tribute to their work,” he told the media. “Greater corporate transparency of taxes and payments to foreign governments is a positive step for communities in the world's poorest nations and will leave them less open to exploitation.”
More than politics
Speaking to Devex, Thistlethwaite explained that his own experience witnessing the impact of Australian mining industries in developing countries encouraged him to push for this new policy.
“When I was a parliamentary secretary for the Pacific Islands in the [Kevin] Rudd and [Julia] Gillard governments, I travelled around our region and visited some of the most resource rich countries in the world, but they had the poorest populations,” he said. “Many of them failed to meet their basic humanitarian goals associated with education, health care, access to transport, and telecommunications. It didn’t seem right that multinational corporations were exploiting these resources that were really owned by the people of that nation who were not benefiting from the royalties and payments flowing into government, translating into better living standards.”
When Publish What You Pay — a network of NGOs pushing for revenue transparency in the extractive industries sector — began briefing lawmakers in Australia, Thistlethwaite took note.
“Labor had been on a process of looking at our tax laws and making sure they are more transparent, accountable, and [that] we are bringing integrity to it. So I was able to work with organizations like Oxfam, the Tax Justice Network, and indeed with some of the mining companies, to craft a policy that we think is fair and reasonable,” he said.
A policy linked to national concerns
As in many countries, corporate tax havens and other loopholes have become a key issue of concern in Australia. By linking this new extractive industry policy to a larger tax system shakeup encouraging greater transparency from corporations, Labor is expecting the legislation won’t be identified solely as a development issue, reducing the chances of it being sidelined.
“This is part of Labor’s transparency and accountability push in terms of taxation,” Thistlethwaite said. “We are keen to ensure Australia meets international standards, following the push from the World Bank and OECD to open up taxation systems.”
But Thistlethwaite is aiming for more — he wants to develop the “world’s best practice” for transparency and accountability to combat corruption among extractive industries. This, in turn, can improve the opportunities for developing countries to grow economies and raise living standards. Given Australia’s outsized role in the extractive industry, such leadership should be expected, said Thistlethwaite.
“Most Australians don’t know that we are the biggest player in Africa in terms of the number of companies operating on the African continent,” he said. “We’re certainly biggest in terms of mining in the Asia-Pacific region, and I think in that respect Australians understand that if we are going to have such a dominance in this industry we should be meeting best practice in terms of transparency and accountability. But that is not the case at the moment.”
Instead, said Thistlethwaite, the only way to learn what sort of payments an Australian company might be making to a foreign government is if the company is listed on the Canadian or U.K. stock exchange. “You can’t use Australian legislation. You have to go overseas, and that simply is not good enough in this day and age and that is why we are implementing this policy.”
Work on the regime will start almost immediately if his party is elected to govern.
“We’ll establish a multistakeholder group within months and work through the issues about how it is implemented,” Thistlethwaite said. “This will include organizations who work in this space internationally as well as mining companies and government representatives.”
Providing quality information for change
By going beyond the existing standards for reporting at national levels, Thistlethwaite said, the accessible information would easily identify corruption by companies as well as governments.
“We’re going down to a project level for companies, so if they have a number of different projects they will have to report on each one them individually,” he said. “There will be a wealth of information organizations will be able to use to ensure they hold the governments in some of these developing countries to account for the way they are spending money on their populations.”
With more accessible information on companies and the payments they are making to extract resources — particularly payments that are made to local landholders and cooperatives — Thistlethwaite hopes it will lead to better spending from governments on health care, education, and transport and other areas that will build strong people and communities.
“That is the missing link at the moment,” he said. “There might be information available at the national level but there is no real information about what is going locally, and local communities are in the dark about how money is being spent in their areas and they are missing out.”
The flow-on effects to international aid programs
By improving the social responsibility of corporations operating in developing countries, Thistlethwaite is hopeful his party’s new policy will improve delivery and outcomes of Australia’s aid program.
“Australia is the biggest aid donor to the Pacific and one of the largest to the Asia-Pacific region generally,” he said. “Given that some of those countries where we spend overseas aid dollars aren’t meeting their Millennium Development Goals, it’s essential to ensure that we get value for money in terms of the programs we invest in but also that the governments we work with are effective in translating aid money into better living standards — which is the reason we are following payments.
“Any program that provides greater transparency and accountability for those government will only assist in ensuring our aid dollars are spent more efficiently and wisely.”
Following the announcement, the Extractive Industry Transparency Regime will now become part of the platform of policies Labor will take to the next election, and they will be actively promoting the issue to the wider Australian community.
“But we’ll also be happy to work with other parties,” Thistlethwaite said encouragingly. “If the government wants to do this before the election we would be very pleased to support them and would try and work with them through parliamentary channels to achieve this important outcome.”
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