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A loaded iron ore truck drives through the site at BHP Mt Whaleback Mine in Newman, Western Australia
The Extractive Industries Transparency Initiative is an anti-corruption and tax accountability scheme, but resources minister Keith Pitt says he is concerned about ‘potentially increasing the reporting burden’ for companies. Photograph: Krystle Wright/The Guardian
The Extractive Industries Transparency Initiative is an anti-corruption and tax accountability scheme, but resources minister Keith Pitt says he is concerned about ‘potentially increasing the reporting burden’ for companies. Photograph: Krystle Wright/The Guardian

Australia’s failure to act on tax transparency is at odds with miners and minerals lobby

This article is more than 2 years old

Federal government accused of ‘choosing secrecy’ for not adopting the anti-corruption Extractive Industries Transparency Initiative

The Morrison government’s reluctance to act on a promised tax transparency scheme for Australia’s resources sector puts it at odds with major mining companies and the minerals lobby, which have voiced strong and longstanding support for the reform.

In 2016, then resources minister Josh Frydenberg pledged to join other developed nations in implementing the Extractive Industries Transparency Initiative (EITI), which sees mining companies and governments publish details about taxes paid and received.

The scheme, adopted by 55 nations, helps to prevent corruption and ensure tax accountability by providing information on key steps in the governance of oil, gas and mining revenues, from the point of extraction, through to payments to governments.

But, despite the 2016 promise, Australia has never implemented the EITI domestically, and the current minister, Keith Pitt, has said he is “concerned” about the scheme.

In correspondence with transparency group Publish What You Pay, Pitt said the EITI had morphed into a scheme requiring more comprehensive transparency than initially envisioned, including “project level reporting, beneficial ownership, environment reporting and publishing contracts”.

This, Pitt said, risked “potentially increasing the reporting burden for companies and governments”.

But the government’s view does not appear to be shared by all in the sector. The Minerals Council of Australia told Guardian Australia on Monday it was a long-time supporter of the EITI, saying it would help improve trust and confidence in the industry.

BHP also said it remained a strong supporter of the initiative. The company was a founding member of the EITI in 2003 and says it believes “transparency around revenue flows from the extraction of natural resources is an important element in the fight against corruption”.

Publish What You Pay national director Clancy Moore said the government’s position was clearly at odds with industry.

“Once again the government is choosing secrecy over transparency,” he said. “In this case, minister Pitt’s decision is out of step with industry players like the minerals council, BHP and APPEA who are all on the record as supporting the Extractive Industries Transparency Initiative in Australia.”

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Australia has adopted other tax transparency measures, outside of the EITI, including the voluntary tax transparency code. The code was introduced in 2016 and was recently the subject of a review, currently before government.

Pitt said any suggestion the government was not committed to transparency in the resources sector was “incorrect”. He said any decision on the EITI would be premature before the review of the tax transparency code was complete.

“Australia has an effective tax transparency framework for companies, including those in resources,” he said.

Australia has, since 2011, provided funding to support the EITI globally and to developing countries, but has not implemented the scheme domestically.

“Australia will continue to support EITI internationally as the global standard for increased transparency and accountability in the resources sector, with around $25.7m allocated between 2019 and 2022,” Pitt said.

Minerals Council of Australia (MCA) chief executive Tania Constable said the council’s members also volunteer tax information through the tax transparency code.

“Across Australia, in 2020 the minerals industry paid $39.3bn in taxes and royalties,” she said. “The MCA looks forward to the outcome of the voluntary tax transparency code review.”

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The Australia Institute says the current approach to transparency allows some companies to hide their affairs, because it is voluntary in nature.

“Companies don’t have to publish how much tax and royalties they pay, and owners of private companies can remain anonymous to avoid scrutiny and regulations,” research director Rod Campbell said.

Nicole Bieske, an expert in mining accountability with Transparency International Australia, said the government’s position on the EITI would “hurt communities through lost revenue and damage the reputation of Australia’s resource sector”.

“Communities expect and deserve transparency from mining companies about their contributions and actions, whether it’s taxes and royalties paid, land rehabilitation or community support,” she said.

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