The Case for the Extractives Industry Transparency Initiative (EITI)
The Case for the Extractives Industry Transparency Initiative (EITI) as a Commitment under Australia’s first Open Government Partnership (OGP) National Action Plan.
The Extractives Industry Transparency Initiative (EITI) is a voluntary initiative which requires participating governments to publish what they receive from extractive companies and those companies to publish what they pay to governments. This process is overseen by a Multi-Stakeholder Group (MSG) of government, industry and civil society representatives. Australia completed a domestic pilot of EITI within the resources sector in 2014. A number of civil society organisations participate in a multi-stakeholder group and act as observers.
In May 2015, Australia’s MSG released its report Extractive Industries Transparency Initiative Multi-Stakeholder Group Report to Government.[1] The report states “The Multi-Stakeholder Group recommends that moving to implementation of the adapted EITI model, as developed through the domestic Pilot, would be appropriate in the Australian context”.
In May 2016 the Federal Government announced its intention to implement EITI in Australia and seek full EITI candidacy. The Australian Government is one of the largest financial supporters of the EITI, committing A$18.43 million from 2006-2016. This funding included support for the EITI Secretariat and the World Bank EITI Multi-Donor Trust Fund. Australia also hosted the 2013 EITI Global Conference.
Although a voluntary system, the EITI has already shown benefits beyond its primary aims of increased transparency, better governance and reducing corruption. Through its 2012 and 2013 reporting, Ghana identified a US $55 million discrepancy in payment reporting from Anadarko WCTP Ltd to the Ghana Revenue Authority.[2] Nigeria has recovered US $443 million from missing tax payments of US $8.3 billion through its EITI processes; while the latest EITI report from the Democratic Republic of the Congo (DRC) highlighted that US $88 million dollars is missing and found a tax collecting company unable to account for royalty payments totaling US$26 million.[3] Further, EITI reporting in the Cameroon has been found to compliment capacity building for government officials, strengthening their financial knowledge base reporting; and reporting from Liberia has indicated their EITI processes are seen by the community to contribute to ongoing efforts towards political stability.[4]
Domestically, EITI is important in Australia because, while not suffering from resource-related conflict or incidences of grand corruption, there is a need to improve transparency and accountability in the sector for the benefit of impacted communities. Importantly, the initiative signifies to other resource rich countries that Australia takes transparency seriously and strengthens its arguments in encouraging both emerging and advanced economies to seek implementation themselves.
Australian extractives companies have been named by the International Consortium of Investigative Journalists (ICIJ) recent report Fatal Extraction: Australian Mining’s Damaging Push In to Africa[5] as having allegedly contributed to numerous human and labour rights abuses, advertently and inadvertently, through negligence and ethically ambiguous practices. It is important to note that bribery and corruption in the extractives industry do not operate within a vacuum. Foreign bribery falls on a continuum of corruption that plagues the extractives industry, particularly its activities within emerging economies, and is inextricably linked to a country’s economic and human development. The current ambiguity in international, national and domestic tax frameworks and the high risk of bribery is having a significantly negative impact on countries already faced with enormous development challenges. Australia has a responsibility to ensure fair, equitable and sustainable practices where its companies operate in the extractives sector. In the African continent, more than 150 Australian companies, holding about 1500 licenses, work across 33 countries; an organisational presence higher than Canada, China or the United Kingdom[6].
Whilst the Australian EITI MSG (once operational) provides a vehicle for accountability and public reporting, it is a relatively closed group of stakeholders focused on the resources sector who will primarily benefit. OGP delivers a framework with inbuilt mechanisms for stakeholder engagement, monitoring, review and refinement that is visible to a wider civil society and public audience. Further, OGP provides an opportunity for effective communication of both successes and challenges with the benefit of broad input and a whole-of-government approach. Transparency International Australia and Publish What You Pay Australia are leading the civil society response to Australia’s implementation of EITI. Both organisations are engaged in the development of Australia’s first OGP NAP and commend the inclusion of EITI as a commitment.
[1] The Australian Extractive Industries Transparency Initiative Pilot Multi Stakeholder Group report http://www.industry.gov.au/resource/Programs/ExtractiveIndustriesTransparencyInitiative/Documents/EITI_MSG_ReportToGovt.pdf
[2] https://eiti.org/news/ghana-revenue-jubilee-oil-field-doubles-2011-2013
[4] ‘Impact of EITI in Africa’ p. 7-8 https://eiti.org/files/EITI%20Impact%20in%20Africa.pdf
[5] http://www.icij.org/project/fatal-extraction
Supporting Organisations
Action Aid Australia
Aid Watch
Anglican Overseas Aid
Australian Conservation Foundation
Australian Council for International Development
A Billion Little Stones
Burma Campaign Australia
Caritas Australia
Catholic Mission
ChildFund Australia
Columban Mission Institute
Conservation Council of Western Australia
CFMEU – Mining and Energy
CAER – Corporate Analysis. Enhanced Responsibility
Economists at Large
Friends of the Earth Australia
Global Poverty Project
Greenpeace Australia Pacific
Human Rights Law Centre
Jubilee Australia
Mineral Policy Institute
Oaktree Foundation
Oxfam Australia
SEARCH Foundation
SJ Around The Bay
Tear Australia
Transparency International Australia
Union Aid Abroad – APHEDA
Uniting Church in Australia – Synod of Victoria and Tasmania
World Vision Australia