Exclusive: Mandatory reporting regime would apply to large Australian oil, gas and mining companies working overseas
Gareth Hutchens | The Guardian |30 October 2017
A Shorten Labor government would force Australian mining companies working overseas to disclose the taxes they are paying to foreign governments to extract their minerals.
The mandatory reporting regime would apply to large Australian oil, gas and mining companies, and be designed to ensure that communities in countries such as Papua New Guinea understand how many tax and royalty payments they are receiving and for which mining projects.
Labor says it wants Australia’s resource companies to be “good corporate citizens” and to maintain transparent accounting practices that combat corruption.
It says many of Australia’s neighbours, including Timor-Leste, Papua New Guinea, the Solomon Islands and Nauru, have multibillion-dollar resource projects that are operated by foreign multinationals but are home to some of the poorest people in the world.
Labor will announce on Tuesday an “extractive industries transparency plan” that will require large Australian companies to disclose the taxes they are paying to governments in every country, including Australia, and for every mining project.
Large companies shall be defined as a company that meets at least two of three criteria:
- Total assets exceeding $50m
- Annual turnover exceeding $100m
- The average number of employees exceeds 250
A single or series of taxes and related payments within a financial year would have to be disclosed if the payments were worth at least $150,000.
Payments to be disclosed include: taxes on income, production or profits; royalties; dividends (except where the dividend is paid to a government as an ordinary shareholder); fees including licence fees, rental and entry fees; signature, discovery and production bonuses; production entitlements (such as profit resources) and payments for infrastructure improvements.
The scheme has been costed by the parliamentary budget office at $2.2m over four years. Between 80 and 100 companies would be affected. Subjected companies would be required to begin reporting payments to governments from 1 July 2020.
A multi-stakeholder committee would be established to help the government implement the reporting regime, including defining project-level reporting and establishing an online reporting mechanism to ensure public transparency.
Labor says the legislation would include equivalency provisions so companies captured by other jurisdictions due to cross listing on stock exchanges would only be required to produce one report. The scheme has been modelled on the extractive reporting regime in the UK.
Matt Thistlethwaite, the shadow assistant minister for Treasury, will announce the plan on Tuesday in a speech to the Australian Council for International Development’s national conference in Melbourne.
“Currently Australian companies do not meet world’s best practice for transparency and accountability,” he will say. “Labor is determined to change this.”
Mal Larsen, Oxfam Australia’s mining and extractives policy adviser, has welcomed the policy, saying he has been calling for something like this for a long time.
“This policy could help lift people out of poverty,” Larsen told Guardian Australia. “Australia would join the growing list of countries around the world that require large companies to reveal how much tax is being paid, in which country and for which mine.
“This sort of disclosure will allow the public to hold companies accountable for how much tax they pay and governments for how they spend it.
“Disclosure of tax payments is an emerging international standard. It is key to driving out corruption and building community faith that mining taxes are being spent on essential services like health and education.”
In May 2016 the Turnbull government announced Australia planned to join the Extractive Industries Transparency Initiative, an international standard for increased transparency and accountability in the oil, gas and mining sectors.
It will require Australia to disclose information on taxes and other payments made by companies to the Australian government as well as other information such as licences, contracts, production and exports.
Larsen says Labor’s policy goes further because it would require Australian companies to disclose the payments they are making to foreign governments, not just to Australia’s government.