Aid Cuts Hurt Transparency

Jessie Cato

26 May, 2016

On May 6th 2016, just before the Turnbull Government entered caretaker mode, it announced Australia would implement the Extractives Industries Transparency Initiative (EITI). The move followed other recent anti-corruption announcements, such as the establishment of a public beneficial ownership register and Australia developing its first National Action Plan for an Open Government Partnership.

Publish What You Pay (PWYP) Australia has congratulated the Government on the long overdue decision to proceed with EITI. But we have always argued that EITI implementation must be accompanied by mandatory disclosure legislation. Furthermore, we’re worried that ongoing cuts to the Australian aid budget undermine the capacity of countries dependent on natural resource revenue to proceed with their own implementation of EITI – a critical anti-corruption tool.

As PWYP Australia National Coordinator, I oversee the daily operations of PWYP Australia and advocate for our two primary campaign aims: the introduction of mandatory disclosure legislation that would make it compulsory for Australian extractive industries companies to report their payments to governments overseas, and the EITI’s implementation.

Mandatory disclosure legislation in Australia is still a work in progress. It doesn’t yet enjoy bipartisan political support and its introduction, which would bring us in line with the EU, US and Canada, still seems a long way off.

So what is the EITI and why is it important for overseas development? The EITI standard is similar to a mandatory disclosure regime in that it sets a standard for extractives industries and governments to report payments. Unlike mandatory disclosure legislation though, the EITI is a domestic program and is voluntary, so governments are under no international obligation to implement it and companies can choose to not report.

For countries that rely heavily on natural resources, it’s a way communities can ensure governments and companies are held accountable for how natural resources are extracted, managed and that the economic benefits are shared.

Australia ran a pilot of EITI from 2011-2014 and a multi stakeholder group comprising government, industry and civil society representatives recommended Australia proceed with implementation. Changes to political leaders meant it was delayed until now.

However, Australia has been one of the largest financial supporters of the EITI – allocating 18.45 million[1]  from 2006-2015 to support other countries in their implementation.

Transparency – particularly around natural resources and its governance - is vital to many countries’ development. The benefit of the EITI is that it brings all the stakeholders into the same room – government, industry and civil society. In fact, the EITI implementation process relies on having strong civil society represented, and countries that don’t engage with their civil society well, can be penalised or suspended from the initiative, as recently occurred in Azerbaijan[2].

Many of the regions shouldering the Australian aid budget cuts, such as Sub Saharan Africa, are rich in natural resources. By removing funding that goes to strengthening their civil society, Australia weakens their capacity to be able to fully participate in programs such as EITI.

It’s a fallacy for Australia to think that that we can financially support the EITI while simultaneously removing funding from the civil society organisations that are integral to its proper implementation.

It’s akin to expecting a structure to stand because you strengthened one pillar when you are concurrently destroying the foundations.

Nor should EITI be the sole mechanism through which Australia supports transparency in an international context. EITI is a fantastic program, but it cannot shoulder the transparency agenda alone.

We see this as huge step for extractives transparency here. However, weakening civil society through the reduction of funding, both domestically and internationally, risks the ability of civil society to effectively monitor and contribute to processes such as EITI and to the ongoing sustainable development of natural resources. You cannot support an initiative like EITI without supporting civil society here in Australia and in developing countries.

 

  • Jessie Cato
    Jessie Cato

    Jessie Cato is the National Coordinator of Publish What You Pay (PWYP) Australia, a coalition of 30 organisations, including ACFID, campaigning for greater transparency and accountability in the in the mining, oil and gas industries, part of the global PWYP coalition of over 800 member organisations in more than 60 countries. Before joining PWYP Australia Jessie was based in Dili, Timor Leste as a gender officer with agricultural organisation Seeds of Life and has worked as an adviser to the SA Government. She lives in Melbourne.


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