More than half the world’s poor live in countries that make billions of dollars every year from natural resources. There is obvious potential for this revenue to pay for essential services such as health and education but too often resource wealth is squandered by corrupt officials, and communities directly affected by mining see few benefits.
Standards are now being set to improve transparency in mining, leading to greater corporate accountability and, ultimately, sustainable development. Australia has the opportunity to support such standards.
This week, the head of the Extractive Industries Transparency Initiative, Jonas Moberg, will be in Australia. The initiative is supported by a coalition of more than 300 non-government organisations, including Oxfam Australia. The public disclosure of all taxes, royalties and commissions paid to governments by companies could help fight tax avoidance, corruption and conflict, and help the world’s poorest countries reduce poverty.
Revenue transparency is vital because it provides communities in these countries information they need to hold governments to account.
Currently, 33 countries have signalled their intention to use the standards set by the EITI, but Australia is a notable omission.
If countries such as Liberia are able to achieve EITI compliance, what’s stopping Australia? Australia, as a mining leader with increasing involvement in developing countries in its region and in Africa, is in a strong position to improve transparency. But the Australian government has not displayed enough will to lead the way.
Becoming EITI-compliant would require all oil, gas and mining companies operating in Australia to regularly publish their payments to the government and for Australian companies operating in countries that are implementing EITI to disclose all payments made to foreign governments.
These accounts must be independently audited using internationally accepted standards.
Committing to EITI will require political leadership and the support of a range of government departments, including Treasury, Resources, Energy, Tourism, and Foreign Affairs and Trade.
It will mean working closely with civil society and companies to develop a fully costed work plan with measurable targets and a timetable for implementation.
The implications are global. If Australia becomes EITI-compliant, it will raise the bar in transparency and accountability.
It will help communities get a fair share of their resource wealth and support global commitments to fight bribery and corruption. It will also send a positive signal to other resource-rich, but often regulatory-poor, countries in the region.
Signing up to EITI is just one step we can take to reverse the devastating ”resource curse”, the paradox that for centuries has seen many countries rich in natural resources having worse economic and human development outcomes than those with fewer resources.
The revenue the extractives sector generates each year in poor countries is far greater than official aid flows and could see major improvements within countries if a portion was directed towards essential services for local people.
The resource curse need not be a country’s destiny.
By removing the cloud over how exactly mining revenue is spent, the private sector can be a strong force for economic prosperity and poverty reduction in developing countries.
Andrew Hewett, Executive Director, Oxfam Australia
This opinion editorial was first published by The Age on 9 December 2010.