20th August 2021

Opening Statement: Senate inquiry into Australia’s oil and gas reserves

 On behalf of Publish What You Pay, I would like to thank you for the opportunity to speak today.

-          PWYP Australia is a coalition of anti-corruption, environment, human rights, and faith-based, organisations campaigning for greater transparency and accountability in the mining, oil and gas sectors. Our vision is for communities to share in the benefits of our natural resources and a just transition.

Today, I will focus on two main challenges and recommendations in relation Australia’s governance of our oil and gas reserves.

1.       How Australia’s failure to meet international standards of transparency and accountability, increases the risk of corruption and companies avoiding their tax responsibilities.  

 

2.       And related, how some gas and pipeline companies that stand to benefit from the Commonwealth’s gas plans are using opaque ownership structures, secrecy jurisdictions and tax havens.

Senators. Australia should be leader in good governance and addressing corruption in the oil and gas sectors.

However, Australia’s standard of transparency lags way behind other OECD nations, including those with oil and gas reserves like Canada and UK, and even our neighbours Timor-Leste, PNG and Indonesia.

To date, the government has not yet implemented the Extractive Industries Transparency Initiative (EITI). The Extractive Industries Transparency Initiative is known as the gold standard for anti-corruption efforts and tax transparency.

The Extractive Industries Transparency Initiative helps ensure good governance and accountability of the mining, oil and gas sector. It is led by a multi-stakeholder group of government, companies and civil society.

And despite Hon. Frydenberg promising Australia would join the EITI in 2016, a successful pilot and I might add strong support from MCA and APPEA. Australia has chosen to not implement this important transparency standard.

Australia implementing the EITI would mean participating companies would report how much tax, royalties and other sector specific payments they make to governments and governments would report how much they receive from companies.

Importantly senators, this level of reporting would be required at the project level as this is where the corruption risks are often higher.

The EITI also includes reporting on contract transparency, and importantly reporting on who holds exploration licenses and who are the ultimate beneficiaries of private oil and gas companies.

Committee members, there are 51 other resource rich countries meeting these high standards of transparency and anti-corruption efforts. For the period 2019 to 2022, the commonwealth government will have invested almost $26 million dollars supporting other countries to implement the EITI.

 Yet to date, the government has chosen to not meet these important revenue transparency and anti-corruption standards.

Australia’s current approach to voluntary reporting means traditional owners, investors and even governments are left in the dark as to project level revenue flows, the nature of contracts and who ultimately benefits from our oil and gas reserves. 

To be clear, this increases the risk of corruption and companies fulfilling their tax responsibilities.

To ensure good governance and public confidence in Australia’s oil and gas industry, the inquiry should strongly recommend that the Commonwealth re-commits with a timeline to Australia implementing the Extractive Industries Transparency initiative.

 

Secondly, the government’s gas plans announced last year after advice from the National Covid Coordination Commission, to develop new onshore gas basins across Australia raise several integrity issues.

Our research conducted with the Tax Justice Network of Australia demonstrated that several companies that stand to benefit from the opening up of new gas basins, including the provision of public money, are not adhering to the highest standards of transparency.

This includes several companies with exploration licenses in the Beetaloo basin, NT who have applied for tax payer grants under the government’s 50 million grant program. For example, Tamboran Resources and Sweetpea Petroleum are using secrecy jurisdictions and shell companies.   

Media reports also show that one company, Empire Energy, has already been awarded $21 million in grants and has deep liberal party links.

Senators, our research also showed that APA Group which owns or operates $22billion in energy infrastructure, is involved in the Narrabri pipeline and has more than 15,000 kms of gas pipelines chose to establish a subsidiary in the secrecy jurisdiction of Delaware.

Put simply, the use tax havens or secrecy jurisdiction allows companies to avoid scrutiny and regulations including tax responsibilities.

To be clear, any company that receives tax-payers money from the Commonwealth must adhere to the highest standards of transparency and accountability.  

To date, Denmark, Poland and France have ruled out public money going to companies using tax havens, so I would urge the inquiry to recommend the Commonwealth should rule out any public money or subsidies going to gas companies that do not adhere to the highest standards of transparency.