The Extractive Industry Transparency Initiative – Australia’s Journey to Compliance
(by Boshra Yazahmeidi)
Australia is the latest country to seek candidacy for the Extractive Industry Transparency Initiative (EITI) – a voluntary mechanism that promotes transparency, accountability, and good governance in the extractive industry sector.
In a nutshell, compliance with the EITI requires participating minerals and petroleum companies to regularly publish what they pay to governments; for governments to disclose what they receive in turn in the form of taxes, royalties, and statutory payments; a reconciliation of these figures; and periodic validation by an independent agency to ensure all requirements have been met.
This increased level of transparency is expected to reduce corruption, help civil society organisations hold their governments to account with respect to the management of extractives revenue, and build investor confidence.
Given Australia’s large resource economy, there has been significant international pressure for it to be a global leader and to join the 51 countries already implementing the EITI. In response, Australia completed a pilot project in 2014 that tested the practical application of the EITI principles in the local context. The pilot found Australia’s existing governance systems to be enabling of EITI implementation and recommended a methodology that is at negligible cost and effort to business.
The Australian Government has since declared its intention to join the EITI and is on its way to applying for candidacy, the first step on its journey towards compliance. The media release can be accessed here.
A key step towards of EITI implementation is the formation of a Multi-Stakeholder Group (MSG), comprised of industry, government, and civil society representatives. The MSG is responsible for developing a work plan outlining national objectives, actions, timetable, responsible party, costs, and funding sources, to name a few.
Australia is hoping to have its MSG formed by September 2016. Civil society organisations, including Jesuit Social Services, have collaborated to issue a Joint Paper of recommendations around the implementation of the EITI in Australia, and have begun deliberations to nominate suitable representatives to the MSG.
Once the MSG is formed, it will need to develop and maintain a current work plan in order for Australia’s EITI candidacy application to take effect. Once the EITI Board accepts a country as candidate, the country must publish its first report within 18 months. A country then needs to undergo its first validation within 2.5 years of candidacy, and provided the results demonstrate adherence to all EITI requirements, can have its status elevated to EITI compliant.
Boshra Yazahmeidi works for Jesuit Social Services Australia, and has participated in the civil society process ahead of EITI implementation.