Development in African countries can be supported through a simple measure, asking Australian mining companies to publish what they pay in tax to foreign governments. Why is this not happening?
Austinmer Beach car park was full, and cars had started to park across driveways and on footpaths. A crowd was slowly gathering on the beach, and despite the cold, a warmth exuded as people chatted excitedly in anticipation of the day’s stunt. It was an unusual sight for a winter’s morning, 3000 people with no intention of going for a swim. The community had gathered on Sydney’s south coast to protest the approval of coal seam mining and were pleasantly surprised when an aerial photograph of their human formation made the front page of the Illawarra Mercury the next morning: ‘Stop Coal Seam Mining’.
Looking across the Indian Ocean, communities in Africa are also reacting to the impact of mining. Australian mining companies have already invested more than $20 billion in mining projects across the African continent. According to Mr Joel Negin, Senior Lecturer at the University of Sydney:
“These are not just countries where Australia has a deep engagement, like South Africa or Kenya, but it is in Guinea, Burkina Faso and Angola. Places where Australia’s aid presence is very small or non existent”.
The Australian government is trying to keep pace. It has increased diplomatic relations to 53 countries from 41 in the year 2000, and its aid budget to the continent has increased from $86 million in 2006, to $275 million in 2011. “Africa could be on the brink of an economic take off,” said Kevin Rudd, in a speech to visiting African dignitaries in Sydney. The Foreign Minister spoke about the mining boom and Australia’s growing aid presence at a forum on the Australia-Africa relationship. The visiting Minister for Mines from Mali, Mr Amadou Cisse, reminded Rudd, who would and would not be benefiting from the boom.
“For a long time we were the milking cow of other countries. Now our eyes are open to it.”
And there is a feeling that this boom is going to be different. African leaders have developed ‘Africa Mining Vision 2050‘ for creating no less than:
“A sustainable and well-governed mining sector that effectively garners and deploys resource rents and that is safe, healthy, gender & ethnically inclusive, environmentally friendly, socially responsible and appreciated by surrounding communities.”
The relationship between mining and development is complex. As the civil society movement on Sydney’s south coast is demonstrating, the revenue mining raises is not always the primary concern for communities. But in the absence of a strong civil society holding government to account, Australians can still rely on a structured bureaucracy, protecting Native Title, the environment and communities from at least some of mining’s negative impacts. African countries might not be so lucky – Mali provides an example.
Six Australian companies are currently operating in the land locked West African country, contributing vital foreign investment to a country with few export industries. The government of Mali reformed its mineral code in 1991 to attract more foreign investment and has since become Africa’s third largest producer of gold. Despite this increase in investment and the resulting exports, after twenty years Mali ranks a dismal 160 of 169 on the Human Development Index.
What are Australia’s responsibilities in monitoring the contribution of these six companies to the sustainable development of Mali? Ultimately, it is the responsibility of the Mali government and in his recent visit to Australia, the Minister for Mines recognised their failings and reached out for support for a School for Mining to build capacity in their resource sector.
In the meantime, what role does Australia have? Officially: none. Companies listed on the Australian Stock Exchange are required to report on possible impacts on the share price, but anything beyond that is voluntary disclosure. Whilst the industry is working towards creating benchmarks for corporate social responsibility (CSR) guidelines, these guidelines are neither enforceable nor is there evidence that social programmes delivered under CSR are providing long term benefits to communities.
According to Mr Negin, some social programmes as delivered by mining companies “provide nominal benefit to the communities surrounding the mine, and often cause tension with neighbouring regions who have failed to benefit at at all.” Chairman of the Australia African Industry Group Chairman, Rick Yeates agreed that more could be done. “Social programmes are not our core business. We focus on corporate and operations functions, not the social”.
AusAID has stepped into a supporting role, bringing government mining officials to Australian Universities, to attend short courses, aimed at strengthening governance structures and their capacity to manage resources sustainably and equitably. However, it is not just an issue of government’s capacity. Mr Negin highlights, “If the Australian government struggles to get as significant a portion of the mining revenues that it wants, it is obviously going to be difficult when African governments have less leverage in dealing with the mining companies.”
Presently, Australian companies come to individual agreements with African governments with very little public disclosure. A common practice is for companies to make minor investments in development projects in lieu of fair and equitable tax payments.
Jubilee Australia is an Australian NGO that advocates for economic policies and structures that promote equitable and sustainable use of resources. National Director Adele Webb believes a crucial leverage point for more responsible investment is transparency of tax payments.
“Community development provided by companies is negligible compared with the massive economic transformation required to kickstart sustainable development in most African countries. If Australian investments in extractive industry projects are to translate into future development for the countries of Africa: transparent and equitable mining tax laws and the re-distribution of this revenue is of paramount importance”.
To promote fair tax, the United States recently passed the Dodd-Frank Act requiring oil, gas and mining companies to publish what they pay in tax to foreign governments. This gives communities the information to combat corruption and to demand government accountability for responsible resource use. Stephen Conroy laid out the Australian Government’s position on the Dodd-Frank Act in Parliament, “we do not consider initiatives such as the Dodd-Frank Act to demonstrably reduce corruption”.
This view is completely unfounded. Ms Webb contests the government’s position.
“There is ample evidence to support the claim that transparency of payments to governments does reduce corruption. There is no demonstrable evidence yet as Dodd-Frank has yet to be implemented”.
The Extractive Industries Transparency Initiative (EITI) is one such global movement seeking greater transparency in the industry. 18 African countries comply with the EITI’s principles for the full publication of company payments and government revenues from oil, gas and mining. Despite some suggestions from government that it may be adopted, Australia is yet to become an implementing member. Oxfam’s Mining Ombudsman reports that Australia’s adoption of the standard, as a resource rich country, will assist the principles of transparency and EITI to become a global norm. This is a simple strategy for supporting development in Africa, demand our government become an implementing member of the EITI and review its position on legislation such as the Dodd-Frank Act.
And as the protest on the south coast demonstrates, there is already an appetite for greater transparency in resource management, but it remains to be seen if the government will heed the call.