The following is an overview of progress of Australia's Pilot of the Extractive Industries Transparency Initiative (EITI) within Australia’s resources sector.
The aim of the EITI is to increase the transparency of transactions between governments and oil, gas and mining companies by annually publishing material payments by companies to governments and revenues received by governments.
The Australian Government will use the EITI domestic Pilot to consider how Australia’s existing financial and governance arrangements deliver outcomes consistent with EITI principles, and to test the applicability and usefulness of the EITI in the Australian context. It is a core program that demonstrates Australia’s continued commitment to transparency in the resources sector.
The Multi-Stakeholder Group (MSG) has been established and members includes equal participation from industry, non-government organisations, and government (including Commonwealth, Queensland, South Australian and Tasmanian governments), and is Chaired by the Department of Resources, Energy and Tourism.
Deloitte Touche Tohmatsu Ltd (Deloitte) has been appointed by the Australian Government as the Administrator for the Pilot, and is currently undertaking the collection and reconciliation of material payments and revenues using the approach designed by the MSG.
Deloitte have commenced work on a systems analysis and investigation of options for data capture; and will work with companies and government agencies using data for a 12 month reporting period commencing 1 July 2012. The MSG agreed that 2011–12 financial year data would be used to populate the final templates. Template design for data capture will be an iterative process, and will first be tested using sample 2010–11 financial data prior to being completed using 2012–13 data.
An independent Evaluator has also been appointed to assess the outcomes of the Pilot.
The Minerals Council of Australia (MCA) has provided $40,000 in funding to the Department to contribute to the evaluation of the Australian Pilot. The evaluation will assess the quality of the Pilot process, including its outcomes and processes making it a useful exercise to inform a decision on EITI implementation.
The MSG agreed to the contribution at its December 2013 meeting, noting that the project will be governed by its members to ensure independence and probity.
The following payments and revenues will be included in the Pilot:
- Minerals Resource Rent Tax (MRRT)
- Petroleum Resource Rent Tax (PRRT)
- Company tax
- Upstream Excise paid by North West Shelf
- Northern Territory (NT) Uranium Royalty
- State royalties.
The Minerals Resource Rent Tax (MRRT) commenced on 1 July 2012. Those companies involved in the Pilot that pay the MRRT, report their 2012–13 obligations in Feb 2014—outside the timeframe of the Pilot. The MSG has agreed that for the Pilot, MRRT payments will be analysed as a 6 month case study undertaken by Rio Tinto including data from 1 July 2012 to 30 December 2012.
The MSG has agreed that several other payments will be investigated during the EITI Pilot and included as part of a narrative to accompany the pilot data. Payments in this category include payments to first peoples (e.g. Native Title payments) and the Carbon Price.
The MSG also considers that certain items that affect company tax computations should also be reviewed and included in the narrative for the Pilot to inform a future decision on implementation. This would include Fuel Tax Credits, and research and development concessions.
The MSG expects that the Carbon Price will be analysed for the Pilot as a case study, similar to that of the MRRT, and undertaken by an oil and gas company.
The report of the Administrator and the Evaluator will assist the MSG in formulating a recommendation to government on whether Australia should implement EITI.
A summary report will be made publicly available.
The Australian Government’s decision to undertake a domestic Pilot of the EITI does not constitute an agreement to full EITI domestic implementation.