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2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
Corporations Amendment (Publish What You Pay) Bill 2014
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator C Milne)
Corporations Amendment (Publish What You Pay) Bill 2014
This bill was introduced by the Australian Greens in the 44th Parliament.
OUTLINE
The intention of the Corporations Amendment (Publish What You Pay) Bill 2014 is to
establish mandatory reporting of payments made by Australian based extractive companies to
foreign governments. The bill requires that companies must disclose these payments on a
country-by-country and project-by-project basis.
This will apply to all Australian companies involved in extractive industries, including oil,
gas, mining and native forest logging. It will apply to both Australian public and large
proprietary companies.
The overall aim of the Bill is to improve transparency and accountability of Australian
extractive companies. The Bill aims to deter corruption by requiring payments to be made
public.
Under the legislation, these companies and their subsidiaries would be required to submit a
financial report detailing all payments made to government entities overseas over $100,000.
This threshold would bring Australia in line with the standards set by the US, EU and UK in
their legislation and directives. The legislation sets out that these reports must be in an open
and machine-readable format, and would be published by ASIC, to ensure public accessibility
and accountability. Misleading reporting will be dealt with under the rules that currently exist
relating to financial statements.
This legislation intends to align Australia's legislative response to extractive industry
transparency with that that is being pursued around the world, including in the United States,
the United Kingdom and Canada.
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NOTES ON CLAUSES
Part 1
Clause 1 provides that the Act may be cited as the Corporations Amendment (Publish What
You Pay) Act 2014.
Clause 2 provides for the Commencement of the Bill. Sections 1 to 3 of the Bill will
commence on the day the Act receives Royal Assent. Schedule 1 will commence the day after
12 months after the Act receives Royal Assent. Commencement is delayed for 12 months to
ensure that companies to which this legislation applies will have time to comply with its
provisions.
Clause 3 provides for the Schedule to the Bill to have effect.
Schedule 1 - Amendments
Schedule 1 contains amendments to the Corporations Act 2001.
Item 1 sets out definitions relevant to the legislation.
The definition of `government entity' sets out the different levels of government that, if a
payment has been made to one of these entities, would have to be specifically listed and
disaggregated in a Publish What You Pay report.
The definitions of `primary forest', `resource extraction activity' and `resource extraction
project' are based on the European Union Directive 2013/34/EU. This would align Australian
legislation with that which is currently being implemented in the United Kingdom and across
the EU.
Item 2
Division 9 of Part 2M.3 sets out the operation of the Publish What You Pay requirements
Section 323E provides that this legislation will apply to public companies and large
proprietary companies, and their subsidiaries, in relation to resource extraction
projects anywhere in the world, and payments (financial and in kind) made anywhere
in the world.
Section 323F sets out the requirements for reporting payments by companies
involved in resource extraction
Subsection (1) sets out the activities that will require a company that prepares
a financial report under Section 292 of the Act to include a Publish What You
Pay report in the financial report. This subsection also notes that a Publish
What You Pay report is subject to the same requirements that apply to
financial statements and reports generally in the Act.
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Subsection (2) sets out the time when a company that is required to prepare a
financial report under section 292 but is not required to lodge the financial
report with ASIC must lodge a Publish What You Pay report with ASIC.
Section 323G sets out what must be included in the Publish What You Pay report.
Subsection (1) requires the report to set out reportable payments made by
either the reporting company or a subsidiary of the reporting company.
Subsection (2) sets out what kinds of payments must be reported, including
standard financial payments like royalties, dividends, bonuses, licence fees
and production entitlements.
Other payments that are listed include:
- `infrastructure improvements', which is intended to cover
payments related to the building of roads, bridges, dams, or other
projects relating to the physical environment
- `social payments', which is intended to cover payments related to
payments given for community projects, or for the social welfare
of the community, such as the building of hospitals or schools
- `security services', which is intended to cover payments related to
the security of projects, the company and their interests, and their
employees, including to government defence and police bodies
Subsection (3) sets out a threshold of $100,000 for reportable payments,
which is consistent with reporting requirements in other jurisdictions. A series
of related payments that together meet the threshold is treated as a single
payment, to avoid payments being split to avoid the threshold.
Subsection (4) requires payments to be reported on a project-by-project basis.
Each type of payment referred to in subsection (2) must also be reported
separately
Subsection (5) requires payments to be reported on a country-by-country
basis, and separately for each government entity to which they are made.
Subsection (6) prevents falsely combining payments in order to conceal
particular payments.
Section 323H sets out the requirements for reporting payments by companies, or their
subsidiaries, that are involved in joint ventures that engage in extractive activities
Subsection (1) sets out the kinds of companies involved in joint ventures the
Act applies to
Subsection (2) provides for regulations to extend reporting requirements to
joint ventures and similar arrangements. This will allow the detail of these
reporting obligations to be set out in regulations. This is necessary because the
rules for joint ventures and similar arrangements are likely to be complex and
detailed, and may need to be changed frequently to keep up to date with
changes in accounting standards and international corporate practices.
Section 323J sets out what form the Publish What You Pay report must take
Subsection (1) provides for regulations to prescribe the manner in which
payments are reported, and the way in which the value of a payment is
calculated. This will allow the detail of these reporting obligations to be set
out in regulations. This is necessary because the rules for reporting and
publication are likely to be complex and detailed, and may need to be changed
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frequently to keep up to date with changes in accounting standards and
international corporate practices.
Subsection (2) provides that if payments were made in kind, or in a currency
other than Australian dollars, the report must explain how the payment value
was calculated.
Section 323K sets out how Publish What You Pay reports are published
Subsection (1) provides that ASIC must publish Publish What You Pay
reports on their website and establishes a timeframe in which this must occur.
This also provides that reports must be `machine-readable', which means it
must be well structured to allow automated processing and access with
minimal numbers of file downloads, as set out in the best practices of the G8
Open Data Charter and Technical Annex. As set out in the G8 Open Data
Charter, requiring machine-readable formats promotes greater transparency
and innovation, as the more people and organisations that have access to data,
the greater the social and economic benefits that will flow from its use.
Subsection (2) provides that ASIC cannot charge people for access to Publish
What You Pay reports.
Item 3
Section 342, adds:
Subsection (4) prevents ASIC creating exemptions from the publish what you
pay provisions, except in particular circumstances
Subsection (5) sets out the circumstances in which ASIC can relieve a holding
company from the reporting requirements set out in this Act. This subsection
is based on European Union Directive 2013/34/EU.
Item 4
Sets out the timeframe in which the amendments to the Corporations Act made in this bill
will apply.
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STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Corporations Amendment (Publish What You Pay) Bill 2014
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill:
The purpose of this Bill is to require Australian based extractive companies to report the
payments they make to foreign governments on a country-by-country and project-by-project
basis.
Human Rights Implications:
This Bill does not engage any of the applicable rights or freedoms.
Conclusion:
This Bill is compatible with human rights as it does not raise any human rights issues.
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