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Focus: 'Publish what you pay' may be on its way!

3 November 2014

In brief: A new Bill has been introduced into the Federal Parliament, which might herald the arrival of 'publish what you pay' legislation in Australia. Partner Igor Bogdanich (view CV) and Senior Associate Penny Alexander examine the background to the Bill, together with the implications for Australian companies operating in the resources sector if it becomes law.


How does it affect you?

  • The concept of a 'reporting company' under the proposed 'publish what you pay' legislation is broadly defined.
  • Australian public companies, large proprietary companies and their subsidiaries operating in the oil, gas, mining or logging industries are likely to be affected by the new reporting requirements.
  • All payments in a wide range of categories that are made to government entities above a certain threshold will need to be included in annual 'publish what you pay reports'. These include payments to Australian and foreign governments, their agencies and controlled companies. 
  • Penalties will apply for producing false or misleading reports, and all reports will be publicly available through the Australian Securities and Investments Commission (ASIC).   


In the past week, the leader of the Australian Greens, Christine Milne, has proposed the introduction of a new law that would require all Australian oil, gas, mining and logging companies to publicly disclose any payments made to Australian and foreign governments. At the heart of the new law, which was introduced into the Senate on 28 October 2014, is the aim of preventing corrupt practices by Australian companies, both in Australia and abroad.

The new law comes at a time when anti-bribery and anti-corruption laws and policies have been receiving increased attention in Australia. Senator Milne told Parliament that 'the legislative framework that governs the conduct of Australian companies overseas is opaque, with many Australian companies the subject of concerning allegations in relation to corruption, bribery, human rights abuses and environmental degradation.'

Senator Milne also noted that the legislation is intended to align Australia with the global push for greater extractive industry transparency with similar legal requirements already in force in other parts of the world, particularly the United States, the United Kingdom and Canada.

Proposed requirements

The Corporations Amendment (Publish What You Pay) Bill 2014 (Cth) would, if passed by both houses of the Federal Parliament, amend the Corporations Act 2001 (Cth) by establishing a mandatory reporting regime in respect of payments made by Australian based extractive industries companies to both Australian and foreign governments. The Bill requires that such companies must disclose these payments on a country-by-country and project-by-project basis.
The requirement will apply to all Australian public companies and large proprietary companies (each being regarded in the Bill as a 'reporting company') in relation to:

  • resource extraction activities and resource extraction projects anywhere in the world;
  • payments (including payments in kind) made to 'government entities' anywhere in the world; and
  • importantly, the relevant activities of any subsidiaries of the reporting company, whether or not they are incorporated in Australia.

The concept of government entity has been broadly drafted as meaning any of:

  • the Australian Federal Government;
  • the government of an Australian state or territory;
  • the government of a foreign country (or part of a foreign country);
  • an authority of any government referred to above; and
  • a company owned by a government referred to above.

Reporting companies must prepare annual reports, known as 'publish what you pay reports', and lodge these reports with the ASIC. Each publish what you pay report must set out all reportable payments made during the financial year by the reporting company (or by any subsidiary of the reporting company). The Bill contains a long list of the types of payments that are captured by the reporting requirements, and includes payments made to a government entity in respect of:

  • production entitlements;
  • taxes levied on the income, production or profits of a company (not including taxes levied on the personal income of individuals or on consumption or sales);
  • royalties and dividend payments;
  • licence fees, rental fees, entry fees or other consideration for licences or concessions;
  • infrastructure improvements and social payments; and
  • security services.

However, a payment is only a reportable payment if the total value of the payment and any related payments is more than A$100,000. This threshold is in line with the reporting standards adopted and imposed by United States, EU member states and the United Kingdom.

All publish what you pay reports would be published by ASIC and available fee-free, to ensure public accessibility and accountability. If any reporting companies are found to have engaged in misleading reporting, contraventions will be dealt with under the legislative regime that already applies to financial statements under the Corporations Act.

Support for the Bill

It has been reported that the international 'Publish What You Pay Coalition' supports the Bill, noting that the legislation (if passed) is expected to capture an additional 5 per cent of the global extractive market. According to the PWYP Coalition, this would mean that around 75 per cent of the global extractive market will be covered by similar legislative reporting requirements.

The Financial Services Council and the Australia Council of Superannuation Investors also supports mandatory disclosure requirements such as those reflected in the Bill, on the basis that more information would be made available to their members for the evaluation of investment risks. In addition, the legislation is expected to enable investors in ASX-listed companies to better assess risks associated with pursuing projects in developing countries.

Compliance burden

From a compliance perspective, it is expected that most 'reporting companies' affected by the legislation will already be compiling the information which needs to be disclosed under the Bill, both for themselves and for their subsidiaries. Companies will, however, need to have internal reporting processes in place which ensure they comply with the publish what you pay reporting requirements in each jurisdiction in which they operate. It has been estimated that the cost of complying with comparable legislation in the EU is just over 0.05 per cent of the applicable companies' annual revenue in the first year of implementation, and then less thereafter1. The current intention of making Australia's publish what you pay disclosure regime reasonably consistent with international jurisdictions should help to reduce additional compliance burden on companies who already comply with similar requirements elsewhere in the world.

As this Bill continues to progress through the Federal Parliament, we will update our clients on changes to the requirements under the draft new law, as well as any additional or amended compliance requirements.

  1. European Commission, Working Paper, Impact assessment for financial disclosures on a country by country basis, 2011.

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