Three reasons Australia should regret dropping corruption from B20 agenda

Uranium mining in the Kakadu National Park region in the Northern Territory. Mining is big business in Australia and a commitment to transparency in this sector is needed.

The Australian government took the reins of the G20 on 1 December. In its vision it acknowledges that corruption is bad for business, but Australian business doesn’t seem to think the same, having dropped it from its top priorities for 2014. We think this is a mistake.

 “Corruption is a severe impediment to sustainable economic growth and poverty reduction and can threaten financial stability and the economy as a whole.”

G20 St Petersburg Leaders Declaration, September 2013

The G20 is well aware that corruption plays a crucial role in hampering economic growth. The group commissioned the Organisation for Economic Cooperation and Development (OECD) to draft a paper on exactly this issue earlier this year and emphasises the point in the latest leaders’ declaration.

Business is not blind to the issue. Over the last couple of years, businesses from around the world have formally worked together via the Business 20 (B20) on tangible commitments to tackle corruption. Its work and its engagement with civil society organisations in the Civil 20 and with the G20 Anti-Corruption Working Group were also welcomed by G20 leaders.

Australian businesses drop focus on corruption

In that light, the leadership group of Australian businesses in the B20 should reconsider dropping anti-corruption as a key priority.

For Australian business to drop its focus on corruption is particularly concerning in light of data that emerged recently. Australia also dropped four points this year in the 2013 Corruption Perceptions Index. This is the largest decline among all G20 countries. In addition, 47 per cent of respondents in Australia said that business is corrupt or extremely corrupt, according to Transparency International’s Global Corruption Barometer study.

Why Australia must not lose the anti-corruption angle

Investment and infrastructure is named as a top priority for both the G20 and the B20. It’s a key area in Australia’s drive towards boosting private sector growth. But Transparency International’s research shows infrastructure projects are particularly prone to corruption, whether it is a dam or a road or a new hospital or school.

Here are three reasons it can’t ignore the corruption angle:

  1. Corruption in infrastructure costs a lot
    Transparency International estimates that corruption costs 10 to 25 per cent of a contract’s value. The OECD estimates that at least US$50 trillion needs to be invested in infrastructure by 2030. Without good anti-corruption safeguards, a huge amount of money stands to be siphoned off.
  2. Investment must be efficient to generate maximum benefits
    An environment of transparency and accountability is crucial to attracting investment. Availability of project information levels the playing field for private investors. It also means costs, quality of construction and waste – including any corruption – can be held up for wider scrutiny.
  3. Corruption in infrastructure hits economies of all sizes
    Corruption in infrastructure is not only a developing country issue. In 2008, 103 construction companies in the UK were fined a total of £129 million (US$211 million) when found guilty of rigging bids during the tender process. Dutch taxpayers allegedly forked out US$500 million each year over 10 years as a result of road construction cartels deciding who would win contracts. In many developing countries this impact is exacerbated by the development of projects with little utility or value.

So what should the Australia presidency do?

  1. Ensure the B20 tackle corruption as a core business issue
    The Australian presidency needs to ensure that the B20 mainstreams anti-corruption compliance throughout its work-streams. An anti-corruption task force in each work group could ensure that proposals put forward integrate and promote anti-corruption compliance methods.
  2. Support and promote more transparent corporate reporting and become EITI compliant
    In the EU and the US, legislation requires natural resource companies to publish payments they make to governments on a country-by-country basis. Australia should adopt similar standards for their extractives industry and encourage other G20 governments to do the same. Country-by-country reporting mitigates political, legal and reputational risks and increases longer-term stability. Consultations should also be conducted with other sectors – including construction and infrastructure – with a view to future roll-out of similar legislation beyond the natural resource sector. Mandatory reporting is complementary to the voluntary Extractive Industries Transparency Initiative (EITI) and strengthens the initiative by codifying its best practices.
  3. Implement and promote the Construction Sector Transparency Initiative (CoST)
    The Construction Sector Transparency Initiative was endorsed by the G20 in Cannes in 2011. It has proven effective in improving infrastructure outcomes and tackling corruption. The Australian government should push for the G20 and beyond to support worldwide implementation.

Prime Minister Tony Abbott has been clear from the start – Australia will not host a “talkfest”; the agenda next year will be focused and practical. We welcome focus. But tackling corruption can only help reach other priorities, such as effectiveness, efficiency and accountability in the global financial system.

Carousel image: Creative commons, Flickr / Alberto Otero García

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Maggie Murphy

About Maggie Murphy

Maggie Murphy is Global Outreach, Advocacy and Campaigns Coordinator at Transparency International.

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3 Responses to Three reasons Australia should regret dropping corruption from B20 agenda

  1. Robert Milliner, B20 Australia Sherpa 11 December 2013 at 12:05 am #

    B20 Australia supports the need for transparency and recognises the problems associated with corruption. Contrary to the blog above, the focus on transparency and anti-corruption will be maintained, but as a common theme across the four taskforces: financing growth, human capital, infrastructure & investment and trade. The reason for this is to show the clear and practical consequences of a lack of transparency and corruption in the core areas of the G20 agenda. We are already working with the G20 anti-corruption working group on the action plan for 2013-2014 and have invited members of the existing 2013 B20 anti-corruption and transparency taskforce to join these taskforces and form an identified working group across all four priority areas. Anti-corruption and transparency remains an important focus area for the B20.

  2. Maggie Murphy
    Maggie Murphy 11 December 2013 at 9:56 am #

    This is welcome news Robert and thank you for your quick response. We are glad to hear that the commitment towards tackling corruption and enhancing transparency will continue within the B20 framework in 2014. It would be logical that the plans for a transparency and anti-corruption working group operating across all task-forces be made public on the B20 website as soon as is possible. Equally we’d welcome that your strong anti-corruption commitments here be echoed publicly on the website as well. Best of luck for the months ahead.

  3. Maggie Murphy
    Maggie Murphy 3 April 2014 at 2:26 am #

    Really pleased to see that the B20 have now set up the anti-corruption working group to operate across the four thematic task-forces. Tackling corruption is crucial to establishing a clean and efficient business environment. This will be most relevant in relation to infrastructure projects, one of the Australian presidency’s priority areas for the year.

    Corruption as a cross-cutting issue is referenced on the B20 website under priorities: https://b20australia-public.sharepoint.com/priorities-1

    More details in the following article (paywall)
    http://www.theaustralian.com.au/business/b20-taskforce-puts-corruption-at-the-top-of-the-agenda/story-e6frg8zx-1226872787257#