Speech: Malawi Loses US$43 Million from Mining Company Paladin

Senator RHIANNON (New South Wales) (19:25): Another matter concerns Malawi, which is also one of the low-income countries of Africa. In fact, it is regarded as the poorest country in the world according to the World Bank development indicators. The former Prime Minister Julia Gillard brought in the Mining for Development initiative, a new approach to overseas development where the mining industry is given aid money supposedly to assist it for its work in low-income countries, the argument being that this will benefit people in those countries. However, what we see is that benefits flow enormously to the mining companies.

I understand the example I am going to give was not involved in the Mining for Development initiative, but there is a very worrying trend with overseas aid of giving more assistance to mining companies. Malawi has lost out on US$43 million in revenue over the last six years from a single company-the Australian mining company Paladin. The money has been lost through a combination of harmful tax initiatives, and the Malawian government is having a real problem in managing this. What the company also does to minimise the tax that it pays, and therefore the profits that it can walk out of that country with, is what is called treaty shopping.

Let's remember that this is valuable money in such a poor country. This money could have paid for 431,000 annual HIV-AIDS treatments, 17,000 annual nurses' salaries, 8,500 annual doctors' salaries or 39,000 annual teachers' salaries. This comes from the very important work of ActionAid that is really identifying this abuse that many low-income countries are experiencing at the hands of big mining companies. I do note that what has happened is not illegal. On the contrary, the combination of tax breaks and tax planning is how mining companies in low-income countries are maximising their profits.

ActionAid have made some specific calls to the Australian government on this issue. They have called for our government to provide leadership in calling for the establishment of a UN intergovernmental body on tax by 2017 in order to further democratise the international tax reform processes and ensure decision making extends beyond the OECD countries and G20 finance ministers, to include lower income countries. Their second recommendation is for our government to review its tax policies to ensure adequate public funding of essential services for those that need them, including services that facilitate women's participation in the workforce and reduce their unpaid burden of care-and I congratulate ActionAid's work with women in communities in low-income countries. Their third recommendation is to ensure the focus on private sector development, under Australia's new aid program, promotes ethical conduct of Australian corporates overseas by actively challenging corporate tax avoidance and not promoting tax incentives for companies at the expense of essential public services in low-income countries.