Centre Alliance to introduce a bill to improve 'tax haven' procurement due diligence and transparency

23 April 2019

In response to a purported* lack of knowledge by Barnaby Joyce as to the entity the Commonwealth was signing an $80M water buyback contract with, Centre Alliance will introduce a bill in the next Parliament to amend procurement rules to place greater knowledge and transparency requirements on government departments entering into contracts with companies who are, or have related entities, domiciled in recognised tax havens.

"It is not appropriate for a Government to promote the idea that it is combating multi-national tax avoidance on one hand, while blindly signing contracts with companies who have parent companies domiciled in a tax haven," said Senator Rex Patrick.

The bill will seek to amend the law by introducing three key procurement requirements – a disclosure requirement, a consideration requirement and a publication requirement.

The disclosure requirement will mandate that a company responding to a tender above $4 million (or $7.5 million for construction services) will need to disclose whether the company, or any of its related entities, are domiciled in a tax haven. It will also be required to give details of the foreign entity that might not otherwise be available on account of the secrecy laws normally encountered in tax haven jurisdictions.

The consideration requirement will require officials to consider, in consultation with the ATO, any additional risks that a company, or any of its related entities being domiciled in a tax haven, may have on tax avoidance and transparency.

The publication requirement will impose an obligation on agencies that award contracts to companies that are, or have related entities, domiciled in a tax haven to publish the number of contracts and the total value of contracts in their annual reports.

"Centre Alliance's bill will not make it unlawful to award contracts to companies with tax haven links, but will impose additional due diligence requirement on officials and makes the whole process a lot more transparent," said Rex

"It is quite clear from reports into the Watergate buybacks scandal that the public have a right to be concerned about Commonwealth procurement processes in regards to tenderers and contractors with tax haven links. Australians also have a right to know if a significant amount of taxpayer money is being given to entities with tax haven links," he said.

*In an interview on the ABC last night, Barnaby Joyce indicated he had little knowledge of the entity he was giving ministerial approval to purchase water from. Documents obtained by Senator Patrick through a Senator Order for Production shows that the Australian Government Solicitor did carry out due diligence on Eastern Australia Agriculture, but the details of that due diligence are completely redacted.

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