Abbott government accused of watering down language on tax evasion ahead of Finance for Development meeting

The Abbott government has been accused of trying to water down language on tax evasion in a crucial document ahead of the UN’s Finance for Development meeting in Ethiopia next week.

The Third International Conference on Financing for Development will be held in Addis Ababa, Ethiopia, from Monday next week.

Its delegates had hoped to agree on the final wording of a critical ‘outcome document’ that will form the basis of the global funding agreement for the Sustainable Development Goals, the new global goals replacing the Millennium Development Goals, that aim to end poverty by 2030.

The United Nations had planned to have the document finalised before September this year when the Leaders Summit for Sustainable Development Goals will be held in New York.

But a draft of document, circulated by the UN ahead of a pre-conference meeting in June, shows Australian officials have suggested changing language on multinational tax evasion and subsidies for “extractive industries” before signing anything.

In one paragraph, in which member countries agree to combat tax evasion and reduce opportunities for tax avoidance, Australian officials say they agree to “increase transparency,” but not by “ensuring that all payments to governments from large companies are fully transparent.”

Instead, they suggest using the words “by promoting transparency in financial transactions between governments and companies, particularly large companies.”

In another paragraph, member countries agree to encourage investment in developing countries that rely heavily on natural resource exports, and to address “excessive tax incentives” in extractive investments in those countries.

But Australian officials say the phrase “excessive tax incentives” is unclear and suggest that member countries ought to only agree to measures “to encourage improved practice in taxation of extractive investments.”

Oxfam Australia’s Public Policy Manager, Jo Pride, has slammed the attempted word changes, saying given the rhetoric from Treasurer Joe Hockey on tax avoidance, the Abbott government ought to be advocating for the “strongest possible language” on these issues.

“If Australia is serious about these new Sustainable Development Goals, we must support a strong stance on tax at the Finance for Development conference,” Ms Pride said.

“The Government appears to be moving from action to persuasion when it comes to getting big business to pay fair tax. Developing countries lose an estimated US$138 billion per year giving away excessively generous tax incentives to multinational companies in order to compete for investment. These countries don’t need ‘encouragement,’ they need global action.”

A spokesman for Shadow Foreign Affairs Minister Tanya Plibersek said it was “another international embarrassment.”

“The fact the Abbott Government is seeking to water down financial transparency proposals shows they just aren’t serious about cracking down on tax avoidance,” the spokesman said.

“At every turn, the Abbott Government has opposed greater financial transparency here in Australia, and now it seems they are pushing that approach on the world stage.

But Kate Carnell, Australian Chamber of Commerce and Industry, said the suggested word changes are completely reasonable.

“It’s really important with these sorts of agreements that governments don’t end up signing up to things that they can’t deliver on,” Ms Carnell said.

“Could a government ‘ensure’ that all payments to governments from large companies are fully transparent? Probably not, because ‘fully transparent’ is pejorative to start with.”

“It seems a very reasonable change … which I’m sure has been made by a very competent bureaucrat.”

Shadow Foreign Affairs Minister Tanya Plibersek will be attending the meeting next week.

A spokeswoman for Foreign Affairs Minister Julie Bishop would not confirm if Ms Bishop would be attending the conference or not.