20 June 2014, by Archana Sundarachari, GOPAC.
This post was originally published on the Thomson Reuters Foundation website.
The global civil society meets this year in Melbourne for the C20 summit as part of several preceding conferences preparing recommendations for the G20. Simultaneously, Global leaders are also preparing and examining the challenges of addressing increasing inequality, fostering inclusive growth and promoting sustainable development. For many developing countries natural resources are central to their economic growth. Yet, as the Global Organization of Parliamentarians Against Corruption’s (GOPAC) latest position paper, The Shared Benefits of Resource Revenue Transparency, outlines without a transparent and accountable framework encouraging good governance the resulting dangers of these challenges increase.
Resource extraction can provide a ready flow of revenue through taxes, royalties and production sharing agreements. Long term benefits include investments in infrastructure, efficient consumption and core funding of essential public services. Additionally, macroeconomic stability, and the fostering of an economic climate attractive to foreign businesses are some of the more indirect benefits. However, it should be the ultimate objective of governments to guarantee that the generated revenue reaches the ultimate beneficiaries – the citizens.
The role of parliamentarians is integral to efforts to improve good governance and oversight of the resource sectors. Since parliamentarians are elected officials representing their constituents and on a larger level the national interest, parliamentarians and global leaders are key influencers in developing a framework of resource revenue transparency. Parliamentarian oversight on all forms of public investment is required including public accounts, public procurement of assets and asset disposal. Nevertheless, transparency in investment is only one half of the process, as the effectiveness of public returns on investments in natural resource development is also a key component.
Transparency standards and mechanisms devised by the Extractive Industries Transparency Initiative (EITI), Pay What You Publish (PWYP) and the Natural Resource Charter are means by which policy makers and civil society can foster a more transparent and accountable system. Open access to information on activities of extractive industries as well as set guidelines for governments willing to make progress in sustainable development from resource extraction are some of the crucial steps forward. Civil society and institutions such as PWYP and the Natural Resource Governance Institute offer the public a forum for broader discussion and information sharing which parliamentarians involved in oversight can greatly benefit from. Moreover, parliamentarians should oversee frameworks evaluating returns on investment (ROI) and the management of sovereign wealth funds (SWFs).
The Shared Benefits of Resource Revenue Transparency provides recommendations for parliamentarians to spearhead the move of putting transparency and good governance on equal footing. The paper suggests parliamentarians:
- Increase the range and depth of reporting standards on generated returns on investment, practices in public procurement and asset disposal;
- Improve legislation on establishing clear standards on public procurement practices for transparency in resource development;
- Encourage governments, (regional and national) to comply with the EITI Standard;
- Empower themselves with the capacity and knowledge (human capital) to perform the functions of an oversight body with regards to the management of ROI and SWFs; and
- Engage with the private sector, civil society and institutes to promote transparency and accountability in the resource sector.
With a number of countries growing dependent on natural resources as the force for their economic growth and output, adopting these recommendations on resource revenue transparency is vital for good governance, improving economic growth, and combating inequality and corruption.
About Archana Sundarachari
Archana Sundarachari is a Master’s Candidate in Public and International Affairs at the University of Ottawa and a Researcher at the Global Organization of Parliamentarians Against Corruption (GOPAC).