- Risk key
- Low
- MODERATELY LOW
- MODERATE
- MODERATELY HIGH
- HIGH
Judicial System
Australia’s judiciary bears low risks of corruption for companies. Bribes and irregular payments in return for favorable court decisions are very uncommon (GCR 2015-2016). Companies report strong confidence in the independence of the judiciary (GCR 2017-2018). Businesses are moderately satisfied with the efficiency of the legal framework pertaining to settling disputes, yet are not satisfied with it’s efficiency when it comes to challenging regulations (GCR 2017-2018). The judiciary operates independently and principles of equal treatment, procedural fairness, and judicial precedent are followed (ICS 2017). The executive branch respects the independence of the judiciary and generally accepts its decisions rather than attempting to circumvent them (SGI 2017). Australia has well established legal and court systems for litigation and arbitration and is a pioneer in the development and provision of non-court dispute resolution mechanisms (ICS 2017).
Enforcing a contract in Australia takes less time than in other OECD high income countries (DB 2018).
Police
The risk of encountering corruption within the Australian police service is low. Surveyed business executives place high trust in the Australian police services and report few business costs of violence and crime (GCR 2017-2018). Only five percent of Australians perceive the police as corrupt (GCB 2017). The government has effective mechanisms in place to prevent and detect corruption in the police, and there are no reports of impunity (HRR 2017).
A report found that police in the state of Victoria engaged in drug trafficking and drug use in conjunction with known traffickers; allegations against eight officers have been substantiated (The Guardian, Dec. 2016).
Public Services
There is a low risk of encountering corruption when acquiring public services in Australia. Companies report that irregular payments and bribes are very uncommon when obtaining public services (GCR 2015-2016). Roughly a sixth of Australians perceive local government officials as corrupt (GCB 2017). About a fifth of surveyed companies report having encountered bribery in the last five years (Deloitte 2017). One in twenty Australian civil servants indicated in a survey that they had seen a colleague acting in a corrupt manner (APSC 2018).
Domestic and foreign companies operating in Australia enjoy great flexibility in the licensing process due to a strong rule of law that protects companies against corruption risks (ICS 2017). Australian accounting, legal, and regulatory procedures are transparent and consistent with international standards (ICS 2017). Starting a business takes fewer steps and less time than in other OECD high income countries (DB 2018). Dealing with construction permits is less time-consuming than in other OECD high income countries (DB 2018).
Land Administration
Businesses are very unlikely to encounter corruption when dealing with Australia’s Land authorities, but there are significant risks of money-laundering activity in the real estate sector. Property rights are protected by a strong rule of law (ICS 2017), and companies express strong confidence in the government’s ability to protect property rights (GCR 2017-2018). Transparency International identified significant deficiencies in Australia’s rules and regulations to prevent money laundering in real estate transactions; for example, real estate agents and accountants are not covered by anti-money laundering laws and are thus, for example, not required to follow the law’s due diligence requirements (TI 2017a).
Registering property takes only five days, which is much less than the OECD average of nearly 22 days (DB 2018).
Tax Administration
There is a very low risk for companies operating in Australia to make undocumented extra payments or bribes in connection with tax payments (GCR 2015-2016). Only five percent of Australians perceive tax officials as corrupt (GCB 2017). Australia has tightened its anti-tax avoidance legislation, mainly affecting multinational corporations that operate in multiple tax jurisdictions (ICS 2017). Companies spend significantly less time on paying taxes than the average among OECD high-income countries (DB 2018).
Adam Cranston, the son of Australia’s deputy tax commissioner, Michael Cranston, has been arrested over involvement in an alleged tax fraud scheme worth AUD 165 million (ABC News, May 2017). The deputy tax commissioner is not believed to have had knowledge of the conspiracy, but he is facing a charge of abusing his position as a public official (ABC News, May 2017). His trial date has been set for early 2019 (Financial Review, Mar. 2018).
Customs Administration
There is a moderately low risk of corruption when dealing with the customs administration. Companies indicate irregular payments and bribes during customs procedures are very rare (GETR 2016). Companies are satisfied with the time-predictability and efficiency of the clearance process (GETR 2016). Companies do complain about burdensome import procedures (GETR 2016). It is significantly more time-consuming to comply with border procedures in Australia compared to the average among OECD high-income countries (DB 2018). The costs involved with border compliance are dramatically higher than the average among OECD high-income countries (DB 2018).
In 2017, two border officers were accused of assisting a crime syndicate with smuggling a large amount of drugs and tobacco (ABC News, Aug. 2017). The amount of investigations into border corruption in Australia has significantly increased in recent years, reflecting an increase in the quality of information the police has access to and an increase in capacity to assess the merit of information submitted (The West Australian, Jan. 2018).
Public Procurement
There is a low risk of corruption in Australian public procurement, but some fraud risks exist. Australia’s public procurement system is generally transparent and well regulated, restricting opportunities for corrupt practices in the sector (ICS 2017). Businesses do not report that bribery during procurement processes is a problem (GCR 2015-2016), yet one-third of Australian companies report to have experienced procurement fraud in the past two years (pwc 2016). Businesses indicate that diversion of public funds is very uncommon and favoritism in the decisions of government officials is fairly uncommon (GCR 2017-2018). There are concerns about some tenders not being conducted in a transparent manner, particularly when “commercial-in-confidence” is cited as the reason for non-disclosure of contracts with firms in the private sector; leading to the possibility that friends of particular constituents are being favored (SGI 2017).
AusTender provides centralized publication of Australian Government business opportunities, annual procurement plans, multi-use lists and awarded contracts. Businesses in Australia are recommended to use a specialised due diligence public procurement tool to assess potential risks.
Natural Resources
There is a moderately high risk of corruption in Australia’s natural resource extraction sector. Western Australia’s performance in the areas of licensing, taxation, and budgeting is poor (NRGI 2017). Transparency International has found that the mining sectors in Western Australia and Queensland are susceptible to corruption due to weaknesses in the licensing process, including the failure to adequately perform due diligence into companies applying for licenses (TI 2017b). Another concern is the “revolving door” of personnel moving between the government and the industry, as well as companies making political contributions (TI 2017b). The New South Wales Independent Commission Against Corruption has launched an inquiry into corruption in the granting of leases; it has already led to the resignations of multiple members of the New South Wales parliament (SGI 2017).
In another case in 2015, the NSW Independent Commission Against Corruption accused the mining company NuCoal of holding exploration licenses tainted by corruption, which led to a court ruling suspending NuCoal’s licenses (Sydney Morning Herald, Sept. 2015; The Australian, Oct. 2015). Given the importance of its mining sector, Australia has started implementing the principles of the Extractive Industries Transparency Initiative (EITI) (ICS 2017).
Legislation
Australian anti-corruption legislation is comprehensive and enforced (HRR 2017). Anti-corruption laws are found at federal (national) and state and territory (regional) levels. At the federal level, the Criminal Code stipulates active and passive bribery of foreign and Commonwealth public officials, attempted corruption, extortion and money laundering as criminal offenses, applying to individuals as well as companies. Private sector bribery is primarily regulated by state and territory law, which criminalizes both active and passive bribery and (in some regions) specifies false accounting type offenses. Other relevant legislation includes the Anti-Money Laundering and Counter-Terrorism Financing Act, the Corporations Act and the Public Service Act. Facilitation payments are not illegal in Australia, provided they are of minor value and used to obtain or expedite a ‘minor government action’ (GLI 2018). Australian law does not specify which gifts are legal; however, the Australian Public Service Code of Conduct can serve as a guideline (GLI 2018). Persons convicted of corruption can receive a maximum penalty of 10 years and/or a fine of up to AUD 1.1 million (GLI 2018). For a business, the penalty is a fine of up to AUD 18 million, three times the value of the obtained undue benefit, or 10% of the annual turnover of the company during the period in question (GLI 2018).
Australia has ratified the United Nations Convention against Corruption (UNCAC) and the OECD Anti-Bribery Convention. However, a 2015 OECD evaluation report states that Australia needs to further reform its foreign bribery policies and points out that current anti-corruption creates substantial confusion about the scope of the facilitation payments defense. Access the Australian government’s ComLaw for a collection of national legislation.
As of the time of review, a new bill has been tabled (but not yet adopted) in the Australian Senate which would increase sanctions on companies and introduce corporate liability for not preventing bribery (HSF, Dec. 2017).
Civil Society
Australia’s media landscape is diverse, with numerous public and private broadcasters, but ownership of private print media is highly concentrated (FotP 2016). Australia’s press environment is considered ‘free’ (FotP 2017).
The government respects the rights to public assembly and freedom of speech (HRR 2017). Civil society organizations (CSOs) operate freely, and anti-corruption bodies from all states except for Tasmania actively collaborate with CSOs (HRR 2017). The government is generally receptive to civil society organizations (SGI 2017).
Sources
- World Bank: Doing Business 2018.
- Global Legal Insights: Australia Bribery & Corruption 2018.
- Australian Public Service Commission: APS Values and the Code of Conduct 2018.
- Financial Review: “Former ATO Deputy Commissioner Michael Cranston to Face Trial in Early 2019”, 9 March 2018.
- The West Australian: “Border Corruption on The Rise”, 7 January 2018.
- World Economic Forum: Global Competitiveness Index 2017-2018.
- Freedom House: Freedom of the Press 2017.
- US Department of State: Investment Climate Statement 2017.
- Transparency International: Global Corruption Barometer 2017.
- Transparency International: Doors Wide Open: Corruption and Real Estate in Four Key Markets 2017.
- Transparency International: Corruption Risks: Mining Approvals in Australia 2017.
- Natural Resource Governance Institute: Australia Country Profile 2017.
- US Department of State: Human Rights Report 2017.
- Deloitte: Bribery and Corruption Survey 2017 – Australia.
- Bertelsmann Stiftung: Sustainable Governance Indicators – Australia Report 2017.
- Herbert Smith Freehills: “New Australian Measures to Combat Corporate Crime”, 11 December 2017.
- ABC News: “Police Swoop on Alleged Corruption Inside Australian Border Force”, 10 August 2017.
- ABC News: “Tax Fraud Allegation Could Undermine Trillion-Dollar Investigations, Senator Says”, 18 May 2017.
- Freedom House: Freedom of the Press 2016.
- World Economic Forum: Global Enabling Trade Report 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- The Guardian: “Victorian Police Sold Illegal Drugs, Corruption Report Finds”, 13 December 2016.
- Pricewaterhouse Cooper (pwc): Economic Crime Survey 2016– Australia.
- OECD: Australia Follow-Up To The Phase 3 Report & Recommendations, April 2015.
- The Australian: “NuCoal US investor Ventry says it won’t put money in Australia” 23 October 2015.
- The Sydney Morning Herald: “NuCoal loses ‘futile’ case against ICAC over coal licence recommendation” 24 September 2015.
