On Point - Issue #7

 Enforcing Local Content

1. Local content arises whenever there is a major investment in resources or infrastructure projects within a community. Local content has two parts. Firstly, the direct employment of local people. Secondly, the use of local contractors through the supply chain.
2. Local content obligations can arise in both Australian and international projects. Local content obligations are created through various legal agreements between project proponents and governments.
3. In Australia, these regularly arise in the ‘resources jurisdictions’ of Western Australia (WA), the Northern Territory (NT) and Queensland (QLD). There are slightly different approaches in each. Common features include the facilitation of government approvals and the development of local content plans.
4. WA uses statutory contracts called State Agreements. These agreements are then passed by the WA parliament as laws of WA. In the NT, a project receives ‘major project status’. QLD local content is regulated by the Strong and Sustainable Resource Communities Act 2017 (QLD).
5. Specific local content obligations are contained in Community Development Plans (WA), Territory Benefit Plans (NT) and the Social Impact Assessments (QLD). The Territory Benefit Plan is a voluntary Plan.
6. These Plans can be difficult to enforce because of the specialist skills required, the aspirational nature of local content obligations and the fluid nature of projects. WA State Agreements contain arbitration clauses that deal with disputes. The QLD legislation contains civil penalties.
7. The Australian Jobs Act 2013 (Cth) is the Commonwealth equivalent. It provides for the development of Australian Industry Participation Plans for major projects greater than $500 million. This legislation provides for ‘administrative’ penalties.
8. Local content obligations for international projects are contained in international agreements, such as Production Sharing Contracts (‘PSC’s). The main purpose of these agreements is the payment of royalties. These are binding. Disputes are dealt with via conciliation and arbitration.
9. The power of conciliation and arbitration is created by member countries becoming a party to international conventions that deal with the enforcement of foreign arbitral awards. In doing so they submit to international procedural rules of conciliation and arbitration.