Keeping opportunities in our regions

Recently the Queensland Local Content Leaders Network (QLCLN) released their recommendations, after the group commissioned a research project to develop a better answer to the question: ‘what is local?’. 

The QLCLN is made up of 15 industry and business groups across regional Queensland, local government representatives and key industry partners, with the group working to maximise the local benefit and expenditure in the local region for major resource and infrastructure projects.

Toowoomba and Surat Basin Enterprise (TSBE) is part of the QLCLN and supportive of maximising industry local content in regional Queensland.

In Australia, major project proponents, such as those Tier 1 organisations who deliver major resource and infrastructure projects over $500M value, are contractually required to spend a portion of their project expenditure through local companies, so that there is a benefit to the local economy. 

Yet the current definition of a ‘local company’ from a major project procurement perspective is one that is based in Australia or New Zealand. 

Therefore, a significant major project based on the Darling Downs can theoretically utilise companies many thousands of kilometres away from this region and still be meeting the current government guidelines of supporting local content. 

The QLCLN report “Keeping it in the Regions:  A better practice model for local content and defining local business” was developed in response to the 2018 House of Representatives Standing Committee inquiry into mining and resource industry support for businesses in regional economies. 

Ali Davenport, TSBE CEO, said the House of Representatives Committee recommendation included a need to clearly define ‘local’.

QLCLN developed a new six-tiered model of procurement where priority is given to businesses located within the natural geographical zone of a major project.  

“The QLCLN report shows that major project contractors need to engage with the local community within the regional geographic zones of a project to ensure small and medium sized businesses in regional areas get a fair go,” said Ms Davenport.  

“This would ensure major projects in a regional area are truly beneficial to that area.”

“For the project owners and Tier 1 proponents of major projects, finding local subcontracting businesses with the capability to safely and effectively deliver a project can seem initially challenging,” said Ms Davenport. 

“These Tier 1 companies are often used to dealing with preferred subcontractors who could be based in major cities, and default to utilising FIFO than trying to find local capable companies.”

“Whilst the QLCLN model shows that local companies in a geographical region should be prioritised, the extensive, independent research recognises that local businesses come in many forms and they are not necessarily just those that have a long-term physical presence in a region.”

“QLCLN believe a better definition of a local business should include those businesses making a significant contribution to local economic activity, including businesses which have a significant physical presence in the local area and businesses which are not owned locally but provide goods, services and labour that are primarily produced or supplied within the local area,” said Ms Davenport.

When those responsible for major projects understand regional capability they can set realistic expectations for spend in regional community.

A great example of this is the Toowoomba Second Range Crossing.

By understanding the direct region opportunity to source local, setting a clear definition for the project as well having a business goal to achieve over 75.25% local spend, they were able to exceed over 86% local content spend.

TSBE General Manager of Energy and Infrastructure, Lance MacManus, said the key findings include building local business capability and capacity, which is key in driving positive regional development outcomes for major projects.

“By focussing effort on building business capacity as part of local procurement policies, governments and businesses are contributing to a sustainable cycle of regional economic development,” said Mr MacManus.

Mr MacManus said QLCLN aims to maximise regional spend by prioritising zones from major private and public projects, which is paramount to driving investment and economic prosperity in Queensland’s regions.

“The network’s role is to collaborate and partner with industry to deliver full, fair and reasonable opportunities for capable local businesses to participate in all aspects of the local supply chain,” said Mr MacManus.

The group is now calling on the State and Federal Government to adopt a clearer definition to ‘what is local?’ using this research.

“We urge the State and Federal Government to understand the importance of this model and for it to be incorporated for government led procurement projects, embedding this model into licensing agreements of major mining projects,” said Ms Davenport.

This research is available here for download: