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AIP plans explained

THE centrepiece of the new local content incentive scheme, which formally commenced on January 1, is Australian Industry Participation (AIP) plans.

An AIP plan outlines the strategies that a project will use to ensure Australian producers have a “full, fair and reasonable” opportunity to supply goods and services.

Australian industry must be able to bid for all aspects of a project on an equal and transparent basis, including being given reasonable time in which to tender.

The tenders must also be free from “non-market burdens” that might rule out Australian industry.

David Kobelke, director of the Industrial Supplies Office (ISO) of WA, said the level of detail in AIP plans “has been a huge challenge for the projects”.

The significant increase in paperwork and reporting requirements also is a concern for some project proponents.

Woodside project services manager Rob Hannan described the plans as “overly complex for what they are trying to achieve”.

AIP plans must look beyond the contracts directly awarded by project proponents in Australia.

They must also cover the procurement policies of overseas companies that are awarded major contracts.

“The overseas contractors are obliged to assess and, where possible, use local suppliers,” Mr Kobelke said.

This initiative has a twin objective – to maximise local content on projects, and to help local firms link into global supply networks.

The plans should also outline the impact of the project on employment, skills transfer, the development of strategic alliances and regional development.

They do not mandate a level of local content.

AusIndustry, the Commonwealth agency that administers the scheme, states that AIP plans should be completed at the early planning stages of a project, around the completion of the feasibility study and board approval.

This is because the plan must be approved by AusIndustry before any goods are imported.

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