IS THERE A FUTURE FOR STATE AGREEMENTS?

State Agreements are agreements between private proponents and a State government which aim to facilitate the development of resources and processing projects and associated public infrastructure. State Agreements have been used extensively throughout Australia and each has been given varying levels of legislative recognition and effect, which in turn affects whether the rights and obligations arising under them have statutory or merely contractual effect. This ambiguity highlights the need to balance within State Agreements the private rights of the proponents with the public interest. The public interest critically involves third party rights to access infrastructure or services developed by proponents under the State Agreement. The introduction of National Competition Principles and regulatory regimes has affected the balance of these interests in favour of the public interest which has, in turn, led to a more stringent approach to State regulation under State Agreements. In particular, States are compelled through inter-governmental, federal and international competition and trade agreements to limit the extent to which it can negotiate its terms in a purely commercial way, embodying concessions in favour of proponents or preferences in favour of the State over other states or countries. Where a State Agreement expressly confers a benefit on third parties associated with access, third parties have successfully sought to enforce those benefits through the Courts, resulting in increased risks and costs for proponents that may not have been originally anticipated. Coupled with the political risks associated with changing governments and government policies, State Agreements, which have historically played a significant role in State development, are increasingly losing their ability to meet the commercial objectives of proponents.