Australia: Draft Social Impact Assessment Framework for NT hydraulic fracking inquiry released - Have your say

Last Updated: 27 January 2018
Article by Margaret Michaels

The independent Scientific Inquiry into Hydraulic Fracturing of onshore unconventional reservoirs in the Northern Territory has released the draft Social Impact Assessment Framework prepared by Coffey Services Australia Pty Ltd for public consultation.

Written comments and submissions in relation to the draft Social Impact Assessment Framework must be made to the Inquiry by Friday, 2 February 2018.

Scope of assessment

As part of the Terms of Reference of the Inquiry, the Panel is required to determine the nature and extent of the risks of hydraulic fracturing of onshore unconventional shale reservoirs and its associated activities on the environment, which means land, air, water, organisms and ecosystems and includes:

  • the well-being of humans;
  • structures made or modified by humans;
  • the amenity values of an area; and
  • economic, cultural and social conditions.

The Inquiry engaged Coffey in June 2017 to assess the risks and benefits of the unconventional shale gas industry on social and cultural conditions in the Territory and develop the following:

  • A leading practice framework: includes the identification, assessment and management of the social impacts associated with any onshore shale gas development in the Territory and describes how this framework could operate in in conjunction with the Territory and Commonwealth environmental assessment frameworks;
  • Beetaloo Sub-basin case study: a case study of a possible unconventional shale gas project in the Beetaloo Sub-basin to demonstrate how the framework could operate, including how risks are to be identified, assessed, and managed; and
  • Social licence to operate: a description of the concept of a social licence to operate for the onshore unconventional gas industry in the Territory and the measures that the industry and Government can take to enable a social licence to operate to be earned and maintained in the Territory.

Framework for Social Impact Assessment

The Centre for Social Responsibility in Mining (CSRM) was engaged by Coffey Services Australia to examine current literature, the regulatory environment and case studies to develop a social impact assessment framework (SIA Framework) for shale gas development in the Territory.

The SIA Framework prepared by CSRM highlights the key components of a social impact assessment for shale gas in the Territory, notes gaps in the current regulatory environment and identifies lessons to be learned from similar developments.

CSRM identified leading practice SIA framework as comprising:

  • Strategic, adaptive approach throughout lifecycle of development that addresses cumulative impacts.
  • Communication, coordination and collaboration between industry participants.
  • Independently-led, participatory social baseline assessment.
  • Independently-led community engagement.
  • Participatory, ongoing monitoring of social indicators and transparent reporting of results.

The report proposes 12 recommendations:

  1. Mechanisms for strategic environment assessment.
  2. Terms of Reference to include various specialist assessments.
  3. Commonwealth Department of Environment and Energy should be consulted in relation to possible amendments to the "water trigger" under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) to apply to shale gas projects.
  4. Independent authority for the oversight of the strategic assessment, baseline studies and ongoing monitoring and reporting, as well as for social and environmental compliance auditing.
  5. Collaboration and co-ordination between projects, gas companies, government and community organisations.
  6. Third party ability to report grievances or perceived breaches of conditions to the independent Authority.
  7. Project proponents should be able to recover (to an extent), the costs of undertaking independent baseline studies.
  8. Guidelines and fact sheets for negotiating Land Access Agreements.
  9. Strategies to build local institutional and business capacity early.
  10. Inclusive and transparent negotiations with Aboriginal Traditional Owners.
  11. Royalty payments should not be exclusive to traditional owners, but a community benefits trust or other fund designed to distribute economic benefits to regions.
  12. Perceptions or evidence of negative impacts on the spiritual wellbeing and social cohesion in Aboriginal communities should be given high priority in risk assessment.

Beetaloo Sub-basin Social Impact Assessment Case Study

The Beetaloo sub-basin Social Impact Assessment case study details the approach and outcomes associated with a conceptual unconventional gas development in the Beetaloo sub-basin based upon the Shale WIND scenario outlined in the independent economic impact assessment prepared by ACIL Allen Consulting for the Inquiry.

We have previously examined ACIL Allen's economic impact assessment and the Shale WIND scenario involves the moratorium being lifted, and exploration and appraisal activity occurring with moderate scale development with a production target of 400 TJ/day (an approximately 260 well development).

The relevant aspects of the SIA Framework prepared by the CSRM were applied to the conceptual development in the Beetaloo sub-basin, however Coffey states that the discussions undertaken with key stakeholders to identify the social values, community concerns and to inform the social baseline, were compromised by:

  • the short duration of the case study (the SIA Framework prepared by CSRM proposes a more long-term strategic approach);
  • community opposition to an unconventional gas industry; and
  • the lack of a real project with clearly defined activities and impacts.

Notwithstanding the above, it was identified that the key concerns for communities in the Beetaloo sub-basin are impacts on surface water and groundwater resources, and the equitable distribution of benefits from unconventional gas development to Aboriginal communities.

The case study found that the threats and impacts identified can be managed by refining methods and strategies from unconventional gas development in other jurisdictions for the Territory context. In particular, Coffey conclude that by applying the SIA Framework and the CSIRO's guidelines for achieving a 'social licence to operate' will assist in overcoming community concerns that:

  • the resources industries are short-term rather than long-term, and cyclical in nature;
  • the impacts associated with development of a shale gas industry in the Northern Territory will be similar to those experienced with the development of the coal seam gas industry in Queensland; and
  • the industry is aloof from community concerns and has disregard for the social outcomes of their operations.

Social licence to operate

The Social licence to operate in the Beetaloo Basin and Northern Territory report prepared by the CSIRO examines the Territory's gas industry and fracking technologies to discuss a framework for a social licence to operate (ie. as explained by Coffey, a measure of the acceptance of an industry within society).

Importantly, the CSIRO notes in its report that there is an opportunity for the NT Government to create an "NT way" for a social licence to operate in gas. It firmly points out that the industry will not survive without the acceptance of local communities and the Territory because a social licence to operate is based on relationships.

The report discusses the following principles for the development of a social licence to operate framework:

  • engagement of a trusted third party;
  • protection of community rights and safety;
  • longitudinal design;
  • accessibility of data;
  • inclusiveness of process.

The report analyses the driving force behind trust and acceptance as being; procedural fairness, distributional fairness, governance capacity, effective and appropriate management of physical and social impacts and contract quality.

As key considerations for the basis of the framework, the report discusses:

  • independence and strong governance of any research;
  • transparency of process and provision of data to all stakeholders;
  • strict guidelines for ethical research parties; and
  • research should sim to connect stakeholders through common understanding.


In its Summary Report, Coffey has concluded that implementation of the following recommendations will facilitate the quality and effectiveness of the engagement, leading to an environment in which informed decisions can be made about the social, economic and cultural impacts of an unconventional gas development:

Recommendation 1: The Social Impact Framework proposed by CSRM is implemented with appropriate lead time allowed for compiling a comprehensive social baseline.

Recommendation 2: Shale gas development proponents and the NT Government enter into a memorandum of agreement to share socioeconomic data to enable compilation of a comprehensive sub-basin social baseline that is periodically updated.

Recommendation 3: Shale gas development proponents enter into a memorandum of agreement for cost recovery of expenditure on baseline study, whereby late entrants who benefit from the comprehensive social baseline proportionally fund the work of the first movers.

Recommendation 4: A representative consultative committee comprising the NT Government, shale gas development proponents and community representative bodies is convened to deal with sub-basin wide issues and to integrate government and industry initiatives with community aspirations where appropriate.

Recommendation 5: Shale gas development proponents implement awareness and education programs for affected communities that provide basic information on unconventional gas development, its impacts and their management ahead of discussion about impacts associated with a particular project.

Recommendation 6: The NT Government implements an awareness and education program on unconventional gas industry regulation that informs affected communities about the approval process and their rights under the applicable statutory processes including access to land.

Recommendation 7: Shale gas development proponents build, own and maintain relationships with communities and are involved in consultation and the compilation of social baselines supported by independent consultants and technical experts.

Recommendation 8: Aboriginal community engagement adopts a structured approach that incorporates preparatory meetings, dialogue on social values, industry awareness and education meetings, project-specific meetings covering proposed development and implementation issues.

Recommendation 9: Independent monitoring and evaluation is implemented and designed to differentiate industry-related impacts from other impacts and identify the extent to which industry-related impacts exacerbate or ameliorate other impacts. The CSIRO's principles for a 'social license to operate' measurement and modelling framework are incorporated in the design of the monitoring and evaluation program.

Recommendation 10: Social programs and mitigation strategies are to be adaptive and able to be refined to accommodate the findings of monitoring and evaluation of programs and initiatives.

Recommendation 11: Novel approaches, including those proposed by CSRM, to the distribution of benefits (relative to impacts) are investigated to ensure equity within and between communities.

Next steps

Written comments and submissions on the draft Social Impact Assessment Framework are to be made to the Inquiry by Friday, 2 February 2018 in the manner included on the Inquiry's website.

The Inquiry will also hold its final round of community forums from 30 January to 16 February 2018, the details of which can be found on the Inquiry's website. The Inquiry will also hold the final round of public hearings from 5 to 12 February 2018 and it is understood that these hearings will be live streamed.

It is understood that the Inquiry is committed to providing its Final Report to Government in March 2018. After consideration of the Inquiry's Final Report, the NT Government has said that it will make its decision to either ban fracking in the Northern Territory or allow it in highly regulated circumstances in tightly prescribed areas.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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