Economists and decision makers everywhere, rejoice!  The Business Council of Australia (BCA)  have released a new paper, Policy Essentials: Cost-Benefit Analysis, which hopes to “raise understanding within the public sector and the broader community of the importance of conducting cost-benefit analysis”.  The BCA commissioned Deloittes to write a 20 page guide on a topic with so many existing text books, government guidelines and OECD updates because:

We have become increasingly concerned that decisions which involve considerable expenditure or which have significant impacts in the community are being made without a proper evaluation of the costs, benefits and risks involved. This has often led to poor prioritisation, cost blowouts and poor regulations that have had costly or unintended consequences.

In this context, the Business Council of Australia identified a need for a simple guide on what a cost–benefit analysis should contain and commissioned Deloitte Access Economics to develop this resource. We felt it was important to go back to basics to explain exactly what we mean when we call for cost–benefit analysis.

Now that is timely, because a couple of months ago we took a look at the BCA’s discussion paper about project and environmental assessment.   We found that:

• the paper focused on the costs of environmental assessment (which accrue to BCA members) without mentioning the benefits (which accrue to the public).
• the paper cherry picked low or high values as it suited, without presenting a range of values, a mean or expected value, as you’d expect in cost benefit analysis
• whoever wrote the paper had no concept of discounting, declaring that delaying a project resulted in the complete loss of revenue, rather than its deferral.

and most spectacularly:

The development consent should be able to be issued in the form of a concept approval, which would allow very complex developments to be staged in over long periods. This would mean a project, which is currently subject to new approvals at various stages, would only be subject to meeting certain conditions, or providing updated information, etc. The merit of the proposal should not be subject to assessment. This would give ‘bankable’ long-term approvals to major projects to facilitate financing.

So let me spell this out.  In April they’re calling for complex projects to be given “concept approval” allowing projects to proceed without public assessment of the merits of later parts of the project.  Then in September, we’re told that projects with “significant impacts on the community are being made without a proper evaluation of the costs, benefits and risks involved.”  In other words, we need cost benefit analysis when it might be in the interests of BCA members, but when such analysis might threaten their interests, then “concept approval” will be fine.