44. From the 675 submissions that had been received, the Council decided to shortlist 94 projects for detailed evaluation by the Office of the Infrastructure Coordinator, in order to develop the Interim Priority List. This approach was consistent with the approach proposed by the Office of the Infrastructure Coordinator and the Infrastructure Coordinator.
45 The Office of the Infrastructure Coordinator developed an evaluation plan to assist it in undertaking the detailed assessment of the 94 shortlisted projects. The evaluation plan was consistent with the Prioritisation Methodology previously endorsed by the Council that had been published on the Infrastructure Australia website.
46. The evaluation was undertaken by the Office of the Infrastructure Coordinator in accordance with the evaluation plan. The rigour of the evaluation process was further aided by the Office of the Infrastructure Coordinator engaging (from a panel established by DITRDLG) external advisers to assist in evaluating the BCRs submitted by proponents. The approach adopted was robust and comprehensive.
47. The published Prioritisation Methodology outlined that the outputs of the preceding profiling and appraisal phases were to be used to create a priority list of initiatives to enable informed decision‐making for the allocation of funding. This approach was implemented, with the Office of the Infrastructure Coordinator concluding that, of the 94 shortlisted projects:
• 57 projects either had a BCR that was below the evaluation threshold of 1.526 or a profiling assessment had not been able to be completed;
• nine projects did not have a good fit with the strategic priorities or would not deliver significant economic benefits and therefore should not be further considered as candidates for the Interim Priority List; and
• 28 projects merited being considered by the Council for inclusion on the Interim Priority List (referred to as projects on the merit matrix27).
48. A report on the results of the evaluation was provided to the Infrastructure Coordinator by a Prioritisation Evaluation Committee comprising senior staff of the Office of the Infrastructure Coordinator. These recommendations were presented to the Council at its meeting on 1 December 2008.
49. On 5 December 2008, the Chair of the Infrastructure Australia Council wrote to the Minister for Infrastructure, Transport, Regional Development and Local Government providing him with the results of the National Infrastructure Audit and also outlining the proposed approach to finalising the Interim Priority List. The Minister was provided with the list of 94 projects that had been evaluated and advised that:
• there were six 'priority projects' that addressed one or more of the seven themes and where the project's initial economic appraisal and alignment with key strategic priorities was considered to be well documented. The Minister was further advised that, subject to further engagement with project proponents the expectation was that these projects could proceed to be recommended for funding, including from the Building Australia Fund; and
• there was a second group of 22 'potential projects' that included initiatives that also addressed one or more of the strategic themes but that some aspect of a project's economic benefits or alignment with strategic priorities remained sufficiently in question such that they could not, at that time, be recommended for immediate funding.
50. The Council next met on 12 December 2008. At this meeting, the Council requested that the Office of the Infrastructure Coordinator seek additional information for all 94 projects that were able to be evaluated, and not just for those 28 that had been recommended by the Office of the Infrastructure Coordinator as meriting further consideration. As a result of this decision, the Interim Priority List publicly released on 19 December 2008 (within the document titled A Report to the Council of Australian Governments) was the list of 94 projects shortlisted for detailed appraisal. Neither the Council's decision not to accept the recommendation that 28 projects be included on the Interim Priority List but to instead include all 94 shortlisted projects, nor the reasons for the decision, were reflected in the Minutes of the relevant Council meeting or later meetings.
51. In publishing the Interim Priority List, Infrastructure Australia noted that projects with a comparatively low BCR or with no cost‐benefit assessment evidence had not been included in the list of 94 projects.28 However, as indicated, there were a significant number of projects included in the Interim Priority List that had a comparatively low BCR or where the proponent had not provided sufficient evidence to enable Infrastructure Australia to assess the BCR that had been submitted. Accordingly, an adequate economic appraisal was not applied as an eligibility criterion for inclusion on the Interim Priority List, notwithstanding that the published Prioritisation Methodology had stated that cost‐benefit analysis would be used as the 'primary driver of decision making'. In this context, in June 2010, the Chair of the Council informed ANAO that the Council believes it should have some discretion in selecting projects that should be given the opportunity to show their merit over time. The Chair further informed ANAO that the Council considered the Interim Priority List to be an interim assessment of likely projects to help guide further analysis, but not on an exclusive basis.
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26 The BCR threshold of 1.5 had not been promulgated to proponents.
27 The published Prioritisation Methodology had stated that: 'The integration of the multiple inputs to produce a single prioritised list of initiatives is complex but will be simplified by using matrix mapping of the inputs to offer an easy-to-visualise assessment of priority.'
28 Infrastructure Australia, A Report to the Council of Australian Governments, December 2008, p. 67.