A CBA includes a number of key attributes including the discount rate, the appraisal period and the Base Case.
Literature on CBA contains a number of debates about the key assumptions that should be used in different circumstances. For example, there are a range of views about the method that should be used to set the public sector's real discount rate for different asset types.
Infrastructure Australia will generally consider appraisals that have been prepared in accordance with Commonwealth, State and Territory guidelines. Infrastructure Australia will not be providing separate detailed technical guidelines on appraisal that will resolve all of these debates.
Assumptions and methodologies used in appraisals will be carefully scrutinised by Infrastructure Australia to prevent the overstatement of benefits or understatement of costs. Unrealistic or inappropriate assumptions will be discounted by Infrastructure Australia in its analysis.
In order to provide consistency of presentation of appraisals being prepared for Infrastructure Australia, stakeholders should follow the following advice for the selection of key parameters.