The obvious way to mitigate site risk is by careful site selection, backed by intensive investigation of the site's history and its characteristics, to assist in quantifying the risk. It is critical that bidders have access to as much information as possible in order to assess the risks. An investigation of past uses of the site, coupled with knowledge of its proposed use, should disclose whether there is a significant danger of land contamination and liability for clean-up.
Defects in existing infrastructure that is to be transferred should be identified and quantified. Title searches and investigation of Native Title Tribunal records should disclose land interests and whether there is an active Native Title claim.
With respect to land contamination, government could commission investigations into site contamination and make these available to shortlisted bidders. Government should take care to ensure that these reports do not provide any warranties or assurances as to the state of the site. In this regard, bidders will still need to make their own independent assessment of the reports.
Government-commissioned audit reports do not necessarily lessen the risk premiums required by private parties, unless those parties are able to inherit government's legal rights to sue the investigator if the information proves incorrect. These rights could be novated under the project agreements or, under a project development agreement, if it precedes the contract.
However, mitigation of site risk largely depends on the risk management achieved through the preferred allocations set out in this chapter. Government can seek to minimise the risk of planning refusal through community consultation at the proposal stage (which should minimise community opposition) and by adopting a generally facilitative approach. Together with the transparency and probity requirements and public interest test undertaken as part of the Public Private Partnership business case development, this approach should lessen the risk of planning refusal, notwithstanding the greater scope for public participation and appeal favoured by the policy. In undertaking community consultation at the earlier stages of a project, however, care should be taken not to create community expectations that a project will proceed.