Guidance note: This Section currently refers to the non-labour component being linked to the Consumer Price Index (CPI) and the labour component being linked to the Wages Price Index (WPI). However, this may be expanded to refer to additional indexation factors that are relevant to the sector in which the Project will operate (e.g. the Health Price Index for a hospital procurement). |
The Service Payment may only be indexed consistent with, and to the extent of, the underlying components comprising the Service Payment. The State will evaluate different indexation profiles on a value for money basis. For example, Respondents might propose a structure under which the Services component is index-linked with the labour component linked to the Wages Price Index (WPI) and the non-labour component linked to the Consumer Price Index (CPI).
If an alternative indexation factor to the CPI and WPI is proposed, Respondents should ensure that the indexation factor is referrable to Australian published indices. In addition, Respondents must provide supporting data underpinning the assumptions relating to that indexation factor that have been included in their Financial Model. Should Respondents be considering an alternative indexation factor to CPI and WPI, this should be discussed with the State during the ITP Workshops.
Payment structure indexation factors must not include floor mechanisms (for example, indexation at the higher of the CPI and 'x' per cent).