Report: Cost-benefit analysis crucial for new public works

GROWTH in the value of major infrastructure projects across the country has stalled, reinforcing the need for independent analysis of new publicly funded works, a new Deloitte analysis shows.

The latest Deloitte Access Economics' investment monitor showed the value of all projects was in a "holding pattern", with resource construction investment set to fall below 50% of all investment.

It also revealed the public sector would need to carry a "larger burden" of the investment agenda in coming years, with estimates of up to $16 billion of investment by state governments.

That investment could yet in part be funded by mass privatisations of state-owned assets, with the Abbott government promising to cover 15% of the cost of new projects if funded by the sell-offs.

But the Federal Government, reliant on the asset recycling investment scheme to bolster the economy, has already had a setback with Senate knocking back the bills.

Crucially, the bills failed to get Labor's support due to a lack of complete cost-benefit analyses of major projects being part of the proposed laws.

The Deloitte analysis shows a 0.4% fall in major project investment in the June quarter, while the value of future projects rose $10 billion during the quarter, mainly on the back of proposed state investments.

"While capital recycling can be a useful mechanism for funding new infrastructure in a constrained fiscal environment, consideration of the cost and demand risks for new projects is critical," the Deloitte report said.

"Indeed, it is important that appropriate cost-benefit analysis is undertaken for all major investment projects, and that analysis is arguably even more important when projects are funded by the public sector."

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