Why Australia weighs costs and benefits differently to meet community needs

Infrastructure provides a huge number of benefits. Many – quality of life, sustainability, community bonding, and more – aren’t just economic.

Yet, many governments still use a traditional cost-benefit analysis (CBA) approach to assess proposals.

Australia is one of the few countries to identify non-monetary impacts when planning and delivering infrastructure.

In 2021, Infrastructure Australia developed an assessment framework to review infrastructure proposals submitted by government agencies and the private sector.

The framework emphasises the non-monetised benefits of infrastructure, such as quality of life and sustainability, that CBA doesn’t always capture.

Other countries that follow this approach include Northern Ireland and New Zealand.

This blog outlines how Infrastructure Australia’s different approach to costs and benefits delivers on community needs.

Why assess non-monetary benefits?

CBA tools weigh up the potential impacts of a proposed infrastructure project over time from the perspective of the communities it affects.

But impacts may be difficult or costly to express in financial terms.

Non-monetised CBA approaches assess qualitative (e.g., impacts on the community) and quantitative (e.g., relevant regional/national comparisons) costs and benefits.

Additional information might include surveys and academic literature.

This helps decision makers understand how varying factors affect different groups of people.

It can measure performance against equity outcomes, such as economic and social development or levelling up disadvantaged areas.

The Australian approach

In Australia, non-monetary impacts included in the assessment framework include:

• Cultural/heritage impacts (changes to historical buildings, sites, or landscapes)
• Indigenous values (changes to Indigenous sites of importance)
• Protection of biodiversity (responding to climate change, pollution, and ecosystem loss)
• Mental and physical health (for instance, indirect impacts from resource quality and security)

The framework presents non-monetised impacts alongside monetised impacts to account for the full range of possible effects.

This embodies principle 5 of the Enabling Better Infrastructure (EBI) guidance.

The guidance suggests CBAs that explore all outcomes up front and supports the delivery of infrastructure that meets community needs.

How do you measure non-monetary impacts?

A robust CBA should incorporate a balance of monetised and non-monetised impacts.

Finding this balance, however, isn’t always straightforward.

This is mainly because it’s not easy to detect or gather data on non-monetised impacts. They’re also harder to compare than monetised impacts.

Comparison requires the judgement of decision makers, which may vary depending on circumstance.

To support a balanced assessment, Australia could look to set up new data-gathering structures, such as online platforms that streamline data collection.

As outlined in EBI principle 8, these should undergo regular monitoring and evaluation.

Measuring non-monetised impacts that align with Australia’s strategic vision would help decision-makers prioritise projects that deliver the very best for society, the economy, and the environment.

For example, Singapore’s land-use planning and conservation authority uses data analytics from various government agencies to gain deeper insights and make better informed decisions on infrastructure planning.