The use of a cost-benefit analysis in public sector decision-making : a case study of the Burdekin River Irrigation Development in Queensland

Robinson, Jacqueline Jefferson (1994). The use of a cost-benefit analysis in public sector decision-making : a case study of the Burdekin River Irrigation Development in Queensland Master's Thesis, School of Economics, The University of Queensland.

       
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Author Robinson, Jacqueline Jefferson
Thesis Title The use of a cost-benefit analysis in public sector decision-making : a case study of the Burdekin River Irrigation Development in Queensland
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 1994
Thesis type Master's Thesis
Total pages 142
Language eng
Subjects 14 Economics
Formatted abstract The objective of this thesis is to consider the role of government planning authorities in the decision-making process of project identification, appraisal and selection. It is concerned with demonstrating how cost-benefit analysis provides policy-makers with information which will enable them to determine an efficient allocation of resources. The Queensland Government is requiring that studies be undertaken on proposed public sector capital projects to determine first the economically efficient use of the State's financial resources and second to determine a funding and pricing policy which could be implemented to ensure that the “user pays”.

This thesis provides a cost-benefit analysis of the Burdekin River Irrigation Development in the light of two overall objectives, that:
. it aids in government decision-making for efficient public funding of infrastructure projects by assessing the economic desirability of the project from the point of view of the economy as a whole, which is the economic cost-benefit analysis, and
. it aids in policy formation, and in particular, for pricing and project funding. In this respect financial cost-benefit analysis provides a disaggregation of the financial flows to the major parties involved in the project. The financial cost benefit analysis enables an analysis to be made of the implications for the different players involved, of the proposed alternative pricing arrangements.

By conducting a risk analysis, this study has examined the robustness of the results of the financial analysis to determine the degree of financial risk to the project as a whole and for each of the parties in the project. A number of policy options regarding water charges which are available to government were incorporated in the risk analysis to determine the extent to which the distribution of the financial returns to the project could alter both the financial returns and the risk between Water Resources and the growers.

The role of government (or planning authority) in project appraisal is shown to be important, especially in regard to the setting of national parameters under which projects are to be appraised. As well, the relationship between planning authority and the project analyst is shown to be based on consultation. The planning authority sets the guidelines for project appraisal and the analyst provides information about the project which is more extensive than an "accept/reject' result. It is shown that the information available to authorities from a cost-benefit analysis is extensive and can raises number of policy issues.


 
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