Maddocks Report to Federal Government - Relevance for Major Infrastructure

On Friday, 20 January 2012, the federal government released a report prepared by Maddocks for the Department of Climate Change and Energy Efficiency.

The report – "The Role of Regulation in Facilitating or Constraining Adaptation to Climate Change for Australian Infrastructure" – examines the regulatory frameworks affecting some of Australia's most important infrastructure and associated services to determine the extent to which these frameworks they facilitate effective adaptation.

The report identifies the different types of regulatory tools available to decision-makers and regulators in managing advantages and disadvantages of these tools and identifies the appropriate circumstances for their use.

The report also sets out principles that should be adopted in designing and implementing regulation for climate change adaptation and makes recommendations for the appropriate roles for different levels of government.

The report includes an examination of the application of the National Public Private Partnerships Guidelines (National PPP Guidelines) to major infrastructure procurement to determine whether they are capable of addressing the spectrum and scale of climate change risks that are likely to materialise in the future for major infrastructure in Australia. 

The report notes features associated with the National PPP Guidelines that could facilitate adaptation to climate change, including the Public Sector Comparator, which is used to provide government with a quantitative measure of the value for money it can expect from accepting a private sector proposal to deliver the project compared to delivery by the public sector, includes a comprehensive and realistic pricing of all quantifiable and material project risks, which could include climate change risks.

However, the report also notes aspects of the National PPP Guidelines that could hinder adaptation to climate change, including the development of the Public Sector Comparator has inherent limitations because it requires costs and revenues to be forecast over the life of the project rather than the life of the asset.  This means that the risks accounted for in determining the overall value of a project under the National PPP Guidelines do not include those risks that could arise when the project has come to an end for the private contractor and the asset has passed back to the government.

The report has been described by the federal government as "a useful resource for planners and regulators, as well as local and state government decision makers".  The government has also indicated that the report will supplement work being undertaken by the Productivity Commission in its current inquiry into regulatory and policy barriers to climate change adaptation.

Click here to access the report.

If you have any questions regarding the report, please contact:

Greg Campbell | Partner
Direct 61 3 9288 0587
greg.campbell@maddocks.com.au

Dariel De Sousa | Consultant
Direct 61 3 9288 0552
dariel.desousa@maddocks.com.au

John Thwaites | Consultant
Direct 61 3 8615 0380
john.thwaites@maddocks.com.au