Cost-benefit analysis (CBA) is an analytical tool that can be used to assess the benefits and costs of regulatory proposals. Costs and benefits are examined from the perspective of the community as a whole to help identify the proposal with the highest net benefit. Where regulation is designed to reduce the risk of physical or economic harm, a CBA should include a risk analysis detailing how the regulation will change the likelihood, frequency or consequences of an adverse event occurring.
CBA is needed for regulatory proposals with significant impacts as part of the preparation of a Regulation Impact Statement (RIS).
Information on undertaking CBA for Australian Government regulatory proposals is available in Appendix E of the Best Practice Regulation Handbook.
Information on undertaking CBA for Council of Australian Governments (COAG) regulatory proposals is available in Appendix C of the COAG best practice regulation guide.
The Office of Best Practice Regulation (OBPR) provides training, advice and technical assistance on CBA and risk analysis. A key goal of the OBPR is to help build the capacity of departments and agencies to improve the quality of regulatory proposals.
Assistance in undertaking a cost-benefit analysis can be obtained by contacting the OBPR: phone 02 6215 1955 or email email@example.com.
The OBPR provides:
- training on CBA;
- technical assistance on CBA; and
- advice on improving CBA done in-house or undertaken by a consultant.
It also acts as a repository for CBA reports. Contact the OBPR for more information.
In addition to the material in Appendix E of the Best Practice Regulation Handbook and Appendix C of the COAG best practice regulation guide, the OBPR has issued the following specific guidance for departments preparing a CBA. These are working documents, and feedback on their content and usefulness is welcome.
Decision Rules in Regulatory Cost-Benefit Analysis
Value of Statistical Life
There is a range of CBA consultants in Australia. For a list of consultants that have undertaken CBA for regulatory proposals, contact the OBPR.
- Cost-benefit analysis of proposed new health warnings on tobacco products , prepared for Commonwealth Department of Health and Ageing, December 2003
- Cost-benefit analysis of country of origin labelling,  prepared for Food Standards Australia New Zealand, September 2005
- Australian Government 2010, Best Practice Regulation Handbook, Canberra.
- Commonwealth of Australia (Department of Finance and Administration) 2006, Handbook of Cost-Benefit Analysis, January.
- Sinden, J.A. and Thampapillai, D.J., 1995, Introduction to Benefit-Cost Analysis, Longman.
- Boardman, E.A., Greenberg, D.H., Vining, A.R. and Weimer, D.L., 2006, Cost-Benefit Analysis Concepts and Practice, 3rd edition, Pearson Prentice Hall.
- OECD, Pearce, D., Atkinson, G. and Mourato, S., 2006, Cost-Benefit Analysis and the Environment: Recent Developments, OECD Publishing.
On 21 November 2007, the OBPR hosted a conference — “Delivering better quality regulatory proposal through better cost-benefit analysis”.
Academics, economic consultants and senior government officials presented papers on cost-benefit analysis to an audience of over 150 officials from Federal and State government departments and agencies.
The conference discussed a range of topics associated with cost-benefit analysis, including:
- cost-benefit analysis principles;
- department/agency experience with cost benefit analysis;
- issues and pitfalls when conducting cost-benefit analysis;
- choosing the discount rate in cost-benefit analysis; and
- the concept of value of statistical life.
- Better regulation via CBA: setting the scene - Gary Banks [ 112 KB]
- Developing CBA principles to improve the quality of regulatory analysis - Frances Perkins [ 171 KB]
- CBA/RIS challenges: a practitioner’s viewpoint - David Pearce [ 179 KB]
- Cost Benefit Analysis in the Australian Government - a case of back to the future? - Dr Leo Dobes [ 2.09 MB]
- Valuing the future: Choosing the discount rate in Cost-Benefit analysis - Mark Harrison [ 311 KB]
- Establishing a Monetary Value for Lives Saved: Issues and Controversies - Peter Abelson [ 185 KB]
- WP 2008-01 - A Century of Australian Cost-Benefit Analysis - Dr Leo Dobes
A Century of Australian Cost-Benefit Analysis PDF version [ 124 KB]
A Century of Australian Cost-Benefit Analysis RTF version [ 198 KB]
- WP 2008-02 - Establishing a Monetary Value for Lives Saved: Issues and Controversies - Dr Peter Abelson
Establishing a Monetary Value for Lives Saved: Issues and Controversies PDF version [ 193 KB]
Establishing a Monetary Value for Lives Saved: Issues and Controversies RTF version [ 290 KB]
- WP 2008-03 - Cost Benefit Analysis and Historic Heritage Regulation - Rod Bogaards
Cost Benefit Analysis and Historic Heritage Regulation PDF version[ 83 KB]
Cost Benefit Analysis and Historic Heritage Regulation RTF version [ 171 KB]
Contact for information on this page: OBPR contacts page