Scenario 2: Further reform is undertaken Assuming that further reform is undertaken Scenario 2, the net benefits of Reform options A and B are examined here with reference to a threshold analysis because of challenges in estimating the gross benefits. Drawing on the benefits analysis in section 5, the net benefits are greater than zero for Reform option A if undertaking the reform avoids a in achieving the end-state reform of 0.02 years (or 6 days) (Table 22). In addition, the net benefits are greater than zero for Reform option B if undertaking the reform avoids a delay in achieving the end-state reform of 0.17 years (62 days). Table 22: Benefit of avoiding delay in achieving end-state reform Delay required for net benefits to be greater than zero Reform option Days Reform option A 0.02 6 0.17 62 Reform option B Source: Marsden Jacob analysis. Note: Net present value is estimated using a real discount rate of 7%. Sensitivity analysis Discount rates In line with guidance on cost–benefit analysis (DoF 2006; PM&C 2014, 2016), the net present value of the costs is estimated over a 20-year period using discount rates of 3% and 10%, as well as the central case of 7%. These results are set out in Table 23, Table 24 and Table 25. It can be seen that because the discount rate affects the base case as well as each reform option the impact of altering the discount rate is reasonably small. 23: 7% discount rate—present value of the costs ($ million) Reform Reform Base case option A option B $5.89 $0.00 $0.00 NTC $0.00 $10.76 $67.56 IPR $1.07 $5.35 $31.40 State and territory governments Total $6.96 $16.11 $98.97 Increment over base case $9.15 $92.00 Table 24: 3% discount rate—present value of the costs ($ million) Reform Reform Base case option A option B $8.07 $0.00 $0.00 NTC $0.00 $13.59 $95.13 IPR $1.50 $6.93 $43.54 State and territory governments
Scenario 2: Further reform is undertaken Assuming that further reform is undertaken Scenario 2, the net benefits of Reform options A and B are examined here with reference to a threshold analysis because of challenges in estimating the gross benefits. Drawing on the benefits analysis in section 5, the net benefits are greater than zero for Reform option A if undertaking the reform avoids a in achieving the end-state reform of 0.02 years (or 6 days) (Table 22). In addition, the net benefits are greater than zero for Reform option B if undertaking the reform avoids a delay in achieving the end-state reform of 0.17 years (62 days). Table 22: Benefit of avoiding delay in achieving end-state reform Delay required for net benefits to be greater than zero Reform option Days Reform option A 0.02 6 Reform option B 0.17 62 Source: Marsden Jacob analysis. Note: Net present value is estimated using a real discount rate of 7%. Sensitivity analysis Discount rates In line with guidance on cost–benefit analysis (DoF 2006; PM&C 2014, 2016), the net present value of the costs is estimated over a 20-year period using discount rates of 3% and 10%, as well as the central case of 7%. These results are set out in Table 23, Table 24 and Table 25. It can be seen that because the discount rate affects the base case as well as each reform option the impact of altering the discount rate is reasonably small. 23: 7% discount rate—present value of the costs ($ million) Base case Reform option A Reform option B NTC $5.89 $0.00 $0.00 IPR $0.00 $10.76 $67.56 State and territory governments $1.07 $5.35 $31.40 Total $6.96 $16.11 $98.97 Increment over base case $9.15 $92.00 Table 24: 3% discount rate—present value of the costs ($ million) Base case Reform option A Reform option B NTC $8.07 $0.00 $0.00 IPR $0.00 $13.59 $95.13 State and territory governments $1.50 $6.93 $43.54
consultation_ris_-_hvrr_phase_2_-_independent_price_regulation_of_heavy_vehicle_charges.docx