Mr. Ed Hearne:

I am not involved at present with our input to the debates the Senator mentioned and cannot really speak with authority in that regard. In general on her point about leasing, for any given intervention, all of the feasible options should be considered, particularly at the long list of options stage when we move from the strategic assessment of why we need a project to how we are going to develop it. In certain sectors, I expect that is very much front and centre. The way we tend to operate these things is we set the overall parameters at the central level and then people in the individual sectors, whether that be transport, water, housing or whatever, go away and develop their own individual, sector-specific methodology. I expect there is probably more consideration being given now to those types of questions within the sectors.

On the Senator's question on cost-benefit analysis, we have sometimes struggled with the question of induced demand and trying to understand whether our demand forecasts at the outset will be borne out. We saw in the past with road projects, for example, that there was a higher level of demand than initially envisaged because there was an induced element involved. What we need to do generally, and what the project with the OECD tries to do, is move to complement cost-benefit analysis with other approaches. Cost-benefit analysis definitely will still form a fundamental part of the decision-making process but it probably needs to be rounded out with wider considerations. A good innovation in the transport sector has been the use of modal hierarchies and intervention hierarchies to say that, as a rule of thumb, we prefer maintenance to new build and we prefer improvement before going to the creation of new assets. Building in those kinds of rules of thumb across the various sectors will be really important. It certainly is something we would aim to build out as part of the OECD work.