Why Use Cost-Benefit Analysis?

Posted on the 25th August 2017

The ASVB Value Calculator uses Cost-Benefit Analysis to calculate the social impact created by an activity as this is the approach recommended in government guidelines across the OECD. The Australian Government is “committed to the use of Cost-Benefit Analysis to assess regulatory proposals” according to their Cost-Benefit Analysis Guidance Note. The Government of South Australia endorses Cost-Benefit Analysis as a Socioeconomic evaluation technique within their Guidelines for the evaluation of public sector initiatives. So too, the Queensland Government provides guidance on Cost-Benefit Analysis as part of their Project Assessment Framework. As we announced recently, the NZ Treasury also recommends the use of Cost-Benefit Analysis, purchasing a licence to use the ASVB Wellbeing Values within their analysis, and referring to this in their recently updated CBAx Tool User Guidance.

Our own NSW Government released a Policy and Guidelines Paper in March 2017 titled “NSW Government Guide to Cost-Benefit Analysis.” The Preface, which was written by Deputy Secretary of NSW Treasury, Caralee McLiesh, states that the document is “to provide guidance and promote a consistent approach to appraisal and evaluation of public projects, programs and policies across NSW Government.”

Deputy Secretary McLiesh recommends that “Agencies should use this NSW Government Guide to Cost-Benefit Analysis (Guide) when assessing all significant government projects, programs, policies and regulations.”

“Cost-benefit analysis (CBA) is an evidence based method for systematically organising and presenting information to help government understand all the impact of policies and projects, including economic, social and environmental impacts. CBA helps decision makers identify the best means to improve social welfare and assess competing proposals” McLiesh explains.

The NSW Government Guide to Cost-Benefit Analysis also recommends Wellbeing Valuation as one of the approaches for non-market valuation, citing the UK Treasury, Green Book: Appraisal and Evaluation in Central Government, 2011, p.58., and listing Measuring the Social Impact of Community Investment: A Guide to using the Wellbeing Valuation Approach, Housing Associations Charitable Trust, 2014, as an example of how to apply the approach.

Those of you who have been following the ASVB for a while now and have perhaps attended one of our Masterclasses, would know that our own (ok technically Simetrica’s) Daniel Fujiwara was a contributing author on both of these references, just as he was involved in the technical development of the ASVB.

The ASVB was developed as a method to make measuring social impact accessible and achievable for everyone, so not only does the ASVB Value Calculator make conducting a Cost-Benefit Analysis less resource intensive for organisations, it follows best practice guidelines (both local and global), and it uses Wellbeing Valuation to value social outcomes.

Whilst we can’t say the NSW Government is literally endorsing the Australian Social Value Bank, what we can say is that their Guide to Cost-Benefit Analysis recommends following the methodology that the ASVB applies!

 

 

Read more posts...

Q&A with InCommunity

Recently, the ASVB were fortunate enough to sit down with one of our current Grant Recipient’s, Paul Tommasini, CEO of inCommunity, to ask him about his organisation’s experience of using the ASVB. ASVB Q1: We...

Posted 15 Oct 2018