II Program information requirements

The II Program supports the development of strategic business cases that seek to maximise the benefits of Inland Rail. Business cases will contain detailed information covering each of the 16 sections outlined below, from proposed details through to governance, management and outcomes monitoring. 

Projects will be assessed in a gateway process. As a project progresses through the gateway process, a more detailed explanation will be required and developed. Professional business advisors and analysts will be appointed to work with project proponents to gather the required details and develop feasibility studies and strategic business cases. The business cases are ultimately intended to inform the Australian Governments further thinking on Inland Rail.

At each gateway stage, projects will be assessed as to their viability and capacity to move to the next stage.  Please note, some business cases may not be viable and will not progress through the gateway process.

To be eligible for the II Program the submission must address the Gate 1 criteria as a minimum (Sections 1 to 4 below).

However, some prospective proponents may already have detailed information and analysis to support their ideas and it is possible that at the Gate 1 assessment some ideas may be considered sufficiently developed to jump to future Gates. Consequently, you are welcome to provide additional information in relation to Sections 5 to 16 if appropriate.

Ultimately, all the information requirements contained in Sections 1 to 16 will be needed to develop a strategic business case should your idea proceed to Gate 4 of the II Program.

The information that supports a strategic business case

1. Proposal details

This section includes a short title, information about yourself and any joint proponents, a description of the proposal, including the objective(s) and the background of the proposal.

The description should provide information on the proposed service offering from a customer or user perspective, the relevant performance specifications if available and the location. The background should include a description of the existing infrastructure that the proposal will upgrade, replace or otherwise change.

Or if there is no ‘existing infrastructure’, the relevant existing characteristics of the site of the proposal.

The background should also include the status of the proposal, including confirmation that construction and related works have not commenced and information about any prior relevant studies or investigations.

2. Problem or opportunity definition

Section 2 is an important part of a Gate 1 submission and focuses on identifying and analysing the problem or opportunity to which the proposed idea is a solution.

The description should provide a clear statement of the problem (or opportunity). This section also asks you to explain the causes and the effects (or impacts) of the problem (or opportunity) as you see it. Separating causes from effects can help to ensure that options for solutions address the causes of problems, rather than just the symptoms. Identifying effects can also be a first step to specifying the benefits of solutions.

Writing an effective and clear definition statement of a problem or opportunity is an important foundation for proposals.

3. Strategic fit

The strategic fit of a proposal is gauged by how your idea will contribute to the achievement of one or more of the PEP or CLIP Principles. Proponents should indicate which PEP or CLIP principles their proposal supports and provide an explanation of how addressing the problem or opportunity will contribute to the achievement of those principles. It is not expected that proposals necessarily contribute to the achievement of all principles.

The intent of the National Freight and Supply Chain Principle (PEP 7, CLIP 6) is to assess proposals in terms of their strategic fit with the nationally agreed framework for delivering freight systems and supply chains that will contribute to a strong and prosperous Australia. You are encouraged to demonstrate how, at the local level, your proposal for maximising the benefits of Inland Rail would support such an objective. If you need information on the National Freight and Supply Chain Priorities please go to www.freightaustralia.gov.au.

This section also asks you to explain how the proposal would align with other Australian, state and local government initiatives and to outline the commercial and industry fit. Commercial and industry fit could address, for example, information about commercial realities; the public interest in progressing the proposal; and an assessment of whether there is a market failure contributing to the supply chain constraint.

4. Stakeholders

A central element of the proposal development process is to identify stakeholders who may influence the proposal and/or be positively or negatively affected by it. Relevant stakeholders may include: state and local governments, freight producer industry associations and companies (i.e. rail transport customers and potentially road transport customers), track owners and/or managers, above rail operators, logistics operators, affected property owners, local business representatives and community organisations.

At Gate 1 proponents are required to outline how the community and industry are expected to directly benefit from the idea. This section also requires proponents to identify how their idea may affect other stakeholders and provide an indication of how these stakeholders may react to these impacts. It also seeks information about whether there is direct and/or in-kind financial support for the idea.

Stakeholder consultation links to several areas of the assessment framework and will be required as part of Gate 2 and Gate 3.

Indicate the initial level of direct and/or in-kind financial support for your idea. If there is third party direct or in-kind support available please provide written evidence of support (e.g. letters of support, Council minutes etc.). Detailed assessments of the potential to deliver a proposed idea will take place through requirements for Gate 2, Gate 3 and Gate 4.

If your proposal is found eligible for the II Program at Gate 1 you will be assigned a business advisor who will work with you to develop your idea based on the following topic areas. If you already have the information available you may include it as part of your II Program EOI submission to strengthen your proposal.

5. Options identification and assessment

Best practice business case development requires a thorough assessment of potential alternative solutions to address the identified problem or opportunity. Importantly, “soft” or non-infrastructure solutions (e.g. regulatory reform or demand management through pricing schemes or technology) may provide a more cost-effective solution than investment in “hard” infrastructure.

Even if there are no identified non‑infrastructure options, alternative infrastructure solutions (in terms of scale, location or other aspects) should be considered if appropriate.

6. Demand

Where a proposal involves removing a network bottleneck, filling a missing network link, or realising new opportunities, it is likely to facilitate a change in total freight demand and/or a redistribution of activity across the transport network.

The difference in future demand arising from the proposal compared with the ‘business as usual’ or‘ base’ case is important to describe and, in later assessment stages, quantify. The demand changes will relate to the freight task (e.g. volumes, distances and frequency) and to network usage (e.g. train and truck characteristics, service quality, reliability and cost).

For all proposals, forward demand analysis (against a background of past trends) will be important for understanding the proposal relative to the alternative Base Case. Understanding what other influences may drive changes in demand (for example, emerging industries) are also important.

For CLIP, demand information requirements are divided into two sections: (ii) demand relating to freight flows; and (ii) demand relating to use of the rail network (and road network, where applicable).

7. Costs

Costs should be identified for the entire economic life of the proposal, or for a specified number of years (with a residual value in the final year that takes account of future costs). Capital costs are the main focus, in terms of possible future program funding and 3rd party co-funding contributions. However, operating and maintenance costs are also important, as their funding is critical to ongoing financial viability.

A proposal’s costs (similar to benefits below) are measured as incremental to the costs separately identified in a Base Case. The Base Case should include assumptions about further maintenance and replacement of existing infrastructure.

Importantly, the Base Case is described as a ‘do minimum’ scenario; it is rarely the same as a ‘do-nothing’ scenario. The Base Case is also referred to as the ‘without project’ case. This usually consists of ‘business as usual’: that is, maintaining sufficient expenditure to ensure a continuation of the existing, or minimum, level of service.

8. Benefits

Together with costs, benefits are critical to the Cost-Benefit Analysis (which in turn is the central element of a ‘value for money’ assessment). Examples of possible benefits include:

  • Productivity and economic impacts (e.g. reliability and travel time impacts, and vehicle operating cost savings).
  • Individual user benefits (e.g. accessibility and connectivity benefits; travel time impacts).
  • Service improvement benefits.
  • Health, safety and security benefits.
  • Land use impacts (e.g. higher or lower value of land use).

Any other impacts on stakeholders that would result from the proposal, for example potential increase in noise nuisance arising from increased train operations, or potential increases in vibration or particulate counts, should also be included in the analysis. For this section, no information is required for a Gate 1 submission. An analysis of benefits is required for Gate 2.

9. Cost-benefit analysis and wider economic benefits

A Cost-Benefit Analysis (CBA) combines costs and benefits that can be measured (or monetised) to estimate a proposal’s net benefits to the community. This is presented as a benefit-cost ratio that reflects a ‘whole of society’ perspective.

It is important that benefits and costs that cannot be measured (and which are therefore not included in the benefit-cost ratio) are analysed as far as possible and presented in an appraisal summary table. This additional information allows decision makers to consider both measured and non-measured costs/benefits when considering the merits of a proposal.

For this section, no information is required for a Gate 1 submission. An initial rapid CBA is required for Gate 3 and an updated CBA is required for Gate 4. An assessment of the wider economic benefits, particularly with respect to employment, is also required to complement the Cost Benefit Analysis.

10. Funding and financial analysis

Funding relates to how the proposal is ultimately paid for, whether through revenue sourced from user charging, government taxation revenue, or elsewhere (such as private capital sources). A proposal’s financial (viability) analysis is important as it allows an estimation of the extent of any viability gap between projected revenues and costs (both capital and operating outgoings).

Owners and/or third parties (including government) may in certain circumstances make a funding contribution to cover any 'viability gap'. Co-funding of proposals by the private sector has the potential to reduce the call on Australian Government and other governments funding, increase the leverage provided by Australian Government funds and improve the incentive alignment of proposal owners and (other) funders.

In the absence of co-funding arrangements, this viability gap will represent the minimum amount that governments must be willing to contribute if the proposal is to proceed.

For this section, no information is required for a Gate 1 submission. At Gate 2, proponents will be required to identify if the proposal has any initial third party funding or in-kind support, and provide accompanying evidence (e.g. letters of support). A detailed financial viability analysis is required at Gates 3 and 4.

11. Regional economic impact assessment

A regional economic impact analysis estimates how a proposal affects the amount and type of economic activity in a region. This impact analysis complements the Cost-Benefit Analysis (which is focussed on estimating a proposal’s net benefits to the community).

An initial (or qualitative) regional economic impact assessment is only required at Gate 3. A detailed (i.e. quantitative) assessment is required at Gate 4. In some cases however, the financial value of the proposal may be too small for a regional macro-economic impact to be reliably estimated.

12. Potential regulatory requirements

An assessment of the potential environmental and planning requirements that the proposal may trigger is required to be done at Gate 2. The response in this section will determine the level of detail required in response to Section 13, should a proposal proceed to Gate 3.

13. Environment, heritage and planning assessment

New, permanent and durable infrastructure proposals may involve significant interventions with the natural, built and human environments. It is therefore necessary that impacts, planning approval pathways and risks are identified and understood. These investigations also provide a solid basis for an environmental impact statement, if mandated when a proposal is approved for implementation.

In contrast to other topic areas, environment, heritage and planning management is not directly addressed in the assessment criteria. However, the outcome of investigations in this area will be critical to identification of proposal implementation risks should a proposal be implemented in the future. It will also complement information provided by stakeholders, as many of the possible causes of community opposition to proposals reside here.

Proposals that proceed to Gate 3 will be required to identify specific environmental, heritage and planning issues, as well as any regulatory issues that apply to the proposal, and prepare a planning pathway.

14. Property strategy

Property acquisitions and in some cases property sales and leases are a necessary part of infrastructure proposal planning. A sound property strategy (required at Gates 3 and 4) identifies potential property impacts and response strategies and is important to construction and budget planning.

It is also important for influencing community support for the proposal. As with environment, heritage and planning management, appropriate coverage of this area will strengthen the assessment of both stakeholder support and proposal risks.

15. Risk management

Identifying the key risks that need to be managed (and by which parties) is an important step for the future success of a proposal.

Factors such as design and construction skill shortages or the potential for material environmental damage if a proposal proceeds, can be risks to the successful implementation of a proposal. In contrast, forecasting discrepancy, such as new market growth that fails to eventuate in response to an infrastructure proposal, is a risk to the proposal’s outcomes.

For proposals that progress to Gates 3 and 4, it is essential to catalogue both implementation and outcome risks, what their likely impact is, and how they will be managed.

16. Governance, management and outcomes monitoring and evaluation

Proposal governance and management forms an important part of proposal assurance and success. Structures and processes for planning, decision-making, accountability and reporting are needed for successful proposal delivery and outcomes.

Accordingly, at Gates 3 and 4 the assessment framework provides for early planning of proposal governance as well as, management and outcomes monitoring arrangements. Well-chosen outcome indicators aid post-implementation monitoring, accountability and long-term program improvement. Proposal ‘benefits management’ or ‘benefits realisation’ of this type also assists periodic evaluation of an implemented proposal as a whole.