Scoping Studies Frequently Asked Questions
What is a scoping study?
Independent scoping studies are undertaken to help analyse select business activities or services provided by Government agencies or bodies, and to understand whether such services or activities can be provided more efficiently and effectively by other means. This could include reforming or improving the service or business being delivered by a Government agency or body, selling or commercialising the entity or its functions, outsourcing, or by adopting some other delivery arrangement.
A scoping study:
- considers the Government’s overall policy objectives;
- examines the activity and industry in which the activity occurs;
- considers possible future delivery options; and
- identifies any regulatory or legislative requirements and other actions that may be required to prepare the activity or entity for sale or a new delivery method.
The Government considers the findings and recommendations of a scoping study to help reach a decision on the best approach to the future delivery of activities and services that continue to meet the Government’s objectives. This could include retaining an organisation in Government ownership.
Why is the Government conducting scoping studies?
The Government announced in the 2014-15 Budget that it would undertake scoping studies to give careful consideration to the future delivery of services including the ownership of assets of several entities. The Government committed through its Smaller Government Reform Agenda to examine opportunities where assets currently owned by Government could be delivered more efficiently and effectively in private ownership.
Why did the Government choose the entities they did to conduct scoping studies?
The National Commission of Audit identified a range of agencies that could be the subject of scoping studies in the short and longer term. The Government considered the Audit’s recommendations and announced in the 2014-15 Budget that scoping studies into Defence Housing Australia, Australian Hearing, the Royal Australian Mint and the registry services of the Australian Securities and Investments Commission are appropriate.
As part of the Government’s commitment to smaller government and the efficient management of Commonwealth property, a scoping study was initiated into the divestment options for six Commonwealth properties in Canberra.
And as part of the Mid Year Economic and Fiscal Outlook 2014-15, the Government further announced that it would conduct a scoping study on options for the future management, operations and ownership of the Intra Government Communications Network (ICON).
Some of the scoping studies are into the sale of businesses and others into the commercialisation of activities. What is the difference?
All scoping studies examine activities being delivered by Government that can potentially be delivered by the private sector. Some entities operate in areas where there is currently a well established private sector market. It is therefore appropriate to consider the ownership of these businesses.
Other entities may deliver very specific products and services for the Government. The scoping studies will, therefore, consider the most appropriate delivery mechanism and whether that is through a sale, outsourcing, commercialisation or some other arrangement.
How much does the Government expect to receive from the sale of assets?
The scoping studies will undertake valuations of the entities subject to the studies. To protect the commercial interests of the Commonwealth, such valuations are not made public.
What is the Government expecting to do with any sale proceeds?
The Government has already announced its intention to recycle the sale proceeds from any asset sales by re-investing them in productivity enhancing infrastructure.
Why is the Government contemplating selling otherwise profitable businesses?
Scoping studies examine Government-owned businesses and make recommendations as to the most appropriate structure and mechanism for the ongoing delivery of those respective services. The Government then makes a decision on the most appropriate use of Commonwealth funds to achieve these outcomes, including retaining it in Government ownership, possible sale or other delivery mechanism, or returning capital to the Government for redeployment to other priorities.
Last updated: 29 May 2015