REGULATORY BASELINE REPORTING: THE CASE FOR QUANTIFYING EXPECTED REGULATORY COSTS AND DELAYS IN A BASELINE REPORT – LESSONS IN CROWN UNFAIRNESS FROM AUSTRALIA

In all countries the Crown (the Sovereign or Government) is the source of all law, it creates all regulatory authorities and manages all privatised and corporatized entities that collectively generate the largest non-engineering risks for underground works projects – regulatory approvals and delays. The common international practice by the Crown of contractually transferring both ground and regulatory risks to successful bidders seriously jeopardises the sustainability of the underground works construction industry which is already suffering from low profit margins. This issue is especially obvious in Public Private Partnership style contracts or those which claim to be „fair‟ but at the same time entrench major risk transfer of ground conditions and regulatory burdens away from the Crown. The regulatory risks are usually much larger than the ground risks. The Crown‟s practices often so unfair, that in certain circumstances, they are also likely unlawful under many countries legal systems. As well as possibly being unlawful these practices can also lead to a substantial reduction in bid competition. Project commercial packages are also becoming so large, and the unknown regulatory risks so great, that fewer companies have the ability or appetite to participate in a competitive process where the scale of the unquantified regulatory risks potentially jeopardises the survival of the company. It is suggested that regulatory risks should be the subject of a Regulatory Baseline Report (RBR) in which the Crown defines the risks for the purposes of bidding and the future management of unexpected regulatory disturbances. Countries such as Australia should transition away from bespoke project by project contracts to more common forms of contract that embrace accountability by the Crown for risks uniquely within its control or influence, and thereby empower the Crown‟s delivery authorities to deliver their projects, encourage broad participation by the market and develop a culture of commercial fairness as is enjoyed in some developed countries.