COMMUNITY BRIEFING NOTE 01

Why discounting matters

The Ferry Business Case Summary publishes a headline BCR of 1.7. This note explains why standard present-value discounting materially changes that result.

Damien Smith · 3 September 2026

PTA publishes benefits of about $894 million, costs of about $525 million, an NPV of about $368 million and a BCR of 1.7.

Those headline results can be reproduced from the published undiscounted totals.

WA Treasury says future costs and benefits must be discounted to present-day values, using 7% real for the central case.[i]

Using the publicly available figures, my reconstruction gives an indicative BCR of about 1.16, rather than 1.7, after applying 7% discounting.

That is before applying any constraint for ferry capacity, service frequency or realistic utilisation. Those issues are dealt with separately in Community Briefing Note 02.

Why this matters

The business case places substantial value on a few minutes purportedly saved by hypothetical motorists decades into the future. At the same time, very real people sailing, rowing, disability sailing and using Matilda Bay today may be displaced or materially affected.

Treasury requires benefits and costs to the community to be identified and monetised where possible.i

So this is also a values question: whose benefits are counted, whose costs are counted, and when do they occur?

Source document

Ferry Service Expansion — Business Case Summary
Public Transport Authority / Government of Western Australia.

Read the Ferry Business Case Summary [PDF]

Two questions for PTA

  • What are PTA’s NPV and BCR when its actual annual costs and benefits are discounted at Treasury’s 7% real central discount rate?
  • Will PTA publish the annual discounted cost and benefit streams so the claimed NPV and BCR can be independently reproduced?

About the author

Prepared by Damien Smith, Perth naval architect and Director of Damien Smith Design Pty Ltd.

Disclosures: Damien Smith Design was a tenderer for the Swan River ferry project. Damien is also on the Mounts Bay Sailing Club Management Committee and is an Australian Labor Party member. The views expressed are his own.

[i] . WA Department of Treasury, Strategic Asset Management Framework — Business Case Guidelines, p.26. Treasury requires costs and benefits over time to be discounted to present values and specifies 7% real as the central discount rate.