Australia: Queensland's market-led proposal guidelines – Guiding private investment in innovative real estate and infrastructure projects

The Queensland Government recently released new market-led proposal guidelines. The guidelines are a positive step forward and provide the private sector greater guidance for submitting market-led infrastructure, development and other proposals to Government.

The guidelines are the result of the Government's review of the Value for Money Framework implemented in 2001. As part of the review, the previous guidelines on exclusive mandates, which focused on maximising competition, were replaced with the new market-led proposal guidelines.

MARKET-LED PROPOSALS – AN OPPORTUNITY FOR INNOVATIVE PUBLIC PRIVATE PARTNERSHIPS

The new guidelines encourage the private sector to approach Government with innovative and unique project proposals.

The Government's procurement process for major projects is usually based on a Government initiated competitive tender process. However, the guidelines provide an alternative which allows the private sector to initiate and submit to Government an unsolicited or market-led proposal which has not been specifically requested by Government.

If the proposal represents value for money, does not expose Government to material risk, is unique in achieving a government priority and satisfies the other assessment criteria, Government may accept the proposal.

If accepted, the proponent may be granted an exclusive right (known as an exclusive mandate) to negotiate with Government and deliver the project.

WHAT AREAS CAN A MARKET-LED PROPOSAL COVER?

A market-led proposal may cover a wide range of areas including:

  • delivery of services to or on behalf of the government;
  • provision of infrastructure;
  • access to government assets – including government land;
  • access to government information; and
  • otherwise seeking government support to undertake a specific commercial activity.

MARKET-LED INFRASTRUCTURE AND REAL ESTATE PROJECTS

The new guidelines are similar to the unsolicited or market-led proposal regimes in New South Wales and Victoria – both of which have been updated in the last two years. In those jurisdictions, market-led proposals have been submitted for various infrastructure and real estate development projects including:

Proposal Details
AMP Capital and Macquarie University – "Macquarie Square" The proposal involves a new transport interchange and town centre at Macquarie Park (Under Assessment – Stage 2).
Brookfield Office Properties Australia Pty Ltd (NSW) The proposal is to combine a commercial and retail development on Carrington Street with improvements to the public access areas for Wynyard Station (Under Assessment – Stage 3).
Crown Sydney Resort Project (NSW) The Government approved Crown's Final Binding Offer on 11 November 2013.
University of Sydney (NSW) The NSW Government sold the Queen Mary Building, Camperdown, to the University of Sydney on 10 October 2013. The building will be used for affordable student accommodation.
Cranbourne-Pakenham Rail Corridor Project (Victoria) Proposal from MTR, John Holland Construction and UGL Rail Services for an approximately $2.5 billion upgrade of the Cranbourne-Pakenham suburban rail line.

In Queensland, for a real estate or infrastructure project, the proponent must demonstrate why their proposal is unique in its ability to achieve a Government priority outcome, is unable to be replicated by a competitor and justifies a different process to a traditional competitive market tender process.

For example, if the proponent owns strategic land that limits competitors' ability to deliver the project (eg land adjacent to Government land which would be developed with the Government land for the project) and/or has unique expertise to deliver the project (eg a railway manager or port operator who owns land which could be developed in conjunction with Government land to deliver a terminal or port facility or a consortium with unique collective expertise to deliver a project using government land).

THE ASSESSMENT PROCESS – THREE AND A HALF STAGES

The process for progressing a market-led proposal through to a final binding contract is:

Optional informal pre-submission stage* A proponent may contact Queensland Treasury to discuss the key attributes of a potential proposal. This allows the proponent to obtain feedback before committing substantial resources to developing the proposal.
Stage 1 – Initial Proposal The proponent provides a high level outline and completes the minimum information requirement template attached as Appendix 2 of the guidelines. This enables Government to form a preliminary view whether it should develop and assess the proposal in more detail.
Stage 2 – Detailed Proposal The proponent should demonstrate the extent the proposal satisfies the criteria (see below) in more detail and address other matters determined during Stage 1.
Stage 3 – Final Binding Offer If the proposal reaches this stage, the Government and the proponent will negotiate an exclusive mandate contract. Queensland Treasury, with the relevant line agency, will negotiate and prepare a contract for consideration by government.

*This stage is optional but strongly recommended.

WHAT CRITERIA DOES GOVERNMENT CONSIDER?

When assessing a market-led proposal, Government may consider, among other criteria:

  • community need and government priority;
  • value for money;
  • uniqueness and intellectual property;
  • benefit of proponent's preliminary investment;
  • risk and cost allocation;
  • capacity and capability of proponent;
  • feasibility;
  • public interest and benefits to government; and
  • competing proposals.

WHO WILL ASSESS A PROPOSAL?

The Market-led Proposal Panel and an assessment team will provide Government recommendations about each market-led proposal at the end of Stages 1 and 2.

The Panel will comprise senior members from Queensland Treasury, the Department of Premier and Cabinet, the Department of Infrastructure, Local Government and Planning, the Department of State Development and members from other agencies depending on the subject matter of the proposal. If the proposals relate to infrastructure, the panel will consult Building Queensland.

We have acted for clients in Queensland, NSW and Victoria in relation to various unsolicited proposals and projects granted exclusive mandates for, among other projects, coal export terminals, major rail projects, a transport interchange and town centre and commercial and retail developments.

You can visit the Queensland Treasury's Market-led proposals website here for more information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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