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Guidelines for Setting Charges in the Public Sector -April 2017

Stepping through a cost recovery analysis

Stepping through a cost recovery analysis will always depend on the facts of the situation. Here is a list of questions, which, combined with this guidance, can help shape the policy process for agencies when establishing or reviewing cost recovery regimes.

1 What is the policy and legislative framework?

  • Should government provide the good or service?
  • What is the legal authority to charge?
  • Key considerations for cost recovery analysis: efficiency, effectiveness, authority, transparency, consultation, equity, simplicity, performance, accountability.

2 Research and planning

  • What is the scope and purpose of this work?
  • What information needs to be gathered, or activities planned in order to give effect to the 'open book' approach?
  • What kind of consultation should be run?

3 The policy rationale for cost recovery

  • What are the outputs and how do they link to outcomes?
  • Who are the beneficiaries?
  • Are there any risks? What are they? Are there risk exacerbators?

4 Understanding the costs of outputs

  • What are the outputs and business processes?
  • How much do they cost?

5 Bringing it all together – designing fees and charges

  • Who should pay?
  • What period of time are costs expected to be recovered?
  • What and how much should they pay?
  • Design the cost recovery. Check in: does this meet the policy objectives?

6 Monitoring and managing cost recovery regimes

  • Collecting and publishing financial and performance information.
  • Periodically reviewing cost recovery regimes.


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