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Discount Rates

In addition to the general guidance in our cost benefit analysis guide, the Treasury also provides specific guidance on the discount rates to be used in economic analyses.

These are set out below.  A technical document outlining how the discount rates are derived is also available below.

The Treasury recommends that the following real, pre-tax discount rates be used, unless a project-specific discount rate can be determined on objective grounds: 



Default rate (for projects that are difficult to categorise including regulatory proposals, and most social sector projects):

5.0%  p.a.

General purpose office and accommodation buildings

5.0%  p.a.

Infrastructure and special purpose (single-use) buildings:

  • Water and energy
  • Prisons
  • Hospitals
  • Hospital energy plants
  • Road and other transport projects

5.0%  p.a.

Telecommunications, media and technology , IT and equipment, Knowledge economy (R&D)

6.0%  p.a.

Technical note: In 2020 Treasury changed its smoothing policy to make the rates more responsive to changes in key assumptions, particularly the risk-free rate.

The new policy is that calculated rates are rounded to the nearest whole number, and the published rates are only changed if the new calculated rate is X% +/- 0.7%, where X% is the old rate.

Under the previous policy, rates were only changed if calculated rates differed by more than one whole percentage point from the current published rate. The rate was then rounded to the nearest whole number. 

The latest rates have been calculated using the following assumptions:



Statutory tax rate:


Effective marginal tax rate:


Equity risk premium:  


Risk free rate: 

0.65% (26 May 2020)

Inflation rate: 2%
Gearing:   33% (default),
30% (buildings),
23% (infrastructure),
24% (technology)

The Treasury intends to review these rates approximately once a year.

Last updated: 
Friday, 18 September 2020