Ultimately, it must be demonstrated that the location of the project is contingent on the provision of an incentive and, importantly, if an incentive was offered it would change the investment decision outcome. Under the net economic benefits criterion, the Government examines whether the provision of investment incentives has merit from the point of view of the broader economy and community. There are a number of reasons for this. The funds used by governments to provide incentives come directly from taxpayers. Taxpayers have a right to expect that investments made on their behalf will yield a reasonable return to the community.
Limited funds are available to governments.
Funds provided as investment incentives reduce governments' ability to provide other services like health, education and welfare. An intervention which may make sense when viewed by itself may not be sensible when viewed in the context of the whole economy. The onus of demonstrating net economic benefits rests with the applicant. It is crucial that the economic impact analysis of the project takes into account the direct and indirect effects of the project in a way that considers not only the benefits, but also the costs, of the project. Response to the checklist would assist the Government to identify, from the perspective of the broader economy, the range of costs and benefits which are likely to result from the proposed investment.