Complexity in public policy

Some things in life are simple. Public policy is not one of them. I know this because for the past two days it has been shoved down my throat by people who know what they are talking about.

Public policy is complex. Not complicated. Complex. This was demonstrated to me most clearly by Bruce Chapman, academic-come-Keating policy supremo, whose work includes HECS and Welfare reforms.

Chapman talked about the concept of the Beveridge Curve in relation to long term unemployment (LTU). The Beveridge Curve is a representation of the relationship between the number of people who are unemployed and the number of vacant positions in the labour market. A ‘bad’ economy was one in which a large percentage of the total unemployed were LTU. This meant that despite an increasing vacancy rate, many unemployed people would be without work as they would not be suitable for open positions.

When the Keating Government were unexpectedly re-elected in 1993, the mood to help the most disadvantaged was at it’s strongest. Chapman explained how that at the time LTU (those actively searching for employment for more than 12 months) comprised about 30% of total unemployment, not a good outcome for the Australian economy. Any economic recovery without targeted assistance would only help this cohort of people to a certain extent. As part of the broader framework of ‘Working Nation’, a policy solution was designed to ease LTU.

Despite the apparent mandate (and I use this term loosely), there was vigorous discussion about the benefit, and perhaps more importantly, the costs of assisting long term unemployed people. Chapman outlined how the crux of the issue came down to whether the assistance for LTU in Working Nation would grow the economy by 0.5%, a figure put forward by Treasury officials, or 1.2%, a figure put forward by Chapman and other advisor’s. In a 10-hour meeting, covering presumably very tricky economic modelling, the end result was a compromise of 0.8% additional growth. This was an important debate as 0.5% would not have justified the original spending in economic terms, while 1.2% would have. Thankfully for those people without work, 0.8% was good enough to proceed with the reform.

And this is one reason among many why policy is complex. Bruce Chapman, a leading authority on Australian public policy, posited that determining messages and the future from data is very difficult. The difference between 1.2% and 0.5% growth is millions and millions of dollars to the budget bottom line. Yet here was a group of highly educated people unable to come to an exact figure regarding a 5th term Government’s flagship economic program and a measure designed to help those most in need.

To me, this demonstrates that public policy debates, within Government, the public service, and the media, should try and acknowlegde some of the complexity of what sits behind the slogans, advertisements and headlines. This does not mean acknowledging it in private between groups of economic boffins. Perhaps I am simply a naive public servant, but I believe the public has an ability to understand at least some of the nuanance that  represents the foundation of public policy.

The obvious example in the current environment is the Carbon Tax. From what I have seen to date, on Insiders, on Q&A, reading the Australian, I have seen very little of this. While only a framework has been released, I know that a price of $26/tonne would add some costs to most basic items. But I do not know what to relate this to. How can I compare $26/tonne to $50/tonne? What difference will it make to carbon outputs? What is the optimal adjustment the scheme is aiming for? And regarding an even larger picture, is a 5% reduction by 2020 the right thing to aim for? If I accept Kyoto targets as correct in the late 1990s, is there evidence to suggest that targets need to be updated?

These are the questions that race through my head when I think about methods to reduce carbon pollution and unfortunately for me, I see very little in the ether to help me answer these questions.

 

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