Thursday, April 05, 2012

Announce it, hope for the best. The NBN-style weakness at the heart of Labor decision making

It might be popular now, but Labor’s $36 billion National Broadband Network is shaping up to be a financial disaster that will set back Labor’s image decades rebranding it the party of waste and extravagance.

That’s the view of Percy Allan, president of the Australian Institute of Public Administration and a former head of the NSW Treasury under premiers Wran, Greiner and Fahey.

Releasing a report card on “Public Policy Drift” he told the Herald that while Kevin Rudd came to office in 2007 promising “evidence-based” decision-making, he never spelled out what the term meant.

“True evidence-based decision making requires consultation. Kevin’s style was to lock himself in a cave and put in all the evidence and then emerge as Moses from the mountain with the tablets to tell the people what they would get.”

The NBN is a case in point.

“It would have been quite possible to say ahead of the election ‘we are going to ensure everybody can have an opportunity to be hooked up to the internet at good speeds, and when we get into power we are going to put out a green paper on the options for doing that and we are going to get feedback and make a choice.”

“That choice might be to spend $36 billion ripping out copper wire and disconnection Foxtel cables and starting afresh, which is the proposition we are facing... But had they examined the need, examined options and consulted they might have discovered cheaper ways to fill the need.”

“If a lower than expected proportion of people end up subscribing to it because they don’t want to pay Rolls Royce prices for a Rolls Royce service this thing is going to be a financial disaster - watch public opinion then.”

From opposition Labor would be tarred as a party of waste.

“It already has an image problem from the Whitlam years. If this thing goes under, the Liberal National party will be able to say here’s just another example of waste and extravagance by Labor, the Labor brand.”

“It may not take that long to backfire. When ten per cent of it is rolled out we will have a good idea of the take-up rate.”

The Institute asked management consultants Howard Partners to examine 18 high-profile Commonwealth projects for the quality of decision making making that brought them about. If finds 10 deficient - the alcopops tax, Building the Education Revolution, the NBN, the Darwin to Alice Springs railway, FuelWatch, the green car innovation fund, the green loans program, the home insulation scheme, Grocery Watch and the set top boxes for pensioners program.

Passing the test were the national disability insurance scheme, the minerals resource rent tax, and the emissions trading scheme.

The Institute wants all projects worth more than $100 million be subject to a ten-step process for establishing a business case.

Instead Mr Allan says politicians like to “decide things things in secrecy, call a dramatic press conference, get the front page splash and have people say - boy they’re smart, they got that right.”

“We find out later they haven’t got it right,” he adds.

In today's Canberra Times, Sydney Morning Herald and Age

Ten Criteria for a Public Policy Business Case

1. Establish Need: Identify a demonstrable need for the policy, based on hard
evidence and consultation with all the stakeholders involved, particularly
interest groups who will be affected. (‘Hard evidence’ in this context means
both quantifying tangible and intangible knowledge, for instance the actual
condition of a road as well as people’s view of that condition so as to identify
any perception gaps).

2. Set Objectives: Outline the public interest parameters of the proposed policy
and clearly establish its objectives. For example interpreting public interest as
‘the greatest good for the greatest number’ or ‘helping those who can’t help

3. Identify Options: Identify alternative approaches to the design of the policy,
preferably with international comparisons where feasible. Engage in realistic
costings of key alternative approaches.

4. Consider Mechanisms: Consider implementation choices along a full spectrum
from incentives to coercion.

5. Brainstorm Alternatives: Consider the pros and cons of each option and
mechanism. Subject all key alternatives to a rigorous cost-benefit analysis. For
major policy initiatives (over $100 million), require a Productivity Commission

6. Design Pathway: Develop a complete policy design framework including
principles, goals, delivery mechanisms, program or project management
structure, the implementation process and phases, performance measures,
ongoing evaluation mechanisms and reporting requirements, oversight and
audit arrangements, and a review process ideally with a sunset clause.

7. Consult Further: Undertake further consultation with key affected stakeholders
of the policy initiative.

8. Publish Proposals: Produce a Green and then a White paper for public
feedback and final consultation purposes and to explain complex issues and

9. Introduce Legislation: Develop legislation and allow for comprehensive
parliamentary debate especially in committee, and also intergovernmental
discussion where necessary.

10. Communicate Decision: Design and implement a clear, simple, and
inexpensive communication strategy


• Building the Education Revolution
• NBN - National Broadband Network
• Darwin to Alice Springs Railway
• FuelWatch
• Green Car Innovation Fund
• Green Loans Program
• Home Insulation
• Grocery Watch
• Set Top Boxes for pensioners


• Higher Education – Transforming Australia’s Higher Education System
• Innovation – Powering Ideas: An Innovation Agenda for the 21st Century
• Environment – Caring for our Country
• Taxation – The Resources Super Profits Tax
• Water – The Murray Darling Basin Plan
• Energy – Emissions Trading and Carbon Tax
• Disability – National Disability Strategy 2010-2020
• Regional Development – Regional Development Australia

IPAA Policy Paper - Public Policy

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