Policy 101

Perhaps it is my engineering background, but I feel most comfortable when attempting to come up with a solution to some issue that needs be addressed , if we start with a set of criteria against which the proposed solution can be measured. Without exhaustively thinking through all the criteria – and these will typically come in sets, each representing elements precious to particular stakeholder groups, there is every chance that the solution that emerges will simply shift the burden from one stakeholder group to another.

So I was very pleased to stumble on an article by Productivity Commissioner Patricia Scott describing a set of criteria in the form of a check list of questions that should be asked before a policy is developed in order to establish its economic framework .

They are: What is the problem, its extent and consequences? Who wins and who loses? Is the problem created by a market failure? If so, which type of market failure, as this would affect the remedy? Is it an equity issue? What is the equity outcome being sought by the government? Will government intervention help or hinder a solution? Will gains exceed the costs? Who needs to be consulted?

If the analysis does suggest government intervention, Scott asks what form is right: encouragement of private sector activity; direct government provision; regulation; tax; subsidy; funding to a non-government organisation; public –private partnership; a fee for service or a government ban.

And there are more questions. How should the intervention be implemented and by whom? Who needs to be involved in the implementation? What is a sensible implementation timetable? What are the risks and how can they be mitigated, at what cost? What will be delivered and when? And, ultimately will this intervention really address the problem? What will be the behavioural response of producers and/or consumers? What are the likely unintended consequences?

More generally there is also a need to look at the opportunity cost of addressing this problem now, relative to other priorities and how it fits into the long term strategic view of priorities.

So there you are. Policy 101 for wonks. According to Scott on the basis of these criteria, at the federal level the Carbon Tax, the Murray darling Basin plan, the resources super profits tax and the national disability scheme all come up well against the criteria but the NBN, the Darwin to Alice Springs railway, set top boxes for pensioners, and the green loans scheme do not.

While not developed with local government in mind, in my view the criteria are of equal relevance at this level, they will certainly inform my analysis of problem solutions and policies being proposed by Mosman Council.

But the last word on best practice policy development should go to Professor Ken Wiltshire from University of Queensland. In his view the process of policy development is the really crucial element. The steps should be: establish need; set objectives; identify options; consider mechanisms; brainstorm alternatives; design pathway; consult further; publish proposals; introduce legislation; and communicate the decision.

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