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Good old Collingwood forever

By Nicholas Gruen - posted Wednesday, 13 September 2017

In 2005 Peter Shergold, the country's most senior public servant said this:

If there were a single cultural predilection in the APS that I would change, it would be the unspoken belief of many that contributing to the development of government policy is a higher order function – more prestigious, more influential, more exciting – than delivering results.

He spent another three years championing this idea from the top job. But then a decade later, reporting to Prime Minister Abbott on the public service concluded that progress on the point had been scant.


All of which serves to underline the point that the hierarchies that dictate policy are not just hierarchies of people, but also of knowledge. You can see the power of hierarchies of knowledge when it comes to Royal Commissions. When some shocking revelations came to light about South Australia's child protection system, the Premier set up a Royal Commission. As others had done in child protection before him.

When a system full of people paid hundreds of dollars a day fails, we send in the lawyers – a profession which might not know anything about child protection – but we pay them thousands of dollars a day. No-one ever got sacked for buying IBM or hiring Deloitte and surely those QCs can work out a thing or two about child protection. And we keep getting back answers that don't work.

When I was a kid, law was the uber discipline. There was no other. But today there's another discipline which is more powerful still. Its senior practitioners aren't paid like QCs but they dominate the upper echelons of the public service. I'm speaking of my own profession – economics.

Economics has always chased Adam Smith's grand vision of following Isaac Newton in building a vast disciplinary edifice from simple axiomatic foundations. Smith himself spoke of the Newtonian Method of rhetoric and it's pretty obvious that he cast his two great books accordingly. Especially as Smith's idea of economics as a moral science has given way to the more modern (perhaps I should say 'modernist') idea that we can codify Smith's idea in formally specified models, this gives economics a relentless reductionism. That's a great strength in many contexts. It simplifies things down to certain commonsensical basics and so it sweeps away a lot of undergrowth. Where we can get by adequately without that undergrowth, so much the better.

Nevertheless as powerfully as the radical abstractions of economics can help us get to the nub of a matter, they're also a seductive invitation to ignore much that matters. In the world of policy, rather than take their discipline as Keynes suggested, a set of tools for structuring open-minded inquiry and exploration, many economists take their discipline to endorse settled conclusions which then become a badge of tribal identity, and an invitation to hubris.

Even that isn't all downside. Economists' pride in the rigour and hard-headedness of their discipline has made them champions for evidence-based policy. As the economists at the PC have pointed out, we are spending many billions of dollars on programs to promote aboriginal welfare with remarkably little attention to whether they work or not. It's the economists at the PC supported by economists like Peter Shergold and his successor Martin Parkinson that have managed to get an additional $40 million allocated for evaluating programs for indigenous Australians which is a great opportunity for policy learning, and God knows we could do with some in that area.


But too impatient, too hubristic a quest for rigour can lead us astray.

Here's the thing. In the last few months, I've made a point of asking a number of such people at very senior levels, econocrats who regard themselves as rusted on evidence-based policy people if they know what 'program logic' is. They don't.

What many champions of evidence-based policy have in mind is commonsensical. We should have rigorous evaluation of new programs and pick ones that 'work'. Hence the $40 million. And the best way to know if programs work is with randomised controlled trials (RCTs) which are often referred to as the 'gold standard' of evidence. Still as Sherlock Holmes put it in a somewhat different context, "there is nothing more deceptive than an obvious fact".

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About the Author

Dr Nicholas Gruen is CEO of Lateral Economics and Chairman of Peach Refund Mortgage Broker. He is working on a book entitled Reimagining Economic Reform.

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