As many of you will know, Sherlock Holmes and Dr Watson were lovers of the outdoors, so come spring, it was hardly surprising that they should have decided to spend a weekend camping on the Sussex downs. As evening came, they pitched their tent, put on nightshirts, nightcaps and bed socks, and after a soothing cup of cocoa, a cordial "good night Watson" and an equally cordial "Good night Holmes", went to sleep. A few hours later, Holmes nudged Watson, and said "Watson, Watson, look at the stars!". "What, what?" said Watson, roused from a deep slumber. "Ah yes, Holmes, the stars". "Well, said Holmes, what do you make of them?". Watson, by then awake, summoned his full reserves of pomposity and, as a trained medical man, of scientific method, and said "Well, Holmes, judging by the position of the stars and the moon, I deduce chronologically, that it is some three hours since we fell asleep, geographically, that the earth has rotated forty-five degrees during that time, astronomically, that the handle of the big dipper is still pointing to the north star, astrologically, that Venus is in the ascendant, and finally, meteorologically, that we can expect a fine day tomorrow. Will that do?" "You idiot", said Holmes: "I meant that someone has stolen our tent".
In short, data and facts are no substitute for intelligence.
I say this because I have recently had the privilege of listening to a senior Minister on the subject of evidence-based policy. My immediate reaction was to be reminded of Rossini's famous quip on Wagner's opera Lohengrin, about which he said that "One cannot judge Lohengrin from a first hearing, and I certainly do not intend to hear it a second time".
But though my instinct was to brush this whole notion of evidence-based policy off, history teaches us that you cannot keep a bad idea down. Closer attention to the phenomenon is therefore required.
In paying it that attention, I want to start by disposing of a myth.
The myth is that evidence-based policy is good policy: nothing could be further from the truth. The value of public policy does not depend on whether it rests on evidence, but on whether it seeks goals that are worth pursuing. Indeed, few things attest better to that proposition than the very history of evidence-based policy in Australia.
Now, although this may come as a surprise to Mr Rudd, evidence-based policy is nothing new. As all of you know, in Australia, we are rightly proud of a long history, dating back to Federation and in some cases even before, of serious attention to the compilation and careful analysis of statistics -- precisely for the purpose of supporting public policy. Three policies, in particular, cried out for evidentiary support, and from the earliest days of Federation gave the greatest impetus to our national efforts in this respect.
The first, and in many ways most potent, was the White Australia policy. As the twentieth century dawned, Australia's economic and political elites were seized by the fear -- based on studies showing a rapidly declining white birth rate -- that a process of "racial suicide" was underway. The 1904 Royal Commission, and subsequent reviews, focussed on three issues that needed careful assessment and a forceful, timely and well-informed policy response: the risk of progressive degeneracy of the white urban child, especially as the "physically unfit and feebleminded" (who, it was thought, would have died off in the harsher British clime, but easily survived in Australia) continued to breed; the capacity of the white race, as it was then called, to adapt to the tropics; and the possible impacts of miscegenation, particularly on the offspring's intelligence and ability to withstand heat and humidity.
From these came a mighty evidentiary effort, shaping important parts of our national statistical system. As one distinguished historian has put it, "measurement of the growth, development and intelligence quotient of schoolchildren became national obsessions", and league table like comparisons featured frequently in the press, often presented in lurid terms.
No less obsessive were the efforts to measure and monitor every aspect of the development of the white population, particularly in Northern Australia. The objective, in the words of the President of the Royal Society of Queensland, was to determine the conditions most favourable to: "the formation of a type of [white] human beings specially adapted to live in Tropical Queensland. The type would be based on British blood and be so sustained and nourished, and be British in sentiment, but would be amended by the sun and the soil in appearance, physique, speech and temperament."
Last but not least, great attention was paid to collecting evidence on miscegenation, with a particular emphasis on establishing the hypothesis that "miscegenation between peoples far apart [in race] gives bad results that are not eliminated, but rather are accentuated, in successive generations".
Overall, Gary Banks, Chairman of the Productivity Commission, has reminded us that policy is an experiment -- and this was precisely the view that was then taken. As matters were put by Harvey Sutton, one of the shapers of Australia's population policy and a passionate advocate of the measurement and classification of children by "racial stream": "The settlement of Australia by the British section of the white race is an experiment ... and when we consider that five-thirteenths of the continent is in the Tropic zone -- a daring and novel experiment for which we have no parallel elsewhere". Given that it was so bold an experiment, the outcomes needed to be carefully monitored; and it was by drawing on that monitoring that an authoritative survey, written some forty years after Federation to consider the future of Australian population policy, could conclude that if "a century of experiment has proved that northern white males could survive in these wet-dry or arid tropics and maintain fair standards", that was largely due to the preservation of racial purity.
In case you are not cringing enough already, the second great policy that shaped our national interest in the amassing and analysis of evidence was tariff protection. The allure of the "scientific tariff" -- which morphed over time into the notion, formalised in the Ottawa Agreement of 1932 on Imperial Preference, that protection should be set on the basis of "the relative cost of economical and efficient production" -- spawned incessant demands for the compilation of data on industrial output and on manufacturing costs. As accountants, customs agents and industry bodies became specialised in the task of analysing that data, the result was a proliferation of tariff studies, each increasing -- in the search for ever more perfect "made to measure" protection -- the costs and distortions the policy imposed.
The third and final area where evidence-based policy flourished -- and did so in symbiosis with the tariff -- was the system of industrial arbitration. Although the Harvester claim was born out of a desire by the unions to share in what they saw as the excess profits that the Harvester company was earning thanks to the excise, Justice Higgins' ruling that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community", sparked a mass of inquiries into the cost of living, culminating in the publication of an official Australian Retail Price Index in 1912. As the ducking and weaving between the living wage on the one hand, and capacity to pay on the other, played itself out over the subsequent decades, the Industrial Relations system -- whatever its many defects -- was never short of evidence: far from it. The whole paraphernalia of evidence-based policy was in full swing: special statistical studies, submitted by government; so as to better interpret them, economic experts, from the 1930s on (they were described by a distinguished advocate for the employers, speaking off camera, as every bit as valuable as "performing seals"); and as of the 1950s, modelling that claimed variously to show that higher pay would lead to great harm or conversely, that it would result in prosperity.
Now, each of these policies -- White Australia, the tariff, and our system of conciliation and arbitration -- was hardly the stuff of triumph. True, arbitration, like the Beach Boys, still has its fans, and even more amazingly, has ghoulishly come back from the dead; but supporting those policies today would, I hope, invite well-deserved howls of derision. Yet it would be wrong to think that what they lacked was evidence: on the contrary, in that respect Australia lead the world. Indeed, the seeming solidity of that evidence helped give those policies both sustained elite credibility, including across the political spectrum, and extraordinary staying power. Unfortunately, the purposes to which that evidence was put -- the models of the world, the principles, even the moral judgements, that guided the polices and in the light of which evidence was amassed and analysed -- were all too often flawed and in some cases, repugnant.
This then is the lesson: the mere fact that volumes of data are gathered, expert reports compiled, official committees convened, all assessing how the effectiveness of this initiative or that can be enhanced, is of little use if the goal being pursued makes little or no sense. Evidence is perhaps a necessary condition for sound policy, but it is far from being sufficient. Rather, we need to challenge both the goals being sought and the ways in which they are sought if we are to move ahead. We need to ask not merely whether policy does what it claims to do, but whether what it does is worth doing.
Have we learnt that lesson? I fear not. Rather, we seem to have moved into a world where both goals and instruments, means and ends, are all too often poorly analysed and subjected to too little scrutiny and rigorous testing. Moreover, the larger the decision, the less likely it is that such open scrutiny and rigorous testing will be allowed to occur.
Consider infrastructure policy -- where over $60 billion in taxpayers' funds has been committed in the space of twelve months. Yet staggeringly large decisions, such as the decision to build a National Broadband Network, have been made without any cost-benefit analysis at all. Moreover, virtually no information has been disclosed about what little analysis has apparently been undertaken. What is the objective the NBN intended to achieve? It is the objective of having an NBN. Why? As Kylie Mole pithily said, "cos".
Or consider climate change and greenhouse gas abatement. Clearly, a major challenge, and one where the policy response will have far-reaching consequences for our economic and social future. The government's approach, we are told, is based on detailed and comprehensive modelling. But the model itself is confidential, and all attempts to secure its public release have failed. Now, I realise that to some, "sceptic" is a term of abuse. At least in the Western intellectual tradition, however, evidence is only as good as the tests to which it has been put.
As for the global financial crisis, it appears to have merely made matters worse, as weird and wonderful things are done in the name of urgency. The so-called Australian Business Investment Partnership -- better known as the RuddBank -- and the now notorious OzCar scheme are cases in point, with fax machines running at rates rarely witnessed since the late Mr Khemlani introduced Australia to the mysteries of Middle Eastern finance (now replaced, as no doubt befits a Minister less flamboyant than Jim Cairns, by those of suburban Brisbane). No less striking is the decision to spend hundreds of millions of dollars on refurbishing schools -- much of which appears to have gone in the form of increased income for the building trades -- while prohibiting those schools from using the funds to install air conditioning (which is one of the few such refurbishments likely to have an effect on the comfort and productivity of students and teachers) or from building homes for teachers in remote areas.
As for the so-called cash splash, it is true that some Treasury modelling was released. But that modelling failed to model the alternatives, such as tax cuts or greater reductions in interest rates, and did nothing to assess whether the measures, even if effective, would be efficient. What a contrast to the careful analysis the Congressional Budget Office released in the United States!
And last but not least, what can one say of schemes that seem not so much to lack evidence, but rather to wantonly contradict it, such as the gormless FuelWatch proposal, GroceryChoice, the computers-in-schools plan, the Car plan and the textiles and clothing package? Perhaps there lurks among these exotic birds an instance of evidence-based policy; but so far, every attempt at caging and exhibiting such a specimen has failed, with all those captured having to be declared unsatisfactory and released back into the wild after careful examination.
When challenged, the government responds as if it were in the same advantageous position that Pio Nonno enjoyed at the time when the doctrine of the infallibility of the Pope was being enunciated. He could say, without fear of contradiction, that "before I was Pope, I believed he was infallible; now that I am Pope, I can feel it". Yet however well suited infallibility may be to matters of divinity, it appears to perform less well with respect to the governance of us ordinary mortals.
None of this is to suggest that analysis of evidence has completely disappeared -- there are areas where the opposite is the case. In tax, the current review appears to be doing an excellent job. And in social policy there seems to be increased interest in careful analysis of data, and even in experimentation; in health, too, some exciting work is underway. But the tax area is one where many of the interests at stake are multi-layered and diffuse, while indigenous Australians, welfare recipients, and the mentally ill are among the weakest constituencies in the country. Could it be that we are willing to carefully analyse our policies for the weak, but would rather cut deals, trade favours, buy silence, with the strong? A policy of being strong with the weak, and weak with the strong, is a recipe for both inefficiency and inequity.
In short, we are faced with a paradox: never have we heard so much about evidence-based policy; rarely have we seen so little of the phenomenon itself. By the third term of the previous government the rot had set in; far from disappearing, it has gone ever further.
Ultimately, hypocrisy is the highest homage that virtue can be paid by vice. Pious statements of devotion to the value of evidence are no substitute for policy based on sound principle, clearly articulated goals and careful consideration of options, and that is not merely willing to stand up to independent scrutiny but that genuinely invites it, even and especially for the decisions where powerful interests are at stake. That is hardly the easy or always popular road; nor is it the stuff of focus groups, COAG Communiqués, or the Hollow Men; but as all the evidence shows, the alternative brings only ultimate failure, with much needless pain and disappointment along the way.
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