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BETA testing: new behavioural economics team in PM&C

The federal government is establishing its own nudge unit, while the Assistant Cabinet Secretary hits back at Laura Tingle’s “imagined golden era” critique of public service expertise.

The federal government will establish a new behavioural economics team in the Department of the Prime Minister and Cabinet, following the lead of New South Wales, the United Kingdom and the United States.

The NSW government established a similar central team within the Department of Premier and Cabinet in 2012.

Assistant cabinet secretary Senator Scott Ryan made the announcement this morning at a public policy conference in Canberra, directly before a presentation from US academic Cass Sunstein, who led a similar unit in the White House before going back into academia in 2012.

At federal level, some agencies like the Australian Taxation Office and the Department of Human Services are already applying behavioural economics, which was introduced to federal mandarins during the discontinued DesignGov initiative in 2013.

Ryan said today the ATO had used behavioural insights to increase compliance and improve the experience for taxpayers. “Tailored text messages sent to their phones have helped taxpayers avoid going into debt, and plain English debt letters, using social norms, have led to more people responding and paying on time,” he told the forum. “And the NSW Government has successfully utilised behavioural insights to get injured workers back to work quickly and safely.”

The new team that will sit alongside the Digital Transformation Office in the centre of government will be called BETA, which stands for the Behavioural Economics Team of the Australian Government. It will be a joint initiative of seven agencies, initially led by international affairs professor Michael Hiscox, who was lured back to Australia from a prestigious post at Harvard University.

Ryan touched on the sometimes-controversial nature of governments trying to psychologically sway the actions of citizens, which can set off alarm bells particularly when considered in broad overview. The most publicised real-world interventions are simple and innocuous but Sunstein has also advocated some spookier ideas such as using covert online agents to engender more faith in government.

Turnbull’s assistant cabinet secretary commented that in particular, interventions where the state sought to alter “very personal or individual lifestyle choices or preferences” would be likely to encounter some resistance.

“Behavioural sciences, particularly as they are applied to economics, can provide fascinating insights into how current policy settings drive or deliver particular responses or results,” said the senator.

“However, while these tools help us to understand the world as it is, they do not on their own automatically provide the political or public justification for using these tools to change policy, or seek to alter human behaviour. The challenge of generating public and stakeholder consent for policy change remains; it cannot be assumed.”

Ryan reiterated the Turnbull government’s commitment to sound cabinet processes and said behavioural insights was not a replacement for getting the basics right: developing policy based on consultation, communication and research, and planning for effective implementation.

“There’s no single road to this destination, but translating good policy to a good experience on the ground, delivered on time and on budget, and actually achieving policy objectives rather than merely surrogate measures of success, will remain a focus for the government and the public service,” he said.

The UK government established its own Behavioural Insights Team in 2010, which became known as “the nudge unit” in reference to the title of a 2008 book co-authored by Sunstein that stimulated a wave of interest in how behavioural economics could be applied to public policy.

The UK’s successful BIT has since been partially privatised and is now described as a “social purpose company” that is jointly owned by the government, its employees and another British quango, the “social innovation charity” Nesta. It offers consultancy in the application of behavioural economics to public service delivery, and has sold its services to the NSW government.

The NSW team was built by some of the BIT’s nudge experts like Rory Gallagher, who is also on the bill for today’s conference, organised by the Australian National University’s Crawford School of Public Policy and HC Coombs Public Policy Forum.

Pat on the back for the public servants

Senator Ryan also expressed the more positive view of the federal public service that has become a feature of the Turnbull government, praising the APS as “a tremendous resource” of good advice supported by research, which, he said, was essential for successful reform.

“In the modern world all advice is contestable, and public servants are a bit like the ringmaster in the chaos of it all,” he said.

“There have been a few people of late harking back to an imagined golden age of the Australian Public Service, stating by implication — or directly — that the contemporary public service is not fit to advise on, or deliver reform. My own view, and I know this is the view of [cabinet secretary] Senator Sinodinos, is that today’s APS is ‘fit for purpose’ for a government bent on reform.”

Ryan pointed out the design and development of the National Disability Insurance Scheme and a 600% increase in procurement from indigenous-owned companies under the new procurement policy as public service success stories.

“The APS is the primary source of nuanced policy advice and its expertise, augmented by corporate memory, is essential to good public policymaking,” he said. “Of course, the most perfectly formed policy in the world, if poorly implemented, will fail to meet its objectives.”

Correction: This article incorrectly referred to the Assistant Cabinet Secretary Senator Scott Ryan as Senator Mitch Fifield in an earlier version.

Author Bio

Stephen Easton

Stephen Easton is a journalist at The Mandarin based in Canberra. He's previously reported for Canberra CityNews and worked on industry titles for The Intermedia Group.