Friday, September 14, 2012

"Trust, and better policy through transparency"

Ross Gittins a few months back pointed to examples of the way the government's spin doctors are turning the budget papers into an exercise in media management with the result that those who read them in the hope of enlightenment are getting the bum's rush. Stephen Bartos in the AFR this week, writing about the opaque assumptions that underlie Treasury modelling and forecasting, argued that more transparency could help in development of good policy and do something about that trust deficit. Treasury and Finance (the then minister signed it) need to dig out and further digest the meaning of the Declaration of Open Government of July 2010:
The Australian Government now declares that, in order to promote greater participation in Australia’s democracy, it is committed to open government based on a culture of engagement, built on better access to and use of government held information..
Stephen Bartos:

A far better governance option though would be for Treasury to make public not just the (carbon price) estimate but the underlying sets of assumptions and inputs to the model that they use to derive it.That degree of disclosure would go against the traditional public service inclination towards secrecy, but have considerable advantages. Anyone with an interest would be able to make a better informed estimate for themselves; comments on the model would improve it (the crowd-sourcing principle); public debate would be much better informed; and public and market confidence in the government’s estimates would increase.....The days when the public was happy with black box estimates are history. This is a different century. Service businesses which give outsiders insight into their internal workings gain public trust. The same principle could apply in government, if ministers had the courage to attempt it.
For the public service it could only be a good thing. If the work underneath the estimates was of high quality and reliable, as I would expect, then Treasury’s reputation would be enhanced. If however there were weaknesses, then these could be revealed, fixed, and a better policy outcome achieved.

Australia is one of the least transparent English-speaking countries in relation to budget forecasts. Canada’s budget papers state that “to ensure objectivity and transparency, the economic forecast underlying the government’s fiscal projections is based on an average of private sector economic forecasts”. In the US, the eternal tussle between the executive’s Office of Management and Budget and the legislature’s Congressional Budget Office ensures real debate on estimates. New Zealand is close in structure to Australia, but in substance has much greater disclosure of information and policy advice.The UK’s OBR is highly open and transparent, and engages with both academic and private sector economists regularly.

We are the outlier, and it is likely that our economic forecasts are less trusted as a result. The measures of trust in government and public service from pollsters do not break down into fine enough detail to discern the causes, but do show trust is plummeting. Greater transparency might help turn around this trend.

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