This issue

– nudge and co-design: complementary or contradictory?
– using targets to improve public services
– productivity by the numbers
– Australia as a space power
– housing: the elephant in the economy
Plus what I'm reading.

Research brief: Nudge and co-design: complementary or contradictory approaches? 

Nudge and co-design are gaining popularity as innovative approaches to solving policy problems. An article in Policy Studies compares and contrasts these two approaches. It also reflects on the implications for policy effectiveness, political trust and government legitimacy. Read our brief on the paper.

Using targets to improve public services ​

Targets have been applied to a wide range of public services. Yet their use is controversial because it is difficult to answer the most critical question: do targets improve the performance of public services? A new report from the UK Institute for Government report answers that question. 

Do targets work? 

The report draws three conclusions based on analysing health and education services in the UK. 

1. Targets have improved what was targeted: the evidence showed targets achieved the desired results. 
2. Improvements in what was targeted were partly the result of gaming: in some cases data was either reclassified or manipulated.  
3. Targets appear to be effective at raising minimum standards but not at driving excellence: targets can create a culture of compliance that discourages innovation and prevents adequate services from excelling. 

How do targets change the performance of public services? 

The report sets out three ways in which targets can improve public services: 

1. Targets signal political priorities and communicate them to those responsible for delivering public services. 
2. Targets can increase accountability between the centre of government, the front line and the public. 
3. Targets can incentivise deeper analysis. 

The report also identifies three ways in which targets can damage public services: 

1. Targets can result in public services prioritising easy wins, ignoring key issues and manipulating data. 
2. Targets reduce the ability of front-line staff to use their professional judgment. 
3. Front-line workers can be overwhelmed by the bureaucratic burden of complying with targets, spending time on inputting data that could be used more beneficially providing direct support to people. 

What the report recommends 

The report makes a number of recommendations on designing and using targets to make them more effective, including: 

• Understand demand and performance. Before setting a target, government must understand existing demand for the service and the key factors that determine its performance. This will identify potential perverse incentives. 
• Develop targets in partnership with those responsible for meeting them. Targets are more likely to be effective if designed with those charged with delivering the service. 
• Consider the system-wide impact of targets. Policy makers must consider the broad impact of targets and assess whether targets are driving contradictory behaviour. 

Productivity by the numbers ​

The New Zealand Productivity Commission/Te Kōmihana Whai Hua o Aotearoa has released a report on productivity. It includes a chapter on the concept of productivity and why it matters. 

Productivity and wellbeing 

Improving productivity can make it easier to make growth sustainable, providing higher material living standards for both current and future generations. Improving productivity also: 

• enables people to enjoy more leisure time 
• spend on improved collective wellbeing 
• pursue desired social and environmental outcomes.  

Measured productivity growth in recent times has been weak. Who suffers most when economies underperform? It is typically the least skilled, qualified, or experienced, and people with the fewest social and economic resources. Inequalities tend to increase where productivity growth is weak because some people have fewer options than others. 

How wellbeing relates to material living standards and productivity 

There are many ways to think about and describe the concept of ‘wellbeing’. Some emphasise levels of happiness experienced by individuals. Others centre on the ability of people to enjoy lives of their choosing. 

Material living standards have a bearing on most definitions of wellbeing. However, the relationship between material living standards and wellbeing is not straightforward because of the many different ways in which wellbeing can be conceptualised.  

The report focuses on productivity as it contributes to growing incomes, which in turn contributes to higher material living standards. This is shown in Figure 1. 

Figure 1: How productivity growth relates to current and future wellbeing 

A Policy Options Paper from ANU’s National Security College explores the question of how Australia should approach the space domain in pursuit of national interest objectives. 

Why space policy? 

Space is not just a commercial opportunity or military domain. It underpins nearly every aspect of Australians’ economic and social lives. If we were to ‘lose space’ even for a day the impacts would be catastrophic. 

Australians are critically dependent on space including for: 

• telecommunications, including internet and TV 
• weather and climate tracking 
• banking and trade, which rely on accurate timing 
• farming and mining technologies that rely on Earth observation data 
• bushfire tracking and mitigation 
• secure military and industrial communications. 

Geopolitical jostling in space 

There are commercial and security benefits to Australia’s expansion of domestic space capabilities, including attracting foreign investment and supporting allies and partners. But there are also military and diplomatic risks. 

One of the greatest risks is the move by major powers over the last decade towards an explicit ambition to dominate space militarily. Language in military doctrine and space policies in the US and China shows a concerning rejection of the shared historical position that keeping space stable was in one’s own national interest. 

Policy recommendations 

• The Department of Defence, Department of Industry, Science, Energy and Resources and Department of Education should invest in space literacy training for APS staff and in university space education.  
• The Australian Government should give space its own thematic Ambassador and increase personnel to support the space diplomacy missions of the Department of Foreign Affairs and Trade and the Australian Space Agency.  
• The Department of Defence should designate space an ‘operational domain’ in line with our Five Eyes partners and the NATO space strategy. 

Housing: taming the elephant in the economy ​

This UNSW City Futures report aims to encourage resetting of how to think about the relationships between housing system outcomes and a number of economic outcomes. 

At a glance 

• Over the last 40 years Australia’s housing system outcomes have exacerbated inequalities of income and wealth, compromised economic and financial stability, and negatively impacted on labour productivity.  

• At the heart of the difficulty is a substantial capacity deficit (skills, institutions and governance structures) to understand the housing system and construct a coherent housing market strategy. 
• By a margin of almost four to one (67% versus 17%), leading economists and other surveyed housing experts share the concern that ‘the absence of a coherent housing market strategy for Australia now constitutes a significant barrier to structural adjustment in the economy and to an effective post-pandemic recovery’. 

1. Building Australian infrastructure: What works for women 

This year’s Federal budget included a Women’s Budget Statement and a Power to Persuade blog post analyses the statement through a gender lens. The initiatives make up a small percent of the overall budget – 0.14 per cent of total Commonwealth outlays over a four-year period. The statement also doesn’t systematically examine mainstream budget initiatives to determine whether they have a gendered outcome, intentional or not.

2. The twin pandemics 

An Inside Story article looks at how alcohol, tobacco, fossil fuel, gambling and ultra-processed food companies used the pandemic to promote corporate goals either through:  

• marketing and sales 
• influencing government policy 
• generating positive publicity using philanthropic and other “corporate social responsibility” initiatives 

‘Til the next issue

Maria Katsonis