Consultants ill-suited to evaluate public policy: Labor
Instead of spending millions on consultants to check public programs are working, the Labor government is rolling out an in-house model it believes will be more effective.
Assistant Minister for Competition, Charities and Treasury Andrew Leigh will set out his plan in an address to the National Press Club on Tuesday.
In 2021/22 the Commonwealth spent $52 million on evaluations by private consultants, which Dr Leigh reckons is likely a conservative estimate.
He says consultants are not incentivised to undertake high-quality evaluations.
That’s because it’s very difficult to actually improve social programs and a well-designed evaluation is more likely than not to reveal shortcomings in new policy interventions – a phenomenon known as Rossi’s Law, as coined by sociologist Peter Rossi.
“The fact that failure is more common than success does not suggest that program designers are foolish or careless, but that they’re grappling with problems that are really, really difficult,” Dr Leigh will say.
Based on Rossi’s Law, a well-designed evaluation is actually unlikely to show a program is working.
“Which may make it harder for (consultants) to win the next contract,” he will explain.
He says that is one of the reasons the government has set up the Commonwealth Evaluation Unit and will encourage agencies to partner with the team.
The unit, a Labor government election promise, received $10 million in the May budget but is intended to save millions more in private consultancy fees.
“A core role for the centre will be to champion high‑quality impact evaluations, such as randomised policy trials,” he will say.
Such techniques have been used to fine-tune public policy to deliver better outcomes around the world.
In Africa, for example, some economists argued that free anti-malarial bed nets would not be valued by villagers. But a randomised trial found the free bednets were more popular and just as likely to be used, prompting the World Health Organisation to change its policy.
“The results of the experiment save thousands of lives every year,” Dr Leigh will say.