Gary Banks on the role of reports

Former Productivity Commission chair Gary Banks explores the role reports play in shaping the decisions of governments.

Presenter: David Walker

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David Walker: This episode of Shorewalker On Reports focuses on someone who has had a real influence on how economic reports to government are written in Australia: former Productivity Commission chair Gary Banks.

Before his career at the Productivity Commission, Banks worked as an economist at the GATT Secretariat in Geneva; as a director in the Office of National Assessments in Canberra; as visiting Fellow at the Trade Policy Research Centre, London; and as Projects Manager for the Centre for International Economics in Canberra. He joined the Productivity Commission’s predecessor, the Industry Commission, in 1990 and in 1998 became its founding chair.

Gary Banks ran the Commission until 2012. And he established a reputation for being willing to push governments – particularly the Labor governments of Kevin Rudd and Julia Gillard. The Labor treasurer who took the brunt of his advice was Wayne Swan, whose top advisor Jim Chalmers is now himself treasurer.

This is the first of two episodes focused on Gary Banks. In it he explains how reports can make public policy better. We began our discussion with Gary recounting the role that reports have played in his career.

Gary Banks: I've had a career that started with the Tariff Board, which did reports on tariffs, and ended up as chairman of the Productivity Commission, that did reports on almost everything. So my involvement in reports follow the evolution of that institution. But also I've worked for research agencies internationally, and I've worked in consultancy, I've worked as a consultant myself, as an individual consultant, and it's always about reports of one kind or another. So it's sort of a natural thing for an economist to end up doing, writing a report. And the sort of reports that I've written typically have had recommendations at the end of them or findings that would inform policy.

David Walker: These days, Banks describes himself simply as an economist and commentator. But he remains an influential voice in the Australian economic debate. He continues to think about how that debate should be conducted, and about the place of the Commission’s reports in it. And he thinks the space for reports and studies is growing.

Gary Banks: When I was at the Productivity Commission, it was noticeable to me that the attitude of departments of state changed towards having the Productivity Commission working on their patch. So in the early days, they'd jealously guard anything to do with the policy that they would be advising on the minister. And in the latter stages, they were more likely to to encourage the Commission to do work that would help them in their own task of coming up with policy advice. And I think that was partly to do with, I suppose, greater trust in the institution that it could do a good job, for whatever reason that that came about. But also partly, I think, their capacity to do the research – particularly more technical research – was diminished. And so I think with the rise of the generalist, there's been a bit of a cost in terms of having specialists who can write the technical kind of analytical work that the departments increasingly need. So I think that's an important reason why, you know, we're seeing more reports being commissioned than we might have in the early days. But also, I mean, there are more places to go, if you're seeking to have such studies done externally to your organization, whether it's a department or a private sector organisation. That's become a part of the environment that was not all that strong in the early days, when there weren't many think tanks or consultancies, and the accountants, the big accounting firms, just did accounting – you know, they didn't do do the sort of consulting work. So I do think there's a bigger place, both on the demand side and the supply side, for studies and reports that can be used to influence events and thinking, and so  on.

David Walker: I asked Banks whether he thinks reports are becoming more important to the public policy process?

Gary Banks: I think they are. And I think it's it reflects the fact that there's probably less trust, less acceptance of governments than they used to be. When they do surveys of trust in different institutions, you know, politicians don't rate highly generally. So I think if a politician says 'I think this, this is the best way to go, trust me', it's less likely to get currency and have an effect and influence than if he or she says 'a report has been done by this eminent institution or person, which I'm going to adopt, because I think it makes sense', and gives the arguments from that. So I think people – even though experts themselves have come into fire a little bit – I think, if a study has been well done, particularly if it's a study that involves public engagement, and so on and had a draft report, then a government is better able to, I think, prosecute a reform agenda or a policy agenda than if they don't have something like that to use.

David Walker: So where can public reports make the biggest difference?

Gary Banks: Public reports are particularly important, I think, when there's a contentious issue, right, because the politics will be tougher. Getting a preferred policy option through, by definition, will be harder. So the more that the public has been brought along with the process of reaching a policy conclusion and recommendation, the better. And so I think that's a very important reason for having a public report – in a sense, to bring people along and get a bit more of a meeting of minds that might otherwise have occurred … A second part of the answer to that question relates to the fact that, you know, undertaking a public report or various kinds, a public study can be quite expensive, can be time consuming, can demand quite a lot of the participants. And so you don't want to do it for things that aren't significant. You want to do it for things that are ideally not only contentious, but quite complex, and where that kind of engagement and process will have a big payoff. Or to put it the other way if you got the wrong answer, you'd find that the costs were quite high. So unfortunately, you know, we've seen over time, you know, policy decisions made without that kind of process, which prove the point – you know, that they have involved costs, sometimes they're policies that have had to be withdrawn after a short period of time. I mean, you think about, for example, the export ban on live cattle to Indonesia, right, which happened after a Four Corners program. So within two days of that program, or within three days, a decision was made to ban live cattle exports to Indonesia, because it looked like they were being maltreated in the abattoirs in Indonesia. That had to be reversed. And that wasn't based on anything other than the sentiment really, in the sense that it'd be good politics, but the costs were very high. And in the end, they had to come to another way of dealing with the problem. So I think the more significant the issue, the more contentious, the more important it is to have that kind of, you know, systematic approach.

David Walker: Banks has warned of the increasing tendency for policy players to invent or manipulate data to suit a predetermined position. But he also points out that reports can fight that tendency, because they put on the record the stated reasons for policy and allow those reasons to be examined.

Gary Banks: I think there is a natural tendency ... I mean, a chap called Daryl Huff wrote a book years ago called How to Lie with Statistics – I was in first year at Monash University, and I thought this was outrageous. But he was making a point. And that is: you can manipulate statistics. And you've heard the concept of policy-based evidence, you know, so the whole process of research and evidence can be debauched if it's used in the wrong way. So   it does happen. And it's a natural tendency, and it's a natural political tendency, I think, you know, to do that. And another reason for having studies that are public is that a study, if it's done, well, will show the bigger picture based on the broader data. So that if, if, for example, a minister or senior executive in a company or whatever, chooses to cherry pick and manipulate the data, the evidence is there, and journalists and others can go to that, or others who have a different view can go to that and use it. So one of the functions of a study, if it has shelf life, is that can remain there, in a sense, to prevent data being misused or just manipulated in ways that that would be wrong from a policy point of view, even though politically it may have attractions.

David Walker: By now you may think that Gary Banks has been pretty motivated to seek good public policy outcomes. So where does that motivation come from?

Gary Banks: It probably comes from being trained as an economist, I think, at least in the era that I was trained, and [from] reading books that, you know, are essentially about public policy, and how you get good public policy, and why good public policy matters. So you know, economists are really, in a sense, you know, optimisers, and they're people who think about costs and benefits and trying to get the best outcomes. There’s an old word, utility, which is not used anymore, but it's about maximising, you know, the wellbeing of the community. And so I think that kind of training, you know, leads you in that direction. And then I've always worked for institutions whose job it was to really promote the public interest. You know, we never talked about it in exactly those terms. But that's really what this job was. And, and in that role, you just see that there are so many forces that are favouring private interests or certain special interests that having some people working on the public interest is a pretty good thing to do. And it's interesting that the people I work with had that sort of view as well. So yeah, so I think you're right. I, I have been, I don't use the term passionate about myself, but it's been a particular interest of mine, you know, to try to push the case for better public policy, you know, throughout my life, and I've had some successes and some failures. But, you know, that's the way it goes.

I'm pleased that you're doing this project, actually, David, because I think, as I said earlier, there's a greater need for well-produced reports that can inform decisions than ever. And I think we're in a world where, you know, rushing to judgment, being under pressure to come up with an answer quickly, is ever-present. And so opportunities to do something to give a bit more thought to write something out at length, and to build credibility for strategic or policy decision, I think are really, really important, as important as ever. And that, in turn means that doing that well, understanding how to do a good job is really important, and is probably as important as ever, as well. In fact, in some ways, people may be less maybe less inclined or less trained than they used to be to work in that way, because I think technology these days is more about Zoom meetings than it is necessarily about, you know, analysis and writing and building the evidence base for things.

David Walker: I wondered whether the rise of the Internet has given reports more value by making them more accessible, and with search engines potentially extending their lifespan.

Gary Banks: Yeah, I think that would have to be the case. I mean, for a start, anyone who's doing work in an area that's relevant to that report, will easily find the report. Even if they didn't know it existed, it will pop up in a Google search. So just recently, I'm doing something on doing some work on Whitlam's wetlands creation of the Industries Assistance Commission, right. So I look up Whitlam/IAC, and up comes a number of nice things that have been done, you know, including PhD thesis that have been written in there. So I think there's no doubt that the Internet has just increased the power of a report. It's not gathering dust in the National Library alone, you know. It's available to anybody who has an interest in it, as long as it's on a server somewhere. And it's amazing how many servers these things end up being on. So I do think that is, that is important, and the search engines now are so much more refined than they used to be, that things can be tracked down. It also means that just physically, you don't have the burden of a big heavy report, you know, to lug around with you. In the days when you could fly freely from Melbourne to Brisbane, you could take your laptop, and there was the whole world of reports available to you anytime you wanted them. So that's fantastic.

David Walker: So far we had talked about public sector reports. What was the difference in the approach that Banks took when working with private sector clients?

Gary Banks: Yeah, that's a good question. So working as a consultant in the private sector, but having public sector and private sector clients, the challenge really, I found, was to get agreement on the project in a way that would allow it gets back to my earlier point or you know, would allow us to do what we thought was a good job, a thorough job, and not be unduly constrained in doing that. And sometimes it was a matter of convincing the client that, you know, this was worth doing and it would be in the client’s longer-term interest to have a proper job rather than the one that was seen as being too self-serving to the client. So that issue of having a client who had specific needs is probably the differentiating factor between the work I did in the private sector and what I did when I was working for the commission – where we, if we thought of a client, it was obviously the treasurer and the government, but more broadly, it was, you know, society at large or the citizenry, you know, who we were doing the report for, or the parliament, I suppose, which is a different thing. And provided you got the report specifications to your liking early on, that was OK. I think in the private sector it's much more challenging to manoeuvre yourself to have enough scope to do what you think needs to be done and keep the client on side. But that's part of the skill, I think, of people working in that area –that you deliver a product that the client likes, but it might be a slightly different product than the one they thought they were going to get when the process started.

David Walker: So those are Gary Banks’ thoughts on the role of reports. In the second part of our Gary Banks interview, we’ll explore the task of actually producing reports.

Show notes

Guest

Gary Banks, former head of Australia's federal Productivity Commission