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Outsourcing policy

Caroline Spelman MP is extricating herself from the woods on forests by remitting the issue to a panel of experts.

Caroline Spelman MP is extricating herself from the woods on forests by remitting the issue to a panel of experts.  She is not alone in asking for outsiders to help sort a knotty policy problem. But in Britain every time we do this, we have to set up a new review from scratch.  There is an alternative approach, as Australia's Productivity Commission shows.

In Australia, if there is a problem - what to do about the gambling industry; how to fund long term care for the aged; how to deal with scarce urban water - the Government's answer is to ask its Productivity Commission to take a look.


Its name betrays its origins - and its approaches. The Productivity Commission grew out of the Australian Tariff Board set up in the 1920s. It went through various changes until it was finally established in its current form in 1998, replacing the Industry Commission, Bureau of Industry Economics and the Economic Planning Commission. It bills itself as "the Australian Government’s independent research and advisory body on a range of economic, social and environmental issues". Its role, put simply, is "to help governments make better policy in the long term interest of the Australian community". It does this by:

  • overseeing regulatory impacts
  • reporting on service performance (a sensitive issue in Australia's federal structure)
  • also undertaking policy reviews and public inquiries commissioned by the government.

The Productivity Commission is part of the Treasurer's portfolio - and receives its commissions from him.  But its reviews - which take between six and 12 months - are independent. They are overseen by 11 Commissioners appointed by the Governor-General, and undertaken by the 100 plus staff who work for the Commission. Reports are sent to the government which is obliged to present them to Parliament within 25 days.  The government does not have to accept the recommendations - but the Commission's own prospectus suggests that more of its recommendations are accepted than not. And Australia’s nearest neighbour, New Zealand, has seen enough of the model to decide it is worth setting up its own version (though with a narrower remit).


I recently met its acting first assistant commissioner Lisa Gropp, an economist (all the professional staff have economics backgrounds). She explained the Commission's approach allowed difficult issues to be aired in a way that governments might find politically challenging and thus improved the quality of public debate and widened the political space. The Commission can take a genuinely cross-cutting view since it is not organised on departmental lines – and can call in subject experts to supplement the permanent staff.  Having a standing commission means that it has an established reputation, developed a strong research capability and effective consultation processes. The Commission's critics point out that its reports can be constrained by the terms of reference it gets from the government. However its Act allows it to look at anything relevant to the task and it has the capacity to undertake work on its own account. They also see the approach as very grounded in neoclassical economics – though the Commission draws on insights from other approaches such as behavioural and evolutionary economics and its methodologies are exposed to scrutiny in the public consultation phase. The development of the Commission has also coincided with a hollowing out of policy making capacity within the Australian government.

A UK version?

There is clearly demand within government here to put some issues out to commission or independent review. Indeed, our 'policy reunions' on the Pensions Commission and the national minimum wage have shown the benefits of doing so. But the UK has also seen independent reviews fail to deliver - not least where they are serviced by civil servants too obviously still serving their home department and where the review is there to give a cover for decisions already made. If we are to have a large number of reviews in the future, there is an interesting question of whether we ought to build a standing capacity to support them.

Institute for Government

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