Monday, 20 April 2020

COVID-19: Comparing jurisdictions - opportunities for policy borrowing?

Does policy borrowing make sense during an international public health crisis?

Shamit Saggar

A global pandemic presents a unique public policy challenge, not only for its calamity and complexity, but because it is faced by virtually every jurisdiction. Shamit Saggar outlines what makes for successful policy borrowing and how different countries and states can learn from each other in a time of crisis.

Towards late March, as the Australian economy was put into hibernation, the Prime Minister declared, “It’s not a matter of just cutting and pasting ideas from other places.” Well, sometimes it is, especially if there is good reason to know about and follow up on what works elsewhere. But what are the ingredients of successful policy borrowing and when can the thirst to adopt policies from elsewhere go terribly wrong?

The PM’s administration was under pressure to come up with a response to countless employees who were being let go as demand in the domestic economy ground to a halt. The clamour was for an Aussie version of policies that had been fast-tracked in several European countries allowing workers to be kept on via government-funded wage subsidies.

The week before Canberra had turned its back on the idea, making the eventual policy reversal even sharper. The Federal Government grasped the nettle, producing a wage support scheme that eerily copied the UK’s but added some local features such as processing payments through the existing tax and transfer arrangements.

An international public health crisis caused by a lethal new virus would seem like the ideal backdrop for governments to pay very close attention to the approach of other governments. This also applies to sub-national jurisdictions since they run much of their own health systems, thus controlling key levers such as delaying routine treatments in favour of creating capacity for the crisis caseload.

This is because the cause of the harm that governments are trying to reduce is blind to international and national jurisdictions. This is doubly so in the age of globalisation when it is commonplace for two different places, sometimes far apart, to share many things in common, the most pertinent being people. Australian major cities and many agricultural regions are, at certain times of the year, awash with young backpackers from Europe who have adopted travel and adventure Down Under as something of a lifestyle choice. Global migration reinforces this – Australia receives around 200,000 new migrants annually and boasts more than 600,000 international students, comparatively very high numbers in relation to its modest population base.

The COVID-19 crisis is the global story of the decade because, perforce , it involves all societies, however dissimilar, finding themselves in the same boat. It would be very alarming then if their governments acted as if they were solely informed by facts that were unique to one place.

The reality is that governments routinely pay attention to how their counterparts tackle policy challenges. Fifteen years ago Australia’s federal public service was widely seen as leading the way in the use of empirically testable hypotheses to inform policy formulation – as Ken Henry, a former Treasury Secretary, has noted in his comparisons with the federal public service today. Indeed, Australian best practice is in good company whereby countries including (but not limited to) New Zealand, the UK, Canada, Singapore and the Netherlands regularly and institutionally compared notes and lent out their analytical and policy design expertise to one another. All subscribed to the maxim that few policy challenges were exclusively faced by one among them.

Pooling expertise and know-how in this way is not to give up very much. It revolves around cooperation in sharing of evidence and intelligence. In some areas sovereign governments readily volunteer to do so because the prospects of knowing directly what others know is a big prize. Governments are better informed as a result. The Five Eyes intelligence-sharing alliance that knits together five anglophone nations is one of the best examples. Cooperation of this kind is highly ringfenced at one level but it is an open question how far it then enables countries to amalgamate their sovereignty in order to have a coordinated policy response to a common threat.

Governments that are curious and compare on a systematic basis sound appealing, as if not much could go wrong. It should not, so long as hard distinctions are made between policy learning (exposure to factual differences so that assumptions can be stretched and tested) and policy borrowing (adopting key policy features from elsewhere on the understanding that common causes can be targeted). This is why using evidence about the effects of school vouchers and charter schools in several US states has been good in stimulating policy innovation in the public schooling systems of Australia and the UK.

But there are hidden downsides. Consider the dangers of naive policy transplantation, an ongoing, lurking risk in policy formulation, in part because ideas for fresh policy approaches often come from different sources (politicians, the press, party activists and think-tanks to name some). The ideological common ground between different national leaders – think of Reagan-Thatcher – makes it more likely that governments pick up common policy ideas.

Significant naivety in transplantation arises when context, culture, demography and implementation machinery are brushed to one side.

Successful policy borrowing has to surpass several hurdles, starting with reading contextual information. A successful policy in one place can unknowingly overlook a major constraint, or enabler, in another country. The expensive healthcare systems of almost all OECD nations provide a basis for tackling COVID-19 infections in a way that India, for example, does not enjoy. Successive German governments after 1945, recognising the enormity of the Nazi legacy, managed to be proactive in educating younger generations of Germans about the Second World War where other countries felt less compelled. Civic education is now well embedded in school curricula as a result, but much more loosely delivered elsewhere. Despite that, little of Germany’s success was borrowed by Japanese governments where wartime excesses continue to scar domestic politics.

Demography is another big adjustment. Italy’s structurally older population means that the country went into the COVID-19 crisis in a more exposed position than others. Furthermore, household formation patterns whereby three generations live together exacerbated things. And population density is central to what can be aimed at by way of encouraging or mandating people to remain apart physically. Thus, New York City and London are in an entirely different category to Hobart or Perth.

But the biggest complication of all comes from attempts at policy borrowing that treat culture as neutral. It often is not. This ‘101 Insight’ many MBA students learn through the case study of the failure of western-designed car brands in the Indian middle-class market (factory fitted front-row electric windows had no value in a market that routinely used drivers who were treated as a fixed cost of motoring). Several prominent politicians from northern Europe, concerned about alcohol abuse, have pursued campaigns to promote a southern European approach to drinking in public places. They have mostly failed since the roots of what they seek to emulate lie in national cultures that are very hard for governments to influence.

In COVID-19 terms, there are clearly many cultural norms at play in how different countries seek and/or command and/or monitor major curbs in personal liberty and privacy. Singapore’s model is scarcely new and builds on a lengthy tradition of a paternal state that, for the most part, is seen as benign albeit with irregular, quasi-authoritarian tendencies. For that reason, the use of invasive drones to monitor compliance with public restrictions will inevitably result in a backlash in countries that have very different political traditions to Singapore.

Strong common cultures undoubtedly create a positive platform, which makes it easier for governments to try out policy measures that have had success elsewhere. But in practice there are many national cultural limitations that undermine otherwise sound policies. At the time of writing (mid-April 2020) there is a clamour in Australia for some national sports leagues to recommence as early as late May. Feeding a country’s sporting appetite cannot be under-estimated even in times of lockdown.

Governments, it turns out, are constantly observing and comparing what is working elsewhere. This is a healthy characteristic of the public policy process. It often starts at home when knowledge and awareness of effective measures in one policy area spreads to influence other areas. It extends to using controlled trials to see whether, or how far, implementation matches predictions, and also through pilots to iron out unexpected effects of well-designed policy.

Timing is counterintuitive since well-tested policies, already in place, usually ensures confidence in other jurisdictions. A distinct characteristic of policy borrowing in the current circumstances is that we expect policy transplantation with a much quicker turn-around due to the urgency of the situation, so no-one has observed the long-term consequences and effects of any of these policies. Moreover, the elegance of decision-making processes may be bruised in the clamour for quick fixes in this emergency.

The gold standard of successful policy borrowing would mean that people and places rapidly grow more alike – something that may not be desirable in itself. Global government, to raise a bold idea, could achieve that and meanwhile many governments already pool sovereignty in some manner. In the case of the COVID-19 crisis, cut and paste is a handy tool if other factors align, and the most important is that enough places are following similar policies to make a difference. Currently, what matters overall is that others are following a path that can be emulated – as the states of California, Oregon and Washington are showing, and the states of Western Australia and South Australia are likely to. That, in turn, makes it more attractive for any single jurisdiction to apply effort to do so.


UWA Public Policy Institute