A REVIEW OF RATIONALE FOR ALLOCATING COSTS AND PAYMENTS IN PRODUCING AND SUPPLYING PUBLIC SECTOR INFORMATION (PART A of 2 Parts – Chapters 1, 2 and 3)

Dr John S Cook – 13 March 2011 Version [email protected] © 2011 Collaborative Research Centre – Spatial Information (CRC-SI2) This work is licensed under a Creative Commons Attribution 3.0 Australia License .

ABSTRACT This work reviews the rationale and processes for raising revenue and allocating funds to perform information intensive activities that are pertinent to the work of democratic government. ‘Government of the people, by the people, for the people’ expresses an idea that democratic government has no higher authority than the people who agree to be bound by its rules. Democracy depends on continually learning how to develop understandings and agreements that can sustain voting majorities on which democratic law making and collective action depends. The objective expressed in constitutional terms is to deliver ‘peace, order and good government’. Meeting this objective requires a collective intellectual authority that can understand what is possible; and a collective moral authority to understand what ought to happen in practice. Facts of life determine that a society needs to retain its collective competence despite a continual turnover of its membership as people die but life goes on. Retaining this ‘collective competence’ in matters of self-government depends on each new generation: • Acquiring a collective knowledge of how to produce goods and services needed to sustain a society and its capacity for self-government; • Learning how to defend society diplomatically and militarily in relation to external forces to prevent overthrow of its self-governing capacity; and • Learning how to defend society against divisive internal forces to preserve the authority of representative legislatures, allow peaceful dispute resolution and maintain social cohesion.

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TABLE OF CONTENTS

1 INTRODUCTION ...... 1 1.1 PRELIMINARY OVERVIEW ...... 1 1.2 SUMMARY OF CONCLUSIONS ...... 15 1.3 KEY POINTS ...... 17 2 OVERVIEW OF CONCEPTS AND THEMES ...... 25 2.1 CONCEPTUAL AND TERMINOLOGICAL ISSUES ...... 25 2.1.1 Tacit and articulate knowledge ...... 26 2.1.2 Knowledge production ...... 26 2.1.3 The scope of information and communication technology ...... 27 2.1.4 Typical information processes ...... 28 2.1.5 Classification of knowledge work ...... 28 2.1.6 Meanings of ‘data’...... 29 2.1.7 Meanings of ‘information’ ...... 31 2.1.8 Icons as information ...... 31 2.1.9 Summary of conclusions regarding terminology and concepts ...... 33 2.2 THEMATIC OVERVIEW ...... 35 2.2.1 Fundamental purpose of government and need for information ...... 35 2.2.2 Economic factors in producing information ...... 41 2.2.3 Factors in supplying information ...... 61 2.2.4 Paying for government information...... 65 3 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION ...... 67 3.1 THE INFORMATION DEPENDENCE OF GOVERNMENT ...... 67 3.1.1 The nature of governance ...... 68 3.1.2 Automated systems ...... 69 3.1.3 Living systems ...... 70 3.1.4 Self referential systems ...... 72 3.1.5 Novelty, corroboration and conflict in governance systems ...... 72 3.1.6 Authoritative information ...... 73 3.1.7 Unquestionable authority ...... 74 3.1.8 Influence of conflicting authority on public policy ...... 75 3.1.9 Maintaining respect for authority ...... 76 3.2 GOVERNANCE AND TECHNOLOGICAL CHANGE ...... 77 3.2.1 Emergence of complexity ...... 79 3.2.1.1 Grades of complexity ...... 80 3.2.1.2 Specialisation in observation and description ...... 82 3.2.1.3 Complexity in interconnectedness ...... 83 3.2.1.4 Complexity through combination and interoperability...... 84 3.2.1.5 Complexity in multidisciplinary collaboration ...... 86 3.2.1.6 Complexity in resource allocation ...... 96 3.2.1.7 Policy failure through failing to recognise complexity ...... 97 3.2.1.8 Spontaneous and purposive organisation ...... 99 3.2.2 Strategies for coping with complexity ...... 102 3.2.2.1 Simplifying description of activities and identifying consistency of purpose ...... 106 3.2.2.2 Being prepared in time to allow multidisciplinary communication ...... 109 3.2.2.3 The problem of limited vision in intractable problems ...... 116 3.2.2.4 Increasing preparedness for foreseeable problems ...... 119 3.2.2.5 Avoiding unnecessary risks and distractions ...... 121 3.2.3 Consequences of failing to cope with complexity ...... 123 3.2.4 Summary ...... 124 3.3 STRUCTURING OF INFORMATION TO ACHIEVE GOVERNANCE ...... 125 3.3.1 Authority regimes ...... 126 3.3.1.1 Particulars of legal entities ...... 127 3.3.1.2 Particulars regarding rights and obligations ...... 129 3.3.1.3 Particulars about places and tangible things ...... 129 3.3.1.4 Particulars about intangible things ...... 130 3.3.2 Planning regimes ...... 131 3.3.2.1 The imagined deemed possible ...... 133 3.3.2.2 Science and prediction as aids to design and planning ...... 134 3.3.2.3 Positive and normative aspects of policy ...... 140 3.3.2.4 Science in policy design ...... 143 iv TABLE OF CONTENTS - continued

3.3.2.5 Science in making and interpreting law ...... 147 3.3.2.6 Design of risk management strategy ...... 150 3.3.3 Monitoring regimes ...... 158 3.3.3.1 Structuring of monitoring regimes ...... 160 3.3.3.2 Development and maintenance of physical measurement standards ...... 161 3.3.3.3 Statistical and key performance indicators in policy evaluation ...... 173 3.3.3.4 Financial accounting and auditing ...... 182 3.3.3.5 Environmental reporting ...... 204 3.3.3.6 Review as part of law enforcement ...... 206 3.4 INTERGOVERNMENTAL RELATIONSHIPS ...... 211 3.4.1 Regional relationships ...... 212 3.4.2 Federal interactions ...... 213 3.5 HIGH LEVEL SOCIO-ECONOMIC POLICIES ...... 214 3.5.1 Social objectives ...... 215 3.5.1.1 Education objectives ...... 215 3.5.1.2 Physical and mental health objectives ...... 216 3.5.2 Economic objectives ...... 219 3.5.2.1 The knowledge economy ...... 221 3.5.2.2 World trade ...... 223 3.5.2.3 Microeconomic reform ...... 224 3.5.3 Environmental objectives ...... 226 3.6 SUMMARY ...... 231

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1 INTRODUCTION 1.1 PRELIMINARY OVERVIEW The purpose of this work is to review the rationale and processes for raising revenue and allocating funds to carry out information-intensive activities of democratic government. The review considers: • Fundamental purposes of government and why a government needs information; • How a government gives purpose and authority to its production of information; • What conditions should apply to the supply of information between government agencies, other governments and private persons; and • The development of a rational basis for deciding how much should be paid, who should pay, and how payments can be collected.

‘Government of the people, by the people, for the people’ expresses an idea that democratic government has no higher authority than the people who agree to be bound by its rules. Democracy depends on continually learning how to develop understandings and agreements that can sustain voting majorities on which democratic law making and collective action depends. The objective expressed in constitutional terms is to deliver ‘peace, order and good government’. Meeting this objective requires a collective intellectual authority that can understand what is possible; and a collective moral authority to understand what ought to happen in practice. Facts of life determine that a society needs to retain its collective competence despite a continual turnover of its membership as people die but life goes on. Retaining this ‘collective competence’ in matters of self- government depends on each new generation: • Acquiring a collective knowledge of how to produce goods and services needed to sustain a society and its capacity for self-government; • Learning how to defend society diplomatically and militarily in relation to external forces to prevent overthrow of its self-governing capacity; and • Learning how to defend society against divisive internal forces to preserve the authority of representative legislatures, allow peaceful dispute resolution and maintain social cohesion.

Societal continuity depends on institutional arrangements that allow cultural, genetic and material inheritances to pass from one generation to the next. The following table contains a brief description of these inheritances:

KEY INHERITANCES FOR SOCIETAL CONTINUITY Cultural Genetic Material Inherited in learning how to Inherited through birth. Inherited in natural and man- organise productive activities, Genetic adaptation to made resources, including distribute goods and services changes in environmental the physical inheritance of equitably, live peacefully, and conditions occurs slowly. In meaningful symbols, objects find satisfaction and purpose comparison, cultural and places. (Knowing how to in life. Benefitting from this adaptations happen more recognise and use material heritage requires that each rapidly and provide capacity things as resources is not new generation learns either for survival or for self- inherent in the resources but relevant language and skills. destruction. is part of a cultural heritage). 2 CHAPTER 1

Although all societies aim to ensure their survival through continuity with the past, some societies also learn to expect future improvements in their standards of living. A society merely maintains its standard of living by knowing how to produce the same goods and services with less labour. Living standards do not improve until societies learn how to: • Redeploy human and other resources displaced by increased productivity in one area into new areas of productive activity — which can be but need not be market-oriented. • Overcome problems associated with disinvestment — especially in facilitating education and training of workers for new jobs. • Facilitate wherever necessary the movement of workers to new places so they can live in reasonable proximity to new jobs. • Relieve social tensions arising from unequal distribution of the benefits, costs, opportunities and risks associated with new technology, so far as this is practicable. • Acquire the language, understandings and agreements related to property, contract, liability, warranty and other institutional arrangements that allow proper use of new technology. • Acquire the ability to regulate or mitigate any adverse consequences that arise from abuse of new technology.

Viewed holistically, society relies on organisations in government, commerce and civil society sectors to produce most of its goods and services. In retrospect, these sectors have existed in some form since medieval times, and perhaps longer. Each is distinguished by how it accesses resources when engaging in processes of routine production and innovation. Each is also affected differently when innovations in information and communication technologies remove constraints on its organising capabilities. These sectors may be described briefly as follows:

PRODUCTIVE ORIENTATION IN MAJOR SECTORS OF SOCIETY Government Commerce Civil Society Activities whose authorisation Activities where survival of Activities of not-for-profit and funding through firms depends on capital organisations that depend on compulsory taxes, levies and raisings, profits and loans subscriptions, fees for charges depends on obtained from people with service, gifts, grants and in- decisions by a representative some degree of choice about kind contributions to retain legislature. whether or not they deal with financial solvency. the firm.

In trying to sound out how people might react when called upon to pay taxes, King Edward 1 summonsed the English House of Commons in 1295 to form an assembly that was more representative than any called previously. In 1297, the King also issued a Confirmation of the Charters . Among other things, this enactment reaffirmed Magna Carta of 1215 and formally acknowledged the right and duty of parliament to approve all new taxes. Since the 1300s, the Commons developed fundamental principles regarding public finance that remain intact to the present day, despite periods of significant political unrest since that time. Three of these principles are especially noteworthy: • A representative parliament has a sole prerogative to levy compulsory taxes, charges and other imposts on the people. INTRODUCTION 3

• Revenue raised through taxation should be appropriated only to those activities that have been approved by the parliament. • Continuity of funding depends first on accounting for proper use of prior appropriations; and second, on the making of new appropriations by parliament on a regular and recurring basis.

As a corollary, activities with neither parliamentary approval nor continuity of funding were likely to be seen as illegal. In 1689, the English Bill of Rights reaffirmed the need for parliament to approve taxation, and much the same idea was carried forward into the 1700s and 1800s in the political slogan of ‘no taxation without representation’. However, a simple statement can disguise the complexity inherent in deciding what can be construed as ‘taxation’ and what ‘representation’ can mean in practice.

Interpreted liberally, ‘taxation’ could mean a compulsory requirement for a citizen to provide private resources for the purposes of government. Some citizens might pay taxes directly to the government and be represented, however remotely, by a member of parliament. However, if a tax on a producer is built into the price of a commodity, a consumer could effectively pay part of the tax without having parliamentary representation. Similarly, defence of the realm could extend to defence of empire; and people could be impressed or conscripted into military service and pay with their lives to support matters of state in which they had no say. These kinds of arrangements were a recurring theme over centuries; and by the 1800s social commentators began to express ideas openly about ‘class conflict’, ‘class struggle’ and ‘class war’.

New places became real so far as Europeans were concerned after Columbus’s discovery of America in 1492. Idealised forms of government in imagined places were issues to think about after publication of Thomas More’s Utopia in 1515. Britain formed a number of colonies in North America after 1606; but having offered generous terms to chartered companies and the freedom of self-government to some of them, it was not easy to retain their allegiance or resume control over them. The British navy was in a weak position after recurring international conflict; and the civil war and 1689 English Revolution were significant distractions. The Bank of England was established as the government’s banker in 1694 and became a model for centralised banking. The Bank regularised financing to rebuild the navy; and the rebuilding took on aspects of commercial enterprise when colonial expansion and the advancement of science went hand-in-hand with the growth of commerce. Of particular economic importance were improvements in navigation through astronomy and hydrographic mapping; and improvements in crops and agriculture through advances in biological science. By 1900, the Royal Navy was the largest in the world and the British Empire was the most extensive in world history.

Profits emerging from British exploitation of colonial resources allowed private interests to lend money to government; and the government was then required to redeem loans and pay compounding interest. Private interests were well represented in parliament to authorise naval and military expeditions; the expeditions gave increased access to colonial resources; and military and commercial interests could support each other for as long as military force could assist trade. Overall, this military and commercial symbiosis encouraged a rapacious ‘first in, best dressed’ mentality that became pervasive in resource management and international relations. In signing the Treaty of Paris in 1763, Britain and France created a pause in more than 150 years of recurring bilateral conflict over North American territories. Whitehall and Versailles tried to get non-voting citizens to pay taxes and other imposts to discharge vast war debts owed to financiers. In the 4 CHAPTER 1

process, they stimulated revolutions in America after 1776 and France after 1789 with ensuing conflicts that changed the world forever.

Another factor that changed the world forever was innovation in transport and communications. Sailing ships and horse transport imposed constraints on early colonial development; but steam navigation at sea and steam locomotion on land reduced travel times substantially in the 1800s. Europeans had intervened in most places in the world by 1900. Internal combustion engines and aircraft reduced travel times even further after 1900; but this depended in turn on the geopolitics of finding, extracting and refining oil as fuel. These activities have been both powerfully beneficial and powerfully disruptive ever since. Innovations in telegraphy, wireless, photography and newspaper production allowed a rapid transmission of personal messages and broader dissemination of information. The ability to disseminate information rapidly also allowed the collection and collation of information from many parts of the world more or less simultaneously. This increased capacity for world-wide collation of data led to new areas of specialisation such as seismology and meteorology. Specialisation developed also within the existing fields of geodesy and astronomy; and flow-on effects reflected in the development of new understandings to support global science; the formation of global scientific institutions; and standardisation of weights, measures and timekeeping, among other things.

Research into manufacturing processes began to yield significant productivity improvement in the late 1800s and into the 1900s. Tools were used to make other tools and machines could make parts for other machines. Since economies of scale depended on actually achieving scale, mass production was not viable without mass consumption. That depended in turn on increases in actual purchasing power through wages and tax redistribution to working people; or in an increased capacity to accumulate personal savings; or through access to consumer credit that could create an illusion of purchasing power. Mass consumerism also depended on a mass media that was highly dependent in turn on advertising revenue, and increasing consumer literacy and learning.

The Industrial Revolution concentrated many people in factory towns; and new forms of governance became necessary to replace traditions of rural work, residence and social security. An emerging science of epidemiology combined with water and sanitary engineering helped to overcome cholera after the 1850s. Such public health measures allowed the growth of towns on a scale that might have been impractical otherwise. The garden cities movement in the late 1800s reflected further concerns about the quality of urban living conditions. The fitness of workers had implications not only for how well they could work but also for their fitness for national defence and military recruitment. The size of cities also allowed economies of scale in physical infrastructure; and agglomeration economies though physical proximity of value-adding enterprises and workers.

Historically, growth in size of the modern city paralleled the rise of the modern corporation. Where the corporation relied on mass manufacture it often employed large numbers of workers residing in cities and towns. Manufacturing depended on learning how to introduce degrees of automation into production routines. Automation tended to introduce separate areas of specialisation into the design, construction, operation and maintenance of plant and machinery. While the knowledge associated with systems design, implementation and maintenance tended to become more sophisticated, the systems in themselves often became easier to operate or use. The idea of ‘user friendly’ technology illustrates the importance of easing the cognitive burden of learning to use sophisticated technology to produce beneficial outcomes. However, making powerful technology easy to INTRODUCTION 5

use also increases the risks associated with its misuse. Regulatory responses by government become a nuisance to business; and an even greater nuisance if they fail.

Production systems that work to capacity may seem to be efficient, but they may also be more vulnerable to costly breakdowns and systemic failures. Thus, a relatively small traffic incident at an inopportune time and place may lead to major traffic disruption. Moreover, disruptions can occur accidentally or deliberately; and overall efficiency and effectiveness depend increasingly on people deciding to be creative or destructive in their use of technology. In trying to establish legal liability, an accidental dropping of a spanner may be difficult to distinguish from a deliberate nudge that puts a spanner into the works. People who think that they are being treated unfairly within a socioeconomic system may decide to follow a pathway to destruction; and, if further thwarted, a pathway to self destruction.

After the mid 1800s, public policies facilitated the formation of limited liability companies. Some effects of these arrangements included: • Institutional arrangements to facilitate movement of capital as shareholdings from individual investors into large accumulations for allocation to joint ventures. • Separation of the ownership of shares vested in individual shareholders from control over use of capital accumulations vested in boards of directors and managers. • Allocation of a share of all declared profits in dividends, with retention of profits and revaluations of assets and liabilities affecting the net worth of shares. • Limitation of liability of individual shareholders for insolvency of the joint venture. • Potential for speculation and manipulation of information to affect share prices and capital gains.

The consequence of limiting the liability of individual shareholders for a company that becomes insolvent is generally to transfer losses from the company’s shareholders to the company’s creditors. These creditors can include employees, sub-contractors, suppliers of goods and services, bankers and other lenders. The effects can cascade through local and global economies as one person’s insolvency contributes to other persons becoming insolvent. The global financial crisis that developed rapidly towards the end of 2007 led to coordinated responses as leaders from industrialised nations sought to ensure a supply of money to stimulate demand and avoid the hardship of unemployment. The problem led to frequent debate over whether some organisations are too large to be allowed to fail; and the role of governments as risk managers of last resort.

A further aspect of the movement towards globalisation occurred when Britain hosted the first world exposition in London in 1851. Other nations hosted similar expositions at around four-yearly intervals; with a further new phase emerging with China’s hosting of Expo 2010 in Shanghai. World expositions became international displays of national prowess in applying science and technology in producing goods and services. These regular events sowed seeds of both international cooperation in international trade and international rivalry. International cooperation persisted despite conflicts such as the Crimean War of 1854-1856 and the Franco-Prussian War of 1870-1871. However, increasing interdependence through trade also increased the effects of economic instability. Instability was apparent in the 1890s, and international rivalry eventually overcame international cooperation with the onset of two especially destructive world wars from 1914-1918 and 1939-1945.

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Commander Perry’s US ‘gunboat diplomacy’ in 1853-1854 aimed to make Japanese ports available to supply coal and other commodities to US naval, commercial and whaling vessels. In following these Western imperialist traditions, Japan extended its territorial influence to Manchuria, Korea and China in the late 1800s and was able to defeat Russia in the Russo-Japanese War (1904-1905). In the meantime, naval security changed from dependence on coal to a dependence on oil in the early 1900s. The US was able to rely for some years on its domestic oil industry to supply its navy. In contrast, Britain had to use public funding to partner in commercial oil ventures in Burma, Borneo and Persia to ensure these supplies. Increasing dependence on refined oil for internal combustion engines required prospecting and drilling for oil in oil-rich countries, and investment in oil refining and oil distribution infrastructure. Rulers in oil-rich countries could seek greater shares of the wealth without necessarily improving the well being of their people. Other countries could buy oil and use it for beneficial purposes; but it was also a strategic resource in fighting wars between themselves.

The US entered World War 1 after the 1917 communist revolution. Eleven years after the 1918 Armistice, the Great Crash of 1929 heralded a Great Depression that lasted through the 1930s. Attempts to preserve industries and jobs through protectionist trading relationships led to international resentments and retaliations. A confusion of ideas about how to address serious unemployment led to indecisive electorates and governments. In the confusion, several countries had particular interest groups that were able to enlist military support and take matters into their own hands. Around half of Europe’s democracies became unstable in the 1930s and ceded power to totalitarian regimes. In supporting ideas of either socialism or capitalism, the regimes proved themselves quite capable of great inhumanity and destructiveness.

Despite US president Woodrow Wilson’s contribution to negotiations in the 1919 Treaty of Versailles, the US legislature did not subscribe to a new world order based on a League of Nations. Acting outside auspices of this League, the US hosted a 1921 Naval Conference aimed at disarmament. Although Japan and Italy aligned with Allied forces in World War 1 and were signatories to both the League of Nations and the 1921 Naval Treaty, both felt no longer bound by disarmament restrictions in the troubled economic climate of the 1930s. Germany expanded in Europe; Italy expanded into North Africa; and Japan re- occupied parts of Korea, Manchuria and China. Germany’s invasion of Poland in September 1931 led France, Britain and Commonwealth countries to declare war. When Japan and Italy aligned with Germany, conflict emerged in Europe, North Africa, Russia and the Pacific Rim. Japan sought secure access to rubber and oil supplies under British and Dutch control in south-east Asia. In aiming to frustrate any US attempt to assist Allied naval forces in the Pacific; Japan attacked the US naval fleet at Pearl Harbour in December 1941 and brought the US into World War 2. This war was due in no small part to political tension in Europe and Asia that remained unresolved after World War 1.

In trying to address the significant operational issues and resource allocation problems imposed by total war, governments developed operational research techniques and enlisted international experts to solve large and urgent problems. One example was the Manhattan Project (1942-1946) that developed atomic bombs — used subsequently against Hiroshima and Nagasaki in August 1945. In the meantime, Germans developed V- 2 rockets as long range ballistic missiles and used them against British and European cities after August 1944. Among many other developments, deciphering of coded enemy messages led to communication theory and the birth of a computer age. Jet propulsion revolutionised military and civil aviation. Radar ranging — developed for early warning of INTRODUCTION 7

approaching enemy aircraft — found many civilian uses in navigation and weather forecasting. Health measures to sustain military personnel led to medical breakthroughs in antibiotic and anti-malarial treatments; but reducing death rates led in turn to increasing human populations, increasing demands on natural resources and increasing needs to reach effective controls over use of resources through international negotiations.

Following Allied victory in Europe on 8 May 1945 and in Japan on 2 September 1945, the UN commenced on 24 October 1945 with aims of international cooperation in solving international problems and promoting respect for human rights. UNESCO became an organ of the UN following negotiations in November 1945. UNESCO’s constitution embodied a belief that since wars begin in the minds of men, defences of peace must be constructed in the minds of men. Idealism gave way to pragmatism as the minds of men turned towards independence in territories formerly occupied by both Axis and Allied powers. By 1946, Winston Churchill — Britain’s war time prime minister — argued that an ‘Iron Curtain’ had descended across Europe from the Baltic to the Adriatic Seas. On one side lay the ancient states of Central and Eastern Europe that were subject to Soviet style socialism. On the other side lay freedom and democracy as it was then understood in Western developed nations. A Berlin Blockade in 1948-1949; Soviet suppression of a Hungarian Revolution in 1956; and construction of a Berlin wall commencing in 1961 were outward manifestations of Churchill’s ‘Iron Curtain’ and the start of a ‘Cold War’.

Atomic warheads and long-range intercontinental ballistic missiles were legacies of Allied nuclear technology combined with German rocket technology. Technology was providing new weapons as additions to Soviet and US military arsenals with sufficient firepower to destroy human civilisation. The Soviet launch of the Sputnik satellite in 1957 was a starting signal for a ‘space race’. Does a satellite as a vehicle trespass into foreign territory in orbiting the earth; could it be used for spying; and if so what could be done about it? In 1958, the UN initiated international negotiations related to the peaceful use of space; but military and industrial espionage was rife when Cold War protagonists focussed on technological leadership at any cost. Revelations of the 1960 U2 spy flight indicated a US trespass into Russian airspace. Eisenhower’s farewell presidential address in 1961 coined the term ‘military-industrial complex’ and highlighted not only the significant diversion of government revenue into military spending but also the political power of the ‘complex’ when motivated by a nuclear threat.

Aerial reconnaissance in 1962 revealed Russia’s intention to site intercontinental ballistic missiles in Cuba; placing most of the US within their range if construction were allowed to continue. A review of this confrontation 40 years later indicated that the world was closer to the brink of nuclear war than was generally understood at the time. People became aware that a mistake could be devastating. In trying to prevent misunderstandings about each other’s intentions, a new communication system – known as the ‘hotline’ – was installed in June 1963 to connect authorities in Moscow and Washington. A Partial Test Ban Treaty, reflecting concerns about atmospheric pollution from nuclear fallout and an arms race, came into effect in October 1963. Seemingly, these events were indications of a longer term movement towards nuclear disarmament: but Cold War ideologies remained influential and their influence made a difference to how governments behaved.

Independence movements tried to fill the void in political authority left by the retreat of occupying forces and colonial administrations after World War 2. Australia began to see its future more clearly as relating to Asia rather than Europe; and the legacy of World War 2 includes a series of conflicts in North and South Korea; Communist China and Taiwan; Indochina; Malaya, Singapore and Borneo; Burma; India, Kashmir and Pakistan; and 8 CHAPTER 1

Indonesia; and more recently in East Timor, Bougainville and the Solomon Islands. Australia has been involved in a diplomatic or military capacity in many of these areas, generally as part of UN peace keeping efforts. Other areas include the Middle East, Cyprus, Iraq, Afghanistan and Rwanda, Somalia and other parts of Africa.

Independence movements looked to socialist and capitalist countries for development ideas and finance. However, both socialist and capitalist institutions were capable of applying technology inappropriately and dangerously. The Chernobyl and Bhopal incidents are examples. The Chernobyl incident in April 1986 involved use of Russian technology in the Ukraine. The meltdown of a nuclear power plant caused death, and fear about cancer and birth defects in the local population. But the fear extended across Europe in relation to contamination of the air people breathed, the crops they harvested and the food they ate. The Bhopal incident in December 1984 involved an American firm operating a pesticide manufacturing plant in India. The release of poisonous gas led to a death toll of thousands; although the toll differed significantly according to how statistical agencies classified causes of death. The criminal negligence and legal liability issues transcend national jurisdictions; and matters of jurisdiction and extradition related to Bhopal remain unresolved more than two decades later. The Chernobyl and Bhopal incidents of the 1980s drew attention to the role of public and private bureaucracies in making investment decisions. These incidents showed clearly that people with no part in decision making were unable to avoid the risks or the costs of bureaucratic misadventures.

The idea of ‘taxation without representation’ emerges in a new guise when people cannot avoid the costs and remain uncompensated for bureaucratic misadventures that transcend national boundaries. A further complication is the discretion allowed to negotiators in forming and administering international political pacts, defence alliances and foreign investment proposals. The costs of World War 2 carried over into the Australia, New Zealand United States Security Treaty (ANZUS) that was based on the World War 2 alliance of the parties. ANZUS commenced in 1951 and survives to the present day; but was modified in the 1980s when New Zealand’s stance as a nuclear free zone came into conflict with admitting nuclear powered ships and weaponry into its ports. The parties to ANZUS were among the countries that subscribed to a domino theory: a theory that envisaged successive falls of countries through South-East Asia to communism.

The domino theory became the raison d’être for the South East Asia Treaty Organisation (SEATO) that formed in 1954 and dissolved in 1977. Outbreaks of conflict in Indochina arose from surrender of Axis forces in 1945 and French withdrawal and partition into a North and South Vietnam in 1954. Cold War symptoms appeared in communist support for the North and US-led support for the South. After 1965, the Vietnamese conflict gained notoriety as the first televised war. Routine news reporting included stories about atrocities, body counts, land mines that killed and maimed people and made good agricultural land unfit for much needed food production, profligate use of chemical defoliants and herbicides, and concerns for health and birth defects among the local communities and returned service personnel. Unauthorised disclosure of secret documents – called the Pentagon Papers - contained information that contradicted advice previously given by the US executive to the US legislature. The previous advice was used to justify an escalation of the conflict; and a significant increase in costs of war based on information that was deceitful. Seemingly, it influenced ANZUS countries in deploying conscripted military personnel to the Vietnam War; and set the scene for significant anti- war protest. After the fall of Saigon in April 1975, more information emerged about the extent of what began as US bombing in Cambodia. In destabilised political conditions, the INTRODUCTION 9

Khmer Rouge led by Pol Pot gained ascendency; and the crimes against humanity in its ‘killing fields’ are still being tried in international courts some three decades later.

In the 1960s, global concern grew about adverse effects of development on the natural and built environments. This occurred largely through efforts of international non- government and not-for-profit organisations. However, a groundswell of popular support came from a so-called ‘counterculture’ — a resistance to authority that reflected in civil disobedience on a variety of issues related to human rights and concerns for the environment. However, the resistance was also reflected in increasing use of narcotics that became new forms of addiction. The United Nations Environment Program (UNEP) in 1973 responded to a need for increasing vigilance on environmental matters through global state of environment reporting. The practical problems are to find the skills and other resources in developing countries to carry out such reporting among the many alternative claims on resources. The 1960s were also a time when the ideals as expressed on the formation of the UN in 1946 and in the 1948 Universal Declaration of Human Rights gained expression through civil rights movements, notably in the US. By the mid 1970s, nations were enacting a range of anti-discrimination measures as a response to UN conventions.

The Organisation of Petroleum Exporting Countries (OPEC) commenced in 1960 and reflected a desire of member countries to secure better and more stable economic returns for oil. OPEC was divided within itself when an Arab coalition within OPEC responded to US support for Israel at a time of Arab/Israeli conflict by announcing an oil embargo in 1973. US actions were divisive within the North Atlantic Treaty Organisation (NATO) and seen as likely to lead to long-term oil price increases. US President Nixon acted unilaterally in 1971 in severing the connection between the US dollar and the gold standard; and international oil prices were generally denominated in US dollars. Oil prices and foreign exchange rates were destabilised as national interests prevailed over a more general concern for humanity as a whole. These ‘beggar-my-neighbour’ policies were a form of protectionism; and most of the world began to experience ‘stagflation’. Macroeconomic theory and policy came under renewed scrutiny when a supposed trade- off between inflation and unemployment no longer prevailed.

Reagan’s inauguration as US President in 1981 led to economic policies described as ‘Reaganomics’ in the US. Similar ideas were described as ‘Thatchernomics’ in the UK, ‘Rogernomics’ in New Zealand and ‘rational economics’ in Australia. The general idea was to reduce taxes, government regulation and government spending to provide incentives for business, stimulate the economy and reduce unemployment; and to control the supply of money to control inflation. While no simple cause and effect relationships may be discernible in a myriad of interactions, these policies were correlated with lower marginal tax rates on higher incomes, a widening disparity in wealth distribution, and increasing consumer indebtedness. However, Reagan’s 1983 Strategic Defence Initiative (SDI) contemplated missile launches from ground and space to defend the US against nuclear intercontinental ballistic missiles. Opinions varied on how long it would take to solve technical problems posed by the SDI. Political implications included abrogating treaty obligations related to peaceful use of space and reneging on moves towards disarmament. Economic implications included reducing revenues from taxation; increasing defence and other costs associated with escalating the Cold War; increasing government indebtedness and paying interest to financiers of the government debt. Cold War escalation was a burden also on the Soviet economy; and successive meetings between Reagan and Gorbachev after 1985 led to a gradual easing of Cold War tensions. Reagan’s 1987 10 CHAPTER 1

challenge to Gorbachev to tear down the Berlin wall led in turn to the Kremlin’s November 1989 decision to remove it. Dissolution of the USSR followed in December 1991.

The Marxian critique of capitalism was an important influence on European socialist movements after the 1850s. Marx prophesied an evolutionary change from agrarianism to industrialisation that would occur in its own good time. Lenin’s idea was to accelerate the pace of change in making the case for the 1917 Russian Revolution. The Revolution led to a civil war; and Leninism as an ideology evolved into Stalinism to underpin formation of the Union of Soviet Socialist Republics (USSR) in 1922. Coercion held the USSR together, and when coercion became politically unworkable in the 1990s, the Union was demonstrably susceptible to rapid disintegration. The socialist regimes of Eastern Europe that gained power with USSR support after World War 2 met with similar experiences when the support from the USSR was withdrawn.

The Russian experiment with socialism from 1917 to 1991 was short in the context of world history — within a single life span for many individuals. The Reagan and Gorbachev exchanges carefully avoided claims of victory of capitalism over socialism; for negotiations might have broken down quickly without such a restraint. The short history of Soviet style socialism can be viewed alongside the experiment of Western style capitalism as it evolved after the mid 1800s that also occupies a relatively short period in world history. Market economies have existed since antiquity; but it was only after the mid 1800s that usury laws that had prevailed over millennia were relaxed; formation of limited liability was regularised; and the new forms of energy in internal combustion and electric motors changed the nature of factories and manufacturing. In this period, empires rose and fell; colonies and lesser developed countries were exploited; and some global corporations amassed purchasing power that could overwhelm the ability of lesser developed nations to deal with their own resources.

Seemingly, failing to satisfy people’s needs and aspirations through authorised channels is a powerful motivation to satisfy them through unauthorised channels of a ‘black economy’ or a ‘black market’. Prior to its 1991 dissolution, the USSR experienced subversion and corruption of bureaucratic processes; and a ‘black economy’ was able to operate in a number of areas where central planning failed to meet peoples’ needs at local levels. Arguably, the failures were not attributable to ‘socialism’ per se since insensitivity to individual needs occurs in large public and private bureaucracies quite generally. However, Russian attempts to emulate Western economic policies of the 1980s was destabilising when there was no tradition of mediating conflict in ownership and use of the means of production through democratic institutions. Public resources passed into the ownership of a relatively small number of opportunists who took advantage of the circumstances. Fiscal constraints reduced the size of government; unemployment grew, people were left without subsistence, and law enforcement authorities had difficulty in coping with an escalation of crime and racketeering. At the same time, newly independent states needed to develop new relationships with the European Community.

In 1917, an amendment to the US constitution prohibited alcohol production. It gave a fillip to organised crime and gang violence. A further amendment in 1933 ended prohibition but crime gangs then resorted to new forms of extortion. The counterculture of the 1960s popularised a new range of narcotic plants and synthesised drugs; and the imposition of laws to prohibit their production, sale and use added new dimensions to criminal activity. In addition, the addictive nature of these narcotics created a new problem that might have been classified variously as a criminal issue requiring fines and imprisonment; a medical INTRODUCTION 11

issue requiring treatment for addiction; or a consumer protection issue requiring controls over production standards and prices. Seemingly, the cycle of escalating crime occurs when gangs use intimidation and violence against persons and property to create the need for protection; and then offer protection at extortionate rates. Protection becomes a profitable business and invites rival service providers. Rivalry invites retaliation and — with no lawful means of resolving disputes over unlawful activity — retaliation takes the form of extreme violence. Proceeds of crime can finance legitimate business; and open business activities can mask covert criminal activities and tax evasion. Public officials can be corrupted and weaken the defences against crime. The incidence of crime is in many respects an indicator of shortcomings in governance arrangements. Arguably, this incidence of crime shows how much a society is divided against itself.

Running in parallel with the dissolution of the USSR and the socialist regimes of Eastern Europe were moves to popularise ideas about ‘sustainable development’. The 1992 United Nations Conference on the Environment and Development (UNCED) — often called the Earth Summit — led to the Rio Declaration; and Agenda 21 as a detailed programme for action. The plan for action translated into national, regional and local policies that related to things such as forest conservation, combating poverty, changing consumption patterns, promoting human health, conserving biological diversity, and new forms of integrated decision making. Quality of the human environment has fairly direct affects on human health and well being. The ability to obtain data about the state of the environment globally requires the cooperation of lesser developed countries; and the ongoing ability to do this work requires support for education, training and technology from the developed countries. This is one of many instances where development of human capital becomes important to the development of a country.

The ‘right to know’ about factors affecting human health has attained a status approaching that of a human right. The ‘right to know’ is practically meaningless without being able to know; and that depends in turn on basic education, access to specific information, and a licence to use the information without undue financial costs — in unreasonable government charges, for example. The ethos of a ‘right to know’ appears in Agenda 21 that linked human health directly with the state of the environment. Another ‘right to know’ policy development occurred through linking laws relating to liability of health professionals with ideas about ‘informed consent’ of patients. These ideas were extended to matters of workplace health and safety; and the potential for harm though agricultural, mining and industrial practices in pollution of water supplies and the atmosphere. Policy design and administration depend increasingly on biological sciences where many separate areas of specialisation call for cooperation between different specialists. Insofar as public policies need public acceptance and cooperation to have much chance of doing whatever is expected of them, the questions of ‘informed consent’ extend to the community more generally. The issue is then how people can be informed and learn about things such as the human environment; and issues of nutrition and human health.

The end of the Cold War in 1991 removed some political constraints in global communication and cooperation in science. Technical constraints in storing; processing and communicating information were relaxed with use of the internet; innovations in high performance computing, and introduction of the World Wide Web. Until the first Gulf War in 1990-1991, signals authorised for civilian use from the US Global Positioning System were degraded under a system called ‘selective availability’. The eventual removal of this constraint in 2000 enabled numerous applications of GPS technology in commerce, science and recreation. ICT enabled international collaboration and allowed data sharing on an unprecedented scale – as in the Genome Project, climate science, and national 12 CHAPTER 1

nanotechnology initiatives. Science now has a capacity — unprecedented in human history — to position remote sensing equipment in space, in all kinds of landscapes, in the depths of the oceans, and within human and other animals. Modern telecommunications allow public and private organisations to compile datasets, share information and opinions; and obtain scientific consensus about opportunities and threats as they relate to human well being. This information is essential to the development of understandings about the world and how human activity relates to the human habitat.

The Vienna Convention for the Protection of the Ozone Layer entered into force on 1 January 1989. It created a new milestone in indentifying scientifically and acknowledging politically that small rates of atmospheric change can threaten humanity. Signatory countries agreed to a global ban on producing and using chlorofluorocarbon compounds (CFCs) under its Montreal Protocol. CFCs were a particular class of compounds that reduced ozone concentrations in the ozone layer: a stratospheric layer with a relatively high concentration of ozone that protects the earth from harmful levels of the sun’s ultraviolet radiation. While the ‘ozone hole’ over Antarctica was the largest ever recorded in 2006; authorities consider that remedial actions may have averted catastrophe and that more acceptable ozone levels can be reached by 2050.

CFCs were produced by industry rather than nature and were unambiguously anthropogenic. Usage increased with their application in air conditioning, refrigeration and aerosol sprays after the 1950s. The International Geophysical Year in 1957 was an opportunity for monitoring atmospheric ozone in Antarctica to verify predictions about ozone depletion and associated risks of skin cancer. However, the relevant international science community did not recognise and accept the links between ozone depletion and CFC production until the mid 1980s. Generally, the 1989 Vienna Convention is regarded as a significant international success. Used in this way, science provides an early warning system — and has been likened to a ‘short but meaningful life’ of a canary in a coal mine.

Climate change is a more obvious example of public policies that rely on science to identify risks and propose ways of diminishing or averting those risks. The factors at work include the ability to detect harmful trends that may be gradual and imperceptible from day to day but become noticeable over a period; and the ability to slow the rate of change and organise action that can avoid or mitigate the harm. Scientific devices can detect small increments of change that are outside the range of human sensory perception. The extent of the changes do not become meaningful until the results of many observations over extended time periods can be compiled and a scientific consensus can emerge on how the compilations should be interpreted. In trying to comprehend large numbers of observations that occur at different places and times; the data is compiled and represented in images, maps or models that are socially constructed abstractions that need not bear any relationship to any reality. Representing things that exist in the imagination can have an effect of blurring the distinction between scientific fact and fiction.

As a work of science fiction, Jurassic Park extrapolates from scientific observations of fossilised skeletal remains and animal footprints of the Jurassic period. The scientific reconstruction augmented by assumptions about skin colours and animal sounds produces an audiovisual entertainment experience. Seemingly, this vivid experience leads some people to believe that humans coexisted with dinosaurs despite other scientific evidence to the contrary. Similar audiovisual experiences have portrayed historical events as representations of the past augmented by artistic license of various producers and actors. Thus, film producers have produced a variety of interpretations of noteworthy INTRODUCTION 13

historical events such as the Mutiny on the Bounty and the wreck of the Titanic . On the positive side, people can learn about historical events and enlarge their understandings about the world through a mix of information and entertainment. On the negative side, misperceptions can be created where producers are motivated to create them; and where the audience has insufficient education to form reliable judgements about what to believe.

Complexity emerges in the design of governance regimes and legal liability laws aimed at maintaining integrity in information and communication processes. The complexity results from the variety of motivations and cognitive responses that lead to the production of misinformation. Experts – despite good intentions – can go beyond their areas of expertise and produce misinformation out of ignorance; and deceive themselves as well as other people about the integrity of information they give. While ignorance can be misleading without being malicious; a variety of more conscious behaviours can be more deliberately misleading. These conscious behaviours can range from remaining silent when it is possible to say something to save others from harm to more blatant forms of deceitfulness in outright lying and cheating. However, the complexity increases when there is a variety of motivations and cognitive responses involved when people respond to senders of information. Responses may include simply ignoring a message; being unable or unwilling to spend the time needed to understand a message, rejecting the message or its authorship as unreliable; denying the information, and challenging the reasoning that underpin conclusions and decisions.

In the 1980s, the idea that government should be more business-like in conducting its affairs gained new popularity. However, it came at some cost of not thinking about how government was unlike business in at least two important respects. First, a government operates according to a political constitution that legitimises the use of force and allows it to raise revenues, appropriate expenditures and make laws for the peace, order and good government of a society. In contrast, business conducted by commercial and civil society entities needs to operate under legally enforceable rights and obligations related to the ownership and use of resources. Individuals and organisations are thus subservient to a rule of law that society as a whole creates. This need not impinge greatly on individual freedoms if individuals believe that the laws are fair and reasonable. In the interests of consistency and coherence in the laws, non-government activities need to make a positive contribution to society; or a society would be better off without them. Second, a number of areas of government activity relate to management of risks and relief of hardships that affect individuals, families and communities where non-government entities cannot provide service or relief that is practical, affordable and sufficient.

A legislature’s constitutional responsibility to provide ‘good government’ calls for public investment. Public investment begins with imagining things that are deemed possible in the present that can lead along pathways to new opportunities for better standards of living in the future. The time dimension of a ‘future’ objective can vary considerably. A short time dimension may be likened to hitting a target – as in firing a rifle or in firing a ballistic missile. A longer time dimension may be likened to the idea of ‘guidance’ as in a guided missile. Regular and frequent monitoring is important to keeping a missile on track to hit a target that may also be moving. Even longer time dimensions occur and ‘milestones’ may be recognised where a helmsman steers a ship along an established route through vagaries of weather, tides and currents. Where time dimensions extend beyond a single generation to the notion of ‘sustainable human development’, the pathway is not well established. If steering the ship of state calls for a statesman, passengers and crew may need to feel confident about the leadership; and an arrangement of continuous education 14 CHAPTER 1

and training is necessary if leadership is to pass to successive generations indefinitely into the future.

Whether public investment is socially acceptable within a democracy depends on perceptions about who receives the benefits and who accepts the risks if things do not turn out as expected. The capacity of interest groups to manufacture misperceptions and create doubts about what a public investment entails can seriously impair the integrity of democratic processes. In this regard, the integrity of communication processes in highly technical societies depends increasingly on being able to share — so far as practicable — ideas and opinions obtained from visualisations and representations of complex natural and social processes. Examples include climate change and other modelling of environmental impacts; modelling of the economic effects of government revenue raising or spending proposals; demographic modelling of changes in population; and modelling of public transportation and communication proposals. This kind of modelling usually encapsulates the intellectual efforts of many experts. Differences become all too apparent in the scope and levels of expertise not only between experts from different disciplines; but also between various experts and lay persons.

A voluntary consent of electors is needed if democracy is to prevail. The hope is that the consent can be sufficiently informed despite practically everyone being a lay person with respect to someone else on issues that may have relevance to the design, implementation or operation of a policy proposal. The abiding problem in such a social milieu is to find out who can be trusted to speak with authority and candour on policy matters, given human propensities for self-deception, self aggrandisement and pursuit of wealth and power. Policy proposers can imagine beneficial outcomes that can be shared widely; or where a particular class of citizens can benefit without necessarily admitting where their self interest resides or who bears the costs if things do not turn out as well as expected. Thus, policy proposals usually have implications for distribution of wealth in society; and some sense of fairness and reasonableness needs to underpin decision making if social cohesion is to be retained.

The idea that problems can be solved for all time denies historical evidence that some seemingly elementary functions such as food production and distribution have never been solved permanently. Technology can increase productivity but the more highly geared these production systems become, the more vulnerable they become also to significant losses through simple accidents. In agriculture, standardising production for marketing purposes reduces biodiversity; increases the need for fertiliser, pesticide and weedicide; degrades land; increases potential for pollution; and increases the risk of new plant diseases. A highly effective road network or power supply can experience major disruption through relatively minor road accidents or weather events. Similarly, the idea that providing incomes for retirees can be solved by mandatory savings schemes may create an illusion of social well being — yet it actually introduces a set of new problems. Included in these new problems are how to retain the purchasing power of savings indefinitely into the future; and how can the institutions that hold these savings remain in existence or have some acceptable method of succession for as long as necessary.

In steering the ship of state towards safety and away from danger, uncertainties in conditions that may prevail are both interesting and perplexing. Foresight will depend on hindsight — on the exercise of judgements born out of experience. Learning through experience depends on assessing things that have been observed, memorised and remembered. Experience can be assessed and reassessed; and assessors can also be INTRODUCTION 15

assessed and reassessed. Issues of self regulation can depend on who assesses the assessors in the light of new experience as it unfolds. However, the task for sustainable development is to stabilise things that seem to lend themselves to stabilising; and reserve energies to cope with extraordinary or sporadic events that no one has been able to predict. Any sense of socio-political and economic stability involves matters of judgement — as in weighing the costs of keeping peace compared to the costs of failing to maintain peace; the cost of reaching understandings and agreements compared to the costs of coping with misunderstandings and disagreements; and the costs of regulation compared to the costs of regulatory failures. Similarly, lack of coordination in relieving unemployment and providing social services needs to be compared to the loss of production due to unemployment and the loss of social cohesion in failing to assist those suffering genuine hardship.

Each generation needs to learn anew the things that allow interaction and the organisation of collective action. People make inputs to production systems possible and people make judgements about whether the outputs are worthwhile. Seemingly, the organising of collective action requires a ‘collective competence’ that goes beyond the skill and ingenuity of individuals and extends to the capacity of individuals to work together to obtain mutual advantage. Much depends on acquiring efficiency in the actual learning processes that lead to ‘collective competence’. Ultimately, these learning processes should help people to imagine and appreciate the possibility of worthwhile things; to understand what is fair and reasonable in making and agreeing to public policies; and to be fair and reasonable in assessing the performance of government programmes within the operating environment of a participative democracy. While there is good reason to be hopeful that a ‘collective competence’ can be created; there is no reason to be complacent and think that it will happen unconsciously and without effort.

STRUCTURE OF INFORMATION IN THIS WORK Topic Key Points Overviews Detailed discussion Conceptual and terminological issues Box 1.2 Section 2.1.9 Section 2.1 and 3.3.3 Purpose of government and its need for information Box 1.3.1 Section 2.2.1 Chapter 3 Economic factors in producing information Box 1.3.2 Section 2.2.2 Chapter 4 Factors in supplying information Box 1.3.3 Section 2.2.3 Chapter 5 Paying for government information Box 1.3.4 Section 2.2.4 Chapter 6

1.2 SUMMARY OF CONCLUSIONS The aim here is to summarise, so far as practicable, key issues where information, learning and knowledge transform both the needs for government and the ways in which governments meet those needs. The main conclusions are as follows: • If people are at ‘cross purposes’ with no hope of resolving their conflict, the quality of life is unlikely to improve until they find some commonality of purpose — or some consistency and coherence in the things they do ‘on purpose’ or by design. • Increasing technological knowledge and proficiency increases the scope, power and pace of things that are humanly possible. While considerable improvements in standards of living may be possible; considerable adverse consequences are also 16 CHAPTER 1

possible. Proponents of a technology can pose problems that they do not foresee and cannot fix; and benefits and costs of technological change can be distributed unfairly. • Institutions of natural justice for individuals and democracy for communities contribute to productivity if they can mitigate conflict and redirect human knowledge and energy towards creativity. Generally, the formal institutions of government and less formal social norms have evolved to redress situations where people might suffer from someone else’s ignorance, carelessness, malice or greed as reflected in the design, implementation and use of technical systems. • The increasing scope of technology makes it difficult for people to be informed on matters that affect their well being and how they are governed. Future outcomes become dependent on how people decide to behave. Ameliorating adverse outcomes in ways that are both socially acceptable and timely becomes increasingly difficult. • The increasing scope of technical possibilities combined with the various options available for how individuals might respond in their personal circumstances lead to an immense variety of possible outcomes and no way of knowing in advance which will be chosen. Moreover, a future that allows new things to be experienced and learned can be both exciting and perplexing in its inherent uncertainty. Some areas of vulnerability are as follows:
The speed of communication increases the capacity to provide significant useful information as well as increasing the capacity for creating panic in crowd behaviour.
Policy proposals based on data compilations, measurements, theories, mathematical models and visualisations are necessarily abstracted from reality and vary considerably in their intellectual credibility — regardless of how attractive and real they may seem to be. This is especially true when it seems likely that multiple causes can contribute to multiple effects, and that there may be feedback loops that can amplify and attenuate some of the stimulus-response relationships.
Predictions about how people might behave can set up conditions for self-fulfilling and self-negating prophecies; and the operation of vicious and virtuous circles.
The monetary system in particular contains inherently unstable components attributable partly to unattainable expectations of exponential growth in riches and partly to quality of modelling, forecasts, commentary and auditing. • Society’s institutions can promote learning and working conditions that give individuals a sense of self-worth. Leisure activities can promote learning and health as investments in human capital and give real meaning to ideas about re-creation. Investments in goodwill and trustworthiness through fair and reasonable interpersonal relationships and social institutions are possible — especially in how individuals in need will be treated in the testing times of socioeconomic adversity. • Most countries now face significant demographic challenges where aging populations may need to rely on aging workforces. Longevity and quality of life depend on staying physically and mentally active; with opportunities to reduce skill shortages, maintain personal retirement incomes and reduce health care costs. Work-leisure, learning- pleasure and work-learning have often been seen as mutually exclusive and fundamentally opposed. Conceivably, learning, work, enjoyment, satisfaction and recreation might be seen as mutually reinforcing. Attitudes in this regard might already be changing.

INTRODUCTION 17

1.3 KEY POINTS Two abilities distinguished human interactions within the biosphere from those of other animals. First, the ability to organise complicated collective actions owed much to being able to invent language and share sophisticated understandings about what people believed they could do collectively. Second, the ability to control use of fire and harness other forms of energy amplified what they were actually able to do through their coordinated efforts. Human impact on the biosphere is visible from space and exceeds that made by other living creatures. Constraints on interpersonal communication are barriers to the formation of mutual understandings, and agreements. They are thus a root cause of loss due to misunderstandings, disagreements and lost opportunities; and are a vastly underestimated source of economic inefficiency that increases dramatically with energy devoted to war.

Box 1.2 summarises key points about conceptual and terminological issues that are at problematical in discussions about the role of information in society.

Box 1.2 - Key points — Conceptual and terminological issues

• The words, syntax and logical constructs that make up a language are human inventions for describing present and past experience; anticipating future experience; discussing scenarios and human dilemmas through works of fiction and imagining future opportunities and risks. • The invention of words begins with the symbolic representation of observations and experience.
Some experience can be spoken about because unique words or measurements exist that can be understood by other people who share both language and experience.
Communication can occur in long term relationships through non-verbal cues where some things can be left unsaid; although there may be a depth of understanding that is not apparent to outsiders.
Some experience defies description because no words or measurements exist and because other people cannot imagine what a speaker has experienced.
People can have things ‘in mind’ that cannot be explained without use of analogy. Analogies usually have limited application and may be misleading at some points — as in similarities and differences between tangible ‘real property’ and intangible ‘intellectual property’.
Imprecise and ambiguous use of terms such as ‘knowledge’, ‘information’ and ‘data’ is a barrier in trying to reach common understandings and agreements about how learning occurs; and can frustrate the descriptive processes through which formal authorities and responsibilities are created and interpreted. This frustration permeates the whole gamut of organisational and legal processes.
Learning is a productive process that develops knowledge and skills. Arguably, increasing productivity in a knowledge economy depends on improving the efficiency of learning processes. Improved learning efficiency depends in turn on understanding how people reach mutual understandings that can ripen into agreements and enable collective actions. • In discussing information economics and policy, terminology needs to allow important distinctions to be made without undue ambiguity between ‘stock’ and ‘flow’ concepts — as understood notionally in the distinction between balance sheet and activity statements in accounting practice.
The stock concept applies mainly to memory as assessed at a particular instant of time — such as the start or finish of an accounting period. It applies to:  Natural assets — ‘knowledge’ that exists in living human memory and is lost when an individual loses memory or dies.  Artificial assets — code, images and other representations that symbolise human experience and are embodied in various media, and objects. Media and objects can deteriorate or suffer destruction; and knowledge of how to decipher and interpret the symbolism can also deteriorate unless retained in a continuum of living human memory.
The flow concept applies to activity assessed over an accounting period and may be due to:  Natural processes — involving use of assets that are determined genetically and exist in the sensory and nervous systems of humans and other animals.  Artificial processes — involving use of acquired learning and skills that may readily be 18 CHAPTER 1

communicated to and applied by many people; or information that may only be readily communicated and applied within a community of specialised observers and witnesses.
A communication channel is an asset that can be conceptualised as ‘stock’ and applies to:  Natural assets — as in human sensory and nervous systems that provide natural stimulus and response mechanisms and homeostasis in humans and other animals.  Artificial assets — involving artificial aids to communication such as telecommunication channels, wireless and video channels and the protocols for use of these channels
Transmission between the end points of a communication channel can be conceptualised as a flow and involves some notion of quantity transmitted per unit of time. • In this work, ‘data’ is used as a subset of ‘information’ that plays a role in ‘informing’; or letting someone know something; or signalling an automated device. ‘Data’ refers to the results of observations and opinions of one or more authors expressed in a predetermined form — typically as entries to spreadsheets or databases. As such it has significance for intellectual property rights in that the compilation may require work or ‘sweat of the brow’ without necessarily involving much by way of ‘originality’.

Key points from Chapter 3 Box 1.3.1 summarises key points regarding the kind of functions that governments perform, the need to process information in managing problems presented by performing their functions, particular issues in trying to cope with complexity, how information is structured to meet the purposes of government, and the high level policy issues that influence relationships between governments.

Box 1.3.1 – Purpose of government and its need for information

• A government operates within the framework of a political constitution that allows it to raise revenues from mandatory taxes and charges and appropriate those revenues for the purpose of creating and maintaining ‘peace, order and good government’. • Under a ‘supremacy of parliament’ doctrine, the legislature has a supreme authority to delegate functions to executive and judicial arms of government; and confer rights and duties on individuals and organisations through statutes and other statutory instruments. • The structure of authorities and responsibilities created formally by parliament — together with various sub-delegations of formal authority — provide an overall framework of legally enforceable rights and duties that underpin a ‘rule of law’. • A distinguishing feature of developed countries over the past 500 years is a continuing urge to do things ‘on purpose’ or ‘by design’ in the hope of creating a better future. Technological change superimposed on centuries of European colonisation and exploitation of natural resources created significant political tensions and conflicts about how people could live; how societies could be organised; and how the benefits and costs of technology could be distributed in ways that communities could accept as fair. • A society’s sustainability depends on the ingenuity of its people in using resources at hand in the interests of its continuing survival. This depends on knowledge perpetuated in the minds of succeeding generations together with various forms of infrastructure passed on as tangible and intangible inheritances to successive generations. In the future, sustainable human development may depend on greater human awareness and recognition of this infrastructure whose purposes and characteristics may be considered more precisely as follows:
Physical infrastructure — elements of the built environment that augment the productive capacity of systems in the natural environment. The built environment includes roads, pipelines, electricity and telecommunication transmission facilities, buildings, and the like.
Institutional infrastructure — essentially the body of rules and principles that allows human beings to work together productively and mediate the resolution of conflict.
Information infrastructure — the structured information necessary to authorise use of resources; plan investment to do things better in the future; and monitor to test the efficacy of INTRODUCTION 19

planning knowledge and procedures, and to audit the use of authority in managing resources. • Increasing complexity is mostly an unwanted side-effect of technological change. The potential for increased production is offset by a new series of costs and risks in trying to control more powerful systems operating at greater speed. New control issues include the following:
Things that can influence outcomes become larger in number; more complicated in their details; faster in their reaction times; and of greater significance in their capacity to do good or harmful things as seen in political, social, economic, ecological and other terms.
Insofar as outcomes can be affected by flows of information in anticipating opportunities and risks, they can also be delayed by the creation of doubt, and misdirected by flows of misinformation. Each direction, delay and misdirection has implications for particular flows of benefits and costs; and particular biases in information processing can reflect ultimately in how wealth is distributed in society.
Task specialisation involves information intensive activity of trained observers and expert witnesses who use specialised language. This language is not always readily communicable to people outside the community that shares this knowledge, training and experience.
Constraints on interpersonal communication and the resulting information asymmetries raise the potential for people with special knowledge to take advantage of uninformed people.
A wide range of possible behaviours emerge from trying to take unfair advantage of information asymmetries; but the unfair advantage is merely possible rather than inevitable. Conceivably, institutions can promote a sense of fairness and trustworthiness just as it is conceivable that gamesmanship, one-upmanship and various forms of pretence and deceit can promote distrust and reduce the chances of agreement and cooperation. • Particular difficulties emerge in trying to give meaning to concepts such as ‘efficiency’ and ‘fairness’; and in trying to establish credible numbers that can place the performance of socioeconomic and socio-political systems beyond doubt. Regardless of whether the concepts or numbers are understood, ‘follow the leader’ crowd behaviour in political polling can destabilise governments. Similarly, this kind of followership of published financial indices and news can react rapidly and globally to destabilise markets in stocks, commodities and foreign exchange. • Intergovernmental relationships provide opportunities for nations to cooperate internationally and avoid conflict. However, these relationships can influence ideas about trade, human rights and the environment; with global influences on public policies and the conduct of everyday affairs:
International exchanges of information become important in understanding mutual obligations and monitoring compliance; and international relationships may become untenable if anticipated free exchanges of reliable information do not occur as expected — in meteorological, hydrological, quarantine and disease control issues, for example.
International understandings and agreements underpin the kinds of information to be compiled and the standards to be followed in making the compilations. Accordingly, data compilations and databases are artificially constructed aggregations that may note small changes that are imperceptible from day to day by individual observers unaided by scientific devices and methods.
Democracy can become tenuous if people without relevant scientific expertise are asked to accept a great deal of environmental and other global scientific information on trust to allow timely and collective evasive action. Evasive action that contemplates public intervention and interruption to existing production, distribution and consumption patterns is likely to create perceptions and misperceptions about who might win or lose; or whether some degree of give-and-take is socially acceptable. The issues then merge into matters of equity and social cohesion in the distribution and redistribution of wealth.
Over time, people may be able to see some cumulative effects — such as the retreat of glaciers or the melting of ice caps attributed to gradual temperature increases of global warming. People who cannot avoid degraded living and working environments have a reduced quality of life. Contributors to degraded environments can avoid liability because the complex chains, cycles and networks of cause and effect leave significant uncertainties in assessing precisely who is responsible, how much they should pay and to whom. • Human rights principles are international in character and are integrated into a wide variety of public policies related to education, health and employment. Of particular concern is the right to information about the quality of living and working environments.
Ultimately, understandings about the quality of the environment will depend on the quality of 20 CHAPTER 1

monitoring regimes; and these regimes need to test the intellectual integrity that provides scientific underpinnings of policy as well as the political integrity of policy implementation.
Evidence-based policy relies on monitoring regimes; but reinterpreting records and the unfolding of long-term experience is open-ended. Evidence can be re-assessed in the light of new experience gained by more than one person and whenever it is warranted.
In contrast, many political and commercial decisions try to achieve ‘finality’ through restricted forms of inquiry. This usually occurs under adversarial conditions to limit the extent and timing of various assessments and reassessments in administrative and legal decision making.
Although some political decisions occur under adversarial conditions, they may have long- term implications for a society’s distribution of wealth and social cohesion. Leaders of public opinion do a public disservice if they are unduly pretentious about the knowledge they bring to debates about complex issues and fail to demonstrate honesty and fairness in their public announcements.
Some government agencies facilitate education and research to promote productivity; while others impose barriers to informal learning with unnecessary restrictions on access to official data, and to material used in the design, implementation and revision of policy. Removing unnecessary restrictions is important in encouraging a participative democracy.

Key points from Chapter 4 Box 1.3.2 summarises key points regarding how governments produce information, given technical, economic and socio-political considerations that affect production of information and learning processes associated with use of information.

Box 1.3.2 – Economic factors in producing government information

• A productive entity functions by using available resources to create value that did not exist previously. The direction given to begin and continue production stems from the combined effects of human knowledge, information stocks and information flows. • The vector attribute of direction combines with a measure to provide the human motivation for a productive entity to function. The direction and weight to be given to separate pieces of information — and the separate risks associated with according those separate weights — leads to intractability in analysing value and returns on investment (ROI) in relation to information. • An alternative approach to this intractability is to begin with a general proposition that information has no intrinsic value or income producing capacity while recognising also that information can acquire value under specific criteria . • Understanding the specific criteria for productivity improvement can then focus research into the economics of information and the development of information policy. This involves addressing issues along the following lines:
Understanding how assimilation of specific information at the level of an individual satisfies rhythmic, routine and non-routine functioning in human beings and contributes to sustainable production and improvements to quality of life.
Understanding the changing technical, economic and political factors and a shifting nature of constrains in:  Assignment, re-assignment and use of property rights for information and other commodities. Measuring and telemetric technology influences technical possibilities and their costs; and economic circumstances determine productivity improvements.  Contract negotiations and acceptance in markets in information; where the ability to devise appropriate performance criteria can vary appreciably across the rhythmic, routine and non-routine information processes that sustain and improve quality to life.  Contract arrangements for sharing risk; and factors related to information asymmetry in determining how activities are bundled and unbundled in various kinds of productive enterprise.  Bundling that leads to vertically integrated production with administered prices of value added production established by political power and command in public and private bureaucracies. Unbundling requires a form of enterprise that can operate under varying degrees of competitiveness and becomes associated with competition policy. INTRODUCTION 21

 Assignment of liability for nuisance, negligence and consequential damages in civil cases and under statutory duties of care; with special reference to cognitive and evidentiary processes that can limit the capacity of law courts to deliver justice.  Understanding the informative role of money and risks associated with its acquisition; holding costs; appreciation and depreciation in purchasing power; and the manipulation and distribution of purchasing power.  Understanding the stabilising and destabilising effects of money on human employment and economic activity through various guises — as a numerator and denominator of value, facilitator of exchange, and store of wealth, for example.  Understanding that money is not a factor of production in itself. Ideas about making money — as popularly understood may conceal activities where some win and some lose in the gamble of a zero sum game; with a net loss resulting from transaction costs in churning money using resources that might be more useful if expended elsewhere.  Understanding the information intensive activity that increases productivity in the administration of justice; operation of courts and tribunals; studies in jurisprudence; motivation of human energy in productive activities; sense of security in protection of individual rights; and effects on physical health and well being. • The world’s biosphere is a natural production system that sustains microbial, plant and animal life through natural sub-systems involving food, water, atmosphere, energy, climate and procreation. The interdependence that secures procreation, infant nurture and human sustenance underpins the notion of sustainability — a notion that has no enduring meaning to human beings without survival of the human species. • Human beings face an enduring task as individuals, groups and communities of learning how to manage natural sub-systems and use available resources to sustain and improve human life. Management involves enhancing the human interactions that are life-sustaining; and mitigating the individual or combined actions that harm or risk causing harm to the environment. • All things done in the hope that they will be beneficial in the future may be categorised as investment . Knowing that hopes are not always fulfilled and that unexpected things — both fortunate and unfortunate — can reveal themselves over time introduces unavoidable uncertainties into all investment decisions. Things that were once thought to be assets can become liabilities through accident, misuse, technological obsolescence or changing fortunes. • The ability to take advantage of fortunate circumstances and cope with unfortunate circumstances depends primarily on access to three basic factors of production :
Knowledge and information – comprising mainly the capacities to do the following:  Combine the knowledge of individuals in collective endeavour;  Observe and assess whether unfolding circumstances offer opportunities or pose threats to individuals or communities; and  Recall and use records of collective past experience in time to allow benefits of experience to inform future decisions and actions.
Energy – comprising mainly:  The energy combined with healthy attitudes and motivation needed to direct human capital into productive activity; and  The knowledge and capacity to enable the harnessing of other forms of energy to produce outcomes of use to human beings.
Physical things – involving the knowledge and ability to recognise, access, process and allocate and use physical resources to satisfy the needs of individuals, groups and communities in the interests of human survival. • The basic factors of production can be engaged in higher and higher levels of organisation by relying on task specialisation. In an historical pathway from the earliest agrarian economies to modern information economies, progress has involved redeployment of people into new occupations and increasing sophistication required in understanding how people can use basic resources without being drawn into conflict. The progress so far may be summarised as follows:
Allocation and use of land and other physical resources — involving the invention of ways of creating and using property rights; and inventing ways to resolve conflicts pertaining to changing patterns of ownership and use.
Allocation and use of labour — involving invention and reinvention to adapt the changing circumstances of technological change into understandings and agreements between managers who administer combined efforts at various levels of organisational hierarchy and 22 CHAPTER 1

workers with some capacity for self-organisation.
Retention and use of surplus production — involving invention of ways of dealing with savings; practical methods of managing savings in the form of inventory; and issues of investing in use resources in ways that can produce streams of future benefits. • The pathway in workplace relations runs in parallel with innovation in the various phases in production where the timing, location and quality of outputs delivered from one phase become inputs into another phase; and producing a bundle of information is an essential element in each phase. Management in production necessarily involves risk management and the longer the chains of intermediate steps, the greater are the difficulties in managing all parts of all processes that lead to delivery of satisfactory outcomes. • Productivity in a modern age requires a new approach that can understand the risk management strategy in holding productive capacity in reserve; as in a dam built to satisfy both water supply and flood mitigation purposes. In principle, the admission of multidisciplinary information into policy formation is justifiable if an integrated approach can reduce the risk of policy failure. The benefits ensue if one discipline can identify a risk of failure that other observers may not be trained to see and understand. • Attempts to apply multidisciplinary approaches are not likely to succeed without some attempts to overcome the confusion in language and analytical concepts and methods. Some possible areas of difference can be identified as follows:
Operational research, risk management and error management techniques; and market research. These underpin management science and practice.
Financial accounting practice – extending from the level of the individual to the level of corporations to include the public accounting of governments. Accounting methods direct attention to questions of solvency and financial accountability that are important legally, but may have little bearing on productivity; or on profitability in not-for-profit organisations.
Economic theory - especially marginal analysis; transaction cost approaches to property rights, contract and risk sharing; and in the macroeconomic approaches to achieving economic stability.
Other behavioural sciences such as sociology in its understandings of power and authority: psychology in its understandings of cognitive processes and human needs and motivations: communications theory in its linguistic understandings and other denotative symbols; and in its changing nature of language and concepts used in compiling statistical records.
The use of data for as long as can be compiled without undue cost is justified to lend credibility to projections for strategic plans that are to guide developmental intentions over one or more decades.
In general, transaction cost approaches have ignored capital and current costs in assimilating information; leaving unnecessary theoretical arguments unresolved over decades. • Some of the information-theoretic approach can help to reduce some of the red-tape burden that results from failing to seek productivity in all information processes. Consequences include:
Recurring regulatory failures - where poor design, implementation, maintenance and monitoring of regulatory systems leads to unnecessary compliance costs.
Consistent overestimation in the capacity of groups to operate in multidisciplinary review of regulatory proposals by seriously underestimating the problems associated with multidisciplinary communication and the dynamics of group situations. This results in a consistent failure to foresee risks that are foreseeable and eminently predictable.
Consistently overstating benefits of proposals that require public funding to secure ongoing support through the budgetary processes that are predominantly political with only a pretence of economic rigour.
Failure to understand government as a living system where cutting some budget items may be like a sensory deprivation that causes severe disorientation whereas other procedures may be more like reducing the intake of an overweight individual. Reducing sensory power and high level analytical power incurs a risk of disproportionately expensive consequences.
Misplaced dependence on benefit cost analysis as a means of justifying budgetary allocations that might be more properly described as discounted cash flow analyses for financial management purposes.

INTRODUCTION 23

Key points from Chapter 5 Box 1.3.3 summarises issues affecting the supply of public sector information to users and re-users of information. Key issues include secrecy, privacy and copyright administration.

Box 1.3.3 — Factors in supplying information

• Re-use of existing government information raises issues that include:
An ownership problem of who has authority to say how information may be re-used — with special reference to bundled information derived from numerous sources.
An access problem of who can decide to withhold or disclose information produced for purposes of government. Should access to information be denied on secrecy or privacy grounds as a matter of public interest?
An information licensing problem that sets out the conditions under which a licensor may allow a licensee to use information within the legal framework provided by copyright law. • Undue secrecy has a series of costs involving:
Reduced communication between government and scientific communities — making it harder to identify errors and misinformation in time to avoid costly mistakes.
Reduced communication between government and the people — making it harder for citizens to participate meaningfully and cooperate actively in their own government.
Increased risks of selective and unauthorised information disclosures; and mistrust if potential informants feel that an agency is unable to protect their anonymity. • Secrecy can be justified where informants are likely to suffer disadvantage by disclosing information that a government seeks; or where reprisals might occur to an informant whose identity is made public. Experience suggests that securing a small amount of truly sensitive information is more manageable than securing larger amounts that may not be so sensitive. • Risks associated with supplying government information are often overstated; especially if a risk assessor fails to consider lost opportunity arising from failure to supply information. • Believing that there is an inexorable pathway leading from access to public sector information and its beneficial re-use is naïve. Among other things, the use of information by a user may be influenced by:
The nature of the information licence that prescribes how the information may be used legally.
A user’s sensitivity to paying for information without knowing whether it will be useful.
A user’s technical and cognitive ability to receive and assimilate information in deciding some issue. This is determined largely by the user holding or having access to prior knowledge.
Opportunity to use the information advantageously provided by the circumstances. • Under copyright law, the default position is for copyright to subsist in a work from the moment of its creation. Unless there is a clear indication to the contrary, an intending user should presume that a copyright owner may prosecute against copyright offence infringements. A clear copyright licence removes uncertainty for law abiding users; and transaction costs of precautionary negotiations between users and owners are then obviated. • Copyright administration is usually expensive and often fails to meet policy objectives of fostering innovation; yet copyright is also intimately bound up in international and national trading arrangements. Ways of working within a copyright framework include:
Streamlining copyright licensing by public and private agencies to provide immediate benefits of greater certainty for law abiding users.
Negotiating new ways of sharing efforts, risks and rewards associated with the re-engineering of traditional tasks in compiling fundamental datasets and information. This needs to involve both producers and users of information that reside in both government and nongovernment sectors.
Prudent procurement policies that preserve the potential to reuse and value add to information purchased by a government agency; especially where the reuse is associated with an agency’s statutory duty to communicate particular information. Without proper management, issues related to copyright on procured information may be brought into conflict with statutory duties to supply information.

24 CHAPTER 1

Key points from Chapter 6 Box 1.3.4 contains a summary of pricing principles that emerge from the findings of this work. Many statutes permit or require production of information expressly or implicitly to meet requirements for planning, implementing, and monitoring public policies. Some statutes allow supply of information or evidence to satisfy needs of individuals and corporations. These statutes may specify standards of service; rules about the government’s liability, rules regarding access, details of the licence pertaining to use of information, and the basis for charging for the service. Supply of information by command of the parliament or by command within a public or private sector monopoly cannot be construed sensibly as market place transactions.

Box 1.3.4 — Paying for government information

Summary of pricing principles No charging • No charge should be made for government information where the government has objectives of informing the public; obtaining information from the public; or securing public cooperation and community engagement. • No charge should be made in circumstances where people are able to re-use existing government information for lawful purposes at a negligible cost to the government. • Costs to the government should be regarded as negligible where information is supplied online in a digital format; no representation is made that the information is suitable for any non- government purpose; and access is not restricted by any requirements for privacy or confidentiality.

Charging in some situations for services that provide information • A charge should be made to conform to a prescribed fee for service as set out in an Act or associated regulation when information is supplied to meet statutory duties and standards of service. • A charge may be negotiated for work needed to achieve interoperability and cooperation between the government’s own agencies to meet its own purposes. Generally, details of the proposed work and inter-agency transfers of money and information should be recorded in a memorandum of understanding. • A charge may be negotiated for work needed to achieve interoperability and cooperation between governments. The arrangements should be properly set out in an inter-governmental agreement. • Important issues of public policy arise in going beyond prescribed statutory duties and using public resources to service the particular needs of a private person, firm or organisation for information or advice. Consequently, decisions about charging need to be well informed in relation to the political and economic risks involved. Without attempting to be exhaustive, things that need to be considered include:
A liability regime that compares to private professional practice.
A need for openness and accountability in pricing.
A potential for profit-making to be construed as a form of taxation that should have parliamentary approval.
A potential for non profit-making to be construed as failing to comply with competitive neutrality provisions and a crowding-out of private sector initiatives.

25

2 OVERVIEW OF CONCEPTS AND THEMES 2.1 CONCEPTUAL AND TERMINOLOGICAL ISSUES Regular interchangeable use of terms such as ‘data’, ‘information’ and ‘knowledge’ increases ambiguity of their use in everyday conversation. This ambiguity reduces the chances of arriving at genuine mutual understandings. Consequently, people may be unable to cooperate fully in timely fashion about matters of considerable socioeconomic importance. This need for understanding and cooperation increases as specialised knowledge becomes a key factor of production in modern competitive economies. Knowledge that is trustworthy and reliable is an economic advantage when people can simply use it without needing to inquire too deeply into what it actually means or how it was acquired. The cognitive trade-off is to reduce attention needed for some things — such as knowing that title to land is secure — and to increase attention available for other things — such as planning improvements that may increase the productivity of land. In this vein, Whitehead noted: It is a profoundly erroneous truism … that we should cultivate the habit of thinking of what we are doing. The precise opposite is the case. Civilization advances by extending the number of important operations which we can perform without thinking about them. 1 Increasing efficiency in the ways that people learn things of value is important in improving economic efficiency more generally. Accordingly, the contribution of government information policies to social and economic well being depends ultimately on increasing learning efficiency in public and private enterprises. If increasing learning efficiency is seen as an objective of information policy, then success of the policy depends on its contribution to knowledge as a factor of production. However, development of such policy is subtle in that it eventually requires the modelling of thinking and learning processes and making them the object of operational research. 2 This is essentially Drucker’s approach in suggesting that: The productivity of knowledge and knowledge workers will not be the only competitive factor in the world economy. It is, however, likely to become the decisive factor, at least for most industries in the developed countries. 3 The idea that people learn from experience presumes that they can know when they have had an experience and can remember its significance in time for future decisions and actions. Accordingly, ‘observing’ is a useful entry point in considering a cyclical process where prior learning is reinforced or challenged and amended by further experience. The idea that people might learn to observe is implicit in the notion of a trained observer or expert witness. Similarly, people may see the same thing or circumstance differently according to how they have learned to see. This is often expressed metaphorically in ideas about cognitive, cultural or disciplinary lenses and filters. As a corollary, people are blind and habitually fail to notice things that they have not learned to see or had an opportunity to experience. Observing is both the ultimate starting point and the most fundamental question in any attempt to understand reality and reason as phenomena of the human domain. Indeed, everything said is said by an observer to another observer that could be him- or herself. 4

1 Attributed to Alfred North Whitehead (1861-1947) — This passage is often cited but the actual source is unknown 2 Jonathan H Klein, ‘Cognitive processes and operational research: a human information processing perspective’ , Journal of the Operational Research Society , Vol. 45 No. 8, August 1994, pp. 855-866 3 Peter F Drucker, ‘The future that has already happened’, Harvard Business Review , September-October 1997, p.21, cited in Thomas H Davenport, Thinking for a living: how to get better results from knowledge workers , Boston MA: Harvard Business School Press, 2005, p.8. Further commentary on this theme appears in Peter F Drucker, ‘Knowledge-worker productivity: the biggest challenge’, California Management Review , Vol.41 No.2, 1999, 79-94. 26 CHAPTER 2

2.1.1 Tacit and articulate knowledge The biological imperative whereby ‘everything said is said by an observer’ does not mean that everything observed — and thereby experienced — can be spoken about. Thus the totality of a person’s knowledge — involving what they know and what they think they know — covers a spectrum between experiences that can be spoken about and experiences that defy description. Polanyi described this distinction in terms of ‘articulate’ and ‘tacit’ knowledge.5 This distinction has since become a key element in analysing information processes and innovation policy.

Although Polanyi used the term ‘articulate knowledge’, it is often referred to as ‘codified knowledge’. This can create a simplistic impression that human knowledge is readily convertible into code as meaningful information. Arguably, code has no intrinsic meaning,6 and further issues of linguistics, psychology and human motivation arise in communicating meaningful messages. Processes of description and interpretation may provide some accumulation of knowledge within living human memory as an element of human capital. However, it is useful analytically to separate issues about returns on human capital from issues concerned with capital deepening provided by investments in information and communication technology. Preferably, ‘knowledge’ and ‘learning’ can be seen primarily as human attributes and functions. Managers of libraries, public records and other information systems can be seen primarily as managing coded material without needing to delve too deeply into its meaning or economic significance.

2.1.2 Knowledge production Machlup described ‘knowledge production’ as a process where a person learns something of value that he or she did not know previously.7 However, the fact that somebody learns something new does not necessarily mean that it is not already known by someone else. Thus, learning is essential to the accumulation of knowledge at the level of an individual, and knowledge is human capital when retained in living human memory. However, the distinction between articulate and tacit knowledge has far reaching implications for how this accumulation can occur. Examples of learning include the ‘show and tell’ of childhood education, and technology transfer described as taking place ‘on the hoof’ and ‘on paper’. 8 Transfer ‘on the hoof’ usually refers to movement of personnel between institutions and their capacity to demonstrate things that they find difficult to describe. Transfer ‘on paper’ occurs typically through trade, professional and scientific communications and publications; and training or instruction manuals.

Some commentators deliberately avoid using the term ‘knowledge management’. Although it is possible to motivate learners and foster learning opportunities, the idea of owning or controlling the use of something that exists in another person’s mind is seen as impractical

4 H R Maturana, ‘Organization of the living’, International Journal of Man-Machine Studies , Vol.7 No.3, May 1975, p.324 5 Michael Polanyi, Personal knowledge: towards a post critical philosophy , London UK: Routledge, 1973 6 F J Miller, ‘I = 0 (Information has no intrinsic meaning)’, Information Research , Vol.8 No.1 October 2002, accesed at URL < http://informationr.net/ir/8-1/paper140.html > 7 Fritz Machlup, Knowledge: its creation, distribution and economic significance , Vol.1 ‘Knowledge and knowledge production’, Princeton NJ: Princeton University Press, 1980, p.7 8 J Langrish, M Gibbons, W G Evans and F R Jevons, Wealth from knowledge: studies of innovation in industry, London: Macmillan, 1972, p.43 OVERVIEW OF CONCEPTS AND THEMES 27

at best or nonsensical at worst.9 Similarly, the term ‘information management’ cannot sensibly apply to information processes that take place within the individual, although some of these processes might be assisted through training in observation and memory, for example.

2.1.3 The scope of information and communication technology Seemingly, human sensory abilities to see, hear, feel, smell and taste; and the capacities to acquire language, remember and forget are innate human capacities. The actual development of these capacities depends on an investment in learning as people learn to see, recognise and speak about things. In going beyond what is innate to what is learned, opportunities begin for inventing and improving knowledge of how to see and how to describe things. Thus inventions of spectacles, microscope and telescope provide ways of seeing; and the invention and social acceptance of new words allows communication about new things. Information and communication technology begins at the boundary between what is innate and what is learned in processes of observing and communicating.

The use of symbols to encode information has existed since ancient times. The word ‘code’ is also used in relation to governance and law making — as in criminal and civil codes, and in codes of practice or ethical codes. The term ‘codex’ was used to distinguish manuscripts relying on pages rather than rolled parchments. The meaning of ‘enrol’ has its origins in the experience of maintaining public records in the form of rolled parchments.

Attention directed towards the effects of recent technological change often draws attention away from how much of this change depends on a cultural legacy. Arguably, current changes depend extensively on prior developments of a written language; the printing press; telecommunications through telegraph, telephone and wireless; and electronic computing. Important stages in this technological evolution are as follows: • Semantic symbolism — invention of forms of recorded description that depend on associating mutually understood meanings to symbols — as in alphabet systems, numbering systems, language systems, systems of weights and measures, calendars and methods of describing and recording time. • Mass replication of language symbols through printing presses — involving developments such as publishing standards and conventions; the adoption of dictionaries to regularise vocabulary; regular publication of tide tables and places of sun, moon, stars and planets to facilitate land and maritime navigation; rise of literacy to secure markets for published works; invention of intellectual property; and publication of works of religious and scientific authority that encouraged broad cultural movements in the Renaissance, the Age of Enlightenment and the Industrial Revolution. • Electronic symbol communication — beginning in the nineteenth century and continuing to the present day through transmission via wire and cable in telegraph and telephone; and wireless transmission using various frequencies of the electromagnetic spectrum as in radio, radar, and satellite communications. • Symbol processing and manipulation — involving information technology in the form of computers integrated with communications technology. This evolved out of the strategic importance of decoding enemy messages during World War 2.

9 T D Wilson, ‘The nonsense of 'knowledge management’, Information Research Vol.8, No.1, October 2002, accessed at URL < http://informationr.net/ir/8-1/paper144.html > 28 CHAPTER 2

Much of the post-war development occurred through semiconductor technology that allowed miniaturisation of equipment, and reduced its power consumption. This allowed automated sensing from remote or inaccessible locations — as in various field locations, and aircraft and artificial satellite platforms, and medical diagnostics.

2.1.4 Typical information processes The processes leading to accumulation of coded material are often systematic and capable of being assisted by automated sensing equipment and computer processing; and through institutions that promote interoperability within communication networks. These activities include: • Observing and recording - Typically the results of human or automated observation and recording processes — as in basic surveying, statistical collecting, observing from remote sensing platforms, weather observing and the like. 10 An unrefined record of a basic observation usually has limited utility without further processing. • Processing and integrating - Integrating basic observations into unique compilations to produce information described variously as ‘basic’, ‘fundamental’, ‘core’ and ‘unrefined’ information. • Dissecting and recompiling - Reintegration and recompilation of information - generally derived from separate sources or agencies - to produce new combinations of information elements that become value added intermediate or final product for subsequent decision making.

While accumulation of coded material is important in understanding what may be seen as possible as an opportunity or as a threat, a further information activity occurs in selecting which of the alternatives to follow. Typically, selection involves elements of chance, rule governed behaviour and purpose-oriented decision making, which may be based on rational or irrational ideas and thinking.11

2.1.5 Classification of knowledge work Attempts to achieve improved productivity of knowledge workers needs to follow from some description and analysis of the work they do. The idea of a knowledge worker recognises the shift from manual labour and routine machine operation towards the performance of cognitive tasks in making a living. Cognitive tasks include various information-intensive activities such as observing, analysing, communicating and deciding.

Davenport identified two particular areas of variability in knowledge work. The first lies on a spectrum of work performed by collaborative groups and individual actors. The second lies on a spectrum between routine and more complex functions. Diagram 2.1.5 shows a four way typology at the opposite ends of these two spectrums. 12 Some information activity may be a meld of all four types.

10 Section 3.3.3.2 — ‘Development and maintenance of physical measurement standards’ — If measurements and records are to be understood internationally or legally, knowing how to measure and record depends on considerable investment in developing acceptable standards and protocols for measuring and recording. 11 Further discussion of this issue is deferred to section? 12 Thomas H Davenport, Thinking for a living: how to get better results from knowledge workers , Boston MA: Harvard Business School Press, 2005, p.26 OVERVIEW OF CONCEPTS AND THEMES 29

Diagram 2.1.5 DAVENPORT’S TYPOLOGY OF KNOWLEDGE INTENSIVE PROCESSES

Collaborative groups Integration model Collaboration model • Systematic repeatable work 1 Improvisation work • 2 Highly reliant on deep Reliant on formal processes • Dependent on integration across expertise across functions functional boundaries 3 Dependent on fluid deployment of flexible teams

Transaction model Expert model

LEVEL OF • Routine work • Judgement-oriented work • Reliant on formal rules, • Highly reliant on individual procedures and training expertise and experience INTERDEPENDENCEE • Dependent on low-discretion • Dependent on star performance Individual actors workforce or information Interpretation/ Routine Judgement COMPLEXITY OF WORK

Work that is readily identifiable as ‘routine’ is amenable to programming into computer systems. The work is also easier to describe; and is therefore more amenable to training through instruction manuals and to producing written specifications for contracting and quality control purposes. The more complex work may be aided in some degree by ‘decision support’ and ‘expert’ systems’ that admit a wide variety of interactions between humans and computerised machines.

The dichotomy between individual and collaborative work has implications for the forms of communication channels that need to be established. Advantages of cross-cultural or multi-disciplinary information exchanges are usually offset to some extent by a need to invest in the learning of new language, concepts and terminology to allow effective communication of meaning; or the use of translation services to help bridge gaps in understanding. 13

2.1.6 Meanings of ‘data’ Many text books and journal articles use a ‘data-information-knowledge-wisdom’ hierarchy in attempting to explain information processes and production. 14 However, literature in economics and management seems to avoid discussion about what is meant by ‘wisdom’ - apart from hinting that it is something worth acquiring.

As a Latin word, ‘data’ was used as a plural of ‘datum’ meaning ‘a thing given’. In current usage, ‘datum’ is a singular term denoting ‘a thing given’ — especially as a reference or starting point in making measurements or establishing standards. Perhaps mostly, but not always, ‘datums’ is accepted nowadays as a plural form of ‘datum’ when used as a point of reference.

The term ‘data’ is now commonly used in a singular form as a ‘thing given’, generally to include results of observations or surveys that find ready acceptance as facts, opinions or preferences. These results are essentially coded material — usually in a natural language

13 Section 3.2.1.5 discusses ‘Complexity in multidisciplinary collaboration’ in greater detail. 14 Jennifer Rowley, ‘The wisdom hierarchy: representations of the DIKW hierarchy’, Journal of Information Science Vol.33, No.2 (2007): pp.163-180 30 CHAPTER 2

when recorded by human observers. However, data can also include language produced and read by machines such as results from automatic sensing equipment, and the encoding of images, sounds and other non-textual material. ‘Data’ has also acquired extended meaning in the context of increasing use of computer technology; and is commonly used in combination with other terms — as in ‘data capture’, ‘database’, ‘data sets’, ‘data infrastructure’, ‘data sharing’ and ‘data management’.

‘Data’ differs from more general text in how it is structured. As an example, the organised structure of a spreadsheet or database is distinguishable from the more general arrangement of text through writing or word processing. The organisation of data makes it more amenable to compilation though routine collaborative work. This contrasts with practical limits on the number of writers who can contribute to successful compilations of written text. The organisation of data also facilitates further processing and analysis by people who may or may not understand the significance of the content and structuring.

An important consequence of the nature of ‘data’ is that authorship; ownership and control of large databases become institutional in character, and their organisation often becomes rigid and not amenable to adaptation or change. Accordingly, success in attempts to merge data from different databases is highly dependent on questions of interoperability.

The extent of interoperability achievable in practice depends in part on the underlying nature of investments made in the observations, concepts, language and methods used in compiling databases. Investments in computer hardware may be readily adapted to other uses. In contrast, the learning inherent in the concepts, language and methodology of a discipline is shared within members of an interested community. Investment in this kind of learning is generally a sunk cost. The time taken is unrecoverable and the processes involved are mostly irreversible. While investment in specialised learning can increase efficiency in producing a database, it can also decrease efficiency if the learning is rigid and not readily adaptable to giving databases a wider range of potential uses through data merging. As Arrow observes: Short run efficiency and even flexibility within a narrow framework of alternatives may be less important than a wide compass of potential activities. 15

The term ‘data’ helps to isolate two current issues that relate especially to database management. The first relates to copyright licensing where different elements of a data merger might be subject to different copyright licensing restrictions. The practical effect is that the most restrictive condition applying to a part of the merger will need to be applied to the merger as a whole. Such a restriction has a potential to undo a great deal of the advantage that may have been derived from the data merger; and unjustifiable restrictions lead to costs in wasted opportunity.

The second management issue concerns the creation of metadata to describe different data sets created by different institutions. Experience indicates that different institutions based on different scientific disciplines may use different words to describe similar issues and problems. This difference in words relates also to differences in metadata terminology that can limit capacities for merging metadata. The ability to merge metadata becomes important in searching for new and useful ideas by linking data from different disciplines that deal in their own way with similar problems. This linking has a potential to suggest

15 Kenneth J Arrow, The limits of organization , The Fels lectures on public policy analysis, New York NY: Norton, 1974, p.59 OVERVIEW OF CONCEPTS AND THEMES 31

new ways of observing, classifying and solving problems. The remedy seems to lie in the construction of a metalanguage that can transcend the differences between different disciplines; or in some way of translating to achieve more effective interdisciplinary communication. 16

2.1.7 Meanings of ‘information’ ‘Information’ can add to someone’s knowledge through its capacity to inform. Insofar as the added knowledge can lie on a spectrum between articulate and tacit knowledge, ‘information’ is a broad term that transcends the notion of ‘data’ or other coded information and includes all sensations that signal something to an observer — such as body language; or an aroma of good or bad food; or a flooding back of memories that occurs in revisiting a place, or sighting a photograph or some other memento.

Information has a potential to motivate what people do; and where, when and how they do it. In this sense, information is a stimulus that can trigger a response in the form of a release of energy with a particular intensity and in a particular direction. Thus a stimulating idea has attributes of a vector; and opposing ideas may allow some action, though with internal friction and a diminished resultant intensity. This has major implications for whether workable voting majorities can be achieved and whether proposals for concerted action can be implemented democratically on divisive issues. 17 Being unable to agree on future courses of action can lead to frequent changes of government, loss of continuity in ministerial responsibility and, in extreme cases, to constitutional crisis.

‘Information’ may be analysed separately at technical, semantic and behavioural levels. 18 This opens numerous opportunities for ‘information’ itself to be dissected and analysed. Machlup and Mansfield noted more than 30 disciplines as having ‘information’ as a focus for their studies. 19 However, this ability to dissect information activities also poses particular difficulties of interdisciplinary communication and collaboration in trying to reach holistic understandings about problems of communication, control and governance.

Information economics places importance on the transaction costs of reaching understandings and agreements that provide the basis for social and economic organisation. The formation of agreements depends in turn on the nature of investments needed to establish communication and networks. These issues are intimately bound up in how to organise and exercise control. The constraints on how these things can be done impose practical limits on the scope of what can be organised. 20

2.1.8 Icons as information The scope of information management and information policy is often confined mainly to considerations of alpha-numeric code or machine readable code. However, other forms of

16 In essence, these area also aims in building a semantic web as in ‘W3C sematic web activity’, accessed at URL 17 These issues are discussed further in this report at Section 3.2.3 — ‘Consequences of failing to cope with complexity’ 18 Warren Weaver, 'Recent contributions to the mathematical theory of communication', 1949, rpt in Claude E Shannon and Warren Weaver, The mathematical theory of communication , Urbana: University of Illinois Press, 1964. pp.4-6. Also, ‘Brief Excerpts from Warren Weaver’s Introduction to Claude Shannon’s The Mathematical Theory of Communication ’, accessed at URL < http://darkwing.uoregon.edu/~felsing/virtual_asia/info.html > on 12 February 2008 19 Fritz Machlup and Una Mansfield, ‘Prologue: cultural diversity in studies of information’, The study of information: interdisciplinary messages , ed by Fritz Machlup and Una Mansfield, New York NY: Wiley, 1983, p.4 20 Arrow, Limits to organization , pp.55-58 32 CHAPTER 2

iconic symbolism are also public information and subject to public policies. Examples include: • official seals and signs of authority; • official symbols, emblems, insignias and flags; • iconic signage on roads and other public places that often follows international conventions and can transcend language barriers; • museums, art galleries, herbarium and zoological displays; • heritage sites, shipwrecks and public monuments, and • botanical and national parks.

Some icons have commercial application and fall within a framework of intellectual property rights by allowing exclusive use of trade marks and registered design features. Ownership and exclusive use of a brand on consumer goods to identify a producer has features in common with branding or tagging that identifies an owner of livestock. Brands have an effect of differentiating the product of a firm where brand reputation and advertising may influence prices that consumers are willing to pay for a product.

Terms such as Burgundy, Champagne, Feta and Parmesan are used to label agricultural and food products. In a similar way, logos and icons can associate an organisation with a geographic location — as in images of the Eiffel tower, the Sydney Opera House or a kangaroo. Geographic indicators have value to producers if they establish a nexus between place and traditional knowledge of how to produce goods of acknowledged quality. Although some bilateral agreements have been reached within the European Union, attempts at reaching more general agreement within the World Trade Organization have been mostly unsuccessful. 21 This also involves the World Intellectual Property Organization (WIPO) in its administration of aspects of the Trade Related Intellectual Property Rights Agreement that is annexed to the World Trade Agreement.

The ability to reproduce traditional knowledge - in the minds of succeeding generations — about plants and animals as genetic resources depends on maintaining access to particular habitats. This knowledge includes skills and practices about healing and nutritional attributes of genetic resources that are now recognised at high levels. Much of this recognition occurs through the United Nations Convention on Biological Diversity; 22 and the incorporation of its principles in Commonwealth and state legislation, 23 and in recent multilateral trade negotiations. 24

Boundary marks and features indicate artificial and natural boundaries as geographical limits to the exercise of authority by land owners; and by government agencies at federal, state and local levels. Artificial boundaries involve costs in their establishment and

21 Justin Hughes, ‘Champagne, Feta and Bourbon: the spirited debate about geographic indications’, Hastings Law Journal , Vol.58 No.2, December 2006, pp.298-386, accessed at URL < http://ssrn.com/abstract=936362 > 22 Convention on Biological Diversity, Australian Treaty Series 1993 No.32, Department of Foreign Affairs and Trade, Canberra ACT, opened for signature on 5 June 1992 at Rio de Janeiro, entry into force generally and for Australia on 29 December 1993, accessed at URL < http://www.austlii.edu.au/au/other/dfat/treaties/1993/32.html > on 20 February 2008 23 Environmental Protection and Biological Diversity Act 1999 (Cth), as included in the aims of Act at s.3(1)(g). Biodiscovery Act 2004 (Qld), s.4 addressing ‘Why this Act was enacted’ 24 Marion Panizzon, Traditional knowledge and geographic indications: foundations, interests, and negotiating positions , Swiss National Centre for Competence in Research, NCCR Working Paper No.2005/01, October 2006 OVERVIEW OF CONCEPTS AND THEMES 33

maintenance. Natural boundaries involve the adoption of some feature such as a river or shoreline. In addition, various administrative boundaries indicate things such as electoral boundaries, and court districts.

Other symbols of authority include the great seals of government, common seals of corporations, and official emblems, flags and insignias. Some signs in public places may rely on textual messages in a particular language to indicate place names and directions. Other signs may be less dependent on a particular language and become more universal in indicating locations of public facilities as well as rules applying in public places.

2.1.9 Summary of conclusions regarding terminology and concepts This review of conceptual and terminological issues reaches a number of conclusions that may be summarised as follows: • The idea of ‘knowledge management’ — in the sense of attempting to own or control something that exists in another person’s mind — is impractical at best or nonsensical at worst. • The idea of ‘knowledge production’ identifies the distinctly human elements involved in understanding how people learn what to do; how, when and where to do it; and knowing whether things have been done satisfactorily. • The ability to consider ‘information’ separately at technical, semantic and behavioural levels opens opportunities for multidisciplinary studies of ‘information’ itself. However, this ability also poses particular difficulties of interdisciplinary communication and collaboration in trying to reach holistic understandings about problems of communication, control and governance. • ‘Data’ may be seen as a particular subset of ‘information’. It is coded material with a potential for routine collaborative compilation into a structure that reflects the language and methodologies of different institutions and disciplines. • Similarly, the idea of ‘information management’ is impractical in the sense of attempting to control the observing powers and thought processes that occur within individuals. • Flows of data and information depend on investments in communication channels and networks with sufficient channel capacity to recognise opportunities and threats and respond to them. Being able to respond in timely fashion gives meaning to ‘responsibility’ in terms of what is possible for a person to know in particular circumstances.

34 CHAPTER 2

In recognising new information as an opportunity or threat; and in working out what to do by way of a response, a person has recourse to an investment in personal knowledge held within ‘living human memory’. He or she may also have recourse to ‘artificial memory’ — in repositories of informative material retained as a public asset. Diagram 2.1.9 shows an inter-relationship between tacit and articulate forms of personal knowledge; and with a variety of informative material held as public assets and having a capacity to inform people of things they may need to know.

Diagram 2.1.9

CULTURAL HERITAGE - REPOSITORIES OF HUMAN SYMBOLISM PUBLIC INVESTMENT WITH A POTENTIAL TO INFORM INDIVIDUALS ABOUT OPPORTUNITIES, THREATS AND POSSIBLE RESPONSES

INFORMATIVE THINGS AND PLACES INFORMATIVE WRITING S • Official seals and signs of authority; • Public sector information in current • Official symbols, emblems, and flags; files, computerised information systems • Iconic signs on roads and public places; and databases; • Museums, art galleries, herbarium and • Information resources held in public, zoological displays; academic and research libraries; and • Heritage sites, public monuments, and • Information held in public record landscape; and archives. • Botanical and national parks.

LIVING HUMAN MEMORY AS HUMAN CAPITAL KNOWLEDGE SPECTRUM Tacit knowledge Articulate knowledge

Tacit cognition RECOGNITION OF OPPORTUNITIES, Articulate cognition and recognition THREATS AND RESPONSES and recognition

OBSERVATIONS SELECTION PROCESSES: ACTIONS • Random selection; • Rule governed selection; and • Purpose-oriented decision making

Response time in searching, Stimuli researching, deciding and acting Responses

Public polices related to information, education and employment can find common purpose in improving efficiency in processes where people learn valuable things for the benefit of themselves and their communities: In this regard: • Information policy has a function of maintaining the media and coding that contains informative material, and the communication channels that allow information to flow. OVERVIEW OF CONCEPTS AND THEMES 35

• Among other things, education policy needs to perpetuate an ability to interpret the symbolic representation of cultural heritage. Unless this ability is embedded within living human memories, the repositories of human symbolism become meaningless and lose value accordingly. • The need to perpetuate a capacity for interpretation within living human memory emphasises the importance of teaching and learning processes that can create this ability in each new generation. • The internet and modern technologies can improve public access to some government information. The downside is that highly productive systems carry increased risk of adverse effects in the event of breakdown. In the absence of appropriate information policies, misused or malfunctioning technology can also seriously threaten the public's continued access to digitised government information and jeopardize the permanent preservation of that information. 25

2.2 THEMATIC OVERVIEW The aim is to identify themes that relate to the whole of government or themes that are inter-governmental in character rather than themes that are restricted to the work of particular government agencies. The four themes considered separately in Chapters 3 to 6 of this review relate to: • fundamental purposes of government and why a government needs information; • what economic factors are involved, and what distinguishes public sector and private sector production of information: • what conditions should apply to the supply of information between government agencies, other governments and the private sector; and • issues concerning how much should be paid for producing and supplying information, who should pay, and how payments can be collected.

2.2.1 Fundamental purpose of government and need for information The fundamental purpose of government is often expressed broadly in constitutional terms as to provide and maintain ‘peace, order and good government’. 26 Whatever that means in practice becomes open to interpretation. The idea of ‘peace’ may be contrasted to war and conflict with their profligate use of energy and resources. The idea of ‘order’ may be contrasted with chaos — of knowing rather than not knowing what to expect insofar as socially acceptable human behaviour is concerned. The question of whether a government is ‘good’ might be somewhat subjective but will generally allow people to attain a reasonable standard of living — to live and let live. History is replete with examples of ‘bad’ governments. Generally, they become noteworthy through their undue demands for and wasteful use of resources, and their denial of personal freedoms.

Keeping the peace depends on people reaching understandings and agreements about what is socially acceptable behaviour and then behaving accordingly. This involves learning how to behave; and it occurs for the most part through contact with a variety of non-government associations and organisations rather than the formal studies of law as undertaken by lawyers. Nonetheless, the less formal learning processes allow a ‘rule of

25 Karrie Peterson, Elizabeth Cowell and Jim Jacobs, ‘Government documents at the cross roads: the move from paper to online access imperils the public's right to information’, American Libraries , September 2001, pp.52-55 26 Australian Constitution, s.51 36 CHAPTER 2

law’ to exist; and the ability to reach workable understandings becomes the basis for social and economic organisation and economic well being. As an example, the United Nations Development Programme (UNDP) sees the building of a capacity for governance as central to sustainable human development. The Programme recognises governance as: … the exercise of political, economic and administrative authority in the management of a country’s affairs at all levels. Governance comprises the complex mechanisms, processes and institutions through which citizens and groups articulate their interests, mediate their differences and exercise their legal rights and obligations. Good governance has many attributes. It is participatory, transparent and accountable. It is effective in making the best use of resources and is equitable. And it promotes the rule of law. 27 In elaborating on the nature of governance, the same policy document states that: Governance includes the state, but transcends it by taking in the private sector and civil society. All three are critical for sustaining human development. The state creates a conducive political and legal environment. The private sector generates jobs and income. And civil society facilitates political and social interaction - mobilising groups to participate in economic, social and political activities. Because each has weaknesses and strengths, a major objective of our support for good governance is to promote constructive interaction among all three. 28 In comparing the respective strengths and weaknesses of government, commerce and non-profit organisations and their contributions to a democratic society, key features are: • Government — where people have no choice but to pay taxes and obey laws as determined by a representative parliament. Insofar as government agencies depend on an appropriation of resources by the parliament to perform their duties, they are not free to cease performing existing tasks or take on new tasks without authority from the parliament. Innovation is confined mainly to increasing efficiency in existing services; and advising on appropriate regulatory responses to changing technological, economic, social and environmental circumstances. • Commerce — where people have some freedom to choose how they will satisfy their individual needs through the operation of markets. This ability to satisfy individual needs depends on interactions between producers in the value-adding processes of production; and between producers and consumers. Markets are suited to production and distribution of commodities where property rights, contracts and liability rules can be described sufficiently to be legally enforceable without incurring prohibitive transaction costs. • Civil society — where monetary and in-kind contributions of manpower and resources allow provision of services on a not-for-profit basis.29 This important area of non- commercial activity has evolved historically out of:
medieval ecclesiastical institutions that provided schools and higher learning; and care of the sick, the incapacitated and the poor; but became secularised since Tudor times in the social welfare functions of the state:
trade-related guilds that foreshadowed modern trade, commercial and professional institutions: and

27 Jame Gustave Speth, Administrator, United nations Development Programme, Governance for sustainable human development: A UNDP policy document, UNDP, January 1997 accessed at URL 28 ibid. 29 Lester M Salamon, Megan A Haddock, S Wojciech Sokolowski and Helen S Tice, Measuring civil society and volunteering: initial findings from implementation of the UN handbook on non-profit institutions , Working Paper No,23, Baltimore MD: John Hopkins Center for Civil Society Studies, 2007, accessed at URL OVERVIEW OF CONCEPTS AND THEMES 37

organisations claiming special knowledge and interest in various issues, and often attempting to influence political decision-making in the making and administration of public policies.

Nowadays, learning gained through experience — described variously as ‘on the job learning’, ‘action learning’, ‘evidence-based policy making’ and the like — is seen as a driver of economic development. In 1996, Stiglitz referred to the World Bank’s change of focus in financing economic development as follows: We now see economic development as less like the construction business and more like education in the broad and comprehensive sense that covers knowledge, institutions, and culture. 30 Other UN agencies promote ‘sustainable human development’ — an idea where development of people is seen as central to socio-economic development. 31 The opportunities for people to realise their potential is a central theme of the United Nations Development Programme and the publication of a range of statistics to provide international and interregional comparisons of socioeconomic progress. Understanding the importance of evidence-based analysis and using it to measure human development is critical not only for policy makers, but also for civil society at large. In the absence of this evidence, other forces fill the vacuum. These include powerful and sectional interests, corruption, political ideology and arbitrary practices based on anecdote. Evidence-based policy-making is the only form of policy-making that is fully consistent with a transparent and accountable democratic political process. 32

Development of human potential is often described alternatively in the terms of ‘capacity building’ or as investments in ‘human capital’. Humans can learn not only as individuals but also as members of teams, organisations or communities. Moreover, individuals are likely to belong simultaneously to more than one organisation or distinctive association. While talk about team learning is fashionable, the learning is essentially that of individuals within a team context. Each member learns how to fulfil a function and interact with other members. When members leave a team, they take personal knowledge of team interactions with them. When members join a team, they need to learn how to interact with other team members, but they can also bring experience from other organisations that may help to improve team performance. However, a team identity remains despite this need for continual re-creation of knowledge brought about when team members come and go.

Learning functions are of fundamental importance to a society that is able to retain its identity despite complete turnover of personnel through succeeding generations. Each new generation needs to re-learn how to produce and distribute goods and services performed in government, commerce and civil society. Diagram 2.2.1a is based on a premise that a mental map or model is not merely desirable but a logical necessity for

30 Joseph E Stiglitz, Senior Vice President and Chief Economist of the World Bank, ‘Public policy for a knowledge economy’, Keynote address in The knowledge driven economy: analytical and policy implications , held by Department for Trade and Industry and Centre for Economic Policy Research Conference in London, UK on 27 January 1999, p.3, accessed at < http://www.worldbank.org/html/extdr/extme/knowledge-economy.pdf > 31 Declaration on the Right to Development, adopted by General Assembly Resolution 41/128 of 4 December 1986, at Article 2(1) — ‘The human person is the central subject of development and should be the active participant and beneficiary of the right to development’ - accessed at URL < http://www.unhchr.ch/html/menu3/b/74.htm > 32 United Nations Development Programme (UNDP), Measuring human development: a primer - Guidelines and tools for statistical research, analysis and advocacy , New York NY: UNDP, September 2007, p.2 accessed online at URL < http://hdr.undp.org/en/media/Primer_complete.pdf > 38 CHAPTER 2

management of a system. The model suggests that the goal of socioeconomic development and good government is sustainable human development.

Diagram 2.2.1a A PRINCIPAL OBJECTIVE OF SOCIO-ECONOMIC DEVELOPMENT AND GOOD GOVERNMENT Recognising people as both the means and the ends of development

INVESTMENTS IN = HUMAN CAPITAL SUSTAINABLE HUMAN HUMAN HUMAN = KNOWLEDGE + ENERGY AND + OPPORTUNITY DEVELOPMENT MOTIVATION

Learning through Functions that Functions that Functions that experience support learning sustain health allocate resources

Education, training and information — Physical and Mental Health — Pre-schooling, primary and secondary Health services; food and nutrition; schooling, technical and further education, housing and shelter; sanitation; physical university graduate and post-graduate security; and quality in physical, social studies, on-the-job learning, information and economic environments services and public broadcasting

Innovation — Science and technology activities; GOVERNMENT INFORMATION research and development activities; and introduction of new products and Information and activities related to: processes • Authority — in use of resources • Planning - of future resource use • Monitoring — of use and abuse of Tacit Learning authority; and the efficacy of prior planning

PUBLICLY -FUNDED INFORMATION RESOURCES Written and recorded information • Current government information −−− transitioning to public archives: • Information resources held in public, academic and research libraries: and • Public broadcasting archives Informative things and places • Official seals and signs of authority; official symbols, emblems and flags: • Iconic signs on roads and public places; heritage sites, public monuments and landscape; botanical and national parks: and • Museums, art galleries, herbarium and zoological displays

Articulate Learning

OVERVIEW OF INFORMATION -INTENSIVE ACTIVITY TO UNDERPIN GOVERNMENT INFORMATION MANAGEMENT STRATEGY

Suggesting particular commonalities of purpose and need for coherence in policies related to education, innovation, and management of publicly-funded information resources.

OVERVIEW OF CONCEPTS AND THEMES 39

Diagram 2.2.1a also emphasises two information-intensive areas of government. The first involves a cluster of activities through which governments support life-long learning and the advancement of knowledge. The second involves a cluster of activities where government provides legislative, administrative and judicial frameworks to support resource allocations. These two areas are more particularly associated with productive learning. However, activities that promote human health are also important insofar as physical and mental health can motivate creative use of knowledge. Conversely, poor motivation, social alienation and problems of mental health can stifle creativity, and can lead to more destructive use of knowledge. This destructiveness can descend into vicious circles of violence and self harm.

Since the advent of the United Nations in 1945, the United Nations Education and Scientific Organisation (UNESCO) in 1946, and the Universal Declaration of Human Rights in 1948, the tendency in international relations has been to associate a philosophy of democratic government with basic human needs expressed as human rights. Ideas about ‘basic human needs’ within the social sciences have been strongly influenced by Maslow’s hierarchy of needs.33 Some debate revolves around the notions of what is ‘basic’ and a distinction between terms such as ‘needs’ and wants’. Maslow also recognised higher level needs in a pathway to self-fulfilment.34 Arguably, human needs tend to be life-preserving and life-affirming, and the administrative arrangements of government tend to reflect additional clusters around specialised areas of learning that are directed towards fulfilling these functions. Some minor differences exist in how these needs are described and clustered. 35

Advanced democracies may have similar overall objectives, but there are usually differences in how they departmentalise their activities. Federal systems add a new dimension to this departmentalisation. They usually develop historically when governments of small proximate areas see advantage in combining their efforts to achieve some common objectives. This commonality of purpose relates especially to national identity, international recognition and mutual defence. In ceding some responsibilities under a federal compact, the federal and a state authority can exercise different functions within the same territory. Alternatively, a state may cede territory and all of the responsibilities of government that attach to that territory.

The overview in Table 2.2.1 identities clusters of activities where commonality or coherence of purpose is especially desirable and should be expected. The situation becomes somewhat more complicated under a federal system with a division of responsibilities between federal and state government departments. However, the clusters in Table 2.2.1 are functions that support health, and join with learning functions to become major activities directed towards an investment in human capital and its maintenance. A more complete integration is evident in understanding how government: • manages resources under its own control: and

33 Ross Fitzgerald, ‘Abraham Maslow’s hierarchy of needs — an exposition and evaluation’, in Human needs and politics , ed by Ross Fitzgerald, Rushcutters Bay NSW: Pergamon, 1977, pp.36-51 34 Abraham H Maslow, The farther reaches of human nature , Harmondsworth Middlesex: Penguin, 1971 — contains several essays published posthumously that explore concepts such as ‘meta-needs’ and ‘meta-motivation’ related to the quest for people to reach their full potential. 35 Peter A. Corning, ‘Biological adaptation in human societies: a ‘basic needs’ approach, Journal of Bioeconomics , Vol.2 No.1, January 2000, 41-86 40 CHAPTER 2

• establishes a regulatory framework governing use of resources held by individuals and non-government organisations.

Table 2.2.1 EXEMPLIFYING ACTIVITY CLUSTERS AND AREAS OF POTENTIAL FOR BENEFICAL SIDE-EFFECTS THOUGH CONSISTENCY AND COHERENCE IN PURPOSE IN DELIVERING GOOD GOVERNMENT Clusters Functions with potential for beneficial side-effects

Health services Medical, dental, hospital, recreation, disease prevention,

Food and nutrition Agriculture, food and packaging standards, quarantine and bio-security

Housing and shelter Owner-occupied and rental accommodation, thermo- regulation in human habitat, access to supply of clean air, water, food and employment

Sanitation Clean air and water, safe waste disposal

Physical security National defence, police protection, fire safety and emergency,

Physical environment Built environment, transportation and communication infrastructures,

Socio-economic environment Employment, social security, worker’s compensation, governance infrastructure

Diagram 2.2.1b provides an overview of the information activities that accompany allocation and use of resources. These activities produce public sector information as written records with a basic structure and purpose that become important in considering what it means to invest in information infrastructure. Governance of resources involves the granting of authority in some form to do things or use materials; planning that involves the use of resources to achieve outcomes over one or more accounting periods: and monitoring to account for how authority and resources have been used. This harmonises with legislative, budgeting and auditing processes of government and provides a basis for describing most public sector information activities. 36

Diagram 2.2.1b STRUCTURE OF PUBLIC SECTOR INFORMATION

Authority

Modifications to authority based Planning on experience of management performance Accumulation of experience to improve future planning Monitoring

36 Section 3.3 deals with ‘Structuring of information to achieve governance’. OVERVIEW OF CONCEPTS AND THEMES 41

Monitoring provides a basis for considering democratic government as a collective learning through experience. The processes of producing and disseminating public sector information can be aligned to reinforce a cluster of education and other activities that become investments in human capital and provide a well informed workforce and citizenry. 37

The general categorisation of information activities according to authority, planning and monitoring regimes is relevant also to accounting for resources in non-government organisations. The major difference between government and non-government activity is that government has a judicial arm for an ultimate resolution of disputes according to law. The role of the judicial system and the recording of its proceedings are included herein as monitoring activities.

A number of factors contribute to the complexity of modern government; and these factors include: • Increasing diversity in the range of goods and services. • Multi-disciplinary responses with attendant problems in multi-disciplinary communications in addressing problems. • Increasing needs for intergovernmental cooperation at local, regional, national and international levels. • Alienation within large organisations and loss of understanding about commonality and coherence of purpose. The chances of systemic failures increase when people are at cross-purposes.

People can learn to do things collectively that they would find difficult or impossible to do as individuals. Individuals need to form understandings and agreements about how they can work together if they are to participate freely in activities that affect their own well being. In 1835, and based his personal observations, de Tocqueville noted: In democratic countries, knowledge of how to combine is the mother of all other forms of knowledge; on its progress depends that of all the others. 38

2.2.2 Economic factors in producing information Chapter 4 discusses economic factors that influence how resources are allocated to the production of information in general and government information in particular. The capacity to exercise control begins at the level of an individual; and then proceeds through organisational hierarchies of increasing size and scope. This indicates a need for: • Self-control at the level of individuals that depends on information intensive activity — as in ‘hand-eye coordination’ — and allows an individual to perform productive activity. • Control within groups and associations involving persuasive authority; and degrees of mandatory compliance as conditions of ‘membership’ of various groups, associations and organisations.

37 Section 4.5.2 on ‘Better regulation’ refers to policy alignment. The Guiding Principles for Regulatory Quality and Performance that were updated as seven principles and adopted by the OECD Council in April 2005 38 Alexis de Tocqueville, Democracy in America , 1835, p.323 42 CHAPTER 2

• Control at the level of society in the form of a government; albeit with hierarchy possible also in levels of government.

The human species could not survive without personal interactions. Individuals would not exist without parents; nor survive formative childhood years without care-givers. The basic learning that underpins a society’s ability to organise itself begins with childhood learning of self control and socially acceptable behaviour. It leads eventually to learning how to communicate, reach agreements and make commitments that allow organisations to function at all levels — from basic family units up to many kinds of highly specialised global organisations.

Systemically speaking, a human being comprises complex cellular structures. These structures combine to form various subsystems that include a sensory system; the brain as a central coordinating system; and the nervous system as a mechanism to fire muscular activity. These subsystems combine to provide stimulus/response mechanisms that are fundamental to all control systems. An entity that learns how to respond appropriately to various stimuli in the interests of its continuing survival is ‘intelligent’ and has attained some sense of what it actually means to ‘manage’ or exercise ‘control’. At a basic level, hunger and thirst will stimulate searches for sources of food and water. Information intensive activity combines with use of human energy to enable systematic hunting and food gathering. The processes of hunting, gathering and consuming provide learning through experience that is retained within living human memory. Consuming food as fuel and breathing air containing oxygen allows a ‘burning’ or conversion of the fuel into energy to perform further hunting and gathering; among other things. Rhythmic biological processes merge with diurnal and seasonal rhythms; and loss of rhythm may create systemic instabilities such as famine and drought in the biosphere or arrhythmia in the human heart beat.

The urbanised individual is unable to rely on hunting and gathering; and the search for sustenance depends on a sufficient number of able-bodied people finding different ways of working for a living. Human sustenance then depends on a range of technologies that conserve and transport food and supply water; but this tends to alienate urbanised individuals from the biorhythms related to food and water supply. Production and transportation technologies harness energy; but poor design, construction, use and maintenance of powerful technologies can have serious and even fatal consequences if mistakes are made. Decisions of overworked and exhausted workers may be a disadvantage to all concerned; but too little physical or mental work is also unhealthy. Some deterioration may occur through entropic processes where non-use of memory or failure to keep information ‘energised’ can lead to loss of human skills; loss of human and artificial memories; and the ‘death’ or extinction of language. These phenomena are often encapsulated in the maxim — ‘use it or lose it’ in relation to human memory and physical coordination.

Increasing productivity in agriculture generally decreases demand for agricultural workers. Further improvements in standards of living then depend on redeploying displaced agricultural workers to manufacturing and service sectors of the economy. Effecting this change usually requires innovations to produce new goods and services. The disinvestment and reinvestment in workers’ skills can be psychologically disturbing if displaced workers are left unemployed and doubting their self worth. Furthermore, improvements in manufacturing equipment and processes can reduce the need for labour in manufacturing; and entail further redeployment and re-skilling of labour to maintain OVERVIEW OF CONCEPTS AND THEMES 43

employment. Early manufacturing in sub-sectors comprising food processing and clothing and apparel depended on a supply of raw materials from plants and animals. Mining supplied solid, liquid and gaseous fuels to power machinery; and metals and minerals for use in manufacturing. A civil construction sub-sector of the tertiary sector used timber and quarry materials supplied by the primary sector. Each primary sector extractive process and secondary sector manufacturing process has interactions with the transport and construction elements of the tertiary sector. The transportation and transformation of physical materials and the physical nature of value added products allows excess production to be stored as inventory and used as necessary to cope with fluctuations in demand. Examples of public infrastructure investments appear in ancient granaries and water storage, although their construction was not labelled as tertiary sector activity before development of national accounting standards in the 1900s.

Managing inventory is basically a problem of maintaining savings or assets. Inventories of raw materials and components can help to maintain production schedules. Inventories of finished products can help to maintain a flow of production through periods of fluctuating demand for finished physical products. The costs of holding inventory depend on characteristics such as bulk, perishability, inflammability and susceptibility to pilfering. Fluctuations in value can occur over the period that inventory is held; and variations in foreign exchange rates and the politics of international relationships can also affect holding costs where international trade is involved. Managing reserves of cash is a special case in managing inventory as reflected in accounting, banking and monetary systems and methods of operation. Retaining access to knowledge and to flows of information are also special cases of an inventory management problem.

The interconnectedness of production and marketing schedules becomes apparent when access to human resources is also part of production scheduling. The ability to live in reasonable proximity to places of extraction, manufacturing and assembly becomes an important reason for people to live in urban areas. The coordination required to maintain human life in urban habitats is complex; and is identified as a problem of ‘organised complexity’ in the 1961 work on The death and life of great American cities .39 In this kind of thinking, the city is a living thing; and just as a sustainable ecosystem depends on biological diversity, sustainable city life depends on socioeconomic diversity. Some towns gain stability as a location for government services — in defence, universities, research centres, major hospitals, and central or regional agency services, for example. Conversely, when mining or manufacturing loses its financial viability, ghost towns, urban slums or blighted manufacturing areas can occur and city life can be said to die.

The spatial relationships between sources of supply of raw materials, lines of transportation, locations of towns in relation to other towns and their hinterlands, and location of workers and consumers contribute to a living spatial economy. Urbanisation is an aspect of the spatial economy and a form of specialisation in how land is used. Changes in urban form reflect the cultural heritage of urban dwellers and various compromises needed to respond to technological change. In medieval Europe, larger towns were often centres for longer range trade over land routes and through sea ports. The channelling of physical product through these centres allowed economies of scale in merchandising; and profitable trade could support more specialised arts, crafts and professional services in commerce and government. The towns also acquired political significance in centralising assessment and collection of government revenues in the form

39 Jane Jacobs, The death and life of great American cities , Harmondsworth Middlesex: Penguin, 1961, pp.442-447 refers to the analysis of Warren Weaver that is cited in this work in Section 3.2.1.1 – ‘Grades of complexity 44 CHAPTER 2

of taxes such as customs and excise; and as a source of loan finance. The forms of governance for towns set the scene for establishment of towns and local government under royal charter. 40 Many of the ideas inherent in later statutory forms of local government were based on a delegation of authority and responsibility for economic development in declared geographical areas.

Closure of mining and manufacturing plants is a form of disinvestment that can impose social costs on communities. The winding-down of large-scale private enterprises can reduce government revenues through reduced use of existing public infrastructure. Second and subsequent rounds of effects occur if unemployed people defer spending their savings, obtain unemployment relief from the wider community or find new employment by moving to new locations. Local governments can find themselves as rivals in promoting and seeking economic development within their designated areas. They become targets for the special pleading of dominant private enterprises that seek either advantages or reduced obligations related to their existing or prospective operations. A further political factor emerges because people make investments too. They vote in local and other elections to influence decisions made on their behalf as taxpayers; and they usually participate in the life of their communities.

In an information society, the intellectual input of knowledge workers increases in significance at the same time that manual labour is replaced by machinery. Intellectual input can be replaced to some extent by information and communications technology where intellectual tasks follow algorithms or routines.41 However, intellectual tasks that require interpretation and judgement do not permit quantification and counting as piece work in financial accounting systems. Most introductory economic textbooks contain oversimplified ideas about ‘labour’ that fail to capture the complicated nature of investment in human capital and the potential for ambiguity in valuing flows of information. As a consequence, they can be quite misleading in guiding labour economics and policy; and in regional and town planning as it relates to the living and working arrangements of knowledge workers.

Human resource issues involved in productive enterprise are not so much about how to share benefits when things go well as how to share dis-benefits when things do not go so well. Traditionally, agricultural workers and fishermen could retain somewhere to live and something to eat for themselves and their families — albeit with some belt-tightening in poor seasons. Workers had ways of being uncooperative in reacting to perceived injustices in their working arrangements. However, mechanisation overtook the role of manual workers in many operations in agriculture and manufacturing. The nature of risks borne by workers also changed — especially in relation to industrial accidents, under- and un-employment, and homelessness. New institutions evolved to share benefits and new risks associated with new forms of production. While this evolution was basically a variation on the themes of share cropping in agriculture and fishing; continuing changes to social security arrangements signify the ongoing nature of this evolution as part of technological change.

40 Francis Sheppard, London: a history , Oxford UK: Oxford University Press, 1998, Chapter 6 – ‘The emergence of the medieval capital’, pp.92-122. The Corporation of the City of London was established to recognise the town’s special powers to govern commercial relationships and to be represented in decisions related to national taxation. Some of its unique governance arrangements survive from feudal times. The legal instruments that established colonies as trading corporations in colonial times contained many similarities. Many localised governments were eventually established as statutory corporations under ministerial control. 41 Section 2.1.5 – ‘Classification of knowledge work’; and Section 3.3.3.4 – ‘Financial accounting and auditing’ both elaborate on these issues. OVERVIEW OF CONCEPTS AND THEMES 45

In general, as required levels of knowledge and skills increase, workers operate not so much as additional ‘eyes and ears’ to see what a manager might see if he or she had time. Knowledge workers are employed to ‘see and hear’ things that are important to the functioning of the productive entity that managers are unable to see and hear because they do not personally have requisite knowledge and skills. Levels of trust need to increase as workers become authorised to speak on behalf of the firm in particular matters; and to take particular actions as part of an employment contract. In performing these functions, workers make prior investments to acquire knowledge and skills, maintain their own health and that of their families, and reside within reasonable distance of their place of work. Workers also make investments in the education and well being of their dependents; and this helps to ensure a future supply of skilled workers. Again, simple ideas about supply and demand for footloose unskilled labour bear little resemblance to the reality and complexity of employment and its value from a social point of view.

The long-term nature of town and regional planning and it impacts on urban and regional economies often leads to competition between jurisdictions to attract industries in the hope that they can provide long-term local employment. Negotiations between local governments and private developers can be eminently corruptible in the absence of effective anticorruption measures. Matters for negotiation go beyond distribution of resources to include who accepts the political accolades and economic benefits if things turn out as good as or better than planned; and who accepts the political consequences and economic costs if things do not turn out as expected. The quality of living and working conditions and the state of the natural environment influence the quality of air, food, water and medicines that people ingest. The quality of these ingestions has an influence in turn on the health of human individuals and their quality of life. This creates positive and negative feedback that link quality of human life with the quality of living and working environments where there is considerable circularity in the loops of cause and effect.42

The capacity of individuals to control the things they ingest is complicated by exigencies of lifestyle and the addictive nature of some foods and other substances — notably alcohol, tobacco and narcotics. Again, the elements of self-control begin with information. At the level of an individual, sensory deprivation produces severe disorientation and is generally outlawed as a form of torture. A complete incapacity to process information is a symptom of ‘brain death’ in a human being; and a loss of viability in a living organism or organisation.43 Poor learning can contribute to poor nutrition; and loss of physical activity can lead to atrophy in physiological systems. Accordingly, learning and working are life sustaining processes provided people operate within safe operating ranges with water, salt and temperature balances or homeostasis as preconditions for effective cellular nutrition to occur. 44 People learn attitudes to work through working; and criminal penalties and penal servitude have been expressed traditionally in terms of years of ‘hard labour’. Similarly, people learn attitudes to learning through experiences with the institutions of learning. Some people find learning and working to be satisfying and life sustaining. The possibility exists that many human activities in learning, work and recreation can seen in combination

42 Section 3.1.2 – ‘Automated systems’ that are also related to the self reinforcing mechanisms where success breeds success and failure breeds failure in so-called virtuous and vicious circles. 43 This has implications for ideas pertaining to ‘equilibrium’ in neo-classical economic models; for an economy based on innovation must be open to information. It cannot be in equilibrium because there is a constantly changing status in human capital; and it cannot ‘optimise’ in any strict sense because people can always change their minds about matters involving prior allocations of resources. 44 Refer to articles on ‘Homeostasis’ and ‘Human homeostasis’, Wikipedia, accessed online in at URLs and 46 CHAPTER 2

rather than as separate, distinct and often mutually exclusive activities. If learning and working are life sustaining, the possibilities are that deferring retirement through access to enjoyable learning and working may provide a viable option in managing the health and social welfare problems associated with aging populations.

Tertiary sectors of developed economies are highly interconnected with their primary and secondary sectors; yet attitudes often portray sharp rural-urban divides. In Australia, the tertiary sector is the largest employer; but the sector is a heterogeneous miscellany of activities that does not lend itself to simple analysis. Some argue that recognising a quaternary sector would be useful in separating services involving physical products from services concerned mainly with information and advice. In addressing the problem of how to sustain workers through perturbations in demand, opportunities for self-help in using ‘spare time’ productively vary considerably across the tertiary sector.

Categorisation of the tertiary sub-sectors according to the capacity for self-help through the build-up and run-down of inventory might help in developing strategies to relieve unemployment if it looks like happening. Some services such as housing or road construction can be performed in advance of actual demand to allow a build up of inventory or improvement of assets while maintaining a viable work force and construction capacity. There may also be some capacity to enhance asset values, maintain employment and retain workforce skills by adjusting preventative maintenance routines. Health services may exist although people may be unwilling or unable to pay in times of economic downturn; and some smoothing of demand can occur through health insurance. The opposite problem of too much demand for health services and hospital beds may occur through contagious disease emergencies and localised disasters; but can be addressed by large scale medical emergency planning. However, some workers who provide personal services or repairs have very little capacity to carry out work and retain it as inventory in advance of knowing exactly what needs to be done.

Particular problems in coping with the burden of unemployment can occur through a combination of being unable to do work in advance and where obtaining goods and services involving discretionary expenditure can be deferred indefinitely. Highly aggregated statistics do not reveal the nature of this unemployment with sufficient accuracy to allow governments to take effective remedial actions. The problem is to identify and smooth deviations from averages or trends to maintain some semblance of stability in overall employment. Remedial opportunities expand if subsidising employment is aligned with the objectives of publicly funded learning. Useful learning can become an investment in human capital under a variety of circumstances that may include: • Work experience; • Acquisition of knowledge and skills with formal recognition through authorised teaching institutions and accreditation agencies; • Part time activity though sporting, recreation, and hobby activities; • Informal reading and other intellectual pursuits; and • Holidays and travel that allow recreation together with closer understandings of cultural, biological and physical heritages in particular localities.

Arguably, a range of learning experiences can help people to qualify for employment and build the kinds of ‘collective competence’ that are needed for community engagement in programs related to environmental and heritage conservation. However, production of OVERVIEW OF CONCEPTS AND THEMES 47

goods and services ranges from providing basic to higher level needs — from the consumption of staples that are vital in sustaining life to areas of refinement that are not needed to sustain life and where consumption and investment expenditure can be deferred. Much of the problem for modern economies is that if people are to be employed at all, many will be providing goods and services in areas where expenditure is discretionary and can be deferred if general economic conditions seem uncertain. Deferrals lead to a downturn in economic activity, and if they become sufficiently severe, they can lead in turn to a downward spiral where economic inactivity produces differential rates of unemployment. Sectors that produce staple goods and services may be able to maintain employment whereas those relying on discretionary expenditure may be unable to do so. Higher levels of education do not guarantee continuity of employment. People who are well educated though unemployed are likely to see unemployment as an injustice and become motivated politically to articulate and seek to redress their grievances. As an example, basic research can involve long lead times to produce results; and discontinuity in funding can do considerable harm to research programmes and the careers of researchers. Conventional accounting practices are incapable of recording the economic consequences of continuity and discontinuity in these learning activities. 45

Finding out how to do something for the first time can be costly compared to the cost of doing the same thing on second or subsequent occasions. Similarly, creating a tool, machine, device or pattern to build a prototype is costly compared to the cost of using the same method to produce a replica of the prototype. However, invention usually involves a merger of a new idea with pre-existing ideas to obtain synergy through the bundling of information elements. 46 Re-using knowledge is essentially a process of replicating, copying or emulation; and high fidelity replicating is often a characteristic of natural and artificial production processes. Examples include genetics, memetics, mass production, communication and measurement. Being able to recall from memory and re-use existing knowledge to advantage means that knowledge has economic attributes of capital. In this work, ‘memory’ is categorised as follows: • ‘Natural’ or ‘living human memory’ — where information needs to be passed on in the minds of living human beings and where particular knowledge is lost through the death of an individual. Here, ‘human capital’ is formed partly by living human memory and partly by human energy and motivation. Used in combination, they provide a human being with a capacity to do useful work — as represented in Diagram 2.2.1a. • Artificial memory — involving information as code or icons that can convey meaning for as long as there are people who have learned from a former generation how to decode, decipher, interpret and reinterpret information represented by the code or icons. The interaction between humans and various forms of artificial memory is represented in Diagram 2.1.9. • Embodied design information — where the learning of human designers becomes embodied within artificial things such as machines, computer programmes, pharmaceuticals and administrative procedures. This learning is capable of being reinterpreted — at least in part — though processes of reverse engineering. Metaphorically, this involves ‘taking things apart to see how they work’. However, the re-

45 Section 3.3.3.4 —‘Financial accounting and auditing’ discusses the conceptual and practical aspects of valuing information stocks and flows. 46 ibid., discusses ‘synergy’ in combining elements of information. 48 CHAPTER 2

use of this knowledge may be protected by intellectual property rights — principally, and often controversially, in patent laws. 47 Insofar as information contributes to the functioning of living things, taking things apart to see how they work is unlikely to reveal the contribution made by information intensive activity. ‘If you try and take a cat apart to see how it works, the first thing you have in your hands is a non-working cat’.48 Communication channels that connect sensory stimuli with motor responses in organisms are important elements of a system that provides coordination of activity within animals and humans. In considering how behaviour might be modified, it is important to distinguish between instinctual behaviour over which an individual may have little self-control and learned behaviour where retarining or relearning may be effective. In practice, public policy responses to socially unacceptable behaviour on the part of an individual are usually penal — involving punishment and retribution; or correctional — involving efforts at rehabilitation.

Learning begins when stimuli from sensory organs become ‘wired’ to or associated with cognitive functions and memory. ‘Re-cognising’ depends on recalling an earlier similar experience. Thus, the essential elements of learning through experience depend on observing, committing things to memory and recalling relevant experience in time to influence future actions as circumstances unfold. Interpersonal communication begins when infants learn language to describe their experiences. However, not all experience can be described; partly because individuals can acquire experience without being conscious of having learned anything; and partly because the necessary vocabulary has not been established in a way that permits communication. In trying to describe or explain a personal learning experience, people are not always able to say what they have learned or how they learned it.

Seemingly, deeper insights may require some recognition of the roles of linguistics and cognitive psychology as they affect learning at the level of the individual. Other understandings may be needed regarding the development of interpersonal channels and networks in a productive society. Coordination at the social level depends on collective sensory and motor activities; but the need is to appreciate how individuals learn to work together to solve problems collectively and coordinate their activities. The maxim ‘it’s not what you know, it’s who you know’ acknowledges limits to the knowledge of an individual and the interdependence created in seeking information and advice. But knowledge is also necessary to obtain information about who can give advice on particular issues. Perhaps, the more significant problem is to know what questions to ask; how to obtain advice and how to decide whether an adviser can be trusted. Accordingly, investment in organisation relies upon: • Individual learning — where capacity for new learning may depend on the advantages or disadvantages provided by previous learning. • Interpersonal communication channels — where authorities may exist at particular nodes in a network; and channel capacities may vary according to the direction of flow along each channel. As a result:

47 Padmashree Gehl Sampath, India’s product patent protection regime: less or more of “pills for the poor”? , United Nations University - Maastricht Economic and Social Research and training centre on Innovation and Technology, Working paper series No.2006-19, Maastricht, The Netherlands, 2006 provides discussion on this topic as it applies to pharmaceuticals, accessed online at URL 48 Douglas Adams, ‘Is there an Artificial God?’; speech at Digital Biota 2, conference held at Magdalene College, Cambridge U.K. made on 11 September 1998, accessed at URL < http://www.biota.org/people/douglasadams/ > OVERVIEW OF CONCEPTS AND THEMES 49

General information may flow easily in many directions to become common knowledge.
Some information might pass in two-way communications between experts with similar experience and language; but it may be ‘too technical’ to pass from an expert to a lay person or to an expert with a different body of experience and language.
Some information may be given as orders or ‘directions’ with the expectation that they will be obeyed unquestioningly. Typically, this applies when a parent steers a child away from a danger that the child is too young to understand. However, some risks may not be recognised by people of mature age if they have not acquired the specific knowledge needed to appreciate the particular nature of those risks. • Networks — where teamwork depends on intercommunication; and team leadership may involve information that flows from one or more nodes as sources of particular political, intellectual or moral influence in a network. • The disinvestment and reinvestment in communication channels that occur when people retire from particular positions and new appointments are made. The extent of disinvestment and reinvestment increases when a person exercises particular leadership functions and operate from an important node in the network.

In organisations, many aspects of production involve ‘make’ or ‘buy’ decisions. ‘Make’ decisions involve production that occurs according to planning, specifications and managerial commands within the organisation. Various levels of value-adding can occur at different stages of production in vertically integrated enterprises; and it is usually unnecessary to quantify how much value is added in economic terms at each stage. 49 This vertical integration can be complemented with additional processing or assembly of components involving ‘buy’ decisions that reach outside the organisation and where procurement of components, services or finished products is made through market exchanges. Thus, most large private organisations have bureaucracies that are similar to government bureaucracies. As Simon observed: Why, in a modern society, do we have markets, and why do we have organizations, and what determines the boundary between these two mechanisms for social organization? These questions go heart of the roles of our diverse political and administrative institutions, public and private, in contemporary society. 50 Two particular procurement issues arise. First, some commodities can be obtained in advance and held as inventory. Second, provision of some services cannot always be obtained in advance and people may need to be on-call to recognise and deal with issues as they arise. In general, factors affecting ‘buy’ or ‘make’ decisions can include: • Risks associated with interruptions to supply of raw materials and components required to maintain production scheduling. • Costs associated with maintaining inventory as inputs to production and outputs from production that can be affected by characteristics such as bulk, perishability, inflammability and susceptibility to pilfering. • The need for effective organisation and control in procuring inputs, marketing outputs and satisfying conditions of warranty and after sales service.

49 Some attempts at estimating value-adding use accounting methods and arbitrary apportionments. Where value adding can be shifted to a different jurisdiction with differing tax arrangements, some manipulation of accounting records can occur to allow profits to emerge in low-tax jurisdictions. 50 Herbert A Simon, ‘Public administration in today's world of organizations and markets’, PS: Political Science and Politics , Vol.33 No.4, December 2000, p.751 50 CHAPTER 2

• The need for people and advisers to be ‘eyes and ears’ of the organisation; and sometimes to speak for the organisation. These services usually depend on salaried personnel or retainers being available to deal with circumstances as they unfold — since some services are not capable of being kept on hand as inventory. • The possibility of purchasing particular commodities using competitive tenders, assuming that specifications of product quality and service performance can be written in advance to satisfy requirements for contract administration. • Risks that an entity may lose control in matters of pricing and scheduling when dealing with external buyers and sellers with considerable market power.

Particular attributes of a resource determine whether understandings can be created and maintained about its ownership and contracts to transfer its ownership or license its use to someone else. Attributes of exclusiveness compared to non-exclusiveness ; and rivalry compared to non-rivalry in consumption provide an idealised four way typology of archetypes as shown in Diagram 2.2.2. However, exclusiveness and rivalry are matters of degree and the diagram can only be indicative of the available resource types and resource management options. As an example, car parking space might be public and generally unreserved; or reserved for members of a particular class or club; or reserved for a single person. Similarly, a road might be non-rival in consumption when it has a considerable under-utilised capacity at off-peak periods but involve competition for space during peak periods. The question of exclusion applies in particular to physical things, where real property in the form of land and personal property in the form of ‘goods and chattels’ are archetypical of private property and are capable of being transferred to new owners in market exchanges. Diagram 2.2.2 RESOURCE CLASSIFICATIONS

Excludable Private property Club goods

• Rival/Excludable • Non-rival/Excludable • Management of these resources • Non-rivalry indicates under- is achievable through market utilised resource capacity. Some place mechanisms based on spare capacity is insurance property, contract and tort. against systemic failures.

TRESPASS Common property resources Public goods • Rival/Non-excludable • Non-rival/Non-excludable TO TO DETECT AND • These resources are often over- • High transaction costs of dealing PREVENT PREVENT

A FUNCTION OF A ABILITY FUNCTION used and depleted when popul- with beneficiaries individually are ation pressures exceed biological reduced if funding of these goods is paid for out of general taxation. Non -excludable capacities for regrowth.

Rival Non-rival A FUNCTION OF RESOURCE USE BY MORE THAN ONE USER WHERE USERS DO NOT INTERFERE UNDULY WITH EACH OTHER

If ‘exclusion’ is to be legally enforceable, socially acceptable methods of providing evidence of trespass need to be available at a manageable cost. Innovations in information and communications technology offer new options in problems of resource allocation with use of automated sensing and recognition features and computerised management of online micro-transactions. Similar issues occur in various permissions to enter premises and use plant or equipment. Issuing authority and verifying authorisations is part of the role of an authority regime. Authority can exist not only at the highest levels of OVERVIEW OF CONCEPTS AND THEMES 51

government but also at various levels of sub-delegation within public and private organisations.

Table 2.2.2a highlights the important relationships of mutual obligation that an individual has to a government — and thus to the rest of the community — and that the rest of the community has to individuals through the processes of government.

Table 2.2.2 a INDIVIDUAL SELF-CONTROL AND SELF-GOVERNMENT

Structures of legally enforceable rights and obligations a ffecting Entity the behaviour of individuals and joint ventures

• Collective dependency on creative capacities of individuals comprising knowledge; physiological health to work energetically; Individuals psychological health to motivate creative endeavour

• Ability to work in combination with other individuals

• Representatives rely on the consent of voters through fair electoral processes; and learn how to be a representative. • Representative Decisions of an assembled parliament confer rights and obligatio ns parliament on individual citizens. • Fair and reasonable parliamentary decision making can be persuasive rather than coercive when people who know how to be fair and reasonable are affected by the decisions.

Desirably, a society should be able to mediate issues of resource allocation in ways that can be seen as fair and reasonable. If this mediation does not occur, a society is likely to dissipate its energy and resources in civil disobedience and internal conflict. In developed countries, mediating the allocation of resources requires formal delegation of legally enforceable authority by a representative parliament. The extent of this delegation depends on the complexity and the geographic dispersion of issues covered by a society’s laws.

Table 2.2.2b provides an overview of this formal delegation by a parliament. The situation becomes more complex in federal systems of government and with the constitution of local governments. The formal delegation of authority reaches into all economic activity where people have legally enforceable rights and obligations. The legal entities that usually perform productive activities include the sole practitioner — where authority and responsibility resides in a single person; or some form of joint venture — where authority and responsibility resides in more than one person. Joint ventures usually take place in organisations; and organisations can engage in public and private (or non-government) enterprise. Non-government enterprise includes commercial organisations that depend on profitability; but it also includes not-for-profit organisations where solvency rather than profits per se may be a sufficient condition to sustain production. The not-for-profit organisations are often described as ‘civil society’ organisations. 52 CHAPTER 2

Table 2.2.2 b FORMAL DELEGATIONS OF AUTHORITY BY PARLIAMENT • Executive arm of government. Pubic Enterprise • Judicial arm of government. • Statutory office holders and corporations.

• Authority regimes to underpin institutions of property, contract, torts and the operation of markets. Private Enterprise • (Commercial and not- Authority for establishment, operation and winding up of various forms of private enterprise and rules for their incorporation. for-profit enterprise) • Authority for legally recognised standards, professional and trade qualifications, and mechanisms for consumer protection.

Table 2.2.2c provides an overview of the productive orientation of these major sectors in society.

Table 2.2.2c PRODUCTIVE ORIENTATION IN MAJOR SECTORS OF SOCIETY Public Enterprise Private (Non -Government) Enterprise Government Commerce Civil Society

Activities whose authorisation Activities where survival of Activities of not-for-profit and funding through compuls- firms depends on capital organisations that depend on ory taxes, levies and charges raisings, profits and loans subscriptions, fees for serv- depends on decisions by a obtained from people with ice, gifts, grants and in-kind representative parliament. some degree of choice about contributions to retain financ- whether or not they deal with ial solvency. the firm.

People can trade when they have access to resources through property rights and various permissions that allow property to be transferred and exchanged. Where people know well enough what to expect and are not coerced into making a transaction, the usual presumption is that they will trade to mutual advantage. This kind of trading depends fundamentally on institutions of property and contract as follows: • Property — generally requiring an ability to exclude people from unauthorised use of a resource. Owning something usually involves a right to use and the right to exclude others from using the thing. These rights can transfer to a new owner through a grant or donation, conveyance in a sale, operation of inheritance laws or through some other legal process. • Contract — allowing people to make interpersonal commitments to each other under arrangements that are legally enforceable.

Property involves a relationship that an owner has with the rest of the world. While a property owner has a responsibility to take care of property and pay taxes, the community too has a responsibility to respect the owner’s rights. Contract involves an interpersonal relationship involving a promise to perform according to an agreement — usually a promise by one person to supply a good or service of a particular quality and a promise by the other person to pay a particular amount at a particular time. Under contract law, courts OVERVIEW OF CONCEPTS AND THEMES 53

can order people to live up to their promises — provided that the promises are about doing things that are within the law; and it is also seen as fair and reasonable that the promises should be kept. These mechanisms for control over use of resources depend on the ability to detect and take legal action in relation to infringement of property rights and permissions to use property; and in relation to non-performance in contracts.

While notions of property and contract have underpinned trading relationships since antiquity, a law of negligence is of relatively recent origin. Arguably, it developed since the 1920s in response to problems of apportioning economic loss under conditions of mass production, distribution and consumption. Consumers of final product became alienated from producers and distributors; and former doctrines relating to ‘privity of contract’ were unworkable in trying to redress losses arising from poor product quality in assembling many parts in concatenated chains of value adding. The courts adapted the common law to impose a duty of care on those able to foresee and take reasonable steps to avoid harm to someone else, even in the absence of a direct contractual obligation. Productivity improves when foreseeable harm is avoided. Accordingly, law relating to liability has an important place in modifying human behaviour in the interests of microeconomic reform. 51 Some laws of negligence now have a basis in statute law and include issues such as avoiding pollution where traces of chemicals used in agriculture, mining and industry might harm human health. The law extends to the mandatory inclusion of information in product packaging and other warnings that might avoid harm and promote safe use of goods produced for mass consumption.

Markets depend on being able to negotiate contracts successfully. A great deal of information intensive activity either does not ripen into formal agreements or is pre- contractual in nature. Contract law identifies some of this activity by distinguishing between an ‘invitation to treat’ and an ‘offer and acceptance’. Sending an invitation is a one-way communication; and it becomes a two-way communication if an invitee responds to the invitation. Examples of invitations include advertising, shop displays, web sites, calling tenders and seeking expressions of interest where prospective sellers and buyers are motivated to let people know about things they have to offer. Examples of responsive activities include window shopping, browsing, searching and researching where people are motivated to learn about things on offer.

When a buyer and seller both see a market exchange as beneficial, and no third party is affected adversely, the exchange produces a ‘win-win’ situation that is unambiguously beneficial. 52 If one party gains while someone else loses somewhere, deciding whether society as a whole is better off involves some ambiguity. Gains to one person may be greater than, equal to or less than losses to one or more other people and a net loss to society becomes a possibility. Apart from market exchanges that depend on contract law, alternative cooperative ventures allow people to achieve things collectively that might not be achievable otherwise. People may be willing to negotiate and cooperate to mutual advantage without having any intention of entering into formal agreements that are legally enforceable. Voluntary and formal arrangements exist in professional and trade organisations; but voluntary and informal arrangements often underpin local cultural and sporting associations of civil society. The contributions of volunteers to a productive

51 Section 4.2.2.2 – ‘Risk allocation through liability rules’ gives a more detailed historical account. 52 The underlying assumption is that parties are well informed about the transaction and are well placed to know how their interests are being served. This is the Pareto criterion for welfare improvement. In essence, it is a tautology insofar as it says that things get better if they don’t get worse. 54 CHAPTER 2

society include useful learning experiences, improvements in human well being and development of human capital.

If peace and order are to be maintained, governance mechanisms need to deal with the practical problems of instilling principles and rules in the minds of members of the community to govern the possession and use of resources. While new technology increases the potential for new products and processes, it also increases the potential for new forms of abuse. Establishing new forms of governance becomes a significant challenge in a number of ways: • The variety of potential sources of abuse increases to make things more complicated in understanding production; the risks involved; and who might be affected. • The power of the technology can make increasingly momentous adverse effects occur in decreasing intervals of time. • Particular technologies can produce changes that are gradual and imperceptible from day to day but insidious in their cumulative adverse effects — especially in matters involving the environment and human health. • People who can decide when and how technology will be used are often able to appropriate opportunities and benefits associated with its use. They do not necessarily know how to recognise, avoid or effect remedies associated with adverse effects caused by accidental, incidental or intentional use and misuse of technology. • The interconnectedness of a modern economy increases the chances that risks and actual costs of adverse effects arising from use and misuse of technology will occur to people who have no say in the decisions. • The gradual nature of change affecting living things makes it difficult to meet standards of ‘proof’ and produce evidence to substantiate civil claims for damages. In contrast, it is relatively easy to create doubt about evidence of cause and effect, and the risks about whether some imagined events might actually occur. • Where there is substantial difference in the financial power that litigants can devote to legal action in civil claims for damages, some of the risk might be borne under forms of insurance. However, where the risks are not easily insurable, some redress might be found where the law allows a collective burden of proof to be met through a class action.53 • Democratic societies become vulnerable if matters are left to experts who lose sight of the socioeconomic consequences of what they do; and who are also unable to explain their ideas and actions in ways that can be understood by a concerned community. While task specialisation leads to information asymmetry, the asymmetry does not lead inexorably to ‘market failure’. Specialists do not always take unfair advantage of their special knowledge to the disadvantage of other parties. Nonetheless, an ability to discover and expose deceptive behaviour seems likely to reduce the chances that unfair advantage will be taken. In addition, people who value the truth — so far as it can be ascertained — are also likely to be concerned about potential for self-deception. The capacity for self- deception increases significantly when management of a productive entity becomes separated from the interests of owners, consumers and the general community.54

53 Stephen C Yeazell, ‘ Group litigation and social context: toward a history of the class action’, Columbia Law Review , Vol.77 No 6, October 1977, pp. 866-896 54 Section 3.3.2.6 – ‘Design of risk management strategy’ refers to groupthink and the dynamics of self-deception in groups of people. OVERVIEW OF CONCEPTS AND THEMES 55

The changing nature of control over information, energy and physical resources provides some insight into technological progress. Many of the effects of this progress are written on the landscape as part of an evolving spatial economy. Production processes begin with being able to find useful things and transport them to places where they are potentially even more useful; and knowing how to combine and transform resources into more useful things. 55 The roles of information, energy and physical resources as key factors of production can be considered briefly as follows: • Information — an ability to learn useful things and harness sources of useful information. Changes in how information is recorded, retained, analysed, transmitted, used and reused determine the forms of socioeconomic organisation that are possible. Concentration of particular information intensive activity in sources of education and training to educate a workforce; with advertising, warehousing and retailing and other access to distribution and marketing all having implications for spatial economies and urban design. • Energy — human energy and motivation together with the ability to harness other forms of energy to perform useful tasks; where production calls for sources of fuel and energy generation for transformation in manufacturing processes and transportation of raw materials and physical products. • Physical resources — access to materials that can gain value by being transported to new places where they are more useful or where they can be transformed into new and even more valuable products. The viability of storing and transporting materials depends on factors such as perishability, and the value of products in relation to their weight and volume.

In recognising and attempting to analyse information, energy and physical resources as fundamental factors of production, the following broad areas of science become involved in describing systems and processes and anticipating the outcomes from their operation: • Life sciences — in matters related to flora, fauna and microbiology as forms of life within the biosphere; and connected to human issues through agriculture, nutrition, medicine and health. • Physical sciences — connected to physics and chemistry — and related more particularly with tangible physical products as outcomes of consumption and investment decisions. The tangibility of these products allows physical counting and measuring that facilitate contract specification and provide a basis for financial accounting systems. • Human sciences — sciences related to human character, motivation and behaviour. The human behaviour component is fundamental to analysis of public policy insofar as it is oriented towards preventing or limiting antisocial behaviour while facilitating and encouraging socially beneficial behaviour. Moreover, human behaviour reveals itself in individuals and in groups – such as community groups, associations, organisations and societies. The three broad categories of life, physical and human sciences are not mutually exclusive. Some public policy analyses need to bridge all three if they are to take many of the things that can make a difference to outcomes into account. Much depends on the capacity of humans as individuals to acquire personal knowledge, maintain personal health and live satisfying lives. Some of an individual’s satisfactions will depend on a

55 Section 4.2.3 – ‘Allocating factors of production’ 56 CHAPTER 2

capacity for working with other persons; and coordination of this work will depend on individuals acting as nodal points in networks of communication within various groups, associations and organisations.

Knowledge of how humans can work together as social animals and apportion benefits and risks is part of a cultural heritage. In the traditions of Western civilisation, some of this heritage includes the conventional accounting approach to factors of production as follows: • Land — understandings between individuals and the state over property rights to a particular land parcel; merging with contractual understandings between people in relation to use of particular land parcels. • Labour — human resources engaged under various forms of agreement involving sharing of benefits, costs and risks — as participants in joint ventures such as fishing or farming; in largely pre-determined contracts between employers and employees; or as independent parties in negotiated contracts. • Capital — things deemed worth retaining — as in money to be used primarily in facilitating future exchange; or other retained items having income-producing capacity or value in exchange.

Viewed historically, major shifts in the nature of employment can be traced as follows: • Primary industry — dating from ancient times and using husbandry of plants and animals to produce unprocessed food, plant fibres; and animal hides, skins and fibres. Nowadays, these activities involve many producers, many ultimate consumers, considerable homogeneity of products and many close substitutes. These circumstances resemble the neoclassical economic model of perfect competition where product prices are established in markets; and producers are under constant pressures to contain production costs. • Secondary industry — involving processing of agricultural produce; forest products and materials obtained from mining and quarrying. In this sector:
Ancient craft work and artisanship were associated with primary industries – as in the making of swords to provide territorial defence and ploughshares to increase agricultural productivity; but many older methods were replaced progressively by mechanised and automated manufacturing processes.
Developments in science and technology underpin new products for mass consumption — such as processed foods, pharmaceuticals, electrical goods, motor vehicles and electronic devices.
Manufacturing of physical products has been associated with economics of scale — unionisation of labour and politicisation of interests representing labour • Tertiary industry — involving activities with tangible and intangible outcomes. Some of these activities existed in ancient times but all current activities have been influenced by technological change and the need to interact with primary industry to maintain food and water supplies. Tertiary sector activities include:
Construction of public and private infrastructure in granaries; water storage and reticulation; and transportation on roads and through sea ports. Some of this construction has ancient origins but it now extends to include large-scale assets such as railways, airports, telecommunications, power generation and power reticulation. OVERVIEW OF CONCEPTS AND THEMES 57

Information intensive service delivery concerned with advice to government and commercial interests related to governance, tax and other accounting, and record keeping.
Personal services such as education, health, and cultural activities that might be provided by government, commercial and not-for-profit organisations using a variety of funding arrangements. Some activities tend to interact and overlap boundaries between basic primary, secondary and tertiary classifications. Thus, a farmer’s information intensive activity in assessing weather and market conditions may be dissected as farming activity. However, it may be dissected as a tertiary sector activity if a farmer pays a consultancy fee to a professional adviser for such information. The discrete dissection helps to avoid double counting of activity; but it underestimates the specific role and actual contribution of information intensive activity in production processes. Manufacturing has generally involved large investments in plant, machinery, and factories; and in the transport and communication channels for receiving raw and partly processed materials and in distributing consumer products. This investment has been accompanied by large investments in infrastructure. Larger enterprises associated with manufacturing and the provision of services such as water, electricity, fuel and civil construction usually have a considerable potential for economies of scale. Some of the effects of technological change on society can be summarised as follows: • Shifts can be identified over time in concentrations of economic and political power across sectors involving agriculture; manufacturing; energy; infrastructure; financial services; communications and mass media as responses to technological change. • The degree to which non-government entities acquire and exercise power within various sectors of the economy determines whether producers need to accept prices as determined in competitive markets or whether they can command prices in exchange transactions. 56 • The ability in public or private enterprise to command prices that contain ‘supernormal profit’ is like a taxing power if an individual cannot avoid paying the prices to obtain the commodities in order to sustain a reasonable standard of living.57 • Accumulations of capital in large public and private enterprises provide concentrations of purchasing power and inequalities in bargaining power in dealing with individuals as their various roles as employees, customers, clients and citizens. • Well funded organisations of government, commerce and civil society have a capacity to divert resources into advertising, public relations and the exercise of political influence in suggesting the direction and emphasis of public policies — usually with implications for distribution of wealth.

The development of electronic computers linked to telecommunications, an internet and a world wide web are associated with a knowledge economy and an information society. The ability to facilitate social interactions, commercial transactions and a variety of investments in learning has increased through use of various electronic platforms and devices to deliver sights and sounds, either as-it-happens or as digitally recorded events.

56 The degree of market power depends on the ability to make profits that contain economic rent – a component that allows a profit greater than normally required to bring resources into production. 57 The term ‘supernormal profit’ is used here as an alternative to ‘economic rent’ where the producer is able to receive more than what it takes to obtain normal rates of return on factors of production. 58 CHAPTER 2

Performance of song and dance is integral to most human cultures. Human life relies on its own cardiac rhythm and becomes adapted to diurnal, lunar and seasonal rhythms of nature. Song and dance are valued commodities in modern economies — and are usually categorised, along with live sporting and theatre performances, as experience goods. 58 Performers can agree to give performances — subject to controls over admission and limitations on rights to make and use recordings of the performances. Live performances and the playing of recorded performances can also contribute to learning things of value. 59 Such learning might involve the acquisition of physical dexterity, or the story telling of the dramatic arts. ‘Entertainment’ and ‘information’ are not mutually exclusive categorisations and there is no reason to expect that there should be a distinct boundary between the two.

Insofar as forms of exclusion can be made effective in relation to a commodity that is non- rival in consumption, these experience goods also have attributes of ‘club goods’. Where ‘exclusion’ relies on a system of intellectual property rights, the means for identifying owners and administering payments for use of copyrighted material tends to organise around: • Performers; and record or film producers; and • Authors and publishers.60

A beneficial good or service is non-rival in consumption when produced by a facility with under-utilised capacity. Sometimes, excluding people from access to the benefit is unworkable in a technical or economic sense or undesirable in a social sense. Typically, these are public goods and are usually produced by: • Government using funds obtained through general taxation; • Non-government associations with charitable, philanthropic or altruistic motivations that provide some services on a not-for-profit basis.

Where exclusion is feasible, the cost of providing a benefit to an additional user — its marginal cost of production — may be small in relation to the overall costs of owning and operating the facility. An additional road user, public transport passenger, hotel guest, library borrower, theatre patron, or sporting spectator is generally small in relation to cost of the facility. 61 Where exclusion is workable, an admission or other charge may provide a source of revenue to offset costs of providing the facility.

The theatre goer, sporting spectator or news paper reader has some idea of what to expect; but there is generally some novelty — even in a greater appreciation of the work obtained by playing or replaying a recorded version of the performance or in attending a repeat performance. A buyer accepts a risk about whether the experience will be appreciated; and a degree of uncertainty over the outcome is tolerated. However, news or advice may not be ‘good’ news in the sense that it may reveal tragic circumstances or

58 Section 4.2.2.1 – ‘Search and experience goods’ 59 Recognised as knowledge production in Section 2.1.2 60 Christian Handke and Ruth Towse, ‘Economics of Copyright Collecting Societies’, International Review of Intellectual Property and Competition Law , Vol.38 No.8, 2007, pp. 937-957, version posted Social Science Research Network on 12 July 2008, accessed online at URL . In Australia, ‘Copyright collecting societies’, Australian Government, Attorney General’s Department, information accessed online at URL 61 The potential for using discounted prices for off-peak users is often an attractive option in using a facility and maintaining a revenue stream; but the motivation and effets are quite different from predatory pricing. OVERVIEW OF CONCEPTS AND THEMES 59

warn of troubled times ahead. Since the very notion of risk management admits that ‘bad news’ is possible, the willingness to pay for this kind of information usually depends on the credibility, reliability and reputation of particular advisers. If more than one source of information is available and insofar as a fee is charged at all, some semblance of a market may be said to exist.62

Payments to authors and publishers of information often exhibit considerable variations in pricing. This is due, at least in part, to differences in motivations and efforts on the part of both senders and receivers of information. A commercial enterprise may resort to some form of advertising to let potential customers know about products and services on offer. A government seeking to obtain community understanding and cooperation in implementing public policy initiatives usually tries to provide information about reasons for the policy and how people can assist in achieving policy objectives. Not-for-profit associations may seek to raise awareness and influence charitable fund-raising or public policies where they have a particular interest.

Arguably, information becomes increasingly idiosyncratic when a producer or a user bundles new information with information that was known previously. Moreover, a bundle can contain elements of information that are general and widely used; or information that is understandable only by people ‘in the know’ through their particular experiences, qualifications or expertise. Bundles are often clustered around solving particular problems associated with planning and investment. The more that information is ‘customised’ around a client’s particular needs and specifications, the more it is thereby differentiated as a product. The fewer the alternative producers capable of satisfying the particular specifications, the less it can be regarded as supplied in a market. The fact that circumstances can vary considerably ought to suggest a need to be cautious about not inferring too much from schedules and diagrams that purport to show aggregated demand for information. In addition the bundling of elements of information into an information product is similar to the clustering and vertical integration of some services linked to the production of information in telecommunication industries. This poses considerable conceptual and practical difficulty in administering anti-competitive laws; and for attempts to use prices as indicators for efficient production.63

Uncertainty implies an absence of particular information; and the supply of information as code may not reduce the uncertainty if it is deemed irrelevant or has doubtful quality. Matters of relevance and quality can be subjective; and information may be preferred through choosing that may be judicial or prejudicial. The idea that ‘time will tell’ may be true sometimes but ‘time will not tell’ without people open-minded enough to hear or ill- equipped intellectually to understand the message. The net result is that information is transferred or exchanged in ways that are quite different from trade in physical commodities. In essence, appointment of an adviser is more political than economic in character. An adviser is appointed and sustained with an expectation that information and advice will be forthcoming without knowing exactly what the advice or its quality will be. This can occur through political or economic decision making — as in the following situations:

62 Kenneth J Arrow, ‘Uncertainty and the welfare economics of medical care’, American Economic Review , Vol.53 No.5, December 1963, pp.941-973 reproduced in Bulletin of the World Health Organization , Vol.82 No.2, 2004, pp141-149 63 Adrian Goss, ‘The Trade Practices Act 1974 (CTH) and the treatment of cluster markets in the Australian telecommunications industry’, Melbourne University Law Review , Vol.25 No.3, December 2001, accessed online at .

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• Schedule of rates tendering — where the schedules may involve use of automated sensing and data processing equipment to supply data in digital formats or information in other formats such as aerial photography. • Lump sum tendering – generally reserved for standardised reporting where the scope, forms of presentation and methodology are largely predetermined to allow preparation of tender prices on the basis of anticipated times of knowledge workers plus other material costs. • Cost-plus tendering — the more general basis for professional fees, but usually involving time-based charging for knowledge workers. • Payment of retainers for experts to hold themselves in readiness and be available to give advice at short notice; together with time-based charging for actual engagements.

Sometimes, a service may provide satisfaction that is practically immediate and transitory — as in the signalling of a traffic light. Benefits accrue to a person who gains safe passage while costs of operating the lights are met from current expenditure. In the absence of lasting effects, the service provision is readily dissected as consumption rather than as investment. By way of contrast, knowledge obtained from a traffic sign may have a lasting benefit to yield information for a particular trip – such as the turn-off to a particular location or the load limit on a particular bridge; or more lasting effects in the mind of a traveller that may provide cost savings on future trips. The ability to dissect some operating experience as both a current cost appearing notionally as a flow; and to have it retained as capital or learning though experience is pervasive in information intensive activities.

Although losses may occur through a collision of unfortunate circumstances, careful analysis might inform improved risk management strategy into the future. Similarly, careful analysis of a near-miss of potentially tragic circumstances might also provide improved risk management into the future.64 In contrast, nothing of much importance might be gained from tragic or near-tragic circumstances without doing the things necessary to observe, analyse, memorise and recall experience. This is a recipe for repeating mistakes and failing to learn through experience. Summarising, work that occurs under current expenditure provides on-the-job learning and contains components of investment in augmenting human capital. Although intangible, these benefits are nonetheless recognisable even though they are not quantified as an accumulation of assets in conventional financial accounting procedures. Moreover, although benefits reside as personal knowledge in the minds of individuals, this knowledge can include improvements to teamwork that can lead under favourable circumstances to improved productivity at various levels — agencies, firms, industries, regions and nations. Information is a necessary resource – though usually insufficient in itself — in producing a beneficial outcome. Table 2.2.2d is a generic check list of things that are easy to overlook but are important in developing systems of production. It shows that producing information in a coded form via the spoken or written word or through the digital output from some sensing or computational device will not lead inexorably to a clearly beneficial outcome. A series of events may need to take place before a beneficial outcomes is obtained; and some necessary steps can be easily overlooked.

64 Section 3.3.2.6 — ‘Design of risk management strategies deals with this issue in more detail. OVERVIEW OF CONCEPTS AND THEMES 61

Table 2.2.2d IDENTIFYING NEEDS OF PRODUCTIVE ORGANISATION AND REMEDYING SHORTFALLS IN MEETING THOSE NEEDS Necessary condition for production Actions required to remedy shortfalls That knowledge exists regarding how to Research and development into production design; construct or implement; operate; and and product alternatives; relying on operat- maintain a production system. ions research into technical aspects of production. That people who are expected to perform Education and training in each area of each of the tasks involved have the requisite specialisation required for adequate knowledge to do things expected of them. functioning. That people are motivated to perform the Questions of motivation need to be addressed necessary tasks. in wage and salary negotiations and contractual conditions of employment. Resources are available to fulfil the Timely supply of necessary resources from in necessary tasks. house holdings using resources obtainable ‘in- house’ or externally. That authorisation or permission is available Generally the information obtained through an to do whatever is necessary. authority regime that authorises particular people to do particular things with particular resources. That risk is understood and possibilities of Careful design and implementation of risk errors and mistakes are admitted. management strategies that includes error management.

An organisation is well regulated when it can perform the things expected of it and can do so efficiently through using the resources at hand to good effect. Using resources frequently occurs through political rather than market mechanisms and wherever there is some degree of monopolisation that can involve prices set by command or administratively, the situation deviates considerably from pricing in competitive markets.

The result of this analysis is to express a need for caution about what is known – or indeed what can be known in relation to long term investment, the role of money and issues related to measuring. However, in identifying what is probably intractable, attention can turn to what it means to develop an increasing collective competence to deal with emergencies. This leaves considerable scope for research that is in the nature of an investment, provided the research can be made available in forms that the various individuals in society can assimilate. This requires a fresh look at problems that needs to be solved and requires a significant reappraisal of how research agendas are set. 65

2.2.3 Factors in supplying information Chapter 5 proceeds from understanding: • Why information is needed — as covered in Chapter 3. • Whether it needs to be produced by government agencies or whether it can be produced by non-government agencies under competitive conditions with government funding or oversight — as covered in Chapter 4.

65 In this work, ex ante considerations have been considered as part of a planning regime under Section 3.3.2; and ex post , as part of a monitoring regime under Section 3.3.3. 62 CHAPTER 2

Chapter 5 introduces new issues related to the supply of public sector information. The production of information as a public record is quite independent of the scale on which it can be reused for purposes that may not have been contemplated at the time of its production. Supply of public sector information is influenced by a number of factors that include: • The ownership problem – Who owns information held by public sector agencies; especially where information is compiled or bundled together from numerous sources? • The access problem – How can decisions be made either to withhold or to disclose information held by public sector agencies be justified as matters of public interest? • The information licensing problem – How can controls over use of information in the context of copyright law be exercised or relaxed.

The separation of ownership of resources from control over their use became a noticeable feature of large joint ventures. Government is a joint venture insofar as is constituted as a corporate entity and a body politic. Numerous non-government entities can be similarly regarded as joint ventures — especially when constituted as bodies corporate by enabling statutes. A citizen does not acquire automatic access to public sector resources quite generally or to public sector information in particular that a government agency may happen to manage. Similarly, a shareholder of a commercial organisation or a member of a not-for-profit organisation does not acquire automatic access to information that belongs to these organisations. Rights of access to such shared resources are usually embodied in rules of the respective organisations.

In some respects, the principles for managing physical resources are similar to management of information as a resource. Thus, a motor vehicle and its ignition keys may be locked up to control use of the vehicle. Similarly, public sector information can be encoded on physical media as artificial memory and the media can be kept in a locked area; or the code can be encrypted to restrict its use. A motor vehicle may be used legally subject to conditions of a driver’s licence and compliance with rules of the road. Similarly, encoded information may be used legally subject firstly to the conditions of an information licence issued by a copyright owner; and secondly, to a more general compliance with the laws and norms of society.

Similarities between physical resources and information disappear when considering how these different kinds of resources may be used. A particular vehicle and its licensed driver can only be in one place at a time. In contrast, the same information can be in many places at the same time; and each piece of an information parcel can have a separate licence to inform potential users about how it may be used legally. Information as coded material can be replicated relatively inexpensively through technologies such as the printing press, photocopying and facsimile machines. However, replication of digital files that may contain separate pieces of information is relatively inexpensive using computer technology; and its dissemination at a relatively low cost can be achieved through networked computers. Advent of the World Wide Web around 1992 led to global movements towards government online, e-government and e-democracy, and changed the nature of library services and information management.

Technology that allows copying and merging of information electronically poses particular challenges for copyright administration. The problem may be likened to two or more travellers where each traveller may have different passport restrictions affecting where OVERVIEW OF CONCEPTS AND THEMES 63

they can travel. Thus, the ability of a whole party to travel together is limited by the individual with the most restrictive conditions. In a similar way, a bundle of information comprising tightly integrated parts with different copyright conditions is similarly limited in how it can be copied, transmitted and used by the part with the most restrictive conditions. This work refers to matters of copyright only insofar as they relate to immediate technical and economic issues in producing and supplying information. It defers to the work of legal scholars on important matters of detail. 66

The risks associated with supplying information on the off chance that it might create opportunities in the non-government sectors is clearly different from the risks associated with supplying information to satisfy a particular statutory duty; and is different again from the risks associated with supplying information to meet a contractual obligation that a government agency enters into voluntarily. Insofar as management of risk involves a cost, the supply of information can include an explicit cost such as an insurance premium when a risk is insurable; or an implicit cost if things do not go as planned and losses need to be recompensed. The risks of supplying information need to be weighed also against the cost of not supplying information. These risks are in opportunities and benefits foregone by not allowing information to be used for beneficial purposes. Table 2.2.3 summarises the more important risks encountered by public sector agencies in supplying or failing to supply public sector information.

Table 2.2.3 RISKS ASSOCIATED WITH SUPPLY AND NON-SUPPLY OF PUBLIC SECTOR INFORMATION SUPPLY NON-SUPPLY • Liability for breach of a contract between a • Loss of opportunity in testing the veracity of government and some other person information when there are serious risks that • decision makers in government agencies can Liability for breach of a duty of care that results be deceived by poor information on important in unauthorised disclosure of secret or private aspects of government policy information • • Losses of opportunity in failing to achieve Liability for breach of a duty of care where public cooperation and participation when it information is in error, misleading, or unfit for a could be advantageous user’s purpose • • Loss of opportunity where people can re-use Liability for careless or inadvertent breach of existing information to advantage at negligible copyright costs to government or the community

Economic consequences flow from too much or too little secrecy. Secrecy is justifiable when people are prepared to disclose information voluntary to allow the information to be available to government provided that they are not prejudiced by being associated with the disclosure. Examples include assistance to crime investigation and statistical collection agencies. In such cases, privacy of the informant may be a prerequisite for an informant’s cooperation. However, serious consequences can also flow from unnecessary restrictions on two-way flows of information between government agencies and persons within the

66 Some of the detailed work is summarised on the Government Information Licensing Framework (GILF) website at URL – more especially ‘GILF Resources’ at URL . Other information has been organised and collated by Anne Fitzgerald, (assisted by Neale Hooper, Baden Appleyard, Karen Buttigieg, Kylie Pappalardo and Brian Fitzgerald), Open access policies, practices and licensing: a review of the literature in Australia and selected jurisdictions , Cooperative Research Centre for Spatial Information (CRC-SI), July 2009, some of this information is accessible at QUT ePrints – URL 64 CHAPTER 2

government’s operating environment. Human pathologies such as deafness, muteness and paralysis often have organisational counterparts.

According to assessments by the Global Integrity Alliance that was formed after a World Ethic Forum Conference held in 2006, Australia rates highly in reputation for integrity but fails to allow objective testing in the court of public opinion to see whether this reputation is actually deserved. Australia may enjoy a global reputation for integrity in its government, but the public's ability to investigate and expose what corruption does occur is being severely curbed by unnecessary restrictions on access to information. If sunlight is the best disinfectant, then the mantras of privacy, security and trade secrets are being used increasingly inside government across Australia to justify keeping citizens in the dark. Spin-management by political staffers working for government ministers is one of the biggest hindrances to accounting for whatever corruption—including gross mismanagement—is happening. An increasingly politicized public service is learning that the best path to career advancement is to suppress, cover up and lie. As one retired major-general complained publicly this year, "The political staff will support their minister at all costs, including, probably, the cost of truth." The federal government has no standing anti-corruption body, choosing instead to rely on such checks as departmental internal investigation sections to assist federal agencies in controlling fraud and corruption. But the lack of an independent and aggressive corruption watchdog has allowed excessive interference by political staff from ministerial offices, who are often far too predisposed to cover up scandals and corruption. 67 Apart from issues of secrecy and privacy, a further set of issues emerge in relation to copyright law. Respect for copyright is a political issue with national and international dimensions; and it is naïve to suggest that it can simply be ignored. Copyright pertains to public sector information quite generally. However, this work refers in particular to surveying and mapping information for the following reasons: • Surveying information tends to get merged with other surveying information in the production of composite mapping and can complicate issues about copyright. • Information about time and place tends to get bundled with other information in the production of thematic maps and various statistics. Again, this can complicate issues related to copyright. • Recent cases before the Copyright Tribunal, the Federal Court and the High Court have given reasons for decisions pertaining to copyright in cadastral plans. These cases indicate that there are many practical difficulties in trying to respect copyright law.

Arguably, a workable solution needs to start with some understanding of the problems now encountered in making any new work that relies on earlier work; and where the earlier work may or may not have copyright protection. Abandoning copyright protection is perhaps impractical, given the place it now assumes in international and national trading relationships. However, the workability of copyright is also questionable. • Copyright is costly to administer – when overall costs of compliance by government agencies, copyright collecting societies, oversight by a Copyright Tribunal, the time of courts, and lost opportunities due to uncertainties about copyright are all considered.

67 Ross Coulthart , contributing journalist to World Integrity Alliance, ‘Australia: corruption notebook’, in Global Integrity Report 2004, accessed online at URL < http://www.globalintegrity.org/reports/2004/2004/country792c.html?cc=au&act=notebook > OVERVIEW OF CONCEPTS AND THEMES 65

• While copyright administration is expensive procedurally, it fails to provide incentives in many instances for innovation that are usually claimed as fundamental policy objectives associated with copyright protection. • These comments apply also to classes of information transfers and exchanges where governments receive information from the public, engage in work of compilation and further processing, and then redirect the results to the work of government or re-use by members of the public.

Computers and telecommunications allow efficient electronic information transfers and exchanges in a technical sense. However, the effect of information technology may be that of automating inefficiency in producing fundamental datasets unless there is also re- engineering of processes to avoid undue duplication of effort in their compilation. New arrangements need to involve producers and users in both government and non- government sectors to work out how to share the efforts, the risks and the rewards of this re-engineering.

2.2.4 Paying for government information A representative parliament has a right and duty to decide why government revenues should be raised, how they will be raised and how they will be appropriated. In addition, the parliament is responsible for satisfying itself — through its accounts committees and auditing processes — that revenues have been used lawfully, efficiently and effectively.

In exercising its legislative function, the parliament authorises the executive branch of government to perform particular functions. The parliament also passes appropriation bills that authorise the funding of those authorised functions within regular cycles of budgeting, accounting and auditing. Consequently, activities that are neither authorised nor funded should not be undertaken.

Sometimes, parliament authorises the production and use of particular information as a discreet government function. Examples include land registration, motor vehicle registration or registration of corporations. In such cases, the purpose in providing the information is generally clear; beneficiaries are usually identifiable; and applying a user- pays principle becomes possible. Parliament may prescribe other matters concerning these transactions such as: • Methods for assessing and collecting charges. • Whether compensation should be paid to those who suffer losses through misinformation or non-disclosure where fault is attributable to a government agency. • Whether it is desirable to distinguish between ‘ability to pay’ and ‘willingness to pay’ and make appropriate allowances as an equity issue.

Apart from registration processes that can be identified as part of an authority regime; governments also produce large volumes of information to meet other purposes of government. In meeting requirements of planning and monitoring regimes; parliament often legislates in quite specific terms about information production; as in requirements for strategic planning, annual reporting, and archiving. Other information may be produced as an implicit requirement — as in planning for services and infrastructure that may contain elements based on natural, engineering and behavioural sciences. Implicit requirements are likely to involve considerable discretion on the part of administrators. 66 CHAPTER 2

The pricing principles that emerge from the research in this work are summarised in Box 1.3.4. — ‘Key points — Paying for government information’. They depend on the nature of the transactions involved that may be summarised as: • No charging - Non-contractual supply of public sector information to anyone. • Charging — the circumstances can be considered as:
Supply of information by command of a statute to anyone who is entitled to receive it.
Inter-agency transfers and exchanges within a government as a single legal entity.
Transfers from and exchanges between a government as one legal entity in dealing with other governments or statutory authorities as separate legal entities.
Supply of information under terms of a contract with a private person.

The arguments related to charging for public sector information are generally based on grounds of efficiency and fairness perceived broadly as follows: • Efficiency — that may include issues such as effectiveness and synergy in achieving the purposes of government, administrative simplification, and the proportion of transaction costs associated with collecting revenue compared to the amount of revenue raised and the net revenue after collection. • Fairness — that may include issues such as redistributive justice, administrative simplification and transparency, and the giving of reasons for decisions about charging that can help to maintain social cohesion.

Efficiency arguments can be analysed in relation to a number of activities that include: • Transactions costs in collecting revenue as a proportion of the revenue actually collected; and its efficiency compared to other methods of raising revenue. • Methods of producing information as coded material stored in various media as ‘artificial memory’; and methods of transferring and exchanging information as coded material. • The costs of receiving and assimilating information. These costs are part of learning costs and ‘knowledge production’; and where the learning is deemed to have a potential to be worthwhile into the future, it becomes part of an investment in ‘human capital’. • Opportunities to use knowledge for beneficial purposes – involving use of information, energy and other resources in producing goods and services that may be transient in their effects in consumption or have ongoing beneficial effects as worthwhile investment.

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3 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 3.1 THE INFORMATION DEPENDENCE OF GOVERNMENT Government can provide legally enforceable rules that govern how non-government organisations can establish themselves and make their own rules about their own internal governance; and how they can be dissolved. In contrast, a government is likely to be constituted under rules whose legitimacy is subject to referenda of eligible citizens as electors. The government needs to be indissoluble to preserve law and order. Dissolution of a government might imply a breakdown of law and order, revolution deriving from within society, or conquest by some external political power. Perhaps it defies logic to imagine that a government could oversee its own dissolution according to law.

Governments oversee a framework of rules that tend to become increasingly complex as the power and scope of technology becomes more widely available. Some controls may be desirable to develop the creative use and avoid the harmful use of technology. However, this raises new issue of whether the benefits of these control measures outweigh their costs. The following key points provide some sense of how complexity emerges as a consequence of technological change: • Organised actions involve costs in the information-intensive activity required in processes of organising. If advantage is to occur, the benefits or organising, managing or regulating need to outweigh its costs. • Improving productivity of labour means that less people can do the same work in producing a particular good or service. However, producing the same output with less labour does not in itself increase output for the economy as a whole. Increase in aggregate output depends on producing more of the particular good or service or redeploying displaced workers into new forms of employment in delivering new goods and services. • Displacement of workers may be ‘functional’ and pose problems of education and retraining for new tasks; or ‘geographical’, with implications for new travel and accommodation arrangements. • In the absence of equitable arrangements concerning costs of worker displacement, workers may be inclined to engage in uncooperative or destructive behaviour in efforts to stymie the processes of evolution. 1 • Increasing the variety and use of new products and services increases also the opportunities for their misuse. • Governance arrangements and regulatory activities required to control misuse of technology become increasingly specialised and complex. • The effectiveness of government shows an increasing dependence on a breadth of specialised information required to cope with its increasing complexity. • New forms of employment introduce new experiences, new elements of language to describe those new experiences, new requirements to check abuse of special knowledge, and a more diverse and complex economy.

1 Adrian J Randall, ‘The philosophy of Luddism: the case of the West of England woolen workers, ca. 1790-1809’, Technology and Culture , Vol.27 No.1, January 1986, pp. 1-17 describes the Luddite movement which is often seen as archetypical of worker reactions to their being displaced by technology.

68 CHAPTER 3

• Obtaining productivity improvements in information-intensive activity and knowledge production becomes increasingly important in trying to improve productivity more generally. Moreover, knowledge workers are generally well equipped intellectually to manipulate access to and flow of information in ways that expedite as well as impede innovation processes.

3.1.1 The nature of governance At a local level, ‘governance’ is about controlling a system’s inputs to produce outputs that can meet or exceed reasonable expectations, at least in the mind of the controller. In a mechanical system − such as a motor vehicle − operation depends on knowing how to convert the latent energy of its fuel into the dynamic energy of its motive power; and knowing how to direct that energy through human manipulation of controls such as an accelerator, brakes and steering. The operator requires information obtained through forward-, side- and rear-vision; and various gauges that indicate performance — as in a temperature gauge and a battery-charge indicator in a vehicle’s cooling and electrical sub- systems.

The fundamental stimulus-response activities in observing, communicating and responding to information about a system’s internal workings and its operating environment are common to all control systems. These activities indicate what it means to exercise control. Moreover, the word ‘control’ is often used interchangeably with — and gives meaning to — ‘management’ and ‘governance’. Analogies and metaphors abound — as in references to the ship of state, machinery of government, the pushing of levers and the pulling of strings. However, the nature of control changes if the thing to be controlled seems to have ‘a mind of its own’ − as in attempts to manage the behaviour of human and other animals.

Regardless of the system involved, control depends on some mental image, model or description of how manipulation of inputs into a system can change outputs from a system. The model may be some informal personal schema; or it may embody more formal theorising that is understood and accepted within a particular learned community. In some situations, a chain or network of causes and effects may occur and involve a number of theories. Thus, current ideas about climate change depend on separate theories involving separate causes and effects about various parts of a complex system. Ultimately the separate theories link greenhouse gas emissions into the earth’s atmosphere with changes in the natural and built environments. Insofar as human behaviour is seen as a cause of climate change, some modification of this behaviour may be brought about by a suitable structure of incentives and disincentives that depend on theories about how people can be motivated. Ultimately, adoption of one or more models becomes a logical necessity; and quality of governance depends to a large extent on the quality of its underlying models or theories.2

The usefulness of a motor vehicle would be limited if confined to off-road use. However, providing for on-road use opens an array of governmental issues. Without attempting to list these issues exhaustively, matters that typically involve government include: • roads — road design, construction, maintenance and financing; road mapping, street addressing and navigation:

2 Roger C Conant and W Ross Ashby, ‘Every good regulator of a system must be a model of that system’, International Journal of Systems Science , Vol.1 No.2, 1970, pp.89-97 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 69

• traffic control — traffic signalling, road signage, rules of the road and their policing: • vehicles — vehicle registrations, vehicle safety and maintenance, consumer protection in new and used car markets: • fuel distribution, supply and safety: and • drivers — licensing of drivers for different classes of vehicles; surveillance of driver behaviour, law enforcement activity to control driver behaviour, and driver training to achieve road safety.

A considerable intangible investment underpins the more tangible investment in physical infrastructure. Intangible investment include the separate knowledge areas involved in knowing how to design, construct, maintain and use physical infrastructure, and the governance structures that try to avoid the costs associated with misuse of knowledge. A more complete picture of actual public investment involves: • Physical infrastructure — as in roads, railways, water supply, electricity reticulation, vehicles, plant and machinery. • Institutional infrastructure — as in investments in learning required to reach informal and formal understandings concerning design; construction or implementation; maintenance; adaptation to changing technical, economic or social environments; financing; and rules pertaining to use of physical, institutional and information infrastructures that extend where necessary into legally enforceable agreements and laws. • Information infrastructure — as the structured information regimes needed to manage the use of resources, including human resources. These regimes are described herein as authority, planning and monitoring regimes.

3.1.2 Automated systems Systematisation and automation are design features in many production systems. The effect is to reduce the time and attention that an operator needs to give to one part of an operation to allow more attention to be given to other parts of the operation. Examples include speed governors, automatic transmissions, autopilots, and thermostatic controls of heating and cooling systems. Generally, achieving stability in a dynamic system calls for sensing mechanisms to detect deviations from an acceptable range of operating conditions; and regulatory mechanisms to restore the system to positions within the acceptable range. These are essentially stimulus-response mechanisms where sensing devices provide feedback to inform the regulatory responses. In the language of control theory, stimuli and responses that tend to stabilise the operation of a dynamic system are referred to as ‘negative feedback’. In contrast, ‘positive feedback’ refers to situations where the magnitude, direction and timing of responses tend to destabilise the system, possibly to lead to its destruction. 3

The idea that marching feet might synchronise with a bridge’s natural resonance is often cited as an example of how dangerous oscillations might occur in a physical structure. In social systems, stimuli and responses occur at the level of individual actors; and shared expectations can become self-defeating or self-fulfilling prophecies — as in prospects of inflationary or recessionary spirals; and the kind of feedback processes where success breeds success and failure breeds failure — often called ‘virtuous’ or ‘vicious’ circles.

3 Philip Johnson-Laird, The computer and the mind: an introduction to cognitive science , 2nd edn, London: Fontana, 1993, Chapter 11 — ‘Action and the control of movement’, pp.195-214. 70 CHAPTER 3

The quest for efficiency in a government’s information production processes depends on being able to identify and automate processes that follow well established routines. A consequence is that some aspects of production simply happen without people needing to worry about them; and productivity improves by allowing people to concentrate on other things. A further consequence is that knowledge that is essential to the operation of some systems is taken for granted; and this often leads to a loss of understanding about things on which continuing efficiency depends. 4

3.1.3 Living systems Living systems carry within themselves dual capacities for self replication and evolution. They replicate things that have gone on before and make adjustments to cope with changing environmental conditions in which they operate. This occurs at a level of genetic coding and mutation as part of a genetic inheritance and evolution. It also occurs at a cultural level with the acceptance of the ideas of an older generation being imitated and varied to suit the needs of a younger generation.

Governments are essentially living systems that are established politically and formalised legally as corporate entities with perpetual succession. They provide coordination within a larger social system; and the success of government becomes inseparable from the success of society as a whole. Perpetual succession depends on cycles of education and re-education needed to carry on processes of government itself; as well as the production needed to sustain human life. 5

A human lifecycle in modern times involves some 20 years in basic learning, and around 45 or more years in employment that includes learning on the job, and whatever span of life remains. Estimates suggest that information-intensive activity comprises about half of overall activity in a modern economy. 6 The extent of this activity suggests also that improving the efficiency of this information-intensive activity may be important to increasing efficiency more generally. More particularly, improving efficiency might depend — at least in part — in increasing capacity in the following areas: • Learning and deciding how, when and where to devote time and energy as individuals. • Forming mutual understandings and agreements about how to devote energies and allocate resources collectively.

Learning becomes part of life itself. If performing intellectual tasks provides personal satisfaction to a knowledge worker, distinctions between work and leisure can become blurred; and both learning and physical activities may promote longevity and well being. Increasingly, medical research — funded by various governments and shared internationally — contributes to people living longer. Longevity poses a problem of how

4 Section 3.2.1.7 — Policy failure through failing to recognise complexity’ cites the insights of Blackstone and de Soto in relation to this problem. 5 The term ‘autopoiesis’ refers to systems with inherent processes for replacing parts while retaining identities as wholes — as in replacing words in language systems; cells in organisms; and members in organisations or teams. M Radosavljevic, ‘Autopoiesis vs. social autopoiesis: critical evaluation and implication and implications for understanding firms as autopoietic social systems’, International Journal of General Systems , Vol.37 No.2, April 2008, pp.215-230 provides a useful review of ‘autopoiesis’ as a concept in understanding social systems. 6 Charles Jonscher, ‘Productivity and growth of the information economy’, in Communication and information economics , ed by Meheroo Jussawalla and Helene Ebenfield, being Vol.5 in the series Information Research and Resource Reports , with N Szyperski and F Winkelhage as eds-in-chief, Amsterdam: North-Holland, 1984, pp.95- 103. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 71

senior citizens can afford to live. Policies aimed at providing compulsory employer-funded retirement savings in superannuation are unlikely to succeed unless some things happen simultaneously. A seemingly simple matter of saving for retirement becomes intimately bound up with other things. These things include retaining the purchasing power of the savings by maintaining productivity and long-term control over inflation; and in ensuring that savings remain accessible though long-term stability of financial institutions that are responsible for managing retirement savings.

Life-long learning within an aging population may have other socio-economic consequences in changing people’s minds about what is in their own best interests and what is in the community’s interest. Older people may be less persuaded by appeals to fashion — with effects that flow on into their consumption patterns; and may be more inclined to see events within the context of longer time frames. Their levels of satisfaction may reflect in their priorities towards issues such as voluntary work and philanthropy. They may also impact on how they judge the success or failures in their social institutions and how people relate to their government. As Maslow observed: All the basic needs which have been fully gratified tend to be forgotten by the individual and to disappear from the consciousness. Gratified basic needs just simply cease to exist in a certain sense, at least in consciousness. Therefore, what a person is craving and wanting and wishing for tends to be that which is just out ahead of him in the motivational hierarchy. Focussing on this particular need indicates that all lower needs have been satisfied, and it indicates that the needs which are still higher and beyond what the person is craving for have not yet come into the realm of possibility for him, so he doesn’t even think about that. 7

Maslow suggested that the kinds of complaints that people make reflect the levels of satisfaction they have reached. 8 The satisfaction reflected by a person who complains about a lack of protection from violence is qualitatively different from the satisfaction reflected by a person who complains about injustice to someone else. Formally hearing complaints and redressing grievances has a long political history in relieving social tensions and maintaining social cohesion.9 However, where grievances are perceived as challenging the competence of government administration, human propensities to deflect, negate, and deny critical evidence can become a corrupting influence. This influence leads eventually to social divisiveness through moves to silence the critics and deny personal freedoms.10

Recognising government as a living system has another consequence in that human pathologies affecting human capacity to process information are likely to have counterparts in public and private sector organisations. 11 In some instances, it may be socially beneficial to regard some matters as settled. Statutes of limitation have an effect of closing some issues to further argument. A government might also exhibit information problems reminiscent of blindness, muteness, and loss of memory; and information malfunctioning similar to epilepsy, convulsions and paralysis. Similarly, the illusions, self- deceptions, obsessions and symptoms of sensory deprivation that are known to occur at

7 A H Maslow, The farther reaches of human nature , Harmondsworth Middlesex: Penguin, 1970, pp.229-230 8 ibid., p.230 9 Parliament of Australia, Making a difference: Petitioning the House of Representatives , Canberra ACT: House of Representatives Standing Committee on Procedure, tabled on 17 September 2007, Appendix B — ‘Historical development’ accessed at URL < http://www.aph.gov.au/House/committee/proc/petitioning/report/fullreport.pdf > 10 Daniel Goleman, Vital lies, simple truths: the psychology of self-deception , London: Bloomsbury, 1997, ‘The flow of information in a free society’, pp.231-240 11 Manfred F R Kets de Vries and Danny Miller, ‘Neurotic style and organizational pathology’, Strategic Management Journal , Vol.5 No.1, January-March 1984, pp. 35-55. 72 CHAPTER 3

the level of an individual may have some counterparts that affect the way that government’s decide issues and allocate resources. 12

3.1.4 Self referential systems The distinguishing feature of a self-referential system is that its governance does not depend on external observers and controllers but has internalised self-observing and self- controlling capabilities. Processes of self-evaluation, self-coordination and self-correction may allow individuals to exercise self control. They can function within a society without much need for a government to exercise coercive powers of law enforcement. Similarly, self-regulating organisations need little control by government to the extent that they do not act against the interests of society.

A system can reduce complexity of its central governance by delegating tasks to self- regulating sub-systems. This provides a rationale for departmentalisation, specialisation of functions and hierarchical structure in bureaucracies. Ultimately, government depends on the use of a superior coercive power where many are ‘on-side’ and able to control aberrant behaviour of one or a few who are ‘off-side’ — even at the level of international affairs.

The self-referential nature of government means that its authority needs to be open enough to cope with higher level issues of accountability. In effect, it needs to be able to address and answer questions such as what governs the government, who teaches the teachers, who polices the police, and who judges the judges?

The phrase ‘government of the people, by the people, for the people’ contains within itself the idea of self-reference within a democratic system.13 Democratic government is a self- referential social system; and the supremacy of parliament doctrine contains an inherent circularity. A community’s highest authority for saying what must be done is its parliament; but its legitimacy depends also on people electing members of parliament in fair elections according to its political constitution.

3.1.5 Novelty, corroboration and conflict in governance systems Government as a living system maintains its coordination through internal communications between its sub-systems or departments; and external communications with its operating environment. Generally, individuals — acting alone or as part of an organisation — may receive information as: • Additions to prior knowledge — providing new ideas and new perceptions about what are opportunities and threats. Confidence in new information may vary considerably and its perceived value may be highly dependent on the reputation of its author — that is, on whether the source is seen as ‘authoritative’. • Corroboration of existing knowledge — in reinforcing levels of confidence in existing knowledge through additional corroborative information or evidence. At some stage, increasing redundancy in information may do little to increase levels of confidence and cost more than it is worth. This exemplifies declining marginal productivity in particular information gathering processes.

12 Gerald A Caiden, ‘What really is public maladministration?’, Public Administration Review, Vol.51 No.6, November-December 1991, pp.490-492, refers to ‘Bureaupathologies’. 13 These words are part of the Gettysburg Address made by Abraham Lincoln on 19 November 1863 at the dedication of the Soldiers' National Cemetery in Gettysburg, Pennsylvania. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 73

• Conflict with prior knowledge — where redundancy leads to contradictions with existing knowledge and decreased level of confidence in what is known. Stocks of existing knowledge may be subject to revaluation and devaluation as a consequence.

Experience suggests that learning processes do not necessarily provide discrete incremental additions to human knowledge. Similarly, technology can have beneficial or adverse consequences, depending on how it is used or misused. Nor is it reasonable to expect that expenditures on education or research will correlate simply with estimates of productivity improvement or economic growth. 14 Some research effort needs to be directed towards understanding requirements to control misuse of new technology through appropriate innovation in governance arrangements.15

3.1.6 Authoritative information In politics, the idea of ‘authority’ derives from how much notice should be taken of an ‘author’ as a source of information. An authority’s reputation grows or declines according to whether its observations, predictions and prescriptions are seen over time as competent or incompetent in helping to manage whatever situations arise. Growth in the reputation of some ideas within interested communities often leads to: • their formal recognition as theories within institutions that may have a global reach — as in publication of new scientific and technical journals; • politicisation — as the theories reach begin to influence public opinions and political decision making — in climate science, for example; and • commercialisation as a basis for new patterns of production and consumption.

The nature of the investment in ideas has implications for how people may be motivated to either change or resist changing their minds when new information contradicts or challenges an existing authority — a situation often referred to as ‘cognitive dissonance’. Fromm argued that resolving such contradictions is a source of all human progress. It is one of the peculiar qualities of the human mind that, when confronted with a contradiction, it cannot remain passive. It is set in motion with the aim of resolving the contradiction. All human progress is due to this fact. If man is to be prevented from reacting to his awareness of contradictions by action, the very existence of these contradictions must be denied. To harmonize, and thus negate, contradictions is the function of rationalizations in individual life and of ideologies (socially patterned rationalizations) in social life. 16 Failing to admit and resolve contradictions is a barrier to social progress. As an example, the progress of science depends significantly on resolving contradictions between theoretical propositions and experimental outcomes. This may impact on levels of confidence where the science underpins a particular public policy or commercial venture. Conversely, ‘denial’ at the individual level can affect attitudes to substance abuse, for example, and become significant as law enforcement and public health issues. Similarly, ‘denialism’ at the social level infiltrates corporate decision making and public debate. As an

14 Bruno Crépon, E. Duguet and Jacques Mairesse, ‘Research and development, innovation and productivity: an econometric analysis at the firm level’, Economics of Innovation and New Technology , Vol.7 Issue 2, 1998, pp.115-158 — this article has become influential in examining innovation processes. See for example, Australian Bureau of Statistics, Methodological News , Cat No.1504.0, September 2007, p.4 15 Jane Marceau, ‘Innovation and industry development: a policy-relevant analytical framework’, Prometheus , Vol.18 No.3, 2000, pp.283-301 16 Erich Fromm, Man for himself: an enquiry into the psychology of ethics , London: Routledge & Kegan Paul, 1948, p.44 74 CHAPTER 3

example, ‘holocaust denial’ is outlawed explicitly or implicitly in 13 countries; and is a barrier in attempts to establish peace in the Middle East. 17

In a somewhat different vein, ‘climate change denial’ reflects a failure to agree on scientific hypotheses; and a failure to agree on a satisfactory response; even where risks are perceived in doing nothing. Policy or judicial decisions can have significant economic impact on various vested interests; and concerns have been expressed about attempts to bias the results of climate research. A 2007 report by an American whistleblower organisation found: … no direct interference with climate change research. Instead, unduly restrictive policies and practices were located largely in the communication of ‘sensitive’ scientific information to the media, the public, and Congress. 18 In this context ‘sensitive information’ signifies science that does not support existing policy positions or objectives. Interference with media communications includes delaying, monitoring, screening, and denying interviews, as well as delay, denial, and inappropriate editing of press releases. Interference with the public and Congress includes inappropriate editing, delay, and suppression of reports and other printed and online material. These restrictive communication policies and practices are largely characterized by internal inconsistencies, ambiguity, and a lack of transparency. In turn, they send chilling signals to federal employees, including scientists and public affairs officers, that reinforce the suppression of ‘sensitive’ information.19 3.1.7 Unquestionable authority The ability to resolve contradictions often depends on being able to question a prevailing authority. This is especially true when the resolution depends on reducing ambiguity or imprecision in words. An expanded explanation or some qualification may resolve what a person with authority means when they say something. Practical difficulties occur in resolving conflicting interpretations of what has been written or otherwise recorded when the actual authors are deceased, absent or unwilling to respond. In other circumstances, deliberately avoiding questioning is a means for avoiding responsibility and accountability. Two avoidance mechanisms often apply in public affairs, namely: • plausible deniability — in being able to deny that a particular person in high authority gave particular orders to do something; and • anonymous authority — in accepting uncritically and holding an allegiance to an idea without questioning its origin, credibility or reasonableness.

The term ‘plausible deniability’ describes a more deliberate and deceptive form of denial aimed at concealing the source of authority in chains of command.20 The term has been applied to covert activity by national security and other organisations that operate clandestinely. In commenting on failures by US presidents, Pious noted: The greater his risk of authorizing an illegal or unconstitutional act, the greater the distance he will put between himself and the operatives. This leads to several different patterns, particularly if domestic or international law must be violated: one is plausible deniability , so that the president can claim subordinates acted on their own; another is ambiguous signalling , in which the president signals a goal but leaves it to officials to act on their own responsibility to carry it

17 Wikipedia, ‘Holocaust denial’, accessed at URL < http://en.wikipedia.org/wiki/Holocaust_denial > 18 Tarek Maassarani and Jay Dyckman, Redacting the science of climate change: an investigative and synthesis report , Government Accountability Project: Washington DC, March 2007, p.1, accessed on 11 June 2008 at URL 19 ibid. 20 Douglas Walton, ‘Plausible deniability and evasion of burden of proof’, Argumentation , Vol.10, 1996, pp.47-58 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 75

out; yet another is inverted responsibility , in which officials in presidential agencies take operational responsibility when departments refuse to commit illegal acts; related to this is delegation out , in which hired hands work the operation. Presidents know that if they can defend the wisdom of the policy, and its consonance with American values, most of the constitutional criticism will not harm them. Winning in the court of public opinion is often more important than winning in a court of law. 21

Apart from the inherent tension in trying to achieve accountability in clandestine operations, the processes of denial limit the capacity for learning through experience. In suppressing the true nature of an experience, the facts of the matter become difficult to determine, and ‘learning through experience’ is deficient from the outset.

‘Anonymous authority’ is a further phenomenon that influences the formation of political ideas and public choice. Sometimes explanations of why things should be done in a particular way are attributed to anonymous entities — such as ‘the system’, ‘the establishment’, or ‘powers-that-be’. Similarly, argument may rely on uncorroborated claims about what is ‘scientifically proven’, or what ‘expert opinion’ says or what ‘statistics show’. Ideas that are repeated often and without challenge can become politically influential even though the source of their authority is not identified, and source of the authority remains unquestionable. In essence, anonymous authority is recognisable as social alienation and mindless conformity.22

The requirement for reasoning and rationality is central to the recent growth of administrative law as part of modern government. 23 In the absence of reasoning, authority can be applied unreasonably; and people can claim they are merely obeying orders in doing things that are destructive, inhumane or illegal. 24 This argument is now known as the Nuremburg defence and is often used as a legal ploy in situations such as abuse of power by military forces, or in fraudulent falsification of accounting documents to comply with orders from a higher authority. 25

3.1.8 Influence of conflicting authority on public policy Historically, three kinds of authority have exercised particularly important influences on processes of government, namely: • Intellectual authority — in saying what can be done — finding much of its basis in ancient times in history and philosophy; but relying increasingly since the 1600s on experimental sciences and various scientific and technical institutions. • Moral authority — in saying what ought to be done — finding its basis historically in religious thought as expressed in sacred writings; but augmented with humanistic thought within some behavioural sciences; and finding some of its expression internationally in the human rights movement under auspices of the United Nations.

21 Richard M Pious, ‘Why do presidents fail?’, Presidential Studies Quarterly , Vol.32, No. 4, December 2002, p.735 22 Erich Fromm, The sane society , London UK: Routledge & Kegan Paul, 1963, pp.152-163 23 Geoff Airo-Farulla, ‘Rationality and judicial review of administrative action’, Melbourne University Law Review , 2000, accessed online at URL < http://www.austlii.edu.au/au/journals/MULR/2000/23.html > 24 This issue was the focus of controversial ‘obedience studies’ in social psychology by Stanley Milgram conducted in 1961-62 and discussed in Section 3.3.2.4 — ‘Science in policy design’ 25 Peter Small, ‘Ex official denies using “Nuremberg defense’”, Toronto Star , 28 May 2008. 76 CHAPTER 3

• Political authority — in saying what must be done — relying mainly on persuasive authority within democratic institutions; but with recourse to coercion where persuasion fails to prevent antisocial behaviour.

Contradictions within and between sources of authority over what can be done, what ought to be done and what must be done have created tensions in the political decisions throughout history. They still affect policy making at all levels. Contradictory sources of authority can arise: • Within and between intellectual disciplines — as in bell curve wars, gene wars, science wars, history wars, and culture wars — and reaching into policy implications of behavioural sciences and how historical evidence should be interpreted. • Within and between religions — generally involving doctrinal argument related to origin and interpretation of sacred writings. • Within and between governments - political argument with a potential to degenerate into physical violence and war. • Between intellectual disciplines and religion — where conflicts between intellectual and religious ideas emerge, especially in ethical issues concerned with the conduct of science. • Between intellectual disciplines and government — especially where new scientific findings challenge existing policies; or contradictory scientific evidence impacts on administrative or judicial decision making. • Between religion and government — notably in life sciences, science policy, and ethics — and spilling over into what should be taught in publicly-funded schools and universities.

At its worst, the inability to mediate contradictory information can threaten democratic institutions; especially where people are tempted to take the law into their own hands. Totalitarian regimes usually rely on suppression of information. Episodes such as ‘book burning’ are attempts to destroy cultural heritage and silence particular sources of intellectual or moral authority. The Orwellian aphorism is apt — ‘Who controls the past, controls the future; and who controls the present, controls the past’. 26 Undue control over flows of information can influence how history is written. It also corrupts the recording of experience and the processes of learning through experience.

3.1.9 Maintaining respect for authority Maintaining respect for authority is central to constitutional responsibilities of providing ‘peace, order and good government’. In a free society, authority earns respect when those in authority can be seen as ‘competent’. Perceptions regarding the competence of those in authority depend on the levels of education that underpin public opinion; access to relevant information about public affairs; and ability to question intelligently and expect reasons for decisions on matters of public interest. Many of the institutions surrounding government — such as question time in parliament, requirements for decisions to be in writing, and various forms of parliamentary, administrative and judicial review — aim to demonstrate the reasonableness of governmental decision making. 27

26 George Orwell, 1984 , New York NY: Signet Classics, 1961, p.248 27 Section 3.3.3.6 – ‘Review as part of law enforcement’ revisits issues concerned with administrative and judicial review. It reiterates the importance of ‘reasonableness in maintaining respect for authority. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 77

Insofar as energy can be wasted when people misunderstand each other or are at cross purposes, the ability to arrive at workable agreements and maintain respect for authority is likely to impact fairly directly on efficient outcomes in collective activities. In a social environment of well educated people, reasonable compliance with authority depends increasingly on the respectability of whatever intellectual and moral authority underpins political and judicial decision making. Similarly, compliance does not mean that knowledge workers will respond enthusiastically to the goals of an organisation unless they actually agree with them. This gives good reason to speculate on the effects of managerial style and culture on efficiency in commercial organisations. 28

He that complies against his will Is of his own opinion still Which he may adhere to, yet disown, For reasons to himself best known. 29

3.2 GOVERNANCE AND TECHNOLOGICAL CHANGE The invention of new governance arrangements accompanies the acceptance of all important technological advances within a society. This pattern of government evolving with technological change differs from so-called ‘primitive’ forms of government where the forms of social organisation exercise some degree of control by means of indigenous laws perpetuated through oral traditions. 30 While ‘primitive’ forms may have sophisticated knowledge of biological diversity as a key to their survival; 31 they do not otherwise exhibit any adaptation to a pace of technological change.

The transition from lower to higher intensity technologies in food production came at a cost of more complex social and economic systems. These systems became increasingly vulnerable to changes in the natural environment. Examples include seasonal variability, longer-term climate changes, plagues of insects and locusts, crop diseases, soil erosion and soil salinity. Archaeology, history and legend are replete with examples of the rise and fall of civilisations, dynasties and empires. 32 These more complex economic and social systems evolving from ancient to modern time exhibit: • Increasing dependence on innovations in food production and the increasingly specialised knowledge available within individuals, informal groups and organisations. • A tendency for spatial organisation to occur in the form of urban agglomerations, with increasing complexity in their governance issues as trading centres.

28 Managerial style and organisational culture are discussed in Section 4.5.1.2 on technical and x-efficiency 29 Samuel Butler (1612-1680), Hudibras. Part III, Canto iii, lines 547-550; cited in CliffsNotes.com, ‘Who wrote, "A man convinced against his will is of the same opinion still "? ’ accessed at 30 Lucy Mair, Primitive government , Harmondsworth, Middlesex: Penguin, 1962, p.9 discusses use of the term ‘primitive’ from an anthropological viewpoint. 31 Australian Parliamentary Library, ‘Biological diversity and indigenous knowledge’, Michael Davis, Science, Technology, Environment and Resources Group, Research Paper 17 of 1997-1998, Canberra ACT, 29 June 1998, accessed at URL < http://www.aph.gov.au/library/Pubs/RP/1997-98/98rp17.htm > 32 Joseph A. Tainter, The collapse of complex societies , New studies in archaeology series, (Cambridge: Cambridge University Press, 1988) pp.5-21. Jared Diamond, Collapse: how societies choose to fail or survive , London: Allen Lane; Penguin, 2005, pp.486-525 78 CHAPTER 3

• Increasing politicisation, including use of force in territorial defence and aggrandisement, an emergence of social stratification or class structures, and an eventual expansion hierarchically into regional, national and international systems of governance. • Increasing demands for transport and other lines of communication beginning with local and reaching up to global systems to distribute food, water and physical products; fuels and other sources of energy; and information. • Increasing need to overcome the constraints of oral communication and living human memories with written records and ‘artificial memory’ in various forms such as clay tablets, paper records and computer files. • Increasing vulnerability of governance systems due to:
Unavailability of relevant information in time for crucial decisions.
Perceptual bias that draws attention to things that people expect or prefer to see rather than what they may need to see to maintain adequate control over circumstances.
Oversimplification — the pretence of intellectual mastery of an issue by denying or underestimating its circumstantial complexity.
Obfuscation — the pretence of intellectual authority in support of political power — as in ‘blinding people with science’ to make issues appear more complex than they need to be.
Accidental or deliberate corruption of information.

Wittfogel examined examples of governance within ‘hydraulic civilisations’ — those ancient civilisations that combined flood control with large-scale agriculture. He argued that these civilisations found it necessary to invent particular information technology to describe their social and economic arrangements. Much of this invention was institutional in character and helped to address their particular needs for organising. The need for reallocating the periodically flooded fields and determining the bulk of hydraulic and other structures provided continuous stimulation for developments in geometry and arithmetic. 33 Time keeping and calendar making are essential for the success of all hydraulic economies; and under special circumstances special operations of measuring and calculating may be urgently needed. 34 It is no accident that among all sedentary peoples the pioneers of hydraulic agriculture and statecraft were the first to develop rational systems of counting and writing. It is no accident either that the records of hydraulic society covered not only the limited areas of cities and city states, of royal domains and feudal manors, but the towns and villages of entire nations and empires. The masters of hydraulic societies were great builders because they were great organizers; and they were great organizers because they were great record keepers. 35

Telegraphy, wireless, electricity, motor vehicles, and computers are examples of important innovations since the 1800s that have also required the development of new governance structures. New language and new forms of description become necessary to articulate

33 Karl A Wittfogel Oriental despotism: a comparative study of total power , New Haven CT: Harvard University Press, 1957, p.29 34 ibid. 35 ibid., p.50 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 79

new understandings about how technology can be used and how new business can be transacted. In addition, new forms of regulation usually become necessary to underpin the business transactions and mitigate adverse social and economic consequences of misusing the technology. New non-government and not-for-profit organisations usually evolve also to establish technical standards and codes of practice to provide leadership, attitudes and values appropriate to the new technologies. 36

3.2.1 Emergence of complexity Governance depends on regulatory models — mental models or visualisations of how purposeful adjustments to a dynamic system can produce better outcomes.37 Complexity emerges when the mental models become difficult to describe or interpret. 38 What is recognisable as a complex problem depends on what an observer has learned to see and is able to imagine rather than any inherent quality of the system itself. 39 In social systems, the variety of things that are possible may be very large. In regulating use of motor vehicles, for example, the variety of possibilities where particular goods may be transported by particular drivers and particular vehicles over particular traffic routes at particular times is too large to contemplate. Conceivably, individuals may get to their destinations safely to produce benefits for themselves and without causing much harm to anyone else. However, circumstances change if large numbers of vehicles converge on particular traffic routes at particular times to create traffic grid-lock; or roads fall into disrepair through insufficient maintenance; or accidents result in death, injury and property damage. In these situations, people need to have ideas about what needs to be remedied, how remedies can be achieved, and how things that people have in mind can be shared as a precursor to collective decision making and remedial action. Generally, the remedies rely on self-regulation by individuals; and on being bound by socially acceptable rules.

Discussion about regulation often stirs emotions and touches upon fundamental political ideas about how individuals can relate to society. Some people interpret ‘social control’ as an attempt by a centralised ‘planning’ authority to exercise ‘influence’ and ‘power’ in an effort to manipulate how people think and decide; or to command how resources will be allocated. This centralism of authority is seen as inimical to an individual’s ability to exercise personal freedoms. However, absence of ‘social control’ can also be interpreted as a breakdown of law and order. Ultimately, the rights of an individual depend on the degree to which other people are prepared to respect those rights. The quest for ‘social control’ depends largely on how much individuals can align the pursuit of their own interests with those of society. The mechanisms of social control therefore depend on: • informal processes of socialisation and formal processes of education that establish norms and values and influence personal behaviour; and

36 Charles Bazerman, The languages of Edison’s light , Cambridge MA: MIT Press, 1999 — gives a detailed account of the role of language in dealing with the mass media, public opinion, financiers and government agencies in the development of electric power as an industry in the period 1878-1882 37 Mental models are the subject of a growing body of literature. As examples − Karl E Weick, ‘Mental models of high reliability systems’, Industrial Crisis Quarterly , Vol.3, 1989, pp.127-142; and John E Mathieu, Tonia S Heffner, Gerald F Goodwin, Eduardo Salas and Janis A Cannon-Bowers, ‘The influence of shared mental models on team process and performance’, Journal of Applied Psychology , Vol.85 No.2, 2000, pp273-283 38 This was described as ‘d-complexity’ (or description complexity) and ‘i-complexity’ (or interpretation complexity) in Lars Lofgren, ‘Complexity of description of systems: a foundational study’, International Journal of General Systems , Vol.3 No.4, 1977, pp.197-214, cited in G Klir, Architecture of systems problem solving , New York NY: Plenum, 1985, p.349 39 Robert E Flood and Ewen E Carson, Dealing with complexity; an introduction to the theory and application of systems science , New York NY: Plenum, 1988, p.20 80 CHAPTER 3

• social sanctions embodied in various rules or guiding principles that encourage some behaviour and discourage other behaviour.

In practical terms, a significant part of the governance problem is: • to encourage activities that are creative or seem likely to be creative; and to discourage activities which are harmful or pose unacceptable risks of being harmful. 40

3.2.1.1 Grades of complexity The regular description of situations as ‘complex’ is mostly a phenomenon of the post- World War 2 period. It has intellectual origins in operations research, general system theory and cybernetics. 41 In an often-cited 1948 article, Weaver identified three grades of complexity as summarised in the following table. 42 This summary also captures an increasing recognition of complexity as part of the historical growth of science.

Table 3.2.1.1 GRADES OF COMPLEXITY TYPE CIRCUMSTANCES EXAMPLES Organised A small number of significant factors with a Classical physical sciences simplicity high degree of determinism appear against a sometimes called ‘hard’ or background of many insignificant factors ‘mature’ sciences Disorganised Many variables exhibit apparently random Thermodynamics and quantum complexity behaviour, but lend themselves to statistical mechanics techniques to discover a small number of average properties Organised Rich in factors whose influence cannot be Biological, environmental, complexity regarded as negligible and whose behaviour behavioural and social sciences cannot be regarded as entirely random — often regarded as ‘soft’ or ‘immature’ sciences

The recognition of complexity in some systems raises particular questions about how these systems can be regulated. A regulatory model needs to identify variable factors within a dynamic system that can make a difference to how well the system satisfies some purpose required by the regulator. In agriculture, for example, production systems need to cope with variable factors such as seasonal conditions and commodity prices. Threats to the viability of food production have consequences for the wider community; and governments might respond with agricultural policies that provide some relief from these adversities. 43 Despite the ancient origins of agriculture and the considerable intellectual

40 Issues concerned with regulation are discussed also at Section 3.3.2.4 —‘Science in policy design’; and in Section 4.5.2 — ‘Better regulation’ 41 Ludwig L Bertalanffy, ‘An outline of general system theory’, British Journal for the Philosophy of Science , Vol.1 No.2, August 1950, pp.134-165 42 Warren Weaver, ‘Science and complexity’, American Scientist , Vol.36, 1948, pp.536-544 cited in G Klir, Architecture of systems problem solving , New York NY: Plenum, 1985, pp.328-334. Text of Weaver’s article was accessed at URL < http://www.ceptualinstitute.com/genre/weaver/weaver-1947b.htm > 43 In Australia, government responses have involved recurring themes such as ‘living area’ concepts in size of farms; schemes of regulated marketing; and programmes of drought relief. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 81

commitment given to its development, food production and distribution remain as matters of considerable concern internationally. 44

Regulatory design calls for a policy instrument to deal with each problem that is both foreseeable and foreseen, and has sufficient moment to affect a system’s operation adversely. 45 Planning and design of policy instruments can provide two particular advantages. The first is that it provides a coping mechanism that is routine and does not need to rely on the urgent attention of senior management under stressful circumstances. The second is that it conserves managerial resources for strategic thinking and for circumstances that are unforeseen and perhaps unforeseeable.

Despite efforts aimed at producing beneficial results, unforeseen problems often arise to produce unintended consequences. The results of applied science and technology are generally expensive and their consequences are far from benign — as in threats to the biosphere that include imprudent use of pesticides, soil degradation and a greenhouse effect. In 1987, Ravetz argued: This is the lesson of the great biosphere problems of the last decade. Faced with problems not of its choosing (though indirectly of its making), science, which is the driving force and ornament of our civilisation, could not deliver the solutions. When asked by policy-makers “What will happen and when?” the scientists must, in all honesty, reply in most cases, “We don’t know, and we won’t know, certainly not in time for your next decisions”. 46 Some of these difficulties have arisen because the traditional engineering and agricultural sciences seemed to be aimed at solving problems of organised simplicity. The mindset did not include understandings or concerns about the effects of these activities on the natural environment that are problems of organised complexity. Dealing with such problems require a shift from thinking about simple cause and effect mechanisms to thinking about multiple and cascading causes and effects operating through chains, feedback loops and networks.

In the 1970s, governments responded to environmental concerns by imposing regulations that required environmental impact statements to be made in relation to developments. In adopting such regulations, the assumption was that the knowledge existed, or could be readily acquired, to allow decisions about whether a development should proceed and under what conditions. The assumption is far from justified; for in many instances the knowledge is contentious and uncertain. Moreover, experience shows that it is easy to create doubt as a delaying tactic; and the consequential uncertainty can have serious economic consequences.47

In a similar way, attempts to impose regulations introduce a new dimension of complexity. The expectation is that the net benefits of regulated use of technology will outweigh the net benefits of its unregulated use. However, regulation itself does not always operate as

44 This is exemplified in the ‘right to food’ movement shown in the Food and Agriculture Organization timeline accessed at URL < http://www.fao.org/Legal/rtf/time-e.htm >; and in the Right to Food Organization whose website is accessible at URL < http://www.righttofood.org/index.html > 45 This is often referred to in terms of ‘requisite variety’ — in tailoring and matching each instrument of policy with each variable that needs to be regulated. ‘Variety (cybernetics)’, Wikipedia , accessed online at URL < http://en.wikipedia.org/wiki/Variety_(cybernetics )> 46 Jerome R Ravetz, ‘Usable knowledge, usable ignorance: incomplete science with policy implications’, Knowledge: Creation, Diffusion, Utilization , Vol.9 No.1, September 1987, pp. 90-90 47 The Project on Scientific Knowledge and Public Policy (SKAPP) at George Washington University provides examples of how scientific information is both used and misused in making and administering public policy and in judicial decision making. Information is available at URL < http://www.defendingscience.org /> 82 CHAPTER 3

expected; and concerns are expressed regularly about the burden of regulation.48 The inability to predict infrequent but calamitous events means that governments are often expected to accept some risks that are not amenable to private forms of insurance.

3.2.1.2 Specialisation in observation and description Specialist observers learn to see what non-specialists do not see. Where patterns of behaviour are observable, the specialist observer may also acquire some ability to anticipate, predict or foresee things that non-specialists do not foresee. At the level of an individual, this ability to anticipate occurs according to personal theories or schemas. However, theories and schemas can become socially patterned where a number of observers with similar training share much the same ideas — either as explanations in the case of theories or as rationalisations in the case of ideologies. These shared ideas provide the basis for institutional development within trade, professional, scientific and other organisations. However, the need for specialised observation and description — which is the basis of science — leads to a problem of ‘reductionism’. Focussing on particular details helps to overcome cognitive limits in observing, describing and predicting; but it may be a disadvantage if the observer is unable to change focus to obtain a broader view. Gestalt psychology has proved quite generally that we cannot focus our attention on the particulars of a whole without impairing our grasp of the whole; and that, conversely, we can focus on a whole only by reducing our awareness of the particulars to the contribution they make to the whole. 49 The advantage of being able to change focus is evident when looking at maps. Small scale maps can provide a world, national or regional focus; and large scale maps can show detail at the level of streetscape and local features. The value of mapping from a cognitive point of view derives from its ability to demonstrate key features of the landscape at a suitable scale while suppressing features that are not of interest in a particular investigation.

Scientists or technologists might not have the knowledge of how to observe and foresee socio-economic consequences of what they do. Additional insights might be obtained through collaboration with social scientists. The ability to transcend disciplinary boundaries and allow some level of cross-disciplinary communication may help in seeing and predicting opportunities and risks that might not be considered otherwise. The regulatory problem is not only to recognise and understand risks associated with technology but also to see if technology can be modified or adapted to mitigate those risks. 50 As Einstein observed: It is not enough that you should understand about applied science in order that your work may increase man's blessings. Concern for man himself and his fate must always form the chief interest of all technical endeavors, concern for the great unsolved problems of the organization of labor and the distribution of goods - in order that the creations of our mind shall be a blessing and not a curse to mankind. Never forget this in the midst of your diagrams and equations. 51 The immense variety in the things that can be noticed and the ways in which they can be described is met in practice with a considerable attenuation of this variety. Reducing

48 This is discussed further in Section 4.5.2 — ‘Better regulation’ 49 Michael Polanyi, ‘Faith and reason’, Journal of Religion , Vol.41 No.4, October 1961, p.239 50 Nicholas A Ashford, ‘Science and values in the regulatory process’, Statistical Science , Vol.3 No.3, August 1988, pp.377-383 51 Albert Einstein, speech at the California Institute of Technology, Pasadena CA, 16 February 1931, as reported in The New York Times , 17 February 17 1931, p.6. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 83

unnecessary variety in description occurs through standards in measurement techniques and instrumentation; 52 taxonomic systems; statistical analysis that identifies averages and trends among large volumes of descriptive data; mathematical expressions that capture families of relationships; and the like. However, the specialised language and descriptive techniques of one scientific discipline may not translate easily across disciplinary boundaries.

Successful regulation depends on having a predetermined policy or plan to deal with whatever is deemed foreseeable. The alternative is to try to deal with adverse and complex situations under situations of emergency and managerial stress. Policy instruments are therefore designed to deal with circumstances that are foreseeable by a prudent observer; and are then actually foreseen and deemed to be worth managing. 53 Sometimes the unforeseeable turns out to be better than expected — and becomes a positive aspect of risk-taking, especially in processes of innovation. However, when the unforeseeable turns out worse than expected, the questions of who should bear unwanted costs become matters of contention in politics, commerce and law.

3.2.1.3 Complexity in interconnectedness Organised complexity tends to emerge in biological, environmental, behavioural and social sciences where the behaviour of one element provides a stimulus for how another element might react. This creates a situation as described in the maxim — ‘Everything depends on everything else’. In such systems, the variety of possibilities grows exponentially and poses difficulties in describing or predicting the outcomes that are possible or likely.

Table 3.2.1.3 shows how different perceptions about variety (V) — and hence complexity - might arise in the minds of different observers in considering what seven different locations on a map might be used to represent. 54

Table 3.2.1.3 In PERCEPTIONS AND REPRESENTATIONS OF COMPLEXITY Purpose o f representation Possible states

To identify locations where activity might occur; assuming no V = 8 activity is one possibility

To identify locations where something may be active or 7 V = 2 = 128 inactive — ‘on’ or ‘off’ — over time

To identify terminal points of two-way communication V = (7 x 6)/2 = 21 channels

To identify terminal points of one way communication V = 7 x 6 = 42 channels

To identify terminal points of one way communication 42 V = 2 = 4,398,046,511,104 channels that may be active or inactive

52 Section 3.3.3.2 — ‘Development and maintenance of physical measurement standards’ outlines the forms of organisation that achieve internationally accepted measurement standards 53 In cybernetics, the notion of ‘variety’ is directly associated with the possible states of a system as discussed by W Ross Ashby, An introduction to cybernetics , London: Chapman & Hall, 1956, Part II. This idea of ‘possible states of a system’ can be linked to G L S Shackle’s idea of the ‘imagined deemed possible’. Ashby also introduced a concept of ‘requisite variety’ — where the variety of sources of perturbations in a system needs to be matched with a variety of instruments or measures required to exercise control. 54 Stafford Beer, The heart of enterprise , Chichester UK: Wiley, 1979, p.32 84 CHAPTER 3

highly interactive situations, the number of possible states of the systems involved are simply too numerous to contemplate. This profusion of possibilities is sometimes associated with ‘variety proliferation’ in cybernetic literature and with ‘combinatorial explosion’ in computer science. 55 In these circumstances, decision makers cannot even contemplate what would be an optimal state; let alone try to achieve one within the time frames that may be available for actual decision making. This led to ideas about ‘bounded rationality’ that emphasise the limits to human cognition; 56 and ‘satisficing’ rather than ‘optimising’ as the object of practical decision making. 57

This kind of limitation features in managing systems with substantial interconnectedness. Insofar as the behaviour of different operating entities depends on how other entities are performing, studying parts of the system will not necessarily reveal much about the system as a whole. As Adams observed: The reason we had no idea how cats worked was because, since Newton, we had proceeded by the very simple principle that essentially, to see how things work, we took them apart. If you try and take a cat apart to see how it works, the first thing you have in your hands is a non- working cat. 58 The role of networks in society poses new issues for economics and other behavioural sciences in describing and explaining how they influence social organisation and economic production. 59 Networking and organised complexity are obviously related phenomena;60 and they have particular relevance to innovation in suggesting how opportunities for research and product development can occur. 61 These opportunities have become especially noticeable since advent of the World Wide Web; and are more particularly noticeable in the changing nature of rewards and incentives through widespread sharing of information.62

3.2.1.4 Complexity through combination and interoperability Information production takes on particular distinguishing characteristics through: • specialisation of observers and knowledge workers; • economies of scale that arise through replication or copying; and the large variety of possible outcomes that can arise through permutations and combinations of standardised components.63

55 Igor Aleksander and Piers Burnett, Thinking machines: the search for artificial intelligence , Oxford UK: Oxford University Press, 1987, p.298. Roger Penrose, The emperor’s new mind: concerning computers, minds, and the laws of physics , fwd by Martin Gardner, London UK: Vintage, 1989, pp.181-187 56 James G March, ‘Bounded rationality, ambiguity and the engineering of choice’, first published in Bell Journal of Economics , Vol.9, 1978, pp.587-608; republished as Chapter 6 in John Elster (ed), Rational choice , Readings in social and political theory, William Connolly and Steven Lukes (series eds), Oxford UK: Blackwell, 1986, pp.142- 170. At pp.145-146, March attributes the idea of ‘bounded rationality’ to Herbert A Simon 57 ibid., p.146 where ‘satisficing’ is also attributed to Simon as an extension of ‘bounded rationality’ 58 Douglas Adams, ‘Is there an Artificial God?’; speech at Digital Biota 2, conference held at Magdalene College, Cambridge U.K. made on 11 September 1998, accessed at URL < http://www.biota.org/people/douglasadams/ > 59 John Foster, ‘From simplistic to complex systems in economics’, Cambridge Journal of Economics , Vol.29 No.6, November 2005, pp.873-892 60 Albert-Lászl ő Barabasi, ‘Taming complexity: commentary’, Nature Physics , Vol.1, November 2005, pp.68-70 accessible online at URL < http://www.nature.com/nphys/journal/v1/n2/full/nphys162.html > 61 Albert-Lászl ő Barabasi, ‘The architecture of complexity: from network structure to human dynamics’, IEEE Control Systems Magazine , Vol.27 Issue 4, August 2007, pp.33-42 62 Yochai Benkler, The wealth of networks: how social production transforms markets and freedom , New Haven: Yale University Press, 2006 63 These issues are discussed in Section 4.1 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 85

Standardisation of measurements, manufactured parts and tools were important contributors to productivity improvement in manufacturing before World War 2. Developing and automating routine operations also reduced unnecessary interference with value- adding processes.64 Standardisation in materials and processes allowed greater uniformity in quality in manufactured products and allowed development of statistical methods to support Total Quality ideas that emerged in the post war period. In general, these methods automated and mechanised processes involving human physical efforts and physical materials. 65

The methods of scientific management merged into methods of operations research where results were required urgently to obtain strategic advantage during World War 2. Activities influenced by operations research included decoding of enemy messages that stimulated development of computers and telecommunications;66 development of atomic weapons;67 remedial and preventative health measures to sustain military operations;68 and personnel training for wartime armaments manufacture and operations,69 with particular reference to behaviour under operational stress. While some success emerged from multi-disciplinary teamwork under emergency conditions of war, peace-time multi-disciplinary research efforts in commerce and government have often produced mixed results.

Some problems seem intractable and defy solution. As an example, although agriculture dates from the dawn of civilisation, complex problems of production and distribution remain as immense challenges to human ingenuity. Where programmes and investments do not live up to expectations, questioning is likely about whether people are sufficiently resourced or trying hard enough. Believing that additional commitment to an unsuccessful course of action will produce the desired results is referred to in management literature as ‘escalation’. 70 Sometimes this escalation serves the ego of the original proponent of an idea or program rather than any enhancement in chances of success.

The alternatives to ‘escalation’ are to try different approaches; or reconsider whether something is actually possible. In expanding the scope of an investigation into the areas of another discipline, a researcher needs sufficient familiarity with the language and concepts of that discipline to allow meaningful messages to pass and cooperation to ensue. As Weiner observed: It is these boundary regions of science which offer the richest opportunities to the qualified investigator. They are at the same time the most refractory to the accepted techniques of mass attack and the division of labour. If the difficulty of a physiological problem is mathematical in essence, ten physiologists ignorant of mathematics will get precisely as far as one physiologist

64 These movements were often associated with Taylorism — a form of ‘scientific management’ attributed to Frederick Winslow Taylor (1856-1915); and Fordism — from methods of mass production adopted by Henry Ford (1863-1947). 65 Peter F Drucker, ‘Knowledge-worker productivity: the biggest challenge’, California Management Review , Vol.41 No.2, Winter 1999, pp.79-83 66 Stephen Budiansky, Battle of wits: the complete story of codebreaking in World War II , New York NY: Touchstone, 2000 — deals with of breaking the German Navy’s Enigma code among other things. William s Butler and L Douglas Keeney, Secret messages: concealment, codes and other types of ingenious communication , New York NY: Simon & Schuster, 2001 — deals with the variety of codes and motivations for their use in a variety of situations 67 This occurred mainly as an Allied effort in the Manhattan Project. 68 Remedial developments included use of penicillin as an antibiotic. Preventative measures included mitigation of malaria through control of the disease-carrying mosquitos. 69 Drucker, ‘Knowledge worker productivity’, p.82 refers to training for war time manufacture in the US as part of Taylor’s ‘Scientific Management’ 70 Mark Kiel, Gordon Depledge and Arun Rai, ‘Escalation: the role of problem recognition and cognitive bias’, Decision Sciences , Vol.38 No.3, August 2007, p.391 86 CHAPTER 3

and no further. If the physiologist works with a mathematician who knows no physiology, the one will be unable to state his problem in term that the other can manipulate, and the second will be unable to put the answers in any form that the first can understand. 71 Attempts to solve problems can also encounter inherent limitations, sometimes referred to as principles of indeterminacy. Such limits can include: • the unobservable — arising from limits to observation; 72 • the logically untenable or indescribable — arising from limits to language and logic in scientific and legal description; 73 and • incidences of scientific impossibility or impotence. 74

3.2.1.5 Complexity in multidisciplinary collaboration As the ideas and processes involved in science and technology become increasingly specialised, the language required to provide unambiguous description of those ideas and processes also becomes increasingly specialised. Accordingly, specialisation tends to become an alienating factor socially.75 Moreover, the benefits of a particular specialisation are limited when used in isolation; and the highly specialised technocrat could easily starve if left to fend for himself in a hunter-gatherer environment. The significant task for a community of specialists is how to organise the simultaneous use of various specialisations in cooperative endeavours. While language problems are often trivialised, failure to cope adequately with problem of precise dialogue is a direct cause of organisational failure. The issue is central to the allegory in the Tower of Babel legend.76 Communication problems arise regularly in multidisciplinary communication associated with making and administering policy; in judicial decision making affecting criminal law and tort law, for example; and in attempts to archive and manage information and categorise knowledge.77

In a simple schema - ‘A word is a sign for a unique experience.’ 78 When this association between a sign and an experience is shared more broadly, the sign becomes the basis for a mutual understanding within a language community. Thus a sign links with a referent — just as the symbols on a map refer to features on the ground. 79 Shared experiences and shared words become a basis for sharing ideas or schemas about how to understand the world. Long-term relationships increase the likelihood of shared experiences that link with conversations, and ‘schema can become exquisitely calibrated, so that a single word,

71 Norbert Weiner, Cybernetics: or control and communication in the animal and the machine , 2nd edn, Cambridge MA: MIT Press, 1961, pp.2-3 72 Heisenberg’s uncertainty principle is an example. 73 Implications of Gödel's incompleteness theorems are matters for some philosophical debate. 74 R V Jones, ‘Impotence and achievements in science and technology’, Nature , Vol.207 No.4993, 10 July 1965, p.120 75 R Felix Geyer, Alienation theories: a general systems approach , Systems Science and World Order Library: innovations in systems science, Ervin Laszlo, general ed, Oxford UK: Pergamon, 1980, pp.76-83 76 Bible, Authorised King James Version, Genesis, 11:1-9. Charles Birch, On purpose , Kensington NSW: University of New South Wales Press, 1990) pp.138-160 where Birch cites Arthur Koestler, Bricks to Babel: selected writings with author’s comments , London UK: Picador, 1982, p.685 77 Jean Dryden, ‘A Tower of Babel: standardizing archival terminology’, Archival Science , Vol.5 No.1, 2005, pp.1-16 - Leon Kass, ‘Biotech and the new Babel’, New Perspectives Quarterly , Vol.21 No.4, 2004, pp.48-60 78 Erich Fromm, The greatness and limitations of Freud’s thought: a revolutionary study of genius in conflict , London UK: Abacus, 1962, p.15 79 Section 3.3.1.3 refers to ‘Particulars about places and tangible things’ and the potential for ‘latent’ and ‘patent’ ambiguity in written descriptions. Latent ambiguity refers to loss of coincidence between symbols and referents. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 87

gesture, or emphasis can evoke in one’s partner a fully understood statement’.80 Conversely, mutual understandings may be impossible without some sharing of experience that goes beyond mere recognition of words. This distinguishes between what a word sounds like and what an experience actually feels like. ‘Book learning’ can give an illusion of information transfer and create a pretence of knowledge. Hence, ‘participant observer’ methodology in anthropology and some social sciences is seen as important in trying to overcome some constraints in communication and differences in culture. 81

A word learned from a singular experience can become a more general ‘sign’ for a whole class of seemingly similar experiences. In the mathematical language of set theory, a word is a sign for a set. 82 Thus ‘Sooty’ may name the family cat, but ‘cat’ as a word can refer to a set of seemingly similar ‘cat-like’ attributes — and the cat can be seen as an animal with ‘animal-like’ attributes. However, categorisation may depend more on social convention than scientific observation. As an example, a French missionary first described the giant panda to the West in 1869. He thought it was like a bear and named it Ursus melanoleucus or ‘black-white bear’. Authorities in France thought it was more like a raccoon and renamed it Ailuropoda melanoleuca . Scholars debated the matter for 120 years. They decided - on the basis of DNA evidence - that pandas diverged from the ursid evolutionary track between 15 and 25 million years ago - after the divergence of raccoons. Present thought is that a panda does not fit easily as a ‘bear’ or a ‘raccoon’. 83 The result was a considerable wasted effort through misunderstanding the nature of a problem involving use of language by supposedly learned people.

Similar experiences emerged from European discovery of Australia’s flora and fauna. These were new experiences for Europeans — in that they occurred for the most part after Cook’s 1770 voyage — but they were well known to indigenous Australians over millennia. Some thought that a platypus specimen when first received in England in 1799 was a taxidermist’s hoax — a frolic by a colonial prankster. 84 This raises issues about whether people — including leading scientists — can be misled by what they see, think they see or fail to see. Sometimes it is not so much physical capacity in observing, or skill as an observer but psychological factors affecting what people see as noteworthy — giving rise to notions such as an ‘Elephant in the room’ or an ‘Emperor with no clothes’.

Some concepts — such as ‘value’, ‘worth’, ‘utility’, ‘satisfaction’ — defy definition because dictionaries necessarily describe one in terms of another. The only escape from this circularity is to ground the meaning of at least one of the terms in actual experience. On this issue, Joan Robinson commented: It is important to avoid confusing logical definitions with natural history categories. A point is defined as that which has position but no magnitude. Clearly no one has ever observed a point. It is a logical abstraction. But how do we define an elephant? The man had the right idea who said: I cannot define an elephant but I know one when I see one. … An elephant is a pretty clear case, but take another example — those swans which logicians are so fond of. If the word ‘swan’ is to describe a bird that has the characteristic, among others, of appearing white, then those black birds in Australia must be called by another name, but if the

80 Daniel Goleman, Vital lies, simple truths: the psychology of self-deception , London: Bloomsbury, 1997, p.156 81 The issue of ‘participant observer’ methodology is revisited in Section 3.3.2.2 — ‘Science and prediction’ 82 Bart Kosko, Fuzzy thinking: the new science of fuzzy logic , London UK: Harper Collins, 1993, p.155 83 Daniel McNeill and Paul Freiberger, Fuzzy logic: the discovery of a revolutionary computer technology — and how it is changing our world , Melbourne VIC: Bookman, 1993, p.61 84 Ann Moyal, Platypus: the extraordinary story of how a curious creature baffled the world , Crows Nest NSW: Allen & Unwin, 2001, p.xii 88 CHAPTER 3

criteria for being a swan are anatomical and do not mention colour, then the black and white swans are in the same category. All the argument is about how to set up categories, not about the creatures. They are what they are however we choose to label them. 85 Using a word to signify a category is a step from an archetype or prototype to a stereotype; and stereotyping allows people to cross a ‘logical gap’, ‘jump to conclusions’ and draw inferences.86 However, developing a schema is also inseparable from developing vocabulary and syntax that belongs to a particular context. Thus the image of ‘young women looking for husbands’ may differ considerably from that of ‘husbands looking for young women’.87 Word meanings have changed despite similarities in syntax.

A multi-lingual situation occurs when people experience the same or similar things but adopt different words to describe them. These language communities can be large — as in English, French, Spanish and Mandarin speaking peoples. However, a language evolves over time and differences can occur in vocabulary, dialect and spelling within broader language communities. Accordingly, the nexus between words, referents, syntax and logic can deteriorate with separation of place and time. Further differences in vocabulary occur with chunking of information and economising through use of acronyms;88 and in the special language used in particular occupations, organisations and institutions. Translation is often possible but someone with multi-lingual skills may be needed to maintain sufficient semantic integrity for effective communication.

Allegorical expressions usually make associations between abstract and more tangible things — as in ‘life is a journey’ or ‘life is like a journey’. This may be recognisable in one language but meaning can be lost when translated literally into another language. Loss is even more likely in translating from ancient texts in different languages. Stories about computer-generated translation illustrate the point. The English expression ‘the spirit is willing but the flesh is weak’ when translated into Russian and back into English as ‘the vodka is good but the meat is rotten’. The expression ‘out of sight, out of mind’ supposedly translated into Japanese as meaning ‘invisible idiot’. 89 The links between context and meaning introduces considerable complexity into machine translation. Thus the word ‘shot’ used in proximity to ‘rifle’ or ‘gun’ may have a different connotation when used in proximity to ‘lens’ or ‘camera’; or when used in proximity to ‘whisky’ or ‘brandy’. 90

Situations commonly encountered in multi-disciplinary studies include variety in terminology expressing the same or similar ideas, separate streams of journal literature, attention-seeking using vogue terms, and tendencies to duplicate some research. The extent of overlap in studies involving information is a particular example. Without claiming to provide a complete listing, Machlup and Mansfield recorded more than 30 disciplines that sought to recognise ‘information’ as a major focus of their studies. 91

85 Joan Robinson, Economic philosophy , Harmondsworth Middlesex: Penguin, 1962, pp.7-8 86 This is referred to in more detail in Section 3.3.2.2 87 Steven Pinker, Words and rules: the ingredients of language , New York NY: Harper Collins, 1999, p.4 88 George A Miller, 'Information and memory', Scientific American , Vol.195 No.2, August 1956, pp.42-46 rpt in The psychology of communication; seven essays , ed by George A Miller, Harmondsworth Middlesex: Penguin, 1967 pp.11-20 89 This story may have some basis in truth but it acquired mythical qualities through successive retelling. A review appears in John Hutchins, ‘”The whisky was invisible”, or persistent myths of MT’, from MT News International , Vol.11, June 1995, pp.17-18 accessed online at URL 90 George A Miller, ‘On knowing a word’, Annual Review of Psychology , Vol.50, 1999, p.16 91 Fritz Machlup and Una Mansfield (eds.), ‘Prologue’, in The study of information: inter-disciplinary messages , New York NY: Wiley, 1983, pp.6-7 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 89

Ultimately, the test of understanding a communication depends not so much on knowing or sharing words as sharing of actual experience. Knowing about something through book learning may allow a façade or pretence of knowledge that differs qualitatively and meaningfully from actually knowing what something feels like. Two situations are possible: • Shared experiences — shared words: providing the basis for an ‘exquisite calibration’ of understandings. This is possible for the most part through long-term relationships. • Shared experiences — non-shared words: a multilingual situation where collaboration may be possible across the language boundaries of learned disciplines, institutions, organisations and countries. However, collaboration will depend on effective translation that can take account of idiomatic use of language.

A more challenging situation arises in describing non-shared experiences such as those arising from the invention of new goods and services. Where a new experience involves using something tangible, users gain understanding over time as they learn to see and talk about what becomes a shared experience that is no longer new to any of them. The innovation process becomes intimately bound up in learning and communication processes for all who become involved.

An even more challenging situation arises when the novelty pertains to what someone has ‘in mind’ and the words may not exist to allow it to be spoken about. The description of a non-shared experience can take the following forms: • Non-shared experiences — shared words: where existing words take on extended meanings in particular contexts; with potential for ambiguity and misunderstanding wherever people are unacquainted with the intended meanings. • Non-shared experiences — non-shared words: leaving a communication task that needs to combine the ‘show and tell’ aspects of learning. However, ‘showing’ is constrained where the novelty takes the form of new ideas and is therefore intangible.

The development of ideas and theories about how people think and how the human brain works is important in understanding knowledge-worker productivity and the effectiveness of governance structures. By the nineteenth century, ideas about rational human behaviour were filtering into emerging social sciences. In essence, ‘the pursuit of happiness’ was seen as rational, 92 and the cumulative effects of everyone working towards their own satisfactions were believed to serve the needs of society. This was sometimes expressed as ‘the greatest good for the greatest number’. Issues of equity in distribution of benefits were neatly sidelined when things came to be expressed more simply as ‘the greatest good’. The idea of maximising net social benefit provided basic tenets of utilitarianism that were readily integrated into economic thinking. However, by the end of the nineteenth century, they were increasingly exposed to intellectual criticisms with alternative views from psychologists, sociologists, anthropologists and other observers of human conditions. 93

Freud challenged utilitarian thought in significant ways through his psychoanalytic investigations. Although his methods and conclusions were subjected to justifiable criticisms, his ideas provided new insights into seemingly ‘irrational’ behaviour and questioned ideas about what could be seen as ‘normal’. New words described what were then newly observed experiences but are now understood as denial, repression, neurosis,

92 The American Declaration of Independence declared ‘the pursuit of happiness’ to be an inalienable human right. 93 George A Miller, Psychology: the science of mental life , Harmondsworth Middlesex: Penguin, 1962, p.250 90 CHAPTER 3

obsessions and the subconscious. The interest here is in how it affects the information processing capacity of individuals; and the social consequences if particular classes of people are similarly affected. The immediate concern is not so much with Freudian ideas per se , but with problems of language and communication in introducing substantially new questions and ideas into an intellectual environment. Fromm saw the issue in the following terms: … the thinker has to express his new thought in the spirit of his time. Different societies have different kinds of ‘common sense,’ different categories of thinking, different systems of logic: every society has its own ‘social filter’ through which only certain ideas and concepts can pass; those that need not necessarily remain unconscious can become conscious when by fundamental changes in the social structure the ‘social filter’ changes accordingly. Thoughts that cannot pass through the social filter of a certain society at a certain time are ‘unthinkable’, and of course also ‘unspeakable’. 94 Elaborating on this idea, Fromm adds: It follows that the creative thinker must think in terms of the logic, the thought patterns, the expressible concepts of his culture. That means he has not yet the proper words to express the creative, the new, the liberating idea. He is forced to solve an insoluble problem: to express the new thoughts in concepts and words which do not yet exist in his language. 95

An idea that is familiar within a particular learned community may be ‘new’ to someone outside that community. Thus, a new entrant to a learned discipline is like a ‘participant observer’ in undertaking the learning and socialisation processes that prepare a person for everyday practice within the discipline. Thus the US Supreme Court denied that there could be ‘separate but equal’ education for lawyers in 1950; 96 or in racially segregated schools in 1952. 97 However, constraints for a person already trained in one discipline in trying to become familiar with a second discipline and acquire fluency in cross disciplinary collaboration include: • transference issues — where prior learning may help or hinder the acquisition of new language and patterns of thinking; and • opportunity costs — where a person already trained in one discipline has an opportunity cost in not using existing knowledge while acquiring new knowledge.

The issue of opportunity cost is not confined to cross disciplinary issues. The opportunity cost of learning something new comes at a cost of not using what is already known. The issue of opportunity cost is also complicated by the need to distinguish between trying to learn something new in time that is highly valued or in time that might be described as ‘spare time’.

Misunderstanding can occur by loading extended meanings into existing words. As an example, the economist’s concept of a ‘public good’ is often construed as something ‘good for the public’ - somewhat equivalent to a political idea of ‘the public interest’. However, to an economist, it says something about the likelihood that it will be produced by public rather than private enterprise. 98 Similarly, the lawyer’s idea of an interest in property ‘at

94 Erich Fromm, Greatness and limitations of Freud’s though: a revolutionary study of genius in conflict , London: Abacus, 1982, p.2 95 ibid., p.3 96 Sweatt v Painter , 339 U.S. 629 (1950) accessed online at URL < http://supreme.justia.com/us/339/629/case.html > 97 Brown v Board of Education of Topeka , 347 US 483 (1954) accessed online at URL < http://supreme.justia.com/us/347/483/case.html > 98 Section 4.2.1 — ‘Classification of resources’ elaborates on the meaning of ‘public goods’ PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 91

law’ may not mean much more to a lay person than something involving the law. However, a lawyer may use the expression to distinguish between a legal and equitable interest in property. To a lawyer, a ‘legal interest’ refers to a relationship that exists between a person and the rest of the community; whereas an ‘equitable interest’ refers to an interpersonal relationship with another person. The distinction is of profound importance to a lawyer but often goes unnoticed by lay persons.

The idea of complexity is somewhat subjective. It exists in the mind of an observer who has learned to see the complexity whereas it escapes the notice of someone who has not learned to see it. However, complexity can also be seen as ‘inherent’ or ‘contrived’ depending on how an observer may wish to be regarded within an organisation. The distinction may be described as follows: • Inherent complexity — where the ability to note and describe particular distinctions is essential in achieving particular outcomes. This ability in discernment comes at a cost associated with greater attention to detail in vocabulary, meanings of words and phrases, and use of language generally. • Contrived complexity — where knowledge, or the pretence of knowledge, is used to obfuscate or confuse a situation; ‘blinding people with science’ and leading potentially to doubts and delays or indefinite curtailment of action.

Seemingly, the idea that laws should be written in ‘plain English’ is a worthwhile objective, and there is virtue in achieving simplicity without being simplistic to the point of being misleading. However, in the quest for a simple life, people are often led to oversimplify the nature of law and to overstate its power. 99 Simple rules are often supposed to reduce the regulatory burden and achieve certain and predictable outcomes. However, if rules cannot cope with the inherent complexity of situations where they are to be applied, the rules themselves may be subjected to a variety of interpretations. As Weermantry observes: Napoleon, who thought his Code would crystallize the law for all time, is said to have exclaimed, on seeing the first commentary on it, “My Code is lost”. While a traveller can still carry the Code in his pocket, the cases and commentaries would more than fill a railway train. 100

Despite the importance of trying to obtain holistic overviews of complex systems, the problems of multi-disciplinary teamwork are legendary. The problems include how to decide that information is relevant and reliable, and on what basis information can be accepted or rejected. As an example, the US government established a National Acid Precipitation Assessment Program (NAPAP) in an attempt to integrate the work of scientific disciplines following the Acid Precipitation Act 1980 (US). The Program experienced the following problems: • The management of inter-agency research and development was too decentralised and uncoordinated. • The task force had too few resources for managing such a broadly defined and complex undertaking. • Deadlines were unduly optimistic. • There was rivalry and contention among member agencies, and general inability to develop a collegial forum and general research plans.

99 Iredell Jenkins, Social order and the limits of law: a theoretical essay , Princeton NJ: Princeton University Press, 1980, p.x 100 G G Weermantry, The law in crisis: bridges of understanding , London UK: Capemoss, 1975, p.91 92 CHAPTER 3

• Infighting took place over fundamental issues such as the research agenda and the value of pure and applied research. 101

Problems of inter-disciplinary communication appear frequently in making and interpreting laws and regulations. Scientists may wish to emphasise the tentative nature of science and how opinions might change as new evidence unfolds. In contrast, the lawyer may seek information that avoids argument or confusion about the facts. Effort can then be concentrated on advocacy regarding how the law can be applied when facts of a case are known. Consequently, where facts are uncertain, tentativeness of science is brought into stark contrast with the quest for legal decisiveness. In a legal or regulatory dispute, the testimony of a balanced, objective scientist who scrupulously qualifies his statements to guard against over-interpretation is likely to be almost useless to either side. Scientists with strong biases (known in advance to be most likely to suit the interests of the client) are much more likely to be sought out, if they have the requisite respectability and qualifications. 102 The adversarial system poses two particular difficulties when considering expert evidence. The first is that experts often go beyond their levels of expertise in ways that may not be immediately obvious. The second is in failing to reveal available evidence in a timely way when it could make an appreciable difference to decision making. Both of these things contributed to one of the more significant miscarriages of justice in recent UK legal history. Sally Clark, a lawyer and mother, was accused of causing the death of her two children — Christopher who died at age 11 weeks in 1996; and Harry, at age 8 weeks in 1998. She was convicted of their murder in November 1999 and given two life sentences. 103 The convictions and sentences were affirmed in an appeal in October 2000. 104 The appeal court reviewed the use of statistical evidence concerning the incidence of sudden infant death syndrome (SIDS). The court decided that there was error in using statistics; but, with the weight of other evidence, the error did not render the convictions unsafe. 105

Public debate continued about the case and its use of statistics. The Royal Statistical Society released a press statement in October 2001 challenging interpretation of the statistical evidence. 106 Articles in the British Medical Journal also discussed the evidence. 107 However, of greater concern was the discovery that post mortem information was not disclosed to the court at the relevant time. This information related to the

101 Robert W Rycroft, ‘Environmentalism and science: politics and the pursuit of knowledge’, Knowledge: Creation, Diffusion, Utilization , Vol.13 No.2, December 1991, pp.156-157 102 Edward Groth III, ‘Role of scientific expert examined’, Harvard Law Review , Vol.62, 1976, p.3, cited by Milton R Wessel in ‘Comment’ in referring to Peter G W Keen, ‘The cognitive style of lawyers and scientists’, Law and science in collaboration: resolving regulatory issues of science and technology , ed by J D Nyhart and Milton M Carrow, based on proceedings of an April 1981 conference conducted by the National Center for Administrative Justice, held at the Lewis Law Center, Washington and Lee University, Lexington MA: D C Heath, 1983, p.245 103 Some details of the case and hyperlinks to associated documents appear at Wikipedia, ‘Sally Clark’ accessed online at URL < http://en.wikipedia.org/wiki/Sally_Clark > 104 Clark v R , [2000] EWCA Crim 54 (2nd October, 2000) — England and Wales Court of Appeal (Criminal Division), accessed online at URL http://www.bailii.org/ew/cases/EWCA/Crim/2000/54.html 105 ibid., para.256 106 Royal Statistical Society, News release, ‘Royal Statistical Society concerned by issues raised in Sally Clark case’, Embargoed until 00.00hrs Tuesday 23 October 2001, accessed online at URL 107 Stephen J Watkins, ‘Conviction by mathematical error?: Doctors and lawyers should get probability theory right’, British Medical Journal , Vol.320, 1 January 2000, pp.2-3 accessed online at URL Roy Meadow, ‘A case of murder and the BMJ ’, British Medical Journal , Vol.324, 5 January 2002, pp.41-43 Accessed online at URL < http://www.bmj.com/cgi/reprint/324/7328/41 > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 93

possibility of natural death, and may have influenced the outcome of the trial. The doubts about evidence were supplied to the Criminal Cases Review Commission and the case was referred in turn to a second appeal. In January 2003, the appeal court decided that the convictions were unsafe and should be set aside. 108

The General Medical Council (GMC) through its Fitness to Practice Panel found a Home Office pathologist who performed post mortems on both children to be guilty of serious professional misconduct for failing to disclose key evidence that might have helped to clear the defendant. 109 The finding was upheld in an appeal to the High Court in 2007. 110 The GMC also made a finding of serious professional misconduct against an eminent paediatrician who gave evidence at the trial.111 The finding and suspension from practice were disallowed on appeal, mainly on the basis that, in the interests of bringing matters to finality, it is not generally in the public interest to challenge evidence later through a separate system of evaluation.112

Arguably, information-intensive activities that attempt to transcend the boundaries of a single discipline are especially susceptible to error. In a 2005 article with an evocative title — ‘Why most published research findings are false’ — the author argued: There is increasing concern that most current published research findings are false. The probability that a research claim is true may depend on study power and bias, the number of other studies on the same question, and, importantly, the ratio of true to no relationships among the relationships probed in each scientific field. … Moreover, for many current scientific fields, claimed research findings may often be simply accurate measures of the prevailing bias. In this essay, I discuss the implications of these problems for the conduct and interpretation of research. 113

Of particular interest is whether publicly or privately funded research produces misinformation in policy advice and leads to resource misallocation and inefficiency. This brings the system of peer review into question, for the quality of research that goes beyond the boundaries of a single discipline may also escape effective scrutiny; and the usual peer review processes may be seen as deficient. This is apart from the separate problem of how unconventional ideas can be introduced into a discipline.

Journal literature usually follows conventions where submitted papers undergo vetting by anonymous referees. In contrast, a reviewer’s identity is usually made known when books produced through conventional commercial publishers are reviewed within journals. This raises questions concerning the wisdom of decisions that reject articles under circumstances of anonymity; whether reviewing might improve if the identity of reviewers were made known; whether research should indicate the source of funding as an indicator

108 Clark v R , [2003] EWCA Crim 1020 (11 April 2003), England and Wales Court of Appeal (Criminal Division), accessed online at URL < http://www.bailii.org/ew/cases/EWCA/Crim/2003/1020.html > 109 Clare Dyer, ‘Pathologist in Sally Clark case suspended from court work’, British Medical Journal , Vol.330, 11 June2005, p.1347, accessed online at URL < http://www.bmj.com/cgi/content/full/330/7504/1347 > 110 General Medical Council, ‘GMC finding of Serious Professional Misconduct against Dr Alan Williams upheld in High Court’, press release of 9 November 2007 accessed online at URL < http://www.gmcpressoffice.org.uk/apps/news/archive/detail.php?key=383 > 111 Details and hyperlinks to relevant documents appear at Wikipedia, ‘Roy Meadow’, accessed online at URL 112 Meadow v General Medical Council , [2006] EWHC 146 (Admin) (17 February 2006) per Collins J at paras.21-27, accessed online at URL < http://www.hmcourts-service.gov.uk/judgmentsfiles/j3889/meadow_v_gmc_0206.htm > 113 John P A Ioannidis, ‘Why most published research findings are false’, PLoS Medicine 2, Vol.2 No.8 (2005): e124 accessed online at URL 94 CHAPTER 3

of potential bias; 114 and whether there may be ways of accelerating the release of new research findings — through open access regimes, for example.115

One study of acceptance and rejection within journal literature in economics indicated that ‘almost all leading economists who regularly submit to journals have suffered rejection, often frequently’.116 The survey showed ‘that many papers that have become classics were rejected initially by at least one journal — and often by more than one’, and it was quite possible for the review process to overlook excellence. 117 On the other hand, many authors of rejected articles admitted that the review process could be helpful. It could guide the best articles to the best journals and protect reputations by preventing bad work from being published. 118

Questions of acceptance and rejection of information feature frequently in legal decision making. In a seemingly well-intentioned though troublesome 1993 decision in Daubert v Merrel Dow Pharmaceuticals Inc, the US Supreme Court ordered federal trial judges to be ‘gatekeepers’ in deciding whether expert evidence is both ‘relevant’ and ‘reliable’. 119 Two subsequent cases elaborated further on how the Court intended to deal with expert evidence; namely General Electric v Joiner ,120 and Kumho Tire Co v Carmichael .121 In Joiner , the Supreme Court held that where conclusions and the basis for those conclusions do not flow rationally, an expert’s testimony may be properly excluded. In Kumho the court acknowledged that it was ‘knowledge’ rather than ‘science’ that needed to be relevant and reliable. This transcended demarcation difficulties involved in using terms such as ‘science’, ‘non-science’ and ‘junk science’. 122

A reaction to Daubert appeared in a US project called Scientific Knowledge and Public Policy (SKAPP). 123 SKAPP has particular concern about the capacity of private interests — helped by precedent set by Daubert , Joiner and Kumho — to exploit scientific uncertainty and delay regulatory action, especially in matters pertaining to public health and the environment. Michaels, a SKAPP director, argues: Increasingly, scientific evidence, which is relied upon by federal regulatory agencies charged with protecting public health, is being subjected to Daubert -like challenges. All three developments — in civil actions, criminal trials, and rulemaking — favor the powerful in our society over the weak and vulnerable.

114 Carol J Henry and James W Conrad Jr, ‘Scientific and legal perspectives on science generated for regulatory activities’, Environmental Health Perspectives , Vol.116 No.1, 2008, pp.136-141 115 Acceleration of the review process is part of the rationale for the 2001 Budapest Open Access Initiative and the Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities — discussed in Chris Armbruster, ‘Five reasons to promote open access and five roads to accomplish it in social and cultural science’, 12 November 2005, especially ‘Reason 5’ at p.10, accessed online at Social Sciences Research Network (SSRN) at URL < http://ssrn.com/abstract=846824 > 116 Joshua S Gans and George B Shepherd, ‘How are the mighty fallen: rejected classic articles by leading economists’, Journal of Economic Perspectives , Vol.8 No.1, Winter 1994, p.165 117 ibid., p.166 118 ibid., p.176 119 Daubert v Merrell Dow Pharmaceuticals Inc , 509 U.S. 579 (1993), 120 General Electric v Joiner, 522 U.S. 136 (1997), 121 Kumho Tire Co v Carmichael , 526 U.S. 137 (1999) 122 Haack, Susan. "Trial and error: the Supreme Court’s philosophy of science." American Journal of Public Health , Vol.95 Supplement 1 - Public health matters, July 2005, pp.S66-S73 123 Detailed historical background to formation of SKAPP appears in Daubert: the most influential Supreme Court ruling you’ve never heard of , a publication of the Project on Scientific Knowledge and Public Policy, coordinated by the Tellus Institute, Boston MA: June 2003, accessed online at URL < http://www.defendingscience.org/upload/Daubert-The-Most-Influential-Supreme-Court- Decision-You-ve-Never-Heard-Of-2003.pdf > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 95

Close analysis of the Supreme Court decision reveals a series of concerns. The requirements Daubert imposes on federal judges are unreachable — no absolute criteria exist for assessing the validity of scientific evidence. Scientific reasoning is no more susceptible to a mechanical approach than legal reasoning. Checklists of criteria, although appealing in their convenience, are inadequate tools for assessing causation. Alternatively, judges may rely on their own experience and “common sense,” which has inherent biases and limitations. 124

Apart from concerns within scientific communities about how law courts process information, the US government added a seemingly benign rider as Section 515 of a Treasury and General Government Appropriations Act of 2001. As a section of an Act, the provision has no particular name to identify it officially, but it has been labelled for convenience as an Information Quality Act or a Data Quality Act.125 The provision required the Director of the Office of Management and Budget to oversee development of government-wide standards ‘for ensuring and maximising’ the quality of information disseminated by federal agencies. 126 Given this background, the irony is inescapable in a somewhat embarrassing editorial note that appeared in publishing a document related to administration of the Data Quality Act. Due to numerous errors, this document is being reprinted in its entirety. It was originally printed in the Federal Register on Thursday, January 3, 2002 at 67 FR 369-378 and was corrected on Tuesday, February 5, 2002 at 67 FR 5365. 127 The reaction by the scientific community to the provisions as they operate in practice can be gauged from the following comment: A little-known federal law passed without debate threatens public access to scientific information. The Information Quality Act (IQA), also known as the Data Quality Act, puts in place a process for challenging information disseminated by the government which is at best unnecessary and at worst a substantial threat to public health and safety, and environmental quality. On its surface, IQA sounds constructive — clearly, it is important that data disseminated by the government be of high quality. On closer examination, however, IQA has the potential to significantly retard, dilute or censor information the public needs, such as alerts about dangerous chemical or biological hazards, warnings about unsafe drugs or foods, or information about the effects of pollution on wildlife or sensitive habitats. Though its focus is on disseminated information, the law also has the potential to undermine regulatory action: piecemeal challenges to the quality of individual studies can dismantle the body of evidence that an agency reviews in considering appropriate action to prevent or reverse threats to health. 128 Some producers of scientific journals reacted to concerns about quality in reported research by revising their peer-review procedures. These revisions reflect concern for the potential damage to the reputations of journals if research funding is seen to unduly influence research findings. Generally, peer review needs to exhibit multiple assessments by scientists who have experience or expertise in the research in question but who do not have direct association with the research or its sponsors. 129

124 David Michaels, ‘Editorial: Scientific evidence and public policy’, American Journal of Public Health , Vol.95 Supplement 1, Public health matters, July 2005, 125 ‘Data Quality Act’, Wikipedia, accessed online at 126 Draft 2007 report to Congress on the costs and benefits of federal regulations, Chapter 3, ‘Update on the implementation of the Information Quality Act’, pp.37-38 127 Office of Management and Budget, Executive office of the president, ‘Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Information Disseminated by Federal Agencies; Republication, Federal Register, Vol.67 No.6, Friday 23 February 2002. p.8452 128 Project on Scientific Knowledge and Public Policy (SKAPP), ‘Information Quality Act’, accessed online on 27 January 2009 at URL < http://www.defendingscience.org/public_health_regulations/Information-Quality-Act.cfm > 129 Extensive references are available in Wikipedia articles on ‘Peer review’ at URL and < http://en.wikipedia.org/wiki/Category:Peer_review > 96 CHAPTER 3

Peer review frequently draws criticisms of editorial bias and suppression of some ideas; but peer review is nonetheless seen as providing some degree of quality control in research programmes. Ultimately, knowing what to accept or reject by way of observations and evidence is in the realm of tacit knowledge born out of experience. Science is not ‘self- evident’ and requires scientific judgment, and because judgments vary, a well balanced representation of intellectual perspectives is needed to offset potential bias. Where that balance can be obtained, it is more likely to rebut any scientifically untoward or untenable hypothesis and arrive at a successful review. 130

While it is fashionable to speak of evidence-based policy making, it begs important questions about how evidence should be accepted, rejected, interpreted and placed within a multidisciplinary decision-making context. 131 Experience of trying to achieve collaboration between scientists and lawyers in making and administering regulations suggests that it is important to know: • How to frame questions in a multidisciplinary context; the extent to which it is practicable to separate issues concerned with facts and values; and who has responsibility for each issue. • How to build effective inter-disciplinary communication, understanding and trust. • The extent to which scientists can be given ‘room to breath’. • How to fold scientific issues into the legal process. • How to ensure that the process remains acceptable.132

3.2.1.6 Complexity in resource allocation Modern government faces a considerable degree of complexity in overseeing the allocation of resources to meet the needs of society. The information-intensive activity revolving around these allocation processes tends to organise itself around knowledge in a number of areas: • How to provide an initial allocation of resources and property rights — This has been determined mainly through historical circumstances in the cases of resources such as land. However, new allocations can occur with the discovery of new resources or the discovery of new uses for existing resources, as in:
discovery of properties of the electromagnetic spectrum and the rationing of its use through radio and television licences; and
rationing of permits for greenhouse gas emissions — allowing discharges into the global atmosphere at a rate deemed ‘acceptable’.

130 Carol J Henry and James W Conrad Jr, ‘Scientific and legal perspectives on science generated for regulatory activities’, Environmental Health Perspectives , Vol.116 No.1, January 2008, p.137 accessed online on 1 January 2009 at URL < http://www.ehponline.org/members/2007/9978/9978.html > 131 Brian Head, ‘Evidence-based policy: principles and requirements’, Chapter 2 Strengthening evidence-based policy in the Australian federation , Vol.1: Roundtable Proceedings held at Canberra ACT on 17-18 August 2009, published in Canberra ACT: Australian Government, Productivity Commission, 2010, accessed online via URL 132 J D Nyhart and Milton M Carrow, ‘Towards better resolution of regulatory issues involving science and technology’, Law and science in collaboration: resolving regulatory issues of science and technology , ed by J D Nyhart and Milton M Carrow, based on proceedings of an April 1981 conference conducted by the National Center for Administrative Justice, held at the Lewis Law Center, Washington and Lee University, Lexington MA: D C Heath, 1983, pp.273-

PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 97

• How to transform and transport a variety of resources in a variety of production processes — where innovation based in science and technology can improve existing processes and create new products as part of technological change. • How to perform the four separate areas of activity that each require their own knowledge — namely design, construction, operation and maintenance - in relation to three separate areas of infrastructure, namely:
Physical infrastructure;
Institutional infrastructure: and
Information infrastructure. • How to do business with other persons by discovering who has a potential to supply and a potential to demand — a process of reallocating though:
marketing and advertising in the case of goods that can be exchanged through markets; and
political advocacy and persuasion in relation to goods and services provided by command mechanisms within organisations. • How to effect transactions once parties have been identified and introduced to each other. This is usually a problem of contracting in a variety of relationships such as those between:
vendors and purchasers;
employers and employees; and
principals and agents. • How to resolve disputes — in matters such as:
assignment of property rights and obligations;
performance of contractual obligations;
the degree of care to be exercised; and
assessment and apportionment of damages when outcomes do not live up to expectations.

3.2.1.7 Policy failure through failing to recognise complexity Specialisation of tasks begins with learning to see; but people habitually fail to see things that they have not learned to see; or to notice things that seem irrelevant and not worth noticing. As an example, people who have no need to question the trust that they place in their institutions — or the security of their property entitlements — are free to concentrate on other things. This freedom — born out of a sense of security — can contribute to a more productive society. 133 However, unquestioning faith in institutions also leads to economic conundrums: • How can people trust their institutions and place a value on them when value depends on how much they can be trusted and effectively taken for granted?

133 Adolfo Morrone, Noemi Tontoranelli and Giulia Ranuzzi, Organisation for Economic Co-operation and Development, How good is trust? Measuring trust and its role for the progress of societies , OECD Statistics Working Paper STD/DOC(2009)3, Paris France: OECD, 23 October 2009. This paper analyses ‘trust’ as a concept, its role in social progress and how it might be measured. Paper accessed online at URL 98 CHAPTER 3

• If they are taken for granted, how can it be decided that institutions have remained efficient and effective through changing technical and socio-economic circumstances?

The idea — ‘If it ain’t broke, don’t fix it’ — is often used to argue against institutional change. However, the public policy issue is not so much whether something is ‘broken’ as whether it is has remained efficient and effective in achieving its purpose; and whether the purpose remains relevant to a particular society. In commenting on the laws of England in 1776, Blackstone offered a subtle explanation concerning why people may overlook the role of social and economic institutions in underpinning activities of governments and markets. He referred to the ‘despotic dominion’ of a property owner who can be secure in the knowledge of having a legally enforceable right to possess a resource exclusively. Pleased as we are with the possession we seem afraid to look back to the means by which it was acquired, as if fearful that some defect in our title; or at best we rest satisfied with the decision of the laws in our favour, without examining the reason or authority upon which these laws have been built. … These enquiries it must be owned, would be useless and even troublesome in common life. It is well if the mass of mankind will obey the laws when made, without scrutinising too nicely into the reasons of making them. But, when law is to be considered not only as a matter of practice, but also as a rational science, it cannot be improper or useless to examine more deeply the rudiments and grounds of these positive constitutions of society. 134 Seemingly, Blackstone’s comments are applicable to trusted relationships more generally. In placing faith in reasoning as a basis for how to proceed, a ‘rational science’ provides a basis for understanding the design and operation of institutions, provided that institutions can be seen as purposeful and with predictable and beneficial outcomes. In The mystery of capital: Why capitalism triumphs in the West and fails everywhere else , de Soto refers to the ‘The hidden conversion process of the West’.135 He asks: Why have the rich nations of the world, so quick with their economic advice, not explained how indispensable formal property is to the capital formation? The answer is that the process within the formal property system that breaks down assets into capital is extremely difficult to visualise. It is hidden in thousands of pieces of legislation, statutes, regulations and institutions that govern the system. Anyone trapped in such a morass would be hard pressed to figure out how the process works. The only way to see it is from outside the system — from the extralegal sector.136 De Soto’s comment appeared in the context of concern for repeated failure to reduce poverty and advance the cause of lesser-developed countries. In recognising the problems of underdevelopment in bringing about international cooperation, the UN reaffirmed many of its previously-stated principles in its 1986 Declaration on the Right to Development. 137 In 2000, the UN made a Millennium Declaration that reaffirmed human rights principles and established Millennium Development Goals with targets for development and poverty reduction by 2015.138 Concerns have already been expressed as to whether the goals can be met. 139

134 Sir William Blackstone, Commentaries on the laws of England, first published 1765-1769, 15th. edn., Vol.2, ed. by Edward Christian, London: Strachan, 1809, p.2 135 Hernando de Soto, The mystery of capital: why capitalism triumphs in the West and fails everywhere else , London: Bantam, 2000, p.41 136 ibid., p.39 137 United Nations, Declaration on the Right to Development , adopted by General Assembly Resolution 41/128 of 4 December 1986, accessed at URL < http://www2.ohchr.org/english/law/rtd.htm > 138 United Nations, Millennium Declaration, adopted by General Assembly Resolution 55/2 of 8 September 2000, accessed at URL < http://www.un.org/millennium/summit.htm > 139 Jeffrey D Sachs (Director), UN Millennium Project, Investing in development: a practical plan to achieve the Millennium Development Goals , report to UN Secretary-General, New York. January 2005 Accessed at URL < http://www.unmillenniumproject.org/documents/MainReportComplete-lowres.pdf > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 99

Ideas such as ‘capacity building’ and ‘institution building’ are now part of the language of development. ‘Governance’ also has high priority as a development issue, especially when coupled with ideas about a human right to self-determination. 140 The difficulty in all cases is that the development process is subtle. Institutions depend on the development of interpersonal understandings about how people can work together.141 As Blackstone and de Soto have observed, people do not reflect habitually on how they have acquired the understandings on which they depend as individuals or as a community. As a consequence, people — and more importantly analysts and decision makers — do not learn through experience unless they are sufficiently observant to note the experience and consciously make it their own. This impacts on how people learn about learning itself — either as individuals or collectively as communities.

3.2.1.8 Spontaneous and purposive organisation The idea that complex organisation can arise spontaneously without centralised human design; planning or management has a long tradition in studies of socio-economic systems. An analogy in the physical world is in the way crystals can dissolve in water and later recrystallise — although not necessarily in exactly the same crystalline form as previously. Similarly, the complexity of a termite mound emerges out of seemingly uncoordinated termite activity. Other situations where complicated outcomes occur without any sense of overall planning include: • Language — where the vastness of whatever can be described begins with agreement within a language community regarding the meaning that can be attached to the symbolism of each word that is used, and the syntax of sentence construction. • Ethical standards and values where people arrive at understandings about what is fair, just and acceptable from personal and social points of view; and emerge mainly out of individual experiences of what is unfair, unjust and unacceptable. • Market activity where the desire of buyers and sellers to enter into trading relationships allows a substantial variety of possible outcomes that are immensely complex in their totality.

Typically, purposeful learning and intentional actions can be orderly without necessarily predetermining what the organisational outcomes will be. This unpredictability is a consequence of interconnectedness where individual actions may be ‘purposeful’ and determined but the encounters with other people may be probabilistic. Since the kinds of transactions that could take place at chance meetings are immense and mostly unpredictable, the outcomes may seem to be ‘spontaneous’. This characterises the emergence of complexity in social and other systems with strongly interactive elements.142

Ideas about spontaneous organisation are often associated with religious and ideological viewpoints that see some forms of social organisation as ‘god-given’ or ‘natural’. Thus, the idea of a sovereign’s divine right to rule was said to be ‘god-given’ in that it derived from

140 As an example, the United Nations Development Programme (UNDP) sees promotion of democratic governance as an important part of its activities - see overview at URL < http://www.undp.org/governance/about.htm > 141 Kenneth J Arrow, The limits of organization , the Fels lectures on public policy analysis, New York NY: Norton, 1974, p.18 142 Oliver E Williamson, ‘Economic institutions: spontaneous and intentional governance’, Journal of Law, Economics and Organization , Vol.7 (Special Issue), January 1991, pp.159-187. 100 CHAPTER 3

processes of elevation and ordination contained in the coronation as a sacrament.143 The idea was politically troublesome when it was claimed to extend to a right to demand revenues. The claim conflicted with parliament’s role in deciding matters of taxation and contributed to the English Civil War and the interregnum between 1648 and 1660.144 Appeals to religious authority usually attempt to rationalise, and hence legitimise, particular power relationships. In this way, questioning of authority may be seen not only as a civil disobedience but also as a religious disobedience or sacrilege. Prior to constitutional separations of church and state, the combined effect of a political and religious duty imposed a double jeopardy on citizens.

A more secular view associates particular ideas with what is ‘natural’ — as in notions of ‘natural law’ and ‘natural justice’ with its appeal to ‘instinctive’ or ‘hard-wired’ human behaviour. Thus, some behaviour is proscribed on grounds that it is ‘contrary to the laws of nature’. In other cases, laws of god and nature are seen as inextricably interwoven, as in the text of the American Declaration of Independence: When in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation. 145 The idea of a flourishing society emerging without any overall plan appears in Edmund Burke’s 1757 comment on American colonisation: The settlement of our colonies was never pursued upon any regular plan; but they were formed, grew, and flourished, as accidents, the nature of the climate, or the dispositions of private men happened to operate. … Nothing of an enlarged spirit appears in the planning of our colonies. 146 Burke’s words are reminiscent of later comments first published in 1776 by Adam Smith — the year of the American Declaration of Independence. Smith wrote in a Scottish tradition that integrated studies in history, behavioural science and moral philosophy into what he saw as a human propensity to ‘truck, barter and exchange one thing for another’. He postulated — without taking the matter further — that this propensity might be ‘an original principle of human nature’ but more probably ‘a necessary consequence of the faculties of reason and speech’. 147 But man has almost constant occasion for the help of his brethren, and it is vain for him to expect it of their benevolence only. He will be more likely to prevail if he can interest their self- love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this that you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices that

143 ‘Constitutions and canons ecclesiastical’, treated upon by the convocations of Canterbury and York, published for due observation by his majesty’s authority under the great seal of England, 26 June 1640, rpt in The Stuart Constitution 1603-1688: documents and commentary , ed and introduced by J P Kenyon, Cambridge UK: Cambridge University Press, 1966, pp.166-171 144 G E Aylmer, The struggle for the Constitution — 1603-1689: England in the seventeenth century, The History of England Series, ed by R W Harris, London UK: Blandford, 1965, pp.102-108 145 American Declaration of Independence, made at Philadelphia PA on 4 July 1776, with emphasis added by this author − text accessed at URL < http://www.ushistory.org/Declaration/document/index.htm > 146 Edmund Burke, An account of European settlements in America, (2 vols, London, 1757), Vol.2, 288, cited in Great Britain and the American colonies: 1607-1763 , ed. by Jack P. Greene, Documentary History of the United States series HR/1477, (New York, NY: Harper & Row; 1970), p.xi 147 Adam Smith, Wealth of nations , Book 1, Chapter 2 − This comment recognises the purposeful or intentional elements that underpin economic transactions; although Smith also recognises benevolence as a social responsibility PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 101

we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens. Seemingly, Smith felt that faculties of reason and speech were distinctly human attributes that made higher levels of social and economic organisation possible. Moreover, the interpersonal nature of trade offered mutual advantage that transcended divisions between self-interest and benevolence.

Coase wrote a seminal article called ‘The nature of the firm’ in early 1932. It remained unpublished until 1937; 148 the year after Keynes’s General theory of employment, interest and money was published. Coase noted a view that prevailed then; and which retains some currency to the present day; that the economic system is self-regulating and therefore controlled by no-one in particular. He cited the following as an example of the then prevailing view: The normal economic system works itself. For its current operation it is under no central control, it needs no central survey. Over the whole range of human activity and human need, supply is adjusted to demand, and production to consumption, by a process that is automatic, elastic and responsive. 149 The common expression that supply must equal demand is simply a tautology if it only means that each element of supply and demand represents opposite sides of the same transaction. Stiglitz has commented: Indeed, there is a saying that you could teach a parrot to be an economist by simply teaching it to say. 'Supply must equal Demand'. It has played this central role in spite of ample evidence that there are circumstances where markets at least seem not to clear: massive unemployment of labour and extensive rationing of credit provide but two of the most important examples. 150 An economic system might not regulate itself if expectations about supply do not align with expectations about demand. Although rules or algorithms for combining resources may be simple, the forms of organisation arising from these combinations may become complex. The idea that a degree of self-organisation can emerge without an external supervising agent leads to the hope that greater understanding may provide a better capacity to cope with the complexity of government. As Zeleny observes: If the forces or rules that bring about such spontaneous orders are understood, then such knowledge could be used to produce orders that are far more complex that those attempted by deliberately arranging all the activities of a complex society. This is not an argument against planning but rather against the simplistic tinkering and interfering with orders that are much too complex to be viewed as mechanical contrivances. 151 Purposeful organisation occurs through deliberately coordinated actions rather than the seemingly spontaneous outcomes emerging from of a myriad of individual and largely uncoordinated actions. The purpose in organisation is generally formalised in documents

148 R H Coase, ‘The nature of the firm’, Economica, New Series Vol.4, No.16, 1937, pp.386-405. Steven N S Cheung, ‘The contractual nature of the firm’, Journal of Law and Economics , Vol.26 No.1 April 1983, pp.1-22. At pp.1-2 at fn.3, Cheung cites correspondence he received from Coase that explains the delay in publication. 149 At p.387 and at fn.4, Coase refers to this comment by Sir Richard Salter as being previously quoted with approval by D H Robertson, Control of industry, p.85, and by Professor Arnold Plant, ‘Trends in business Aaministration’, Economica , February 1932. 150 Joseph E.Stiglitz, ‘Information and economic analysis: a perspective’, Economic Journal , Vol.95, Supplement: Conference papers, 1985, pp.21-41. 151 Milan Zeleny, ‘Self-organization of living systems: a formal model of autopoieses’, International Journal of General Systems , Vol.4 No.1, 1977, p.27 102 CHAPTER 3

that provide for its constitution — as in political constitutions, or in memoranda and articles of association in private corporations. The purposeful actions involved in making and enforcing rules will certainly influence the operation of markets without predetermining what the actual market outcomes will be. Thus complexity and seemingly spontaneous activity emerge from purposeful activity that establishes the rules of the game.

People are generally born into membership of a community as a matter of human existence and social organisation. Necessity rather than choice binds them to processes of government. Historically, people have also been bound in circumstances of slavery, or have been bound to reside and work on land under conditions of serfdom; 152 or have been obliged to reside and be available for work in particular localities to comply with provisions of Poor Laws. 153 These former conditions can be contrasted with current emphasis on human rights and respect for individuals that have emerged under auspices of the UN since World War 2.

Arguably, people who choose to be a member of a private organisation also subscribe in some degree to the declared purpose and ethos of an organisation. Historical evidence and psychological experiments show that organisations and societies might appear to drift, seemingly spontaneously, towards arrangements that can show respect or disrespect for the rights of individuals. However, the term ‘spontaneously’ used in this context becomes associated with a lack of awareness or forethought.

Despite arguments about self-regulation and spontaneous organisation in markets, the rules of the game can be designed; and ethical principles that emphasise human treatment of individuals can become part of the milieu in considering whether business does a service or disservice to the community. Transactions based on attempts at exploitation are likely to waste energy as people find themselves at cross purposes. In contrast, mutually beneficial transactions have an effect of finding compatibility and are likely to be more efficient and productive. 154

3.2.2 Strategies for coping with complexity In seeking a relatively simple explanation of what is meant by ‘complexity’, it is perhaps sufficient for practical purposes to use the term in relation to things that are difficult to describe and interpret. ‘Complexity’ is certainly subjective when considered in this way because things that may seem simple to one person may reveal immense detail in the eyes of an expert observer. Conversely, an expert observer may be able to interpret some information with relative ease whereas an untrained person may be unable to discover its meaning, or may do so only with considerable difficulty and delay.

A system may operate without undue stress while inputs or environmental conditions remain within ranges that are ‘acceptable’. Arguably, they are acceptable if they are ‘manageable’; and they are manageable if adequate coping mechanisms are available. The system’s stability may be jeopardised by perturbations whose ranges become unmanageable. Thus a non-government enterprise may be jeopardised in a legal sense by attempts at trading outside a range of financial solvency. In contrast, government as an

152 R E Megary and H W R Wade, The law of real property , 3rd edn, London: Stevens, 1966, pp.24-27. 153 Robert Ashton, Reformation and revolution: 1558-1660 , The Paladin History of England, ed by Lord Blake, London: Paladin; Harper-Collins, 1985, pp.104-106 154 These issues are referred to further in Section 3.3.2.4 — ‘Science in policy design’; and in Section 4.2.2.2 — ‘Technical or x-efficiency’ PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 103

enterprise may have other management options. As an example, governments may print money or take money out of circulation if permitted constitutionally to manage the supply of money as a principal medium of exchange in commercial transactions. In federal systems, the national government usually has control over the currency while states may be presented with quite different problems of solvency in times of natural disasters and other crises.

Manageability comes at a cost of acquiring information related to internal operations of a system; and information pertaining to the operating environment. Thus, the homeostasis of warm blooded animals provides benefits in the mobility of animals, though at some metabolic cost in stabilising functions as indicated by vital signs such as blood temperature. 155 Social systems also depend on their production systems operating within tolerable ranges though they too incur costs in self-regulation. Historically, the kinds of things that have caused major socioeconomic upheavals include: • Effects of pestilence, epidemic or plague on working populations — as in bubonic plagues, influenza, HIV and other pandemics. • Gluts and famines in agricultural production and significant price variations in the supply of agricultural and mining production. • Natural disasters — such as drought, flood, fire, earthquakes and tsunamis — where the scale of disaster can disrupt local and regional economies. • Crises and breakdowns in human relationships that can manifest themselves as of lack of confidence, civil strife, international misunderstandings, retaliations and armed conflicts.156

The ability to foresee, understand and manage the kind of risks that threaten the viability of socioeconomic systems depends increasingly on disciplined and institutionalised observing and anticipation by experts; and in particular on interdisciplinary communication and research. In commenting on critical areas for multidisciplinary research as part of a broader research agenda, Rosenberg thought the following questions ought to be asked:

How can organizations and incentives be created that will be conducive to high quality interdisciplinary research? To what extent is it reasonable to expect such research to be conducted inside individual firms, as contrasted with the resort to collaborative linkages with other firms, or with universities, in order to gain access to complementary skills and capabilities? How can fruitful interactions between scientists and technologists, as well as scientists from different disciplines, be most effectively encouraged? What measures can be taken to ensure that valuable findings or methodologies from any point on the science/technology interface will be transferred rapidly to other points? It is essential that these issues are not approached in a piecemeal fashion. The realms of science and technology must be conceived of, not as disconnected bits and pieces of human activity, but as part of large and complex, interrelated systems. 157

A measure of management complexity is the variety of things that a manager may need to consider in arriving at a timely decision. 158 Generally, even the most important decisions

155 ‘Homeostasis’ and ‘Human homeostasis’, Wikipedia , accessed online on 22 February 2009 at URLs and respectively 156 Section 3.2.2 also refers to circumstances that have led to collapse of some societies. 157 Nathan Rosenberg, Exploring the black box; technology, economics, and history , Cambridge UK: Cambridge University Press, 1994, especially at Chapter 8, ‘Critical issues in science policy research’, and at p.157 104 CHAPTER 3

involve a filtering of information to arrive some equivalent of a ‘yes’, ‘no’ or ‘yes - subject to conditions’. Designing ways of coping with complexity is often called ‘variety engineering’. 159 This design task involves amplifying the potential for useful outcomes and attenuating the variety of outcomes that can lead to harm — so far as this is practicable. 160 Perhaps the most fundamental part of this coping mechanism is in the formal establishment of authority regimes within government and non-government organisations. Formal political authority involves the sovereign power of the state, and if acted upon, effectively establishes a rule of law.161 However, a considerable degree of intellectual and moral authority operates outside the realms of formal political authority and legal enforcement. The combined effects of the formal and informal processes ultimately determine the kind of outcomes that can be attained.

Despite the complexity of government, the overall number of statutes passed by parliament to provide a framework for all legally enforceable rights and obligations is finite and manageable. 162 Statutes are the most important source of formal authority through which owners, managers, agents, public officials and others are authorised to give orders or say how resources are to be allocated and used; and how government and non- government transfers and exchanges of resources can be transacted.163 This framework of formal authority ought to be as simple and understandable as possible. In this regard, it is very important to distinguish between ‘essential complexity’ and ‘contrived complexity’.164

Two further factors emerge in considering decisions and actions, namely the separate motivations for: • orders given by people with formal authority; and • the receiving of orders by people whose responses might range across various degrees of understanding, compliance and non-compliance.

Typically, people with formal authority who operate at a high level in an organisational hierarchy rely on a number of sources for advice on internal operations of the system and external relationships within the broader operating environment. Coping with the volume and variety of this advice requires significant attenuation through mechanisms that may include:

158 Concepts of ‘variety’ and ‘requisite variety’ were discussed in Section 3.2.1. 159 Michael C Jackson, System approaches to management , New York NY: Kluwer Academic; Plenum, 2000, pp,72- 74 contains a brief historical overview of the development of ‘variety engineering’ as a concept. 160 Ideas of ‘variety amplification’ and ‘variety attenuation’ were described by Stafford Beer in Brain of the firm , 2nd edn, Chichester UK: Wiley, 1981, p.230 161 ‘The rule of law and enforcement’, address by the Honourable James Spigelman AC, Chief Justice of New South Wales, ICAC - Interpol Conference, Hong Kong, 22 January 2003, accessed online on 23 April 2009 at URL 162 Section 3.3.1 — ‘Authority regimes’ provides more detail on how this information is actually structured 163 This is more or less equivalent to the idea of ‘formal authority’ in Philippe Aghion and Jean Tirole, ‘Formal and real authority in organizations’, Journal of Political Economy , Vol.105 No.1, February 1997, pp.1-29. The authors distinguish between ‘formal authority’ as a right to decide, and ‘real authority’ as the effective control over decisions. Similarly, Todd R Zenger, Sérgio G Lazzarini and Laura Poppo, ‘Informal and formal organization in New Institutional Economics’, 2009, accessed at SSRN: see exchanges as ‘governed by a set of formal institutions (contracts, incentives, authority) and informal institutions (norms, routines, political processes) which are deeply intertwined’. Section 3.3.1 discusses information intensive activity associated with establishment of authority regimes as legally enforceable rights and obligations conferred by statutes. 164 Section 3.2.1.5 — ‘Complexity in multidisciplinary communication’ discusses essential and contrived complexity PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 105

• Making statements or deciding on rules with unquestionable authority — effectively saying ‘that’s that’ — an ultimate tautology rationalised on the basis of ‘because I say so’. • Setting the agenda for the kinds of questions that can be asked, and reserving the power to accept or reject particular information as advice or evidence. • Significant filtering of information - typically through reports with ‘executive summaries’ or ‘summaries of recommendations’.

Insofar as people with political authority rely on advice, some commentators distinguish between ‘formal’ and ‘real authority’.165 Are advisers ‘on tap’ or ‘on top’ in a political sense?166 Moreover, a fundamental constitutional tenet of democracy is that rules allow electors to have some say, albeit with considerable attenuation on what can be said in practice. As examples, rules restrict the eligibility of voters and the range of things on which they may vote. Rules also prescribe how the vote of a majority can lead to action rather than stalemate. Notwithstanding these constraints, even people in the highest political authority can become subservient in some sense to the electorate. The means by they become subservient — and thereby genuinely accountable — depends on the mechanisms that allow the public to be informed about how government agencies are performing. The mechanisms that allow this information to flow are considered in terms of authority, planning and monitoring regimes as discussed in Section 3.3 and outlined in Diagram 3.3.

In organisations of some complexity, information processing involves trying to manage details within various parts of the organisation without losing sight of what the whole organisation is trying to do. Developing the capacity to meet these management goals depends on dealing with a number of issues simultaneously. These issues include: • Attempting to summarise and compress increased understanding about the system to be managed within the living human memories of people charged with management tasks. • Understanding how much can be coded, stored, retrieved and accessed from artificial memories to complement the knowledge contained in living human memories. • Understanding the nature of investment in channel capacity of inter-personal information flows in determining the length of time it will take to get a message across in sufficient detail to obtain effective action. • Developing capacity of individuals in processing information and arriving at decisions. • Ensuring there is authority to use resources when required to make things happen.

Variety and complexity emerge within society when different people know different things. The time and costs of learning impose limits on what individuals can learn and where they can specialise. As a consequence, the depth of detail able to be communicated between particular individuals on particular matters is necessarily constrained; and this imposes further constraints on collective decision making and action. Approaches that might be taken to improve communication management and avoid unnecessary adverse outcomes might include:

165 ibid. 166 James H Capshew and Karen A Rader, ‘Big science: Price to the present’, Osiris , 2nd series, Vol.7, Science after '40, 1992, pp.3-25 106 CHAPTER 3

• Simplifying description of activities and identifying coherence of purpose between different parts of a system viewed holistically. • Being prepared in time to allow multidisciplinary communication. • Overcoming limited vision of seemingly intractable problems. • Increasing preparedness for problems deemed foreseeable. • Avoiding unnecessary risks and distractions.

3.2.2.1 Simplifying description of activities and identifying consistency of purpose The task of coping with complexity in managing a social system with numerous participants begins with helping people to see how they can use their knowledge and energy in pursuit of some common purpose. Generally, a complex system can be perceived as having interacting subsystems; and formal authority to control the operation of the subsystems can be delegated to particular managers and specialists. However in concentrating on details of a sub-system’s operations, people at some lower level of delegated authority in an organisational hierarchy may lose sight of high-level policies and objectives. As a consequence, people can be at cross-purposes and negate some or all of the effects of each other’s work.

The OECD has recognised the interconnectedness of different policy initiatives in an overall development process, and in 2008, an OECD Ministerial Council identified a particular need for policy coherence. 167 Previously, a white paper prepared for the European Community in 2001 had proposed that five political principles were desirable to underpin its governance; namely ‘openness’, ‘participation’, ‘accountability’, ‘effectiveness’ and ‘coherence’.168 However, the fact that questions of coherence remain topical seems to indicate a lack of headway in addressing the issues.

Understanding how various parts of a complex system can be identified and how their separate contributions can be seen as having consistency and coherence of purpose is a fundamental problem for good governance. This problem can be addressed in part by being able to find a satisfactory method for representing, mapping or modelling the system to provide an overview of the situation to be managed. 169 The model needs to emphasise things that can make a difference to outcomes and suppress details that are unimportant.

Diagram 2.2.1a exemplifies a whole of government approach where efforts are made to highlight the information-intensive activities of government. It highlights particular functions that support learning and sustain health as significant contributors to the growth of human potential. 170 Recurring life-cycles of capital investment in the education and health of

167 Organisation for Economic Cooperation and Development, ‘OECD Ministerial Declaration on Policy Coherence for Development, adopted by Ministers of OECD countries at the Ministerial Council held in Paris France on 4 June 2008, Document C/MIN(2008)2/FINAL, accessed at URL 168 Commission of the European Communities (EC), European governance: a white paper, COM(2001)428 Final, Brussels Belgium: EC, 25 Luly 2001, p.32 accessed online on 20 April 2009 at URL < http://eur-lex.europa.eu/LexUriServ/site/en/com/2001/com2001_0428en01.pdf > 169 Use of mental models of management of complex systems is discussed in Karl E Weick, ‘Mental models of high reliability systems’, Industrial Crisis Quarterly , Vol.3 No.2, 1989, pp.127-142; and in John E Mathieu, Tonia S Heffner, Gerald F Goodwin, Eduardo Salas and Janis A Cannon-Bowers, ‘The influence of shared mental models on team process and performance’, Journal of Applied Psychology , Vol.85 No.2, 2000, pp.273-283. 170 Diagram 2.2.1a appears in Section 2.2.1 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 107

individuals creates human capital and helps to determine human potential. The actualisation of human potential depends on opportunity which is aligned to access to resources and authority to use them. Diagram 2.2.1a helps in identifying particular clusters of activities that are usually delegated to government departments or agencies. However, more detailed maps are needed to provide greater detail of these department-level activities. Arguably, each cluster has an information structure related to the cluster’s purpose. The general structure includes information related to authority; planning and budgeting; service delivery; and monitoring, accounting and auditing.

Some of the difficulty in analysing issues concerned with information and knowledge is that it entails a higher order of thinking. In particular, it seeks information about information and knowledge about knowledge. A substantial volume of literature in philosophy and information sciences derives from this kind of thinking and appears under headings such as ‘metadata’, ‘meta-information’, ‘metalanguage’, ‘ontology’ and ‘epistemology’. Similarly, the recursive nature of this thinking is evident when research about policy might entail policy about research into questions of public policy. In commenting on the efficacy of policy in a restricted sense of publicly funded research, the OECD reported that: The biggest challenge today is to capitalise on the progress made in the evaluation of individual programmes to develop efficient approaches to the evaluation of portfolios of programmes. An exemplary experiment is the evaluation of the EU Framework Programme (FP), which consists of a number of sub-programmes and different types of actions. It highlights a number of largely unresolved issues: How to cope with the complexity of a process which involves several levels of evaluation and a massive amount of background information? How to translate the outcomes of such complex processes into practical policy proposals? How to ensure that these policy proposals are seriously considered in actual policy design? 171 An immediate issue arising from the OECD comment is how to decide where there are ‘portfolios of programmes’ that might lend themselves to ‘efficient approaches’ to evaluation. Arguably, government programmes begin when parliaments legislate to authorise them and also allocate continuity of funding to implement them. Analysing the legislation that is the source of this authority seems likely to provide some basis for a coping strategy to deal with the complexity of government and its intergovernmental relationships. The general need is to understand: • Invariance — commonalities or patterns that have an effect of attenuating variety and making things easier to understand. • Variance — where non-standardised approaches produce no significant benefits but introduce complexity that is unnecessary and avoidable. • Variance — where different approaches make significant differences to outcomes and are thus noteworthy from a management point of view.

Typically, systems of taxonomy and classification have helped in processes of description and the progress of science. Similarly, library holdings and other coded information would be difficult to manage without library classification and cataloguing. However, classification can do more than keep things manageable. As an example, the chemical elements might have been classified alphabetically according to their initial letters. However, Mendeleev based his periodic table of elements on atomic weights and other properties. This classificatory system led to anticipation that other elements might be discovered that were

171 Organisation for Economic Co-operation and Development, OECD science, technology and industry outlook 2006 , Paris: OECD, 2006, quoted passage at p.186; but see also Chapter 6 — ‘Evaluation of publicly funded research: recent trends and perspectives’. 108 CHAPTER 3

not known at the time. 172 Similarly, Darwin was able to see evidence to support a theory of common descent in the classificatory system of Linnaeus.

Governments produce large quantities of information in their own operations and also fund a considerable body of research. Evolution of the World Wide Web made it easier for this information to be communicated within and between governments and to members of the public. However, it has also created a new problem of how to find particulars among information sources that are large in volume and wide in their variety. The evolving Semantic Web has been one response in trying to make particular information easier to find. Perhaps the most significant barrier to achieving interchange of information is in the development and naming of concepts and categories for classifying and cataloguing information. 173

The European Union presents an interesting example in trying to improve governance for a common market across 27 countries that use several languages. The European project for Standardized Transparent Representations in order to Extend Legal Accessibility (ESTRELLA) includes development of a Legal Knowledge Interchange Format (LKIF) — a Semantic Web based language to support modelling of legal domains across Europe.174 LKIF provides a core of concepts for inclusion in a broader Ontology Web Language (OWL). Seemingly, ESTRELLA is a significant body of work and suggests that there is high-level support and expectations of success.175 A different approach with a similar objective is to liken a statute to a computer programme comprised of various sub-routines or modules. Some modules, such as a module to create a corporate body, might allow formation of relatively standardised elements and reduce unnecessary variety. 176

Multidisciplinary collaboration is recognised as a source of complexity in trying to assess the effectiveness of public expenditure in providing health services in Australia. This issue was recently described in the following terms: At present, we have very limited ability to compare public health activity across jurisdictions and countries, or even to ascertain differences in what is considered to be a public health activity. Existing standardised health classifications do not capture important dimensions of public health, which include its functions, the methods and interventions used to achieve these, the health issues and determinants of health that public health activities address, the resources and infrastructure they use, and the settings in which they occur. A classification that describes these dimensions will promote consistency in collecting and reporting information about public health programs, expenditure, workforce and performance. This paper describes the development of an initial version of such a classification. 177 A large body of experience points to considerable difficulties in addressing multidisciplinary communication; yet it is often regarded in cavalier fashion within government and

172 M L J Abercrombie, The anatomy of judgement , Harmondsworth Middlesex: Penguin, 1960, p.137 173 This issue was referred to in Section 2.1.6 — Meanings of ‘data’; and was revisited in Section 3.2.1.5 — Compexity in multidisciplinary collaboration. 174 European project for the Standardized Transparent Representation in order to Extend Legal Accessibility (ESTRELLA), IST-2004-027655, Deliverable 1.4, OWL Ontology of basic legal concepts (LKIF-Core), University of Amsterdam, Netherlands, 22 January 2007, accessed online via URL < http://www.estrellaproject.org/doc/D1.4- OWL-Ontology-of-Basic-Legal-Concepts.pdf > 175 ‘Welcome to ESTRELLA Website, accessed online at URL < http://www.estrellaproject.org/ >; and ‘Deliverables and publications’, accessed online at URL < http://www.estrellaproject.org/?page_id=4 > 176 Timothy S Falkiner, Scientific legislation: the use of cybernetics and software engineering knowledge to explain what legislation is, how it behaves and how it should be designed, maintained and replaced , Camberwell Vic: T S Falkiner, distributed by Leo Cussen Institute, 1992 177 Louisa Jorm, Su Gruszin and Tim Churches, ‘A multidimensional classification of public health activity in Australia’, Australia and New Zealand Health Policy , Vol.6 Article 9, 2009 — citation from the abstract, accessed online at URL < http://www.anzhealthpolicy.com/content/6/1/9 > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 109

management. Seemingly, these difficulties are neither entirely avoidable nor entirely insurmountable. However, the cost of ignoring them altogether is that large organisations are unable to respond in timely fashion to avoid harm when disturbing perturbations threaten the viability of social, economic and eco-systems.

3.2.2.2 Being prepared in time to allow multidisciplinary communication In an interconnected world, systems become more highly productive through recognising and removing constraints on the potential capacity of factors of production. However, chaotic outcomes can result from simple accidents — such as the failure of an item of machinery or loss of synchronisation when something is not ready in time. A minor traffic incident or vehicle breakdown can lead to a major traffic jam. The difficulty is that ‘specialisation entails dependence, and dependence in a changing world spells vulnerability’. 178

In a similar vein, De Raadt argues that interdependence is affecting social systems at shorter intervals between disturbances as events in one place compound with events in other parts of the world. The need for shorter response times compares with the longer time it takes to consult widely and obtain consensus over how to respond. Our world is becoming increasingly interdependent; events in one part of the globe combine with events in other parts to strike a host of social systems. As a result of this combination of distant events, systems find the time interval between one disturbance and the next is significantly shortened. On the other hand, interdependence among social systems results in a longer response time, which is, the period of time between a system being disturbed and its regaining equilibrium. Moreover, response time expands exponentially as interdependence increases, leaving our social systems in a very tight predicament. The sharing of decision- making information among systems can significantly reduce the response time and dissipate the exponential pattern that emerges as a result of interdependence. 179 An approach often taken in responding to these dilemmas is to pretend that complexity can be reduced and time saved by simply foregoing consultative processes and not listening to complaints. However, severing some communication channels and being selective about the information that is allowed to flow from other channels can create illusions of well being in the minds of some managers, even in times of terminal crises. 180

The virtue seen in a wise king such as a Solomon exemplifies a long association between sovereignty and the wise dispensation of justice. This association is deeply embedded in Anglo-American legal traditions where hearing grievances and dispensing justice have long been regarded as essential to maintaining law and order. Ordinary notions of natural justice held that people should be heard in matters that affect them. Time can be saved in not engaging in consultative processes and not hearing grievances. However, the savings may be more than offset by costs of avoidable misunderstandings; especially where consultative or complaints procedures can warn of impending problems and allow actions that can reduce the problems or avoid them altogether. In any event, much depends on the ability to obtain voluntary informed consent that allows actions to ensue without undue delay. In these circumstances, ideas about justice are clearly aligned with notions of efficiency.

178 Ervin Laszlo, ‘Systems and societies: the basic cybernetics of social evolution’, Sociocybernetic paradoxes: observation, control and evolution of self-steering systems , ed by Felix Geyer and Johannes van der Zouwen, London UK: Sage, 1986, p.168 179 J D R de Raadt, ‘Interdependence and information sharing in social systems’, Cybernetics and Systems: An International Journal , Vol.21 No.6, November-December 1990, p.591 180 This is a problem of ‘groupthink’ as discussed in Section 3.3.2.6 — ‘Design of risk management strategy’. 110 CHAPTER 3

Scientific disciplines provide intellectual authority that can influence social, economic, industrial and environmental policies quite generally. A particular policy — such as a policy concerned with some aspect of health — will almost certainly seek intellectual authority from more than area of expertise; and each area might depend on some semblance of consensus within custodians of this expertise. A potential for conflict is inherent within and between these various areas of expertise and the authority that comes with demonstrable competence. Multidisciplinary teams might be able to reduce the potential for such conflict; but if the difficulties in getting such teams to work are underestimated or overlooked altogether, there might be little chance of getting useful and timely decisions.181 Sometimes, the impetus for multidisciplinary collaboration only emerges after conditions of emergency have arisen. Preparedness might be possible if the conditions surrounding an emergency can be foreseen in some degree — in planning for natural emergencies, for example.

Apart from difficulties of communicating within and between different sources of expertise, a further need is to establish communication between experts and lay members of the public. Lay persons might expect to receive the benefits of intellectually sound advice and suffer the consequences of unsound advice. Public policy advice often takes on attributes of advocacy and leads to arguments about the roles a political authority vis-à-vis intellectual authority of experts. 182 Advocacy usually incorporates intellectual authority in analysing what are deemed to be possibilities; and moral authority in suggesting what ought to happen. A problem remains for those who exercise political authority in deciding what will be done; especially in the light of conflicting advocacy.

Moral authority is inherent in the idea of ‘legitimacy’ as the proper exercise of a government’s political authority; and is grounded in ancient philosophical and theological thinking on moral issues. Ideas like ‘what concerns all should be approved by all’ pertains to collective decision making. 183 This compares to the idea of ‘natural justice’ to legitimise decisions made with respect to individuals where important principles are that individuals ought to be heard in matters that affect them; and decision-makers should not allow preconceived ideas or biases to affect their decision-making capacity unduly.

Modern thought about ‘informed consent’ has undergone significant reappraisal as expressed in bioethical concerns and development of the Nuremberg Code as a new ten point bioethical code. This Code was developed to establish substantive standards of practice to judge the behaviour of Nazi physicians and scientists charged with war crimes after World War 2. Unsurprisingly, voluntary informed consent was identified as the basis for such a code. Much of the inspiration for the Nuremberg Code can be found in the Hippocratic Oath: thought to have been written some time between 470 and 360 BCE — and probably not by Hippocrates. While the Hippocratic Oath is dedicated to the well being of the patient, the object of human experimentation is usually directed towards a more general human well being. The risks to an individual patient need to be balanced against 184 benefits to society at large.

181 Problems and experiences in multidisciplinary communication were discussed in some detail in Section 3.2.1.5. 182 James H Capshew and Karen A Rader, ‘Big science: Price to the present’, Osiris , 2nd series, Vol.7, Science after '40, 1992, pp.3-25 183 This is referred to in Section 6.2.1 — ‘The role of parliament’ 184 Michael A Grodin, 'Historical origins of the Nuremberg Code', The Nazi doctors and the Nuremberg Code: human rights in human experimentation, ed by George J Annas and Michael A Grodin, New York NY: Oxford University Press, 1995, p.123 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 111

Seemingly, bioethical and economic considerations arising from litigation have also been influential in raising awareness about a notion of ‘informed consent’. 185 Litigation arose from contracts for medical treatments and procedures when patients suffered adverse outcomes and claimed they were not properly informed regarding the risks involved. Moral indignation arose also when participants in various pharmaceutical and psychological experiments suffered adverse outcomes — also without being informed sufficiently regarding the risks involved. 186

The basic idea of ‘informed consent’ became a global issue in considering public policy regarding handicapped and disadvantaged individuals and groups. The thinking was encapsulated in the political slogan — ‘nothing about us without us’.187 This begs the question of how much information needs to be given to satisfy conditions of ‘voluntary informed consent’ as a matter of practice. The matter arises again where citizens claim the right to know about the state of the environment in which they live and any risks it may have, especially in matters regarding public health.

A public policy is similar to any production system that provides a stream of future net benefits as a return on investment. Separate areas of knowledge are usually required to: • Design the system — involving intellectual authority in supposing that things can be done to create outcomes by design rather than by accident. • Manufacture, construct or implement the system — typically involving assembly of small components in manufacturing; or in training personnel to do new tasks and participate in new teamwork within a newly designed and constructed organisation. • Use the system — involving operator or user training; with economies in not needing to know much about the system’s design or construction. • Maintain the system — often involving major scheduled shutdowns for planned preventative maintenance. The rationale for such planned maintenance is that its costs are preferred to the risks of unplanned and inopportune systemic failures.

The uptake of a new system — regardless of whether it involves physical, institutional or information infrastructure — requires the acquisition of new knowledge of how to implement, operate and maintain the system. Undue delay in acquiring this new knowledge will increase the risk of financial failure in the system as a whole.

Seemingly, the following questions increase in importance as economic development becomes more technologically sophisticated: • What can experts do to satisfy a criterion of ‘voluntary informed consent’, including the making of observations and the giving of opinion about foreseeable risks?

Mary Jane Kagarise and George F Sheldon, 'Informed consent and the protection of human research subjects: historical perspectives and a guide to current United States regulations', Chapter 6 of Surgical research , ed by Wiley W Souba and Douglas W Wilmore, Academic Press, 2001, pp.29-46 185 Ruth R Faden and Tom L Beauchamp, A history and theory of informed consent , New York NY: Oxford University Press, 1986, 186 Examples include medical experiments such as the ‘Tuskegee study’ rerred to in Section 3.3.2.3 — ‘Positive and normative aspects of policy’; and psychological experiments refered to in Section 3.3.2.4 — ‘Science in policy design’. 187 ‘Nothing about us without us’, UN Chronicle, Vol.XLI No.4, 2004, accessed online at URL 112 CHAPTER 3

• How much can people be prepared to be ‘quick on the uptake’ in receiving information about matters that require their consent and active cooperation?

Some social commentators have suggested that there is an ‘essential tension’; 188 and an inherent alienation between science and democracy. 189 As Majone observes: The question is not whether analysts should use persuasion in proposing new policy ideas, but which forms of persuasion may be used effectively and without violating basic principles of professional ethics. 190 Whether an individual can be ‘quick on the uptake’ depends on prior learning on the part of a receiver and effective description on the part of a sender. Meeting requirements for communicating in ways that offer some hope of coping with complexity depends on developing preparedness in the kinds of communications that can occur: • between experts and lay persons to make democracy meaningful; • between experts where collaboration is desirable or necessary to understand systems and foresee whatever problems are foreseeable; and • in addressing the issues associated with being able to make timely responses.

Government is unlikely to cope with the complexity of multidisciplinary communication if it is either not admitted or underestimated as a problem. 191 Moreover, tertiary teaching institutions often encourage higher degrees and greater specialisation rather than second degrees in more general studies. More general studies could increase the effectiveness of cross-disciplinary communication, and the potential for synergies through the variety of possible permutations and combinations of different areas of knowledge. However, the variety of possible areas of study also poses some practical difficulties for institutions of higher learning in organising formal courses that might lead to additional accreditation.

If technical people are to understand the social and economic consequences of what they do, some progress might be made by providing access to materials to allow autodidactic learning when time is most opportune to the learner. Similarly, the performance of social and economic analysts is likely to improve through access to suitable technical writings. Formal courses have high costs in processes of accreditation, and in the opportunities foregone in reallocating highly valued time used for regular business to time used for furthering formal learning. Open access to tertiary teaching materials and public sector information can remove constraints on self-motivated learning. This adds to human capital even though it is not aimed particularly at gaining formal accreditation.

Arguably, attitudes towards what is now called ‘science’ have not been far from a public mind since the 1500s. These attitudes may have evolved in Western thought out of curiosity and rivalry between nations spurred by significant geographical discoveries and all that they entailed. Seemingly, the ‘dare to know’ ethos that developed through the Renaissance and the Enlightenment in the West was not followed with the same vigour in China or the Islamic countries of the Middle East, despite their respective traditions in

188 David Gunston, ‘The essential tension in science and democracy’, Social Epistemology , Vol.7 No.1, January- March 1993, pp.3-23 189 Frank Laird, ‘Participating in the tension’, Social Epistemology , Vol.7 No.1, January-March 1993, pp.35-46 190 Giandomenico Majone, ‘Policies as theories’, Omega: the International Journal of Management Science , Vol.8 No.2, 1980, reprint in Policy Studies Review Annual, Vol.5, ed by Louis Horowitz, Beverly Hills CA: Sage, 1981, p.24 191 The matter was discussed at length in Section 3.2.1.5 of this report. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 113

technology and scholarship. 192 The connection between science and technology became clearer with commercial and industrial use of electricity and chemistry after about 1870. From about 1910 to the late 1940s, the educational objective was to develop ‘scientific habits of mind’. From around the late 1940s to around 1980, science education was thought to need ‘modernisation’; and from around 1980 onwards, the idea of developing ‘scientific literacy’ was in vogue. In summarising conclusions drawn from his own experience as a science educator over some decades, Shamos suggested the following principles for education in science to non-science students: 1. Teach science mainly to develop appreciation and awareness of the enterprise, that is, as a cultural imperative, and not primarily for content. Designing curricula aimed at this objective is not difficult, provided one does not attempt to cover everything. 2. To provide a central theme, focus on technology as a practical imperative for the individual’s health and safety, and on awareness of both the natural and man-made environments. Several very good materials along these lines already exist. 3. For developing social (civic) literacy, emphasize the proper use of scientific experts, an emerging field that has not yet penetrated the science curriculum. 193

The need to obtain some understanding of expert advice and resolve conflicts in expert opinion occurs regularly in courts of law. Davies noted that the idea of one or more independent experts adjudicating on such issues seems attractive. In contrast, the idea that a person without appropriate expertise could adjudicate on such issues after hearing competing arguments from opposing experts might seem bizarre. Davies suggests that this seemingly bizarre outcome is what actually happens in practice under an adversarial legal system. We are starting with the system I last described. And the reason for that is that we have a "one size fits all" adversarial system; a system which assumes that the best way to resolve all questions is by evidence and strong argument on both sides before an independent arbiter, a judge or a jury, who will then decide them. Whether that is the best way to resolve disputes generally may be seriously doubted. It is plainly not the best way to resolve questions involving expertise. There are several reasons for this. In the first place, the adversarial system tends to cause such questions to be presented to a court as a clear dichotomy between opposing views; whereas many such questions, including scientific ones, do not admit of resolution in that way. This polarization of opinions which the adversarial system causes, may result in distortion of both the real question and the real answer. That distortion is then exacerbated by adversarial bias, an almost inevitable consequence of evidence given in an adversarial context. Secondly, the independent arbiter, the judge or jury, may not even understand the question. There is an increasing number of questions which arise in litigation, mostly of a scientific nature, the understanding of which, at least without considerable assistance, is beyond the capacity of most judges. An adversarial presentation of such questions by experts is likely to increase the risk of misunderstanding by judge or jury. And thirdly, an adversarial battle of the experts, with cross-examination on both sides by barristers who, like the judge, may know little or nothing of the subject, takes substantial time and comes at a substantial cost for what is, in the end, an unsatisfactory result. A comparison of a system such as this with the one I posited at the outset shows that. 194

192 Kenneth E Boulding, ‘Science: our common heritage’, Science , New Series, Vol.207 No.4433, 22 February 1980, p.832, from an article adapted from text of the presidential lecture at the American Association for the Advancement of Science (AAAS) annual meeting on 6 January 1980 in San Francisco, California. 193 Morris H Shamos, The myth of scientific literacy , New Brunswick NJ: Rutgers University Press, 1994, p.217 194 G L Davies, ‘Court appointed experts’, QUT Law and Justice Journal , Vol.5 No.1, 2005, p.89, accessed online at URL . The Hon G L Davies is a former Justice of Appeal (1991-2005), Court of Appeal, Supreme Court of Queensland. His paper is based upon a public lecture delivered on 13 April 2005 as part of the Trilby Misso Public Lecture Series, presented by the Faculty of Law, 114 CHAPTER 3

In many respects, the adversarial nature of legal actions in law courts is mirrored in adversarial political discourse. Transient point scoring in transient discussion or debate may have a short-term political influence; but it does not contribute much to a more lasting quest for understanding. The particular expectation of litigation is that it must be decisive, timely and not subject to interminable reviews. Time constraints apply if decisions of lower courts are appealed; and benefits are said to flow from the ability to regard some matters as settled. However, the role of science is to continue questioning the foundations of existing belief. Consequently, decisions founded on scientific understandings may change with the accumulation of new evidence emerging from a growing body of worldly experience. Insofar as public policy is concerned, new evidence can change peoples’ minds and they may decide to do things differently. In this way, new information can mark a turning point in the course of history.195

Strategy aimed at being prepared in time to allow multidisciplinary communication has its rationale in being able to secure ‘voluntary informed consent’ and maintaining some semblance of democracy and social cohesion so far as this is practicable. The strategy depends on: • Encouraging experts to do whatever they can to make their work more understandable to other people through activities such as:
Facilitating multidisciplinary teamwork based on clear objectives where experts can learn to work together.
Facilitating access to information generally — and public sector information in particular, insofar as it relates to the authority, planning and monitoring regimes associated with the functioning of government.
Producing summaries and versions of research findings that are more particularly directed towards the eventual need for voluntary informed consent where matters of public policy are concerned.
Promoting non-aggressive interviewing technique in forums and discussion through the mass media that allow experts to demonstrate positive aspects of scientific curiosity and questioning rather than blind acceptance of particular points of view. • Encouraging people to do whatever they can to increase their knowledge generally; and their capacities in particular for:
Continuity in employment;
Community engagement in programmes such as those that maintain health, public safety and the human habitat; and
Contributing meaningfully to policy developments and debates in a participative democracy.

UNESCO’s formation immediately after World War 2 was influenced by a belief that education is important to peaceful coexistence. 196 Education is now recognised as a

Queensland University of Technology. An earlier version of this lecture was delivered at the Annual Supreme and Federal Court Judges' Conference, Auckland, New Zealand, 29 January 2004 and published at 23 CJQ (October 2004) 367 195 Section 3.5.2.1 – ‘The knowledge economy’ discusses some logical consequences of innovation that are incompatible with conventional ideas of ‘equilibrium’ and ‘optimising’ in conventional socioeconomic theories and discourse. 196 This is seen in Section 3.5.1.1 as an ‘Education objective’ of ‘High level socio-economic policies’ in Section 3.5. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 115

human right, and when merged with the idea of non-discrimination on the basis of age, it leads to ideas about adult education and lifelong learning. In the 1970s, increasing attention was given to the complexity and vulnerability of socioeconomic and ecological systems. In the 1990s, attention turned towards lifelong learning as a feature of a ‘learning society’ and a ‘knowledge economy’ with increasing concerns about potential for underemployment and limits to remuneration despite educational attainments. 197 In encompassing all of these themes, UNESCO’s Fifth International Conference on Adult Education, held in Hamburg in 1997, produced two documents: • ‘The Hamburg Declaration on Adult Learning’ as a statement of principle. • ‘An Agenda for the Future’ as a statement of intended actions. 198 Aging populations introduce a new dimension in coping with complexity. Older people are able to participate in things that affect them; and their worldly experience can influence the development of an informed and tolerant citizenry. This is at least useful and may be a necessary condition for humanity’s survival. Long term strategies for retirement incomes pose significant social problems in knowing how to provide future incomes in the face of increasing vulnerability in socio-economic and ecological systems. The problem is not merely to provide incomes but also to maintain their purchasing power and the survival of financial institutions that manage retirement savings. The OECD has also expressed interest in the kinds of policies that can promote adult learning as older workers may need to work beyond what has been accepted as a retirement age. This tends to emphasise the needs for low-skilled workers to engage in continuing education to retain their opportunities for employment and their inclusion in the affairs of society. The relationship of education to employment has been followed for the most part in Australia in terms of where the payoffs are expected to be.199 The difficulty is that agendas for lifelong learning become politicised with increasing calls for public funding and increasing complexity in the type and scale of arrangements needed to manage them. Nowhere is this more evident than in trying to formalise and accredit non- formal and informal learning. 200 As individuals obtain higher levels of learning and it reflects as multidisciplinary and multi-skilled knowledge, the problems of who can assess the learners and who can assess the assessors become more acute. By way of contrast, a more open society depends on more open access to information; and reduced complexity in the arrangements involved in obtaining that access. In this regard, open access that allows re-use of public sector information can help in developing meaningful community engagement, especially in commenting on the workability of policy proposals. Moreover, online access can be provided at an insignificant cost in public funding. The opportunity for informal and self-motivated lifelong learning has

197 D W Livingstone, ‘The limits of human capital theory: expanding knowledge, informal learning and underemployment’, Policy Options , July-August 1997, pp9-13, accessed online at URL 198 UNESCO, ‘The Hamburg Declaration on Adult Education’ and ‘An Agenda for the Future’, Conference documents, CONFINTEA held at Hamburg from 14 - 18 July 1997 accessed at URL 199 Tom Karmel and Davinia Woods, Lifelong learning and older workers , National Centre for Vocational Education Research, Adelaide SA, NCVER, 2004, pp.9-11, accessed online at URL < http://www.ncver.edu.au/research/core/cp0303_2.pdf > 200 Patrick Werquin, ‘Recognition of non-formal and informal learning in OECD countries: A very good idea in jeopardy?’, Lifelong learning in Europe, Vol.3, pp.142-148, Paris France: OECD, Directorate for Education, Education and Training Policy Division, 2008, accessed online at URL < http://www.oecd.org/dataoecd/9/16/41851819.pdf > 116 CHAPTER 3

a potential to create greater understanding and satisfaction to individuals while also being useful to society as a whole.201

3.2.2.3 The problem of limited vision in intractable problems All scientific evidence and data are history insofar as they refer to prior observations, experience or experiment. Some experience reveals behaviour patterns of relative invariance where it may be reasonable to expect that the patterns will continue. This continuity becomes a basis for prediction that can then undergo recurring tests over time and become identifiable as ‘science’. In contrast, historians tend to refrain from anticipating the future, and reflect mainly on discontinuities — especially the unprecedented milestones, watersheds and turning points that seem to have made differences to outcomes and thus provide lessons of history. Observations about what has already happened may be enlightening where people doubt what is possible. A most telling argument against the idea that something is fanciful or impossible is to point to an historical example where it has actually happened.

In cases described previously as ‘organised simplicity’, 202 a small number of significant factors appear to determine outcomes — the results of stimulus and response mechanisms or cause and effect. However, it is often tempting to seek explanations and remedial actions out of simple associations or statistical correlations and assume a causal relationship. This is a well known example of a post hoc fallacy. 203 In complex situations, a number of preconditions and sets of circumstances may be factors that influence a whole set of outcomes. This is often obvious in the writing of history — and emulated in many fictional works — where a story cannot be told in a simple linear fashion. Typically, interconnected themes unfold separately but converge and contribute to particular events at particular times and places. Where interdependence suggests that everything depends on everything else, trying to nominate when some social institution actually begins historically is likely to encounter a sense of futility. Instead of being able to identify and treat ‘root causes’ of identified problems, practical remedies are likely to depend on finding convenient places to intervene in the cycles of virtuous circles — where success breeds success; and the vicious circles — where lack of success breeds continually dysfunctional organisation and may include cycles of violence.

Unwanted symptoms identify problems without necessarily revealing their causes. While it may be attractive as an idea, treating causes rather than symptoms cannot be seriously contemplated until causes and contributing circumstances can be identified and understood. As an example, current knowledge associates tobacco smoking with lung cancer and emphysema. 204 The World Health Organization sees tobacco use as a global epidemic contributing to 5.4 million deaths per year and as the leading preventable cause of death.205 Preventative measures, risk management strategies and treatment might depend in some degree in self-control by individuals in stopping smoking. However,

201 Josie Misko, Francesca Beddie and Larry Smith, The Recognition of Non-formal and Informal Learning in Australia, Prepared for the Department of Education, Science and Training as Country Background Report to support the OECD Education Committee activity entitled Recognition of Non-formal and Informal Learning , Canberra ACT: DEST, September 2007 — describes a narrower OECD focus on informal and non-formal methods of accreditation. Accessed online at URL 202 This was referred to in Section 3.2.2.1 — ‘Grades of complexity’. 203 Post hoc ergo propter hoc — meaning ‘after the fact, therefore because of it’. 204 World Health Organization, WHO report on the global tobacco epidemic 2008: the MPOWER package , p.11, accessed online at URL 205 ibid., p.7 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 117

smoking is recognised as addictive behaviour that reduces capacity for self-control by the affected individuals.206 Where smoking by one person is thought to impact adversely on other people, control over smoking behaviour becomes a political issue that might require a public policy response. 207 Similarly, inhaling asbestos fibres can cause different diseases such as asbestosis, asbestos-related pleural abnormalities, lung cancer and pleural mesothelioma. Seemingly, these different diseases stem from the same cause but are likely to require different treatments. 208

In summary, the idea of cause and effect introduces a range of possibilities: • More than one cause can produce much the same effect — as in smoking or industrial pollution leading to emphysema. • A single cause can contribute to more than one effect or to a chain of causes and effects. When many people rely on a particular system — such as an energy supply system, a public transport system, or a waste disposal system, or a telecommunications system — many chains of causes and effects can occur through a single breakdown. Misinformation from a single authoritative source can also cascade into misallocations of time and other resources in a variety of circumstances. • Several causes can be associated with several effects. As an example, changing technical, economic and socio-political environments can lead to a convergence in particular innovations — as in the development of a semiconductor industry — and then to a divergence in the variety of effects that can emerge from the uptake of those innovations.

Perhaps the most repeated area of policy failure is in Utopian ideas about land development and agricultural production. This may be due in part to the period of several millennia over which it was possible for mistakes to be made and recorded. It may also be due to some extent to the difficulty of understanding the many linkages that lead from ideas about agricultural production to actions and outcomes. In the post World War 2 period, aid to developing countries was influenced by the idea that increased security in land tenure arrangements would lead inexorably to investment in land improvements and increased agricultural productivity. This was believed to lead in turn to other development. However, it can now be seen as a gross oversimplification of development processes.209

Similar simplistic beliefs have surrounded investments in information and communications technology (ICT). An improved ability to manipulate and communicate symbols through an investment in ICT hardware does not translate inexorably into improved productivity. 210 Project planning and implementation usually requires a number of elements of expenditure where each is insufficient in itself to produce productive outcomes. Typically, a production system requires:

206 ibid., p.14 — Cigarettes are seen as a ‘nicotine delivery device’ where inhalation delivers nicotine to the brain as efficiently as intravenous injection with a syringe. 207 ibid., p.11 208 ‘What Respiratory Conditions Are Associated with Asbestos?’, Case Studies in Environmental Medicine (CSEM) - Asbestos Toxicity, US Department of Health and Human Services, Agency for Toxic Substances and Disease Registry, Division of Toxicology and Environmental Medicine, Environmental Medicine and Educational Services Branch, accessed online at URL < http://www.atsdr.cdc.gov/csem/asbestos/respiratory_changes2.html > 209 These issues are revisited in Section 4.2.3.1 — ‘Resource allocations in primary industry’ 210 This issue is referred to in terms of the so-called ‘productivity paradox’. Section 4.2.5.2 — ‘Sharing of results of science and research’. 118 CHAPTER 3

• Knowing how to design various physical and institutional elements of a production system. • Knowing how to construct or implement the system. • Having people with the necessary motivation to apply human energy to the activities needed to obtain production. • Applying machine energy to production processes. • Having access and authority to use resources; and permissions to carry out planned activities. • Knowing how to operate, use and maintain operating systems. • Knowing how to apply resources to productive enterprise and receive continuing supply of resources through support from government, management or markets.211

Systems are often designed to be ‘user friendly’ and to limit the knowledge and skill required by users. A Global Positioning System (GPS) instrument, for example, is ‘push- button’ technology to a user when seeking directions in driving a motor vehicle; but it embodies an array of scientific and technological knowledge that a user simply does not need to know to operate the instrument successfully. The result is that many benefits can be overlooked or taken for granted; or they can disappear from the consciousness.212 When the work that people do to produce benefits is regularly taken for granted, the policy rationale that supports the carrying out of their work can also become difficult to find.

People do not always respond favourably when their work is taken for granted, even though it may be of fundamental importance to society. Yet workers themselves may find it difficult to explain the significance of their work in terms that other people might be able to understand. Even where the significance is explained, it is often convenient from a cognitive point of view to deny its truth and for this denial to become socially patterned and thus ideological in character. Fromm argues that: Every society has its own ‘social filter’ through which only certain ideas and concepts and experience can pass; those that need not necessarily remain unconscious become conscious when by fundamental changes in the social structure the ‘social filter’ changes accordingly. Thoughts that cannot pass through the social filter of a certain society at a certain time are ‘unthinkable’, and of course also ‘unspeakable’. 213 Apart from the unthinkable and unspeakable, the sciences have some well-recognised limitations. These extend into what is observable, measureable, computable and decidable. In summary, strategy for dealing with seemingly intractable problems depends in part on understanding why some issues are often overlooked; where there are errors in logic leading to inconsistent descriptions and approaches; and where there are constraints in what is measurable, describable, computable and decidable. 214

211 Section 3.3.2.1 — ‘The imagined deemed possible’ and Section 4.2.3 — ‘Allocating factors to production’ 212 As examples, comments by Whitehead in Section 2.1 — ‘Conceptual and terminological issues’: comments by Blackstone and De Soto in Section 3.2.1.7 — ‘Policy failure through failing to recognise complexity: comments by Maslow in Section 3.1.3 — ‘Living systems’ refers to ideas of Maslow about human needs and how they are regarded: and comments on denial at individual and social levels in 213 Erich Fromm, Greatness and limitations of Freud’s thought: a revolutionary study of genius in conflict , London: Abacus, 1982, p.2 214 This revisits some issues referred to in Section 3.2.2.4 — ‘Increasing preparedness for foreseeable problems’. Reference works include John D. Barrow, Impossibility: The limits of science and the science of limits , Oxford UK: Oxford University Press, 1998. A K Dewdney, Beyond reason: eight great problems that reveal the limits of science , Hoboken NJ: Wiley, 2004. James P Hogan, Kicking the sacred cow: questioning the unquestionable and thinking the impermissible , Riverdale NY: Baen, 2004. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 119

3.2.2.4 Increasing preparedness for foreseeable problems The processes involved in foreseeing and coping with complex problems include: • Seeing the foreseeable — where what is foreseen may depend on the work of experts who have learned to see what other people may not see. 215 • Communicating about foreseeable risks that may involve the specialised languages of more than one area of expertise. 216 • Deciding whether costs of foreseeable problems can be managed or mitigated.217 • Devising routine mechanisms for sharing costs of foreseeable problems — involving decisions about private insurance, self-insurance or mechanisms of social security. 218

Coupled with increasing preparedness for foreseeable problems are issues about what is actually foreseen and what ought to be foreseen. Where experts are expected to see what other people may not see, these matters transition into questions about professional liability.219 A further transitioning occurs into areas of remote possibilities, where risk management efforts and insurance becomes more problematical; and then into questions of genuine ignorance and things that are genuinely unforeseeable.

Although it is fashionable to talk about ‘decision making under uncertainty’, what is there to decide if there is no uncertainty? Perhaps the most fundamental question is on what basis is it reasonable to accept or reject information that might be used to inform decision making. Uncertainty implies an absence of information, and trying to appreciate what should be accepted or rejected is essentially uncertainty about the veracity of information. This is not so much a question of knowledge as of belief. Arguably, most principles of decision-making under uncertainty are simply common sense. We must consider a variety of plausible hypotheses about the world; consider a variety of possible strategies; favor actions that are robust to uncertainties; hedge; favor actions that are informative; probe and experiment; monitor results; update assessments and modify policy accordingly; and favor actions that are reversible.220 A significant barrier to new learning occurs when individuals lose their sense of curiosity and become satisfied with what they already believe. Personal belief systems influence what individuals are prepared to admit as problems and see as potential risks. Insofar as resource management is concerned, erosion of environmental quality can occur gradually and imperceptibly from day to day; but become apparent with long term anecdotal or other information. Where gradual change for better or worse is seen as being possible and likely to have sufficiently important consequences, long-term state of environment monitoring becomes eminently justifiable. Ludwig et al argue that:

215 Section 3.2.1.2 - ‘Specialisation in observation and description’ addresses issues associated with learning to observe and describe things and happenings. 216 Section 3.2.1.5 — ‘Complexity in multidisciplinary communication’ describes important issues in description and communication 217 Section 3.3.2.6 — ‘Design of risk management strategies’ considers risk management within the context of the design of systems 218 Section 4.2.2.3 — ‘Private insurance, adverse selection, moral hazard and social security’ addresses a number of issues associated with management of risk. 219 Some of these issues are addressed in Section 4.2.2.2 — Risk allocation through liability rules’. 220 Donald Ludwig, Ray Hilborn and Carl Waters, ‘Uncertainty, resource exploitation, and conservation: lessons from history’, Science , New series, Vol.260 No.5104, 2 April 1993, p.36 120 CHAPTER 3

Although there is considerable variation in detail, there is remarkable consistency in the history of resource exploitation: resources are inevitably overexploited, often to the point of collapse or extinction. We suggest that such consistency is due to the following common features: (i) Wealth or the prospect of wealth generates political and social power that is used to promote unlimited exploitation of resources. (ii) Scientific understanding and consensus is hampered by the lack of controls and replicates, so that each new problem involves learning about a new system. (iii) The complexity of the underlying biological and physical systems precludes a reductionist approach to management. Optimum levels of exploitation must be determined by trial and error. (iv) Large levels of natural variability mask the effects of overexploitation. Initial overexploitation is not detectable until it is severe and often irreversible. In such circumstances, assigning causes to past events is problematical, future events cannot be predicted, and even well meaning attempts to exploit responsibly may lead to disastrous consequences. Legislation concerning the environment often requires environmental or economic impact assessment before action is taken. Such impact assessment is supposed to be based upon scientific consensus. For the reasons given above, such consensus is seldom achieved, even after collapse of the resource. 221 The large scale nature of natural resource and environmental systems means that repeatable controlled experiments cannot usually be conducted in ways known to physical scientists. The role of vested interests, the difficulties of assessing pieces of evidence and the immediate prospects of gain increase the chances that evidence will be denied or manipulated and that doubt will be manufactured. The overall effect is complicate the way information and misinformation can coexist and diminish the chances that societies can learn through experience about issues of resource depletion.222 Ludwig et al suggest that in such circumstances, the following management principles ought to apply: Our lack of understanding and inability to predict mandate a much more cautious approach to resource exploitation than is the norm. Here are some suggestions for management. 1) Include human motivation and responses as part of the system to be studied and managed. The short sightedness and greed of humans underlie difficulties in management of resources, although the difficulties may manifest themselves as biological problems of the stock under exploitation. 2) Act before scientific consensus is achieved. … Calls for additional research may be mere delaying tactics. 3) Rely on scientists to recognize problems, but not to remedy them. The judgment of scientists is often heavily influenced by their training in their respective disciplines, but the most important issues involving resources and the environment involve interactions whose understanding must involve many disciplines. Scientists and their judgments are subject to political pressure. 4) Distrust claims of sustainability. Because past resource exploitation has seldom been sustainable, any new plan that involves claims of sustainability should be suspect. … 5) Confront uncertainty. Once we free ourselves from the illusion that science or technology (if lavishly funded) can provide a solution to resource or conservation problems, appropriate action becomes possible. 223

Seemingly, a number of overwhelmingly foreseeable and predictable elements pertaining to resource management are sociological in character. In the absence of a means of rationing common property resources through schemes of legally enforceable permits or property rights, overexploitation becomes highly likely. Similarly, the possible manipulation of information to confuse questions of blame, financial responsibility and legal liability are also highly predictable. The precautionary principle — often interpreted as wisdom in doing

221 ibid., p.17 222 Section 3.2.3 — ‘Consequences of failing to cope with complexity’ refers to other historical analyses that have reached similar conclusions. 223 Donald Ludwig, Ray Hilborn and Carl Waters, ‘Uncertainty, resource exploitation, and conservation: lessons from history’, Science , New series, Vol.260 No.5104, 2 April 1993, p.36 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 121

nothing — requires a more elaborate assessment of the benefits of doing nothing compared the cost of lost opportunity in doing nothing.

Society benefits unambiguously from developments where there are winners and no losers. More problematically, society may be thought of as better off if overall benefits can outweigh overall costs — an idea that provides a basic rationale for benefit-cost analysis. However, transaction costs and time constraints often prevent overt attempts at compensation where winners actually compensate losers. As a consequence, benefits and costs tend to be distributed and redistributed in the various transactions that can take place through the operations of government, commerce and civil society.

Redistribution is fairly obvious when it occurs in systems of social welfare. It is obvious when insolvency of a legal entity effectively taxes creditors because the law imposes an obligation on creditors to bear particular losses. It is less obvious when it occurs through systemic rent-seeking that comes with market power. Nor is it obvious when financial power can fund the production of misinformation; the manufacture of doubt; the denial of moral responsibility; and the avoidance of legal liability. Typically, the obfuscation and ‘plausible deniability’ of legal obligation occurs in relation to safety of working conditions, living environments and various goods and services.224

3.2.2.5 Avoiding unnecessary risks and distractions Risk of error can increase when things are more complicated than they need to be. Some of the more obvious sources of unnecessary complexity include: • Failing to standardise procedures, routines, processes and products where standardisation would make things simpler to understand and do; especially in facilitating interoperability in value-adding processes. • Failing to distinguish adequately between individual responsibility, team responsibility and the responsibility of those with authority to devise the rules under which individuals and teams must operate. • Use of privileged access to information and knowledge about rules and procedures. This facilitates abuse of power by creating confusion and doubt over the scope of rights and duties of the supervisor vis-à-vis the supervised.

Unpredictability, complexity and risk of systemic error increase if people find rules to be unduly difficult to understand and follow; or if they do not comply for other reasons. Conceivably, some of this risk may be mitigated if is possible to simplify some aspects of public administration. The OECD has promoted ‘administrative simplification’ as a strategy — supposedly to reduce complexity within government and its flow-on effects on non- government activity. 225 Administrative simplification is currently high on the political and policy agenda in most countries. It is one of the most effective methods for fighting against regulatory complexity and inflation. Governments are facing increasing and changing challenges and, in response, regulatory activities multiply red tape. There are many advantages in cutting red tape and maintaining administrative requirements better adapted to real needs and circumstances. Three

224 Section 6.4 — ‘Wealth distribution issues’ overviews complex equity issues in processes of distribution and redistribution that occur within the socioeconomic system. 225 Organisation for Economic Cooperation and Development (OECD), Overcoming barriers to administrative simplification strategies: guidance for policy makers , Paris France: OECD, 2009, pp.5-7, accessed online at URL 122 CHAPTER 3

key benefits should be underlined: i) innovation can be encouraged through efficiency gains, ii) entrepreneurship can be favoured by fewer administrative burdens, releasing resources otherwise devoted to red tape, and iii) better public governance can be attained with more effective tools available for policy implementation. 226 The quest for simplicity has been interpreted in Australia within the context of better regulation, especially in relation to the ‘red tape burden’ that is often construed as a tax on business. However, this appeal to ‘better regulation’ raises new questions about how it can be decided that regulatory changes are likely to lead to improvement. In opting for preparation and use of regulatory impact assessments to assist in these decisions, new questions arise about how it can be decided that impact assessments are of suitable quality; and who needs to be satisfied about their quality within the framework of a participative democracy. 227

Understanding where risk-taking is ‘necessary’ gives some insight into risk-taking that can be regarded as ‘unnecessary’. Risk is intimately bound up in the uncertainty of not knowing what an outcome will be. Risk-taking is therefore a necessary consequence of trying to find out if things will improve if something gets done; or of not knowing whether things might get worse if nothing is done. Consequently, some element of risk-taking is essential to all investment decisions. Investment involves a stream of early costs in design and construction or implementation of some production system that can be more than offset by a stream of subsequent net benefits. The risks are: • That the investment will incur unexpected costs or fail to deliver sufficient benefit. • That nothing will be gained and opportunity might be lost by failing to undertake a venture.

Logic requires that the more there is to be learned from a project, the less predictable is the outcome at the time of an initial investment decision. Accordingly, an investment that fails to meet expectations and suffers loss may retain some offsetting gains if the venture can be regarded as a valuable learning experience. This implies some monitoring and recording of the events to retain the ‘experience’ in a useable form.

The same risk-taking is part of all scientific experimentation; and in all experiments with new institutions, organisations and policies. The practical problem is how to proceed cautiously without inviting calamity. This is not simply the building of a pilot project or prototype. It requires a determination to learn through experience at each step along the way; and this calls for monitoring and timely reassessment with a chain of decisions about whether to continue, withdraw or change course. The value in learning can then offset what might otherwise be a financial loss in the investment.

Systematic analysis is likely to assist in reducing complexity of government. A first step is to see if some activities currently performed by government are either: • unnecessary - in which case ceasing to do some things might yield better and simpler outcomes; or • capable of being performed alternatively by commercial or not-for-profit organisations; where there may be advantages in organising to have the activity performed by an outside organisation compared to performing the activity ‘in-house’.

226 ibid., pp.6-7 227 Section 4.5.2 refers in more detail to better regulation in Australia PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 123

This analysis suggests that avoiding unnecessary risk can be sensibly included within careful strategic thinking and planning: and incorporated into the design of systems. 228

3.2.3 Consequences of failing to cope with complexity Collective indecision in addressing issues of socio-economic concern in a timely fashion can be socially divisive and destabilising. Political stalemate can occur if there is no clear majority in voting on policy prescriptions based on two or more competing theories. 229 In these circumstances, democracy itself becomes vulnerable. This presumes that parliamentary decision making is a reliable sampling of public opinion as determined by fair elections. Vacillation in the strength and direction of a voting majority may lead to the making and unmaking of policy through successive parliamentary elections. In addition, the enforcement of contentious laws may become difficult without substantial community support.

Resolution of a political stalemate might occur if further negotiations can change minds and votes. The changing of minds is often politically momentous in that it allows movement in a particular direction. It is also morally courageous in that it often involves someone becoming prepared to do something that they may have already declared emphatically they will never do. 230 A remaining alternative is for someone to resolve the issue by usurping political power — but it will almost certainly come at a considerable cost to personal freedoms of many individuals.

Archaeology, history and legend are replete with examples of the rise and fall of civilisations, dynasties and empires. A common theme is the inability to cope with disturbing influences on already complex technical, social and economic systems. Climate has always influenced agricultural output; and climatic fluctuations still contribute significantly to economic cycles. A common outcome of failing to cope with complexity is to revert to some simpler form of social organisation. Thus a nation might descend into tribes or clans by destroying an empire or federation; but a reduction in complexity at the local level is also likely to incur some cost to human well being; and increase the risks of conflict between warring tribes.231

The period encompassing two World Wars in the twentieth century provides a particular example of uncertainty in economic theory and policy that became a threat to the maintenance of democratic institutions. Bermeo noted that 26 democracies existed in Europe in 1920 but 13 had become dictatorships by 1938. In summarising factors influencing this breakdown in democracy, she concluded: One of the state's principal functions is to minimize both the uncertainty and the conflict inherent in social life. This task becomes extremely difficult during times of economic crisis when the likelihood of conflict over scarce resources begins to rise.

228 Section 3.3.2.6 – ‘Design of risk management strategy’ deals with some of these design aspects as a function of planning. 229 A formal proof based on the search for a decision using non-preferential voting in the absence of coercion are underlying conditions for the Impossibility Theorem of John Kenneth Arrow. In many respects the Impossibility Theorem formally restates the idea that ‘a house divided against itself cannot stand’. 230 Kevin Connolly, ‘A benchmark for improbability’, BBC News, 8 May 2007, accessed online at URL on 24 October 2008 — The reconciliation speeches and the sharing of power in Northern Ireland in May 2007 contrasts with decades on conflict and uncompromising rhetoric of persons who were previously sworn enemies. 231 Joseph A Tainter, The collapse of complex societies , New studies in archaeology series, Cambridge: Cambridge University Press, 1988, pp.5-21 124 CHAPTER 3

States that have already established a sound institutional basis for providing civic order (that is, for facilitating group interactions in non-conflictual ways, and resolving and controlling the conflicts that do exist) are more likely to endure periods of economic crisis than those which have not. 232 Insofar as democracy relies on scientific thought for its policy direction, the capacity of science and scientists to give some leadership to public opinion becomes important. Of particular importance are institutional arrangements that allow people to combine their knowledge and produce a truly collective human competence in matters of governance. A starting point is the somewhat humbling experience of understanding the limits of human knowledge and the consequences of ignorance. Cipola warns about naïve overconfidence as follows: While an empire is flourishing, its members show a strong inclination to delude themselves about its life-expectancy. History offers no examples of indestructible empires, yet most people are convinced that what happens to previous empires cannot happen to their own. In so doing they just show a lack of imagination, a naïve incapacity to imagine new situations for which their tastes, inclinations and institutions will grow progressively inadequate. Once the decline starts, there are still optimistic people who stubbornly deny reality, but the number of those who realize what is happening is bound to enlarge progressively. Some then try to rationalize the events and build theories around them. 233

3.2.4 Summary The requirements for ‘good government’ have usually been interpreted in terms of setting a framework of formal legal authority that can oversee the delivery of improved living standards for citizens. However, in seeking improved standards, a sequence of events leads to increasing complexity and vulnerability: • Being more productive at the level of an individual is a necessary condition but it is insufficient in itself for improving standards of living for everyone. • It is also important to maintain employment by redeploying workers displaced by productivity improvements into new areas that deliver new goods and services. • People usually need employment to be able to buy goods and services on offer. • New areas and increasing diversity of work can produce unintended side effects; increase the potential for misuse and abuse of technology; and increase the complexity of government in dealing with antisocial aspects of new technology, including abuse of institutional arrangements and processes. • New good and services are likely to encompass new areas of discretionary expenditure, with increasing ability to do without some refinements in living standards in times of economic uncertainty or downturn. • Ability to do without or postpone discretionary expenditure leads to increasing vulnerability in sectors of the economy that rely on this form of expenditure.

Perhaps the biggest threats to organisations and society are in over-confidence about the existing state of knowledge and how well things can be managed. At the level of the individual, this over-confidence seems to stem from a sense of ego and self worth. If

232 Nancy Bermeo, ‘Getting mad or going mad? Citizens, scarcity and the breakdown of democracy in interwar Europe’, University of California at Irvine: Center for the Study of Democracy, Paper 97-06, 15 June 1997, p.21, accessed at URL < http://repositories.cdlib.org/csd/97-06 > on 10 March 2008 233 Carlo Cipola, in the introduction to The economic decline of empires , London: Methuen, 1970, cited in Donald M Lamberton, ‘Information sharing’, in Handbook on the knowledge economy , ed by David Rooney, Greg Hearn and Abraham Ninan, Cheltenham UK: Edward Elgar, 2005, at pp.160-161 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 125

people are to learn by their mistakes as individuals, it follows that they need to know and admit when they have been mistaken. 234 People tend to hold overly favourable views of their abilities in many social and intellectual domains. The authors suggest that this overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden. Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it. 235 A collective overconfidence stems from socio-psychological factors that contribute to self- delusion at the level of groups, organisations or societies. The ability to learn from mistakes in a collective sense is a feature of self-organising systems and relates directly to the role of institutions in achieving governance. In summarising his view on the economics of governance, Williamson asserts: The economics of governance has helped to persuade many economists and other social scientists that (1) institutions matter and are susceptible to analysis, (2) adaptation to disturbances is a key purpose of economic organization, (3) the action is in the microanalytics, (4) positive transaction costs can be addressed in a comparative way, and (5) public policy toward business needs to be informed by a broad (organizational) understanding of the efficiency purposes served by complex contract and economic organization. 236 A significant governance problem remains. Efficiency in most tasks depends on being able to take the work of many other people for granted. But many people do not necessarily like having their work taken for granted, especially if is fundamentally important and possibly insufficiently understood or remunerated.

3.3 STRUCTURING OF INFORMATION TO ACHIEVE GOVERNANCE Most government and non-government enterprise depends on three information-intensive activity regimes: • An authority regime — involving the creation of a legal framework of legally enforceable rights and obligations pertaining to ownership, transfer, exchange and use of resources. • A planning regime — to establish the foresight on which to base future actions that involve use of resources. • A monitoring regime — to accumulate experience or hindsight on which planning depends, and to monitor performance on which continuing authority may be justified.

Diagram 3.3 shows the information bundling associated with resource management and the nature of the feedback processes involved in learning though experience.

234 Section 3.2.2.4 — ‘Science in policy design’ discusses the importance of openly admitting mistakes in the context of “Arrangements that attempt to heal broken relationships’. 235 Justin Kruger and David Dunning, “Unskilled and unaware of it: How difficulties in recognising one’s own incompetence lead to inflated self assessments’, Journal of Personality and Social Psychology , Vol.77 No.6, 1999, pp.1121-1134 236 O E Williamson, ‘The economics of governance’, American Economic Review, Proceedings of One Hundred and Seventeenth Annual Meeting of the American Economic Association, Philadelphia PA, 7-9 January 2005, Vol.95 No.2, May 2005, p.15 126 CHAPTER 3

Diagram 3.3

INFORMATION REGIMES NEEDED IN MANAGING USE OF RESOURCES

Accumulation of experience to improve future planning

AUTHORITY PLANNING MONITORING

Modifications to authority based on experience of management performance

3.3.1 Authority regimes Human organisation depends fundamentally on collective understandings and agreements that coordinate the exercise of ownership and control over resources. In this context, ‘resources’ are the means of satisfying human needs — typically the basic physiological needs for food, clothing, shelter and personal safety; and higher level psychological needs for education, equitable social relationships and purposeful lives. Being ‘resourceful’ is about being ingenious in satisfying these human needs.

Creating and perpetuating understandings about rights and obligations regarding resource use are fundamental and pervasive information-intensive activities within families, tribes or clans, and societies with various levels of government based on territorial hierarchy. Within formal legal systems as overseen by governments, authority regimes relate to the processes whereby information is bundled to answer questions about: • What is the particular legal entity that has rights and obligations to control use of a particular resource? • What are the particulars of those rights and obligations? • What is the particular resource to which the rights and obligations relate? • How can rights and obligations be transferred or exchanged? • What redress is there if a transaction involving exchange or transfer fails to live up to reasonable expectations?

In social situations of limited extent — such as families, local communities, tribes and clans — this information may be created and perpetuated through oral traditions. 237 However, where understandings need to extend across much wider communities and over long periods of time, it becomes necessary to establish written records and implement elaborate procedures for storing and retrieving these records. 238

Understandings need to reach even wider audiences for ideas about globalisation to be

237 Oral traditions provide the basis for recognising genealogy and land rights in many indigenous communities 238 Section 5.3.3 — ‘Copyright in surveying and mapping processes’ — refers to the influence of the Statute of Frauds of 1676 in promoting greater discipline in keeping written records as evidence in matters of property and contract. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 127

workable. Moreover, the prospects for misunderstandings and exploitation are likely to increase unless some efforts are made to make arrangements easier to understand. The usual response in trying to establish common market arrangements is to reduce unnecessary variety in terms and conditions of trading through efforts at standardising laws and institutional arrangements that govern trading relationships.239

Traditionally, the granting of an exclusive authority occurred through issue of letters patent in the name of a sovereign power. The term ‘patent’ is now used regularly in a restricted sense in relation to inventions as a particular form of intellectual property. However, the term ‘patent’ remains in use as a ‘land patent’ in the United States; where it refers in particular to the original alienation of land through a grant by a government. Apart from the idea of an exclusive right, the idea of authority also being ‘patently obvious’ relates to the original meaning of letters patent as open letters consistent with making this kind of information readily available as public information.

A person’s rights in relation to the rest of the community depend largely on the willingness of other people to know about and respect those rights. Processes of public registration have evolved to deal with a variety of situations — as in registration of land, motor vehicles, professional occupations, corporations, patents, trade marks, births, marriages and deaths. These examples have much in common in their need to place information on a register, remove information from a register, and produce extracts as legal evidence of registered particulars. Further needs are to resolve conflict over whether a person can obtain benefits of registration or seek correction of particulars already contained in a register. In many instances, the registration of rights also allows assessment of taxes and charges. Thus, land registration assists in administration of land taxes and local government rating. 240 Motor vehicle registration assists in raising revenue for road construction and maintenance.

3.3.1.1 Particulars of legal entities A ‘person’ as a legal entity normally includes a body politic or corporate as well as an individual. 241 Registries of births, marriages and deaths consolidate key information about individuals as natural persons. Proofs of age and personal identity have far reaching consequences for determining legal capacity in matters such as owning property, entering into contracts, rights to vote, eligibility for retirement benefits, and issue of passports. Proofs of marriage and death have implications for administration of family law and laws of succession.

The corporation is a legal arrangement that allows an organisation to exist and act legally as though it were a natural person; except that it can exist beyond the natural lives of people who make up the organisation. Its effect is to provide for ‘perpetual succession’ in principle, although legal power to create a corporation can also provide for it to be dissolved as a matter of practice.

239 Section 3.3.3 – ‘Monitoring regimes’; and Section 3.3.2 – ‘Development and maintenance of physical measurement standards’ provide some introduction to issues of standardisation. 240 Further reference to the Torrens System for registering land appears in Section 5.3.3. Reference to early Australian innovation in the registration of vital statistics appears in John L. Hopper, ‘The contribution of W. H. Archer to vital statistics in the Colony of Victoria ’, Australian & New Zealand Journal of Statistics , Vol.28 Issue 1, April 1986, pp.124-137 241 As in the Acts Interpretation Act 1901 (Cth), s.22(1) 128 CHAPTER 3

The various laws that provide for incorporation and perpetual succession underpin most of the organisation that occurs in government, commerce and civil society. As Simon observed: The economies of modern industrialized society can more appropriately be labelled organizational economies than market economies. Thus, even market-driven capitalist economies need a theory of organizations as much as they need a theory of markets. The attempts of the new institutional economics to explain organizational behavior solely in terms of agency, asymmetric information, transaction costs, opportunism and other concepts drawn from classical economics ignore key organizational mechanisms like authority, identification, and coordination, and hence are seriously incomplete. 242 A government is a body politic established under its particular constitution that prescribes its powers to make and enforce public laws. A government is able to make laws that provide for the formation of other corporations through special and general statutes. A special statute can establish a corporation — usually referred to as a statutory corporation — to delegate some autonomy to a body with a particular mandate to decide some issues and perform some actions. This often occurs where some matters are said to be ‘beyond politics’. More general statutes can prescribe a framework to allow formation of public and private commercial corporations; and in not-for-profit corporations and associations.

The relationships between a board of directors; an executive; and the shareholders of a private corporation are analogous to the relationships between elected parliaments; the executive branch of government; and enfranchised taxpaying citizens. Similarly, the founding documents of a private corporation in the form of its memorandum and articles of association are analogous to the constitutional documents of a government. Although founded under principles of perpetual succession; existence of a private corporation can be terminated through action by its members or the operation of law. Similarly, the existence of statutory corporations can cease through changes to their enabling statues. In contrast, a body politic may amend its constitution in the manner prescribed within the constitution itself. However, dissolution of a body politic implies a constitutional discontinuity — or complete suspension of law and order of a kind that might require political revolution. Indissolubility takes on an added dimension in relation to a federal constitution. Federal law needs to prevail to the extent of any inconsistency with state laws because unity is lost if states are free to go their separate ways on all manners of things. 243

Statutory corporations are generally used to establish and maintain public registers of persons entitled to engage in particular professions, trades or other occupations. These procedures usually involve assessment of a person’s knowledge and character prior to registration. Additional measures apply to appeals available against a registering authority’s decisions to withhold registration; and processes involved in removing a person’s name from a register on the basis of alleged incompetence or misconduct.

Registers that include the names of persons lose some of their evidentiary value if a person’s name changes to leave uncertainty or ambiguity over personal identity. A

242 Herbert A Simon, ‘Organizations and markets’, Journal of Economic Perspectives , Vol.5 No.2, Spring 1991, p.42 243 Some constitutions are described as ‘indissoluble’. In the case of federal constitutions, the term usually refers to whether a state can secede. In Federated Saw Mill, Timber Yard, and General Woodworkers Employers' Association of Australasia Claimants; and James Moore and Sons Pty Ltd [1909] HCA 43; (1909) 8 CLR 465 (25 June 1909), Isaac J saw the need for federal law to prevail as a keystone of the federal idea. In the absence of s.109, the reference to an indissoluble union in the Preamble to the Constitution would be nothing more than a ‘pious aspiration for unity’ — accessed at URL < http://www.austlii.edu.au/au/cases/cth/high_ct/8clr465.html > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 129

person’s name may change through marriage or other legal process; or an identity may be stolen as part of fraudulent activity.

3.3.1.2 Particulars regarding rights and obligations Apart from constitutional changes that might be referred to a referendum of the people, the authority of parliament is paramount in conferring rights and obligations on private persons or government officials in either deciding — or in delegating authority to decide — how resources will be allocated and used.

Generally, statutes confer rights and obligations on citizens in allocating resources for private purposes; or confer authority on public officials to make decisions and allocate resources for public purposes. The authority is administrative insofar as it relates to providing public services and seeking compliance with particular regulations. However, parliaments can also give authority to judicial officers whose decisions have the force of law.

3.3.1.3 Particulars about places and tangible things In relating a particular person with particular rights and obligations concerned with particular places or things, an authority regime needs to provide unambiguous descriptions of places and things. In describing physical places, the requirement is to be able to use the description to resolve potential misunderstandings about a place, and lead to the proper identification of that place on the ground. The need for an understanding about a particular place extends indefinitely for as long as the place retains a particular legal significance. 244 The following examples are kinds of things that this might include: • A parcel of land as private property, above and below the ground. • An administrative area - such as a local government area, an electoral division or a zone forming part of a town or regional planning scheme. • A maritime area such as a zone recognised under the United Nations Convention on the Law of the Sea; or a marine park recognised under national or state laws. • A stretch of road, river or coastline.

In most jurisdictions, motor vehicle registration links particulars about the identity of a motor vehicle with the name of a registrant, a registration number as an identifier attached to the vehicle, and the registrant’s obligations to pay charges for the use of roads. Particulars about identity of a vehicle include the manufacturer’s name, the model name, and chassis and motor serial numbers. Prima facie , the registrant is the vehicle’s owner; and details of registration should lead to an unambiguous identification of the motor vehicle as a physical entity. However, mistakes are possible at the time of registration in recording a vehicle’s particulars, and variations can occur with changes over time that may be incidental or perhaps motivated by dishonesty. Manipulating registration numbers and motor and chassis serial numbers is a source of criminal activity related to stolen motor vehicles.

The quality of information held in registers depends on removing ambiguity — the ‘patent ambiguity’ or error appearing as an inconsistency within a document; and the potential for ambiguity — or ‘latent ambiguity’ — that arises when a thing as described in a document varies from whatever it is intended to represent. Thus a person named in a document may

244 Section 5.3.3 discusses identification of place in the context of land registration. 130 CHAPTER 3

change his or her name — through marriage, or adoption of a nom-de-plume or alias, for example. Similarly, a thing described in a document may change when boundary monuments are lost or if serial numbers are erased. This leads to a potential for latent ambiguity in documented entitlements.

The ways in which evidence of entitlements can be regarded as conclusive are inherent in notions of indefeasibility of title that underpin objectives of the Torrens system of land registration. Ideas about ‘guarantee of title’, ‘title insurance’ and ‘conclusive evidence’ of title seem eminently desirable as public policy but some aspects remain elusive in practice. The practical problem is that registration of particulars in documents can be brought within some measure of control by a registrar; but maintaining correspondence of these written particular with ‘facts on the ground’ is beyond a registrar’s control. Similar hopes for finality have arisen in recent attempts by the UK’s Ordnance Survey in trying to prepare accurate and authoritative digital maps of land use in the UK. 245

The weight to be given to a certificate of title issued under Queensland’s Torrens System was considered in Overland v Lenehan in 1901 where Griffith CJ commented: Before dealing with the facts of the case it is necessary, I think, in order to dispel a mistaken notion which seems to be the foundation of much of the argument addressed to the Court in this case, to point out that a certificate of title does not rest upon a pinnacle by itself, but is an ordinary written instrument, and that, although its operation is far-reaching, and in some respects exceptional, it must be construed in accordance with the ordinary rules for the construction of documents of title. Without extrinsic evidence to identify its subject matter it has no intelligible meaning. Extrinsic evidence is, therefore, admissible, and must be admitted, and, when admitted, must be applied in precisely the same way as in the case of any other document of title. The doctrine expressed in the words falsa demonstratio non nocet is just as applicable to it as to any other instrument of title. 246

The need to compare a written description with extrinsic evidence also applies to contracts for sale of land;247 and more generally in managing assets where written evidence of an entitlement becomes meaningful only in relation to something that is tangible. In summary, sources of ambiguity can be identified as: • Patent ambiguity — an inconsistency apparent within a document; and • Latent ambiguity — an inconsistency that might arise between documentary and extrinsic evidence.

3.3.1.4 Particulars about intangible things Authority may relate to use of a variety of intangible things. Examples include: • Licenses to qualify operators of machines, motor vehicles, and aircraft, for example — where an operator has a non-transferable right to apply a particular personal skill that is generally based on some demonstration of competency as an operator. • Occupational licenses — where a person has a non-transferable right to practice a particular occupation or profession, based on evidence of competence and character.

245 Referred to by Stephen Saxby in ‘Public policy and the digital geospatial representation of designated land use in the UK’, Journal of Environmental Law , Part I, Vol.19 No.1, 2007, pp.5-28; and Part II, Vol.19 No.2, May 2007, pp.227-246 246 Overland v Lenehan (1901) 11 QLJ 59, per Griffiths CJ at 60 247 Donaldson v Hemmant (1901) 11 QLJ 35, per Griffiths CJ at 40-41 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 131

• Intellectual property — involving rights to copy, retain and use various kinds of information. • Registered names, marks and brands that provide evidence of identity, ownership and reputation.

The overall processes in various forms of public registration include: • Authenticating and entering information into registers. • Maintaining information held in the registers; producing information in special formats as output from the registers for use as evidence for judicial and other official purposes. • Producing extracts from the registers in more general format as information only. • Providing for risk of mistake or misfeasance within the registry.

3.3.2 Planning regimes ‘Planning’ is directed towards systematic investigation and decision making that can achieve useful outcomes and avoid calamities. In essence, outcomes occur ‘on purpose’ or ‘by design’ and are not left solely to chance or to ‘accidents of history’. Ideas about planning and purpose also relate to what should be done to achieve future objectives. ‘Planning’ is also often associated with the ‘artificial’; as distinguished from things that are said to occur naturally or things that are regarded as beyond human control. It is also a key element of investment activity insofar as implementing a plan is expected to provide a stream of future net benefits that are preferable to maintaining the status quo .

Conceivably, future benefits can be obtained from investments in physical, institutional or information infrastructure. 248 Moreover, the orientation of planning towards the future requires imagination — essentially a description, modelling or visualisation of some tangible or intangible outcome that can be regarded as a possibility. Thus, plans of physical infrastructure comprise drawings and specifications that are essentially fictional until construction occurs. In some instances, physical scale models or computer models and visualisations might also be used to show what a designer has in mind. Typically, technical design drawings and models are up-dated after construction to become ‘as constructed’ information for operational and asset maintenance purposes. Similarly, actual streams of benefits and costs replace budget estimates over time. The feedback of information in these updating processes is basically the same as learning through experience or hypothesis-testing through experiment.

The problems of communicating what a designer has ‘in mind’ reach new degrees of difficulty and sophistication when the infrastructure is intangible. The language of concrete concepts must adapt through allegorical use of language to describe abstract ideas; typically about organisational or regulatory design in social systems. Thus, spatial concepts such as ‘areas’ or ‘fields’ often become deeply embedded within the language of a classificatory systems that aid in description of intangible things quite generally. Spatial concepts are readily adaptable to geometric representations such as the rigid boundaries applied to some sets or classes — as in Venn diagrams; or the fuzzy boundaries of a range of multi-valued attributes that are said to lie on a ‘spectrum’ or ‘spectrums’ between

248 Section 3.1.1 — ‘The nature of governance’ refers to this categorisation of investments. 132 CHAPTER 3

two or more extremes. Similarly, temporal concepts such as periods, eras and epochs can provide the basis for change over time as understood in dynamic systems generally. 249

Institutions involve understandings and agreements about how people can work together productively; and how they can reconcile misunderstandings and disagreements. Typically, institutions are involved in changing technical, economic and political possibilities and constraints; and institutional development is usually a necessary part of innovations that introduce substantially new products into a community. The new products involve new experiences for producers and users — and new experiences call for new words, or adaptations of old words, to aid in their description and regulation. 250

Typically, rules or problem solving may require that if a particular circumstance arises, then a particular action should be followed. The if-then relationship can change if the particular circumstance is reclassified to allow a different rule to apply or a different approach to the problem to be taken. Popular clichés that allude to such new approaches include ‘thinking outside the square’ and ‘thinking laterally’.251

In the 1980s and 1990s, the idea of highways as physical infrastructure was translated into ideas about information infrastructure, and information superhighways.252 These terms associated information with supercomputing and networking that eventually allowed extensive traffic on the internet. However, just as the purpose of roads is ultimately to deliver passengers and goods safely and efficiently to their destinations, the purpose of the physical features of information and telecommunications technology is to transmit valuable information to its various destinations in a timely fashion while maintaining its fidelity. Moreover, given the patterns of inquiry that attend governance issues and problems, information content itself may need to be structured to assist in systemic planning and monitoring.

Government itself needs to have some command over use of resources to do things that are matters of public enterprise. It also needs to establish and enforce rules for doing things that are matters of private enterprise. ‘Planning’ involves a predictive element in deciding how to allocate resources to achieve future objectives. Predictions are usually based on experience to some degree; and depend on remembering what has been observed in similar circumstances from the past. The work of scientists and historians has its basis in observed experience.

While the purpose of planning is to produce outcomes that can live up to reasonable expectations, new issues emerge when expectations are unreasonable or when outcomes fail to live up to expectations and someone incurs unexpected costs as a consequence. The scope of planning therefore extends to the design of risk management strategies.

249 Section 3.2.1.5 refers to ‘Complexity in multidisciplinary collaboration’ 250 ibid. 251 Edward de Bono, The use of lateral thinking , Harmondsworth Middlesex: Pelican, 1967. De Bono is generally acknowledged as an originator or populariser of ‘lateral thinking’. 252 The terms ‘information superhighway’ and ‘information infrastructure’ were popularised during the Clinton administration and especially through the Vice-President Al Gore. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 133

3.3.2.1 The imagined deemed possible Planning and design enter into the realms of the ‘imagined deemed possible’; 253 and are subject to constraints that may be technical, economic or socio-political in character. Table 3.3.2.1 summarises the nature of these constraints and ways in which constraints might be overcome.

Table 3.3.2.1 CONSTRAINTS THAT PREVENT THINGS FROM HAPPENING

Type Nature of the c onstraint Ways of reduc ing constraints

Technical What is deemed possible — as Advances in science and technology determined by science, technology that extend the boundaries of what is and what is humanly possible humanly possible

Economic What is deemed affordable — Revisions in perceived benefits and where there is a perception that costs through technological change, benefits outweigh costs in an economies of scale, and changes in environment of competing ideas about what things are deemed demands for scarce resources desirable or satisfactory

Socio- What is deemed acceptable or Changes in law and public opinion political permissible as matters of law or about what is legally and socially public opinion acceptable

The socio-political dimension of what is possible can become more complicated when different elements of a planning proposal require separate permissions from more than one authority. Veto can occur at different stages when trying to get something done. An example in Australia followed agreement reached at the United Nations Conference on the Human Environment (UNCHE) held in Stockholm 1970. The Australian Government assumed some responsibilities for environmental issues as part of its external powers. The viability of sand mining on Fraser Island in Queensland depended on permissions from the Queensland Government regarding mining leases. However, viability also depended on an export permit from the Australian Government, and that was not forthcoming. The Australian Government’s constitutional right to withhold permission pending further enquiry regarding environmental impact was upheld in the Australian High Court. 254 This was one of a number of events that changed federal-state interactions related to environmental issues in Australia. 255

Most important decision making involves a pattern of inquiry and a structuring of information that can augment the personal knowledge of one or more planners. As an example, a decision to undertake an agricultural venture may depend on the price, availability and suitability of land; the price and availability of water; pricing for farm inputs and outputs; transportation costs and proximity to markets for inputs and outputs; and any

253 G L S Shackle, Imagination and the nature of choice , Edinburgh: Edinburgh University Press, 1979 - Chapter 6 in particular popularised the idea of the ‘imagined deemed possible’. Additional comment appears in Brian J Loasby, ‘The imagined, deemed possible’, in Behavioral norms, technological progress, and economic dynamics: studies in Schumpeterian economics , ed by Ernst Helmstädter and Mark Perlman, Ann Arbour MI: University of Michigan Press, 1996, pp.17-31 254 Murphyores Incorporated Pty Ltd v Commonwealth (1976) 136 CLR 1; [1976] HCA 20, accessed online at URL 255 Section 3.5.3 — ‘Environmental issues’ elaborates on this issue. 134 CHAPTER 3

socio-political constraints on land use or agricultural production. The multifaceted nature of many planning permissions is endemic in land development processes. Consequential delays in obtaining approvals can impact significantly on costs of developed land and lead to other problems such as housing affordability. Although some statutes aim to streamline these processes, delays still occur and remain contentious.256

The idea that more than one planner may conduct separate patterns of inquiry in the planning of physical and institutional infrastructure leads to the prospects of designing and constructing information infrastructure. Thus, water conservation planning may depend on hydrological information related to rainfall and runoff to determine a potential rate of use consistent with natural replenishment; agricultural information pertaining to potential water use and crop yields; economic information related to infrastructure costs and expected economic returns; and information pertaining to user attitudes and likely behaviour in trying to achieve sustainable water use. 257

In general, physical infrastructure will have formal or informal authorities, understandings and agreements pertaining to its design, its construction or implementation, its use, its misuse and abuse; and its repair and maintenance. The associated records of authority, planning and monitoring will comprise an information infrastructure aimed at making governance arrangements workable. A more complete picture of actual public investment involves: • Physical infrastructure — as in roads, railways, water supply, electricity reticulation, vehicles, plant and machinery. • Institutional infrastructure — as in investments in learning required to reach informal and formal understandings concerning design; construction or implementation; maintenance; adaptation to changing technical, economic or social environments; financing; and rules pertaining to use of physical, institutional and information infrastructures that extend where necessary into legally enforceable agreements and laws. • Information infrastructure — as the structured information regimes needed to manage the use of resources, including human resources. These regimes are described herein as authority, planning and monitoring regimes.

3.3.2.2 Science and prediction as aids to design and planning Generally, humans undertake actions to gain benefits in the future by relying on experience they have acquired in the past. Thus, understandings about sources of food, water and fuel are important to human survival regardless of whether people are hunter- gatherers or members of an industrialised society. Learning is socially important when it helps to solve these significant human problems and becomes part of a cultural inheritance to be passed on to succeeding generations.

A small child might learn that a smile can attract a favourable reaction from grown-ups. Similarly, older people might develop personal theories about how people can be influenced or motivated to behave in a particular way. These kinds of schemas or informal theories are likely to find their basis in personal experience, reasoning, self-observation

256 In Queensland, statutes aimed specifically at overcoming delays in multifaceted government approval processes include the Mixed Use Development Act 1993 and the Sustainable Planning Act 2009. 257 Section 3.1.2 describes physical, institutional and information infrastructures PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 135

and observing other people. They become influential in personal decision making; and influence attitudes towards authority, political power and public policy. Rumelhart describes a schema as: … a kind of informal, private, unarticulated theory about the nature of events, objects, or situations which we face. The total set of schemas we have available for interpreting our world in a sense constitutes our private theory of the nature of reality. 258 In Goleman’s view - ‘Schemas are the organizing dynamic of knowledge. To realize how they operate is to understand understanding.’ 259 In essence, this becomes a basis for learning through experience at the level of an individual. Theorising has an essential feature in going beyond or generalising from information that is given — often regarded metaphorically as ‘reading between the lines’, ‘joining the dots’, ‘jumping to conclusions’ or ‘crossing a logical gap’.

Polanyi argued that ‘discovery’ in science or technology cannot follow established rules to an expected result and retain the essential element of unexpectedness that is part of what it means to make a discovery. 260 It follows that true discovery is not a strictly logical performance, and accordingly, we may describe the obstacle to be overcome in solving a problem as a ‘logical gap’, and speak of the width of the logical gap as the measure of ingenuity required for solving the problem. ‘Illumination’ is then the leap by which the logical gap is crossed. It is the plunge by which we gain a foothold at some other shore of reality. On such plunges the scientist has to stake bit by bit his entire professional life. 261 A statement that contains no inference becomes definitional or tautological in character. As soon as something is inferred, the possibility arises for the inference to be tested by observation. Thus, theory about the past in archaeology, palaeontology, or forensic science might indicate further lines of inquiry to test the theory. Similarly, theory oriented towards some future event can be tested if something is to happen no later than some clearly specified time. Thus predictions of widespread breakdown of computer automated systems with the turning over of calendars on 1 January 2000 were testable at that specific time. 262 In contrast, the prediction that something will happen may be un-testable if the fact that it has not yet happened can be defended by claiming that more time is needed. 263 Moreover, the idea of ‘knowing what to look for’ compares with the so-called ‘theory dependence of observation’ where theory identifies particular variables deemed worthy of observation in a particular analysis.

Understanding begins with assessing evidence. Assessing evidence depends in turn on not being deceived by what is observed; by understanding language and discourse in context;264 and by distinguishing where necessary between what people actually say and what they probably mean to say. 265 Knowledge tends to become more authoritative when it can be described and accepted as ‘scientific’. The question of what can be called

258 David Rumelhart, Schemata: the building blocks of cognition , Center for Human Information Processing, University of California at San Diego, (December 1978), p.13, cited in Daniel Goleman, Vital lies, simple truths: the psychology of self-deception , London UK: Bloomsbury, 1997, p.76 259 Goleman, Vital lies, simple truths , p.77 260 Michael Polanyi, Personal knowledge: towards a post critical philosophy , London UK: Routledge, 1962, p.123 261 ibid. 262 Wikipedia , ‘Year 2000 problem’ accessed online at URL 263 Avoiding testing of a theory is often referred to as an ‘immunizing stratagem’ — a term attributed to Karl R Popper 264 K I Manktelow and D E Over, Inference and understanding: a philosophical and psychological perspective , International library of psychology, London UK: Routledge, 1990, pp.21-41 265 ibid., pp.42-60 136 CHAPTER 3

‘scientific’ was debated extensively during the twentieth century; usually in terms of ‘demarcation’ between ‘science’ and ‘non-science’, 266 or between ‘science’ and ‘pseudo science’. 267 As such, some areas of learning are subject to power relationships through group dynamics, peer reviews and peer pressures. Insofar as these relationships determine what is often regarded as ‘conventional wisdom’, they become an intellectual authority which can also be a significant political force in determining the direction of public policies generally. They become associated also in the formal and informal authority that underpins science and education with long-term effects on systems of belief.

The practical problems of assessing what other people know or believe; and how they are likely to react in particular circumstances is of abiding interest in all social relationships. Describing and interpreting these reactions becomes part of an experience- or evidence- based approach to public policy making. Moreover, it may go beyond the bounds of what many people are prepared to regard as ‘scientific’. In discussing ‘science’ in the context of innovation, the Productivity Commission preferred a pragmatic approach to ‘science’ that included the humanities.268 Ultimately, innovation is about the growth of human knowledge and how people use that knowledge to improve standards of living.

Science is usually regarded as having elements of description, explanation and prediction in relation to something that is deemed to be worth observing and knowing. Things usually expected of science include: • Description of things and processes — with some emphasis on economy of description; 269 and the generality rather than the speciality of its application. 270 • Explanation of processes — with considerable variation in the degree of explanation that is possible or attainable in practice. The minimal situation is to understand that variations in inputs into a system will produce variations in one or more outputs. In this minimal situation the system is often referred to as a ‘black box’ that becomes more ‘opaque’ as growth in explanation and understanding of processes increase in their credibility or utility. • Prediction — where observed regularity of past systemic behaviour provides a basis for predicting future behaviour.

266 The demarcation debate originated in philosophical works of Karl R Popper; especially in Conjectures and refutations: the growth of scientific knowledge , New York: Harper & Row, 1968: and Logic der forschung , Vienna, 1934, translated as The logic of scientific discovery , New York: Harper & Row, 1968. Popper regarded ‘science’ as comprising theory that was testable through observation; and falsifiable in principle - insofar as no amount of observation could prove a theory conclusively but a single observation could disprove it. In practice a single observation or experiment is unlikely to be convincing as evidence of disproof. 267 Seemingly, the terms ‘pseudo science’ and ‘junk science’ are used synonymously; with ‘junk science’ receiving some currency in debate concerning Daubert v Merrel Dow Pharmaceuticals Inc 509 U.S. 579 (1993). This case established rules concerning admissibility of scientific evidence at trials conducted in US federal courts. The rules require the trial judge to act as a gatekeeper in assessing whether proffered evidence is scientifically valid and relevant to the case at hand. 268 Productivity Commission, Public support for science and innovation , Research Report, Canberra ACT: Australian Government, 9 March 2007, pp.5-6. Documentation accessed at < http://www.pc.gov.au/projects/study/science/docs/finalreport > 269 This is usually referred to as ‘the parsimony of science’. The principle of Ockham’s Razor exemplifies this parsimony, as do the simplicity and elegance of some famous mathematical equations in expressing families of relationships between variables. 270 Insofar as the learning of a theory by an individual may be seen as an investment in human capital, opportunities for payoff increase with a widening of its potential application. If the cost of learning a general and a special theory are the same, the more general theory provides a better ratio of potential benefits to costs. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 137

So-called ‘hard sciences’ are distinguished by high levels of confidence in their predictions about systemic behaviour. Examples include astronomy, where confidence about predictability of astronomic events became the standard for time-keeping itself until eventually replaced by atomic clocks based on a well-founded belief in the regularity of oscillations provided by caesium atoms.271 Engineering sciences have their basis in predictable behaviour of materials. Branches of engineering — as in civil, mechanical, electrical, chemical and aeronautical engineering — underpin the design of tangible machinery, equipment and infrastructure. Despite the seemingly precise nature of this knowledge, design criteria often allow significant factors of safety in engineering design of bridges, dams and the like. Incorporating these factors at the time of design and construction usually involves modest marginal costs compared to the risks of experiencing failures through faults in system design or operation. Thus, over-engineering can resemble an affordable risk management strategy or insurance premium when anticipating the likelihood of some systemic failures.

Astronomical observations and experiments with electricity and physical materials by seemingly detached observers produced highly corroborated information that was ostensibly ‘factual’. Confidence in what was ‘factual’, as evidenced by observation and experiment, encouraged a belief in so-called ‘value-free’ predictions that were unarguable. This was compared to statements about what ought to happen where people might easily have differences of opinion. This drew a sharp conceptual distinction between the descriptive ‘is’ and the prescriptive ‘ought’ in ‘is’ or ‘ought’ statements.

Confidence in empirical science provided an ethos for positivism as a philosophical movement in the nineteenth century.272 In the twentieth century, an intellectual community in Vienna adapted positivism to emphasise what was seen as ‘verifiable’, and eschew metaphysical and conjectural questions that were seen as subjective and ‘unverifiable’. This became known as logical positivism and strongly influenced the philosophy and methodology within the natural and social sciences. Similar thinking influenced the move towards legal positivism in jurisprudence. 273

The idea of the detached observer was challenged in quantum physics by Heisenberg’s uncertainty principle. Heisenberg postulated that, in observing a particle with a microscope, radiation comprised of photons could strike the observed particle and cause it to recoil. 274 In attempting to measure simultaneously the position and velocity of a sub- microscopic particle, an increase in the accuracy of one measurement would lead to a decrease in the accuracy of the other. 275

The so-called ‘soft sciences’ that focus on human behaviour are fundamental to the design of social and economic policies. However, an observer of systems in the hard sciences is usually regarded as outside the system under observation. Thus, an earthly observer of the system of planetary motion does not affect the system’s behaviour by observing it or

271 Institute of Physics, ‘GPS: global positioning system’, Curiosity-driven research, London UK: c.2005, accessed at URL < http://www.iop.org/activity/policy/Publications/file_6370.pdf > 272 Auguste Comte, A general view of positivism , Official Centenary Edition of the International Auguste Comte Centenary Committee, trans form French by J H Bridges, New York NY: Speller, 1957. Comte is generally regarded as a leader of the positivist movement. 273 Lord Lloyd of Hampstead and M D A Freeman, Lloyd’s introduction to jurisprudence , 5th edn, London UK: Stevens, 1985, pp.649-654 274 Alastair I M Rae, Quantum physics , 3rd edn, London UK: Institute of Physics, 1992, p.12 275 W Heisenberg, The physical principles of quantum theory , Chicago IL: University of Chicago Press, 1930, cited in F H George, Philosophical foundations of cybernetics, Tunbridge Wells, Kent, Abacus, 1979, p.41 138 CHAPTER 3

predicting how it might behave. In contrast, personal self-observation is usually seen as a learning experience for the observer who may change in attitudes and behaviour through the very process of self-observation. Similarly, in observing social systems, observation is a learning experience for the observer who may be part of the society under observation. A changed state of mind of a member of a social system is effectively a change in the whole system in terms of the resources at its disposal.

Observation can also be an experience for people who know that they are being observed, and their behaviour may change as a consequence. The Hawthorne studies provided an early example where observation of workers led to their increasing self-awareness. In some cases it led to increased productivity; and in other cases, to job dissatisfaction. 276 Moreover, if observation is merged with theory to make predictions about likely human reactions to particular situations, the predictions also become part of the social milieu. Depending on how people actually react to those predictions, it may lead to circumstances where the prophecies become either self-defeating or self-fulfilling.

Apart from limits to observation, prediction is often shown to be tenuous at best, notwithstanding any claims it may have to a scientific basis. This is especially true of highly interactive relationships where a great variety of situations are possible. 277 Some insight into problems of prediction appears from first-order differential equations that arise in biological, meteorological, economic and social sciences. It has been shown that: … the very simplest nonlinear difference equations can possess an extraordinary rich spectrum of dynamical behaviour, from stable points, through cascades of stable cycles, to a regime in which the behaviour (although fully deterministic) is in many respects ‘chaotic’, or indistinguishable from the sample function of a random process. 278

Historically, design that has relied on predictions of agricultural and engineering sciences has been inadequate in understanding and predicting the environmental consequences of primary and secondary production. The complexity of ecosystems arises from its interconnectedness — where ‘everything depends on everything else’. As an example, climate science relies on a number of separate disciplines and involves causes and effects that may be linear; or cyclical in that they involve feedback in simple loops or more complex networks. A prediction that may be shown to be false in one area impacts on predictions for how other parts of these complex systems might behave. Thus, in believing that climate change is anthropogenic, human behaviour becomes part of the problem; but a change in human behaviour can also be seen as part of a solution.

Over the past four decades, policy development and analysis has been undergoing change with the advent of computer modelling and simulation. In April 1968, some thirty individuals from ten countries met as the Club of Rome to express concerns about failures of prevailing institutions and policies to cope with the complexity of interdependent

276 F J Roethlisberger and W J Dickson, Management of the worker: an account of a research program conducted by the Western Electric Company, Hawthrone Works, Chicago , Camridge MA: Harvard University Press, 1939, cited in Robert P Vechio, Greg Hearn and Greeg Southy, Organisational behaviour: life at work in Australia , Sydney NSW: Harcourt Brace Jovanovich, 1992, pp13-16 277 R B McKern, ‘Introduction’ in Limits to prediction , ed by R B McKern and G C Lowenthal, Sydney NSW: Australian Professional Publications, 1985, pp.xi-xiii 278 Robert M May, ‘Simple mathematical models with very complicated dynamics’, Nature , Vol.261, 10 June 1976, p.459 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 139

economic, political, social and environmental factors. 279 They agreed to undertake a Project on the Predicament of Mankind to examine: … poverty in the midst of plenty; degradation of the environment; loss of faith in institutions; uncontrolled urban spread; insecurity of employment; alienation of youth; rejection of traditional values; and inflation and other monetary and economic disruptions. 280 As part of this Project, an international team examined population, agricultural production, natural resources, industrial production and pollution; and published its findings for general readership in 1972. 281 Briefly summarised, the Report found that: 1. If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime in the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity. 2. It is possible to alter these growth trends and to establish a condition of ecological stability that is sustainable far into the future. The state of global equilibrium could be designed so that the basic material needs of each person on earth are satisfied and each person has an equal opportunity to realize his individual potential. 3. If the world’s people decide to strive for this second outcome rather than the first, the sooner they begin working to attain it, the greater will be their chances of success. 282 Ensuing events illustrate the difficulties of receiving some ideas into a popular culture. In 1985, one of the authors of Limits to growth commented on the summary as follows: The first of these statements may be one of the most pessimistic forecasts made in this century - it certainly was received that way. The second, I think, is one of the most optimistic - and I do not believe that it was heard at all. 283 The Report noted that extrapolating some human activities exponentially within a world of finite resources would probably lead to overextension and a subsequent collapse of ecological systems. This merely reinforced what many people already suspected. 284 The extrapolations relied on ambitious global mathematical modelling that used emerging electronic computing technology. At the time, such modelling was largely unprecedented in its scale and scope. It aimed specifically to include five major issues of global concern as interacting variables; namely, accelerating industrialisation, rapid population growth, widespread malnutrition, and a deteriorating environment. 285 Given the many approximations and limitations of the world model, there is no point in dwelling glumly on the series of catastrophes it tends to generate. We shall emphasize just one more time that none of these computer models is a prediction. 286 The possibility that conscious human actions can avoid adverse trends or tendencies is now part of how a government may respond in managing complex systems. People become accustomed to the trajectory of dynamic systems. A person driving a car estimates the convergence of the car and potential obstacles; or, in catching a ball, the ball in relation to the hand that is to do the catching. However, if things speed up, people need

279 William Watts, ‘Foreward’, in Donella H Meadows, Dennis L Meadows, Jørgen Randers and William W Behrens III, The limits of growth: a report for the Club of Rome’s Project on the Predicament of Mankind , London UK: Pan, 1972, pp.9-10 280 ibid., p.10 281 ibid., pp.10-12 282 Meadows et al ., The limits to growth , pp.23-24 283 Donella Meadows, ‘The Limits to growth revisited’, The Casandra Conference: resources and the human environment , sponsored and held at the Texas A&M University, 6-7 May 1985, ed. Paul R. Ehrlich and John P. Holdren, (College Station, Texas: Texas A&M University Press, 1988) p.259 284 Meadows et al ., The limits to growth , p.88 285 ibid., pp.21-22 286 ibid., pp.141-142 140 CHAPTER 3

to re-assess how their reactions can take effect. The Report warns that similar consequences relate to environmental policies: Under conditions of rapid growth, however, the system is forced into new policies and actions long before the results of old policies and actions can be properly assessed. 287 The Limits to growth report was criticised extensively as a doomsday prediction when it was first published. However, the early criticisms have undergone a more sympathetic re- evaluation in recent times.288 Nowadays, far more complex modelling is accepted as a basis for climate change prediction and policy-making at national and international levels. 289 Just as significantly, the effects of science and its role in regulation are seen as expressions of intellectual and political power that need some moral foundation. Knowing who observes the observers and who regulates the regulators become legitimate community concerns. The tendency is for the behaviour of scientists and the work of science to be seen in the context of behavioural sciences. This becomes increasingly important as the distinction becomes blurred in practice regarding: • what is observed to have happened or to be happening — with its emphasis on interpretation and inference to make sense of observation and to facilitate learning that occurs through experience; • what is deemed possible — with its emphasis on prediction that has its basis in prior learning through experience; and • what ought to happen — with its association between the positive or predictive aspect of policy and its normative or ethical counterpart. The consequences of leaning that is yet to happen are beyond the realms of prediction. If it were not so, the idea of ‘new’ information or experience has no intelligible meaning. The fact that people can act in ways that help to confirm or negate predictions about how they are expected to behave is a reason to be cautious about behavioural predictions. Moreover, if new information becomes especially influential, there may be no easy way of deciding when that influence can be evaluated with any finality. 290

3.3.2.3 Positive and normative aspects of policy The separation between ‘is’ and ‘ought’ statements was seen as providing conceptual clarity in matters of policy — where scientists could decide what was predictable or workable; and other people could decide whether to proceed with a particular course of action based on whether it ought to happen. As an influential advocate of a positivist approach to economics, Friedman argued that ‘Evidence cast up by experience is abundant and frequently as conclusive as that from contrived experiments’. 291 However, value judgements are inherent in assessing evidence. The selective use of evidence

287 ibid., p.144 288 Graham Turner, A comparison of the limits to growth with thirty years of reality, Socio-economics and environment in discussion , CSIRO Working Paper Series 2008-09, Canberra ACT: CSIRO Sustainable Ecosystems, June 2008, accessed online at URL < http://www.csiro.au/files/files/plje.pdf >. 289 Alan J Thorpe, Climate change prediction: a challenging scientific problem , London UK: Institute of Physics, 2005, accessed online at URL < http://www.iop.org/activity/policy/Publications/file_4147.pdf > 290 Section 3.3.3.3 – ‘Statistical and key performance indicators in policy evaluation’ discusses this issue in more detail. 291 Milton Friedman, ‘Methodology of positive economics’, in Essays in positive economics , Chicago IL: University of Chicago Press, 1952, p.10 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 141

underscores many arguments concerned with interpretation in science, 292 history and law.293

Value judgements are likely to influence how scientists decide what research agendas are important, the questions they should ask, the observations they should make, the beliefs they have acquired and what they regard as ‘factual’. Bias in observations that scientists make and the advice they give is likely to arise from two particular sources. The first is based on an investment in ego; the value that a researcher attaches to his or her personal beliefs as a measure of self worth. The second arises from the continuing interest that a researcher has in asking questions, providing answers and receiving accolades and rewards.

Astute observers have noted a selective awareness that controls what people are willing and able to see and remember. These controlling influences on cognitive processes introduce biases into observation and reporting that are at the very core of scientific methods and practices. Goldman expresses it thus: The nature of schemas is to guide attention towards what is salient and away from what is not. By establishing a notion of what is salient, and how to construe it, the schema is biased from the start. 294 A pecuniary bias can arise if research findings that purport to be scientific also become attractive within various interest groups, and sections of commerce and government. Scientists need continuity in funding to support their own positions of wealth, status and power. Intense competition between private, government and academic institutions for limited research funding raises the potential for bias in research findings. Unsurprisingly, allegations emerge for time to time about fraud, compromise, and political influence in scientific research. The bias involves not only the giving of answers but also the questions that will and won’t be asked. Under such institutional arrangements, whistleblowers plagued by conscience can expect hard times. 295 The potential for bias extends into judicial processes where litigating parties can control the flow of information through the hiring of expert witnesses as hired guns to profess particular viewpoints. The forensic evidence in the Lindy Chamberlain case is a case in point. 296

The supposed sharp demarcation between facts and values is elusive at best and most likely an illusion. Perhaps it is safer to presume that science is value laden, that scientists believe what they do is worthwhile, and hope that what they have to say will be taken seriously and regarded by other people as having value. The policy concern then becomes the kind of values that scientists do hold when they contribute to matters affecting public policy. The repercussions of the practice of science have become especially noticeable in public health and environmental issues. As an example, on 16 May 1997, President

292 This is consistent with the view of science as ‘craft work’ — as in Jerome R Ravetz, Scientific knowledge and its social problems , Edison NJ: Transaction Publishers, 1996, in ‘Introduction to the Transaction edition’ at p.x 293 William Cronon, ‘A place for stories: nature, history, and narrative’, Journal of American History , Vol.78 No.4 (March 1992), pp.1347-1376. 294 Goleman, Vital lies, simple truths , p.232 295 Robert Hauptman, ‘Dishonesty in the academy’, Academe Online , November-December 2002, accessed online via URL < http://www.aaup.org/AAUP/pubsres/academe/ > 296 See, for example, Paul Gerber, ‘Playing dice with expert evidence: the lessons to emerge from Regina v. Chamberlain ’, Medical Journal of Australia , vol.147, 7 September 1987, pp.243-247. G F Humphrey, ‘The Chamberlain Inquiry: the great difficulties for the defence arose out of the scientific evidence’, Search , Vol.18 No.5, September-October 1987, pp.224-225. John Robertson, ‘Chamberlain and the expert witness’, Proctor , Vol.7-8, No.10, November 1987, pp.1,3. Stephen J Odgers, ‘Experts and evidence’, Current Affairs Bulletin , Vol.64 No.10, March 1988, pp.4-11. 142 CHAPTER 3

Clinton gave a national apology to victims of a Tuskegee syphilis study. This study, originally called the ‘Tuskegee study of untreated syphilis in the negro male’ began as a six-month programme in 1932 but actually lasted forty years.297 This study violated ordinary standards of human decency over an extended period in denying treatment and thus causing harm to victims of syphilis in the name of medical research. 298 Among other things, this study became influential in developing ethical principles now applied widely in using human subjects in medical research. 299

The use of science in policy design follows from a need to understand, develop and communicate ideas about how the whole of government and its various sub-systems or parts can be managed or governed. This may involve engineering or biological sciences in some degree. However, it will also certainly involve some personal and informal schema about human behaviour; or more formal behavioural theory as accepted within various scientific communities. The need for theory applies especially in relation to how human behaviour can be motivated; and most people have some idea about how they can be motivated personally to do or avoid doing things. Accordingly, open policy debate is likely to encounter a variety of formal and informal theories and opinions about what is often called ‘human nature’. The questions that usually emerge are about what degree of self- control a person is able to exercise; what behaviour is innate and what is learned; 300 whether antisocial behaviour can be corrected in some degree; and the means for making these corrections.

Arguably, the best way of approaching problems of bias is to be as open to review and as candid about discussing the potential for bias as circumstances allow. Unless this occurs, the integrity of both the research findings and the review processes is lost. This loss also helps to undermine the credibility of the research; regardless of whether it is funded by government or non-government sources. Accordingly, the supposed separation of positive and normative statements in matters of public policy overlooks the needs of science itself for its own forms of regulation. The system is complicated when the energy directed towards competition between researchers for available resources and professional recognition gets diverted from trying to excel into trying to cheat.

The design of policy and the efficacy of individual and collective learning raise key questions that include the following: • How people have learned to behave so far. • How people may modify their behaviour in the light of new experience and evidence. • Whether something described as ‘genetically determined’ or ‘human nature’ is intractable or unchangeable. • Whether aberrant behaviour that is also socially unacceptable can be corrected through re-education; or whether behavioural changes may be induced by reorganising systems of rewards and penalties.

297 US Government, Department of Health and Human Services, Centers for Disease Control and Prevention, U.S. Public Health Service Syphilis Study at Tuskegee, ‘The Tuskegee timeline’ accessed online at URL < http://www.cdc.gov/tuskegee/timeline.htm > 298 References include ‘Tuskegee study of untreated syphilis in the negro male’; and ‘Belmont Report’, Wikipedia , accessed online respectively on 18 January 2009 at URLs and 299 This matter arose in the context of ‘informed consent’ in Section 3.2.2.2 of this report. 300 This is the so-called nature/nurture divide. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 143

• How people ought to behave — involving value judgements that distinguish between qualities such as good and evil, fairness and unfairness, and justice and injustice; but with an added dimension of whether humane treatment at the level of an individual produces discernible improvements in standards of living in society as a whole.

3.3.2.4 Science in policy design Policy design usually entails an expectation that changes in human behaviour can produce systemic changes for the better. Thus, performance of a public road system may be a function of engineering design in roadways and vehicles, but the human behaviour of designers or users of a road system also becomes a function of institutional design and public policy. Similarly, predictions and evidence of climate change may fall within the province of natural sciences. However, in ascribing climate change to anthropogenic causes and suggesting that human attitudes and behaviour may need to change, climate policy necessarily involves sciences concerned with human behaviour.

Policy design presumes that human behaviour can be modified in predictable ways through a structure of incentives and disincentives or some alternative appeal to human emotions and motivations. Design has therefore depended on behavioural sciences that could offer some basis for developing a policy rationale. Generally, the design of public policy becomes associated with a desire at the social level to: • encourage behaviour that is creative or is likely to be creative; and • discourage behaviour that is harmful or runs unacceptable risks of being harmful.

A doctrine of behaviourism dominated thinking about human behaviour in the period between the 1920s and 1960s. Under this doctrine, observations of stimuli and responses were the only things admitted as scientifically valid. Conjecture concerning the influences of a genetic inheritance was deemed to be scientifically inadmissible when it touched upon inheritance of particular abilities, talents or personality traits, for example.301 Metaphorically, stimuli became inputs into a ‘black box’ and responses became outputs. The information processes of observing, recognising, remembering and learning were, for the most part, regarded as unobservable. Conjecture or introspection on how learning took place within the ‘black box’ of the mind was regarded as ‘beyond science’.

In 1938, Samuelson began developing economic theory about ‘revealed preference’ in sympathy with tenets of behaviourism. 302 ‘Price’ was seen as an observable stimulus and ‘quantity demanded within a particular time period’ was an observable response. This stimulus/response relationship provided a basis for research programs that could observe economic decision making under controlled conditions. The work became influential in developing a narrow view of an economically rational person who was perfectly informed and able to make judgements unfailingly to serve his interests to the fullest extent that circumstances could allow.

The matter of rational choice was always normative or value-laden insofar as it was oriented ultimately towards deciding what ought to be done. This normal or moral element in choosing extended into the conduct of science itself in choosing a research agenda and

301 Steven Pinker, The blank slate: the modern denial of human nature , New York NY: Viking Penguin, 2002 302 P A Samuelson, ‘A note on the pure theory of consumer’s behaviour’, Economica , Vol.5, 1938 referred to in Amartya Sen, ‘Behaviour and the concept of preference’, Economica , Vol.40, August 1973, pp.241-259, rpt in Rational choice , ed by Jon Elster, Readings in social and political theory, series ed by William Connolly and Steven Lukes, Oxford UK: Basil Blackwell, 1986, 144 CHAPTER 3

what should be admitted as evidence. Some argued that the normative element was out of place in a positive science based on observed facts rather than values. 303 However, advances in understandings about human behaviour really depended on significant shifts in thinking towards: • Understanding that positivism failed to explain how the personality, motivation and idiosyncrasies of scientists themselves could affect supposedly scientific findings. • Trying to overcome restrictions imposed by tenets of behaviourism by looking inside the mind and trying to imagine or discover how people actually thought about things. • Trying to obtain a better understanding of why people might be motivated to act in particular ways.

In a seminal 1937 work on the role of knowledge in society, Hayek challenged tenets of positivism and behaviourism in economic theorising. He argued as follows: Indeed my main contention will be that the tautologies, of which formal equilibrium analysis in economics essentially consists, can be turned into propositions which tell us anything about causation in the real world only in so far as we are able to fill those formal propositions with definite statements about how knowledge is acquired and communicated. In short I shall contend that the empirical element in economic theory - the only part which is concerned, not merely with implications but with causes and effects, and which leads therefore to conclusions which, at any rate in principle, are capable of [verification] - consists of propositions about the acquisition of knowledge.304 A theory about learning by individuals is undoubtedly important insofar as thinking and learning occur at the level of an individual. Also, theory about organisation is important since it is apparent that people regularly achieve more by working together than they do by working as individuals. Theory about organisation needs to give some account of the effort involved in coordinating separate activities that opens up the following possibilities: • One or more persons may gain at the expense of other persons through arrangements that are exploitive or coercive. • Everyone may gain, generally through a unique combination of skills that provides net social benefits, although leaving a question of how the benefits can be shared equitably on the basis of the contributions and needs of individuals. • Everyone may lose, perhaps as a consequence of some catastrophe, leaving a question of how to apportion not only costs but also blame and shame wherever it seems to be appropriate.

Gains in productivity through new ways of combining resources to deliver goods and services are often referred to as ‘synergy’. Synergy refers to qualities emerging from the way that resources combine to produce outcomes that might be good or bad, depending on an observer’s point of view. 305 Maslow attributed the adoption of ‘synergy’ as a concept

303 John C Harsanyi, ‘Advances in understanding rational behavior’ in Foundational problems in the special sciences , ed by R E Butts and J Hintikka, Dordrecht Holland: Reidel, 1977, pp.315-343, rpt in Rational choice , pp.82-83 304 F A von Hayek, ‘Economics and knowledge’, Economica , Vol.4 No.13, September 1937, p.33. In a footnote to the term ‘verfication’, Hayek was obviously aware of Popper’s views on science in noting ‘Or rather falsification. Cf K Popper, Logik der Forschung , Vienna, 1935, passim’. 305 Peter A Corning, ‘”The synergism hypothesis”: on the concept of synergy and its role in the evolution of complex systems’, Journal of Social and Evolutionary Systems , Vol.21 No.2, 2000, pp.133-172 — Corning applies the term ‘synergy’ to the combined efforts in a variety of situations in nature that are linked to complexity and evolutionary processes PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 145

in behavioural science to Ruth Benedict, one of his teachers in anthropology. 306 He cited from his notes of a lecture she gave as follows: I shall speak of cultures of low synergy where the social structure provides for acts which are mutually opposed and counteractive, and cultures with high synergy where it provides for acts which are mutually reinforcing … I spoke of societies with high social synergy where their institutions insure mutual advantage from their undertakings, and societies with low social synergy where the advantage of one individual becomes a victory over another, and the majority who are not victorious must shift as they can. Benedict’s ‘low synergy’ societies dissipate their energies because people are at cross purposes. In contrast, ‘high synergy’ societies engage in transactions that would satisfy the Pareto Criterion for efficiency in resource allocation. People are better off to the extent that they can trade to mutual advantage without causing harm to anyone else. 307 In the context of government undertakings, mutual advantage from undertakings occurs where agencies find commonality or consistency of purpose and avoid situations where they are at cross- purposes. Maslow took Benedict’s ‘synergy’ concept a stage further in proposing that productive social institutions could be designed to encourage either human creativity or destructiveness. Even the best individuals placed under poor social and institutional circumstances behave badly. One can set up social institutions which will guarantee that individuals will be at each other’s throats; or one can set up social situations which will encourage individuals to be synergic with each other. That is, one can set up social conditions so that one person’s advantage would be to another person’s advantage rather than the other person’s disadvantage. 308 In the aftermath of World War 2, scholarly attention turned to the possibility that institutional arrangements might lead people, through accident or by design, to behave badly towards other human beings. Evidence given in war-crimes trials about Nazi atrocities motivated much of this attention. In the 1960s, Milgram conducted controversial psychological experiments showing how institutional arrangements could be designed in such a way that obedience to authority could outweigh personal conscience and allow people to inflict pain on other people. The problem of obedience is not wholly psychological. The form and shape of society and the way it is developing have much to do with it. There was a time, perhaps, when people were able to give a fully human response to any situation because they were fully absorbed in it as human beings. But as soon as there was a division of labor things changed. Beyond a certain point, the breaking up of society into people carrying out narrow and very special jobs takes away from the human quality of work and life. A person does not get to see the whole situation but only a small part of it, and is thus unable to act without some kind of overall direction. He yields to authority but in doing so is alienated from his own actions. 309 While accepting human capacity for destructive behaviour, Fromm cautioned against a view of human beings that was too pessimistic. He saw it as important to maintain a hope that institutional arrangements could be implemented where individuals could gain self- knowledge and self-respect.310 In another analysis pertinent to organisational design, Zimbardo gave a number of examples where good people could be led to do bad things.311

306 Abraham H. Maslow, The farther reaches of human nature , (Harmondsworth, Middlesex: Penguin, 1971) p.191 — italics added by Maslow 307 Section 4.5.1.3 — ‘Pareto efficiency’ provides further discussion on this issue. 308 Maslow, The farther reaches of human nature , p.204 309 Stanley Milgram, ‘The perils of obedience’, Harper’s Magazine , 1974, abridged and adapted from Milgram’s Obedience to Authority , New York NY: Harper & Row, 1974 accessed online at URL 310 Erich Fromm, The anatomy of human destructiveness , Harmondsworth Middlesex: Penguin, 1973, pp.80-86 311 Philip Zimbardo, The Lucifer Effect: understanding how good people turn evil , New York NY: Random House, 2007 146 CHAPTER 3

Among the examples he cited were his own Stanford Prison experiments in 1970, the Milgram experiments of the 1960s, the 1968 My Lai massacre in Vietnam, and the 2004 Abu Ghraib torture and abuse scandal in Iraq. Zimbardo saw that compliance with a formal and superior authority could overwhelm good conscience and allow some people to descend unthinkingly into situations that treat people unfairly and inhumanely. However, he was also impressed by how people could act heroically and object to being used to produce immoral outcomes. 312

Public policies make it lawful for some people to issue commands to other people and expect that those commands will be obeyed. This occurs not only in the more obvious examples provided by the legislature; the judiciary; and police, military and prison services. It occurs also in decisions and orders of people charged with public administration, the rights of employers and the rights of property owners. The design of organisations and institutions needs to have inherent checks against abuse of authority.

Zimbardo suggests ten factors or principles that can encourage productive interpersonal relationships and dissuade abuses of authority where individuals are treated badly. 313 These principles are re-arranged and summarised below in three clusters: • Self respect and neighbourliness — learning to be self-sufficient when it is appropriate to be self sufficient — accepting responsibility for personal development to reach full human potential — learning to be a good neighbour — encouraging self- development in other people within a sphere of influence. • Arrangements that are meant to be inclusive and build trustworthy relationships — seeking group acceptance without surrendering individuality — encouraging critical thinking and being concerned about how frameworks and agendas are set — being mindful of circumstances that allow anonymous or unquestionable authority to prevail and where individuals or groups can begin to exhibit antisocial behaviour— respecting just authority and disapproving unjust authority — believing in capacity to oppose injustice. • Arrangements that attempt to heal broken relationships — admitting mistakes and accepting responsibility when it ought to be accepted — having a change of mind and direction to indicate that something has been learned from mistakes — not sacrificing personal or civic freedoms for illusions about security.314

Many of these principles are found within international human rights conventions; and in legislation aimed at mitigating discrimination against individuals that is unfair or irrelevant.315 The harm caused by harassment in workplaces and from officialdom is recognisable and significant although not easily quantifiable as a social cost. If the direction of human energy into creative activity is thwarted, it is likely to be directed towards destructiveness. If the direction of human energy into destructive behaviour is thwarted, it is likely to be directed into forms of self destruction. Accordingly, the social costs of poor institutional arrangements occur in three main areas:

312 ibid., where chapter 16 is entitled ‘Resisting situational influences and celebrating heroism’ 313 ibid., pp.451-456 314 Zimbardo maintains a Lucifer Effect website that contains a fuller set of recommendations under a ‘Resisting Influence’ heading, accessible online at URL 315 As an example, the Australian Human Rights Commission (AHRC) administers the Australian Human Rights Commission Act 1986 (Cth); the Age Discrimination Act 2004 (Cth), the Disability Discrimination Act 1992 (Cth), the Race Discrimination Act 1975 and the Sex Discrimination Act 1984. Information is accessible at the AHRC website at URL < http://www.hreoc.gov.au/ >. The States also have anti-discrimination legislation. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 147

• Loss of motivation and creativity — falling partly within the scope of x-inefficiency. 316 • Destructiveness — where efforts to direct change in one area are offset by efforts elsewhere in opposing the changes. In some cases, the law may regard obstructing change or damaging property as criminal activity.

Supposedly, people can trade to mutual advantage where they are reasonably informed and agree to accept the opportunities and risks that the transaction can bring. The transaction is socially beneficial and responsible if no one else is made worse off as a result. If someone else is made worse off, there are winners and losers and issues associated with knowing whether overall advantages outweigh disadvantages. Circumstances become more complicated if A wishes to transact with B to mutual advantage; but B is also supposed to advise A in relation to benefits that A can expect to receive. This leaves a potential that B can use the information asymmetry to B’s advantage and A’s disadvantage — but potential is not inevitability. Where professional standards and trust prevail, a person with highly specialised knowledge can manage the conflict of interest situation without harm to a client.

Situations become even more complex when A and B attempt to trade to mutual advantage on the advice of C — an adviser who can also expect to gain some advantage somewhere. In general, as goods and services become more sophisticated and rely more on highly specialised knowledge with advances in science and technology, the greater is the dependence on self-regulatory mechanisms to reduce the potential for resource misallocations.

Clearly, people can be lied to and exploited in entering into transactions and it becomes a matter of public policy how much can be tolerated and what remedial actions can be taken. Two issues emerge immediately: • The problem of interacting with science in making and interpreting laws • The design of strategy for coping with risks

3.3.2.5 Science in making and interpreting law Reviews of Milgram’s work suggest a need for conceptual clarity in the nature of authority. 317 In modern democracies, formal authority to make and administer laws resides in elected politicians in the legislatures; and administrators in the executive arm of government. Formal authority to declare how a given law should be interpreted within the context of a whole legal framework resides in judicial officers within a hierarchical court system. Desirably, politicians, administrators and judicial officers need a sufficient understanding of the intellectual and moral authority on which each law depends. Without such understanding, laws will be subject to increasing inconsistency in their logic and fairness.

The desire to introduce new programmes of laws or regulations usually arises through some dissatisfaction or inadequacy within existing laws. This desire seldom begins with members of parliament acting as individuals. It is more likely to begin as part of a party platform of a majority party or coalition; or with the executive branch of government in

316 Section 4.5.1.2 — ‘Technical or x-efficiency’ discusses this issue. 317 A summary appears in Thomas Blass, ‘The Milgram Paradigm after 35 years: What we now know about obedience to authority’, Journal of Applied Psychology , Vol.25 No.2, 1999, pp.955-978 148 CHAPTER 3

trying to improve the workability of an existing programme. Proposals for policies and programmes have inherent theoretical aspects insofar as proponents believe that implementation will produce desired outcomes. The belief might be testable over time if the aims and policy instruments are described with sufficient clarity. 318

Authority for implementing a programme needs to be found within the framework of existing legislation or in legislative changes. Where legislation needs to change, the bills and explanatory memoranda require drafting and become a responsibility of parliamentary counsel — usually relying on advice from departmental experts. The quality of this expertise is important if it can achieve a reduction in complexity for the benefit of parliamentary counsel in drafting documents; members of parliament in authorising the legislation; and members of the public who need sufficient understanding to achieve compliance.

At some stage, a sovereign power cannot rely on living human memory alone and needs to depend on artificial memory in the form of official records. The various observations and descriptions required for purposes of governance are expressed as code. Maintenance of the code is a task for keepers of records. Maintenance of an ability to interpret the code is a different task that depends on passing knowledge from one generation to the next through living human memory as part of human capital. The association with written records is clear in official positions such as a ‘secretary of state’; and the role of a political or religious adviser is implicit in the idea of a ‘minister of state’. The Westminster system of government has origins in the alignment of sovereign power with intellectual and ecclesiastical authority of the Christian church. 319 The office of Lord Chancellor served since Anglo-Saxon times as the king’s personal secretary and keeper of the Great Seal; a chaplain; and a ‘keeper of the king’s conscience’. In this last role, the king accepted the advice of the Lord Chancellor on petitions concerned with equity in the decisions made in the king’s courts. As a secretary, the Lord Chancellor managed the preparation and retention of official documents. 320

The mutual reinforcement of political and moral authority remains as part of the Westminster tradition adopted in a number of Commonwealth countries. 321 However, elements of moral authority derived from religion are deeply embedded and easily overlooked. In practice, the role of a minister of state as an adviser depends on distilling advice from departmental officials who have expertise in matters within the minister’s particular administrative responsibilities. The following list includes more obvious constraints on the capacity to communicate. • Advisers cannot see things they have neither learned nor had an opportunity to see. • Advisers can usually describe what they see and the circumstances they imagine in the languages of their separate disciplines.

318 Ian M L Turnbull, ‘Clear legislative drafting in Australia’, Statute Law Review , Vol11 No.3, Winter 1990; copy obtained at the website of Australian Office of Parliamentary Counsel, with comments on ‘Topic specification: purpose clauses and headings’ at p.9 and ‘Coherence’ at p.10; accessed online at URL 319 Originally, the West Minster was a church within London’s governmental precinct 320 Many these historical associations involving the Lord Chancellor were changed with amendments to the UK Constitution in 2005 321 Remnants of ecclesiastical authority remain in the ceremony of coronation; prayers on the opening of parliament, laws pertaining to the administration of oaths PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 149

• Professional advice and technical information is not always readily communicable to someone unfamiliar with the particular descriptive language or vocabulary used by the adviser. • Advisers may have areas of ignorance, biases and genuine but mistaken beliefs; and can further their own ends through deliberate misinformation and failures to make timely disclosures of information. • Research and legal institutions follow elaborate procedures for hearing evidence and trying to determine the truth, so far as it can be ascertained. Miscarriages of justice can usually be traced to problems of evidence; just as corruption is usually traceable to corruption of information and communication processes. • Assessing blame, liability and penalties or eligibility for grants and rewards depends on establishing the truth; but the threat of being blamed through enquiry made under an adversarial legal system exacerbates the processes of trying to establish the truth.

Research findings and expert evidence may lose some of their credibility, depending on the interests of litigants and the dependence of experts on continuing funding. This led a number of leading journals to review procedures of reporting on potential conflicts of interest prior to publishing. As an example, editors of the Journal of the American Medical Association introduced new requirements in July 2005 for reporting on potential conflicts of interest prior to publishing articles in the Journal .322 The line between information and advertising is often blurred with commercial funding of science.323

While there may be concerns about misleading reporting of industry-sponsored research, there may be as much need to be concerned about the quality of publicly-funded research where the agenda is set by academics or public officials. In suggesting the need for a more balanced approach, some researchers in studies of obesity concluded: … while continued efforts to improve reporting quality are warranted, such efforts should be directed at non-industry-funded research at least as much as at industry-funded research. A benefit of the greater funding offered by industry, the greater scrutiny of industry, or perhaps greater concern or training of industry personnel for rigorous reporting may be an enhancement of the overall reporting quality in the literature, at least for long-term weight-loss studies. 324 Some problems emerge at the limits of science where there are genuine difficulties in knowing how to interpret evidence. The case of Daubert v Merrell Dow Pharmaceuticals shows that the difficulties extend to what legal authorities are prepared to describe as ‘science’.325 Conflict of interest is apparent wherever law, politics and commerce are practiced in adversarial environments. The practice of science cannot escape these pressures notwithstanding its supposed ethos of openness, candour and search for truth.

322 Phil B Fontanarosa, Annette Flanagin, Catherine D DeAngelis, ‘Reporting Conflicts of Interest, Financial Aspects of Research, and Role of Sponsors in Funded Studies’, Journal of the American Medical Association , Vol.294 No.1, 6 July 2005, pp.110-111 accessed online at 323 John Tierney, ‘Misleading research from industry?’, New York Times , Science Section, accessed online at URL 324 O Thomas, L Thabane, J Douketis, R Chu, A O Westfall and D B Allison, ‘Industry funding and the reporting quality of large long-term weight loss trials’, International Journal of Obesity , Vol.32, 2008, pp.1531—1536 accessed online at URL < http://www.nature.com/ijo/journal/v32/n10/pdf/ijo2008137a.pdf > 325 Section 3.2.1.5 — ‘Complexity in multidisciplinary collaboration’ discusses this case in some detail. 150 CHAPTER 3

3.3.2.6 Design of risk management strategy Arguably, the idea of ‘the imagined deemed possible’ can readily be extended from creating things that are desirable to avoiding things that are undesirable. 326 In essence it requires a serious contemplation at the stage of design to understand how human errors, mistakes and stressful working conditions can combine to do considerable harm if particular circumstances happen to coincide. Seemingly, design of risk management strategy can be considered in many practical applications under a number of headings: • The imagined deemed possible from the viewpoint of things that can cause harm.
Technical failures — where technical performance fails to live up to expectations. This may include technical systems under undue stress due to natural disasters.
Economic failures — where net benefits perceived broadly across social, economic and environmental dimensions do not live up to expectations.
Socio-political failures – where people and organisations are at cross purposes through poor design of organisations; or authorities fail to prepare and are unable to respond in timely fashion to complex issues under emergency conditions; lack of necessary knowledge in time for decisions; or lack of formal authority to implement evasive or remedial measures at appropriate hierarchical levels within society and its various governance mechanisms. • Areas of knowledge with susceptibility to human error.
Design of systems — involving risks that are foreseeable and ought to be foreseen by competent observers operating in effective multidisciplinary teams.
Construction or implementation of systems — with risks associated with the order and methods of implementation that may have profound effects on streams of costs and benefits, among other things.
Operation of systems — with the tendency for more automated control measures to make systems easier to operate; but more vulnerable to failure if operators lose a sense of how to cope with what to do if automated systems fail.
Maintenance of systems — with crucial concerns about the availability of replacement parts, assurance over the integrity of those replacements, and their correct installation by skilled technicians. • Decision making entities with influence or control over human behaviour.
Individual self-control — influenced by education and training; and high-level institutional factors related to rights and responsibilities; and structures of incentives and disincentives.
Influence of groups and collective informal decisions affecting teamwork and peer- group pressures on the performance of individuals.
Policy makers at various levels — from a firm or agency operating at a local level within a hierarchical framework of policy making up to regional, national and international levels. • Areas of investment activity.
Physical infrastructure.
Institutional infrastructure.

326 Section 3.3.2.1 – ‘The imagined deemed possible’ introduces these concepts. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 151

Information infrastructure.
Human capital — with emphasis on development of human knowledge, skills, and motivation; and physiological and psychological health.

Unnecessary risk is a distraction that makes things more complicated than they need to be; especially in times of emergency. Design of a risk management strategy needs to deal with avoidable risk so far as practicable by being prepared beforehand. This allows a fuller management effort to cope with unavoidable complexity in times of crisis.327 Risk is synonymous with uncertainty and implies an absence of information in time for making decisions and taking actions. Moreover, the absence of information can occur in relation to things done in the past that remain undiscovered as well as things to be done in the future where events have not yet unfolded. When a person realises that he or she does not have the knowledge personally to deal with a particular situation, the problem is a lack of information. Whether or not the information is available is another matter. However, a person might also fail to realise the kind of information that is necessary and the circumstances where it may be needed; regardless of whether it is available. This is a matter of genuine ignorance. Even where information is at hand, uncertainty might reside in its quality or the quality of communication channels through which it can be communicated. Such a situation superimposes uncertainty on an underlying state of ignorance.

Risks relating to future events are apparent whenever things do not turn out as expected. In addition, insights from chaos theory show how outcomes can be very sensitive to small differences in measures of or assumptions about some initial conditions when anticipating the performance of dynamic systems over time.328 Risks relating to the past decisions and actions can also occur — as in damage that has happened but remains undiscovered and legal actions that have not yet commenced. Hayek saw some sources of failure in terms of ‘pretence of knowledge’, often brought about by failure to recognise the essential complexity and inherent unpredictability of some social systems. 329

The best that can be hoped in cases of genuine ignorance is that openness of government can prompt someone to warn the community of the risks involved in existing or new undertakings. In some respects, this emulates the public advertisement of land development proposals. A call for comments or objections can prompt people to provide information that can reduce the chances of adverse outcomes. Properly used, such a call is useful in considering investment generally, including investments in institutional arrangements that govern society. Open and transparent arrangements are admittedly open to abuse from delaying tactics and frivolous and trivial objections. The remedy may be to lift the standards and expectations of open debate so that trivia meets with censure from a wider community. While exposing ignorance may be embarrassing for proponents of investment proposals, any embarrassment may be a small price to pay compared to the costs of adverse outcomes that might be avoided otherwise.

A 1996 report produced under auspices of the National Research Council in the US saw areas of ignorance and uncertainty in the following terms:

327 Section 3.2.2.5 — ‘Avoiding unnecessary risks and distractions’ provides some background to this section. 328 As popularised in the so-called ‘butterfly effect’ — Wikipedia article accessed at URL < http://en.wikipedia.org/wiki/Butterfly_effect > 329 F A Hayek, Nobel Memorial Lecture, given at Stockholm on 11 December 1974, rpt as Chapter 2, ‘The pretence of knowledge’ in F A Hayek, New studies in philosophy, politics, economics and the history of ideas , Chicago IL: University of Chicago Press, 1978, p.26 152 CHAPTER 3

The uncertainty of risk estimates and the interpretation of uncertainty have become a frequent focus of controversy. Uncertainty commonly surrounds the likelihood, magnitude, distribution, and implications of risks. Uncertainties may be due to random variations and chance outcomes in the physical world, sometimes referred to as aleatory uncertainty , and to lack of knowledge about the world, referred to as epistemic uncertainty . Sometimes, scientists may not know which of two models of a risk-generating process is applicable. Such situations are sometimes referred to as presenting indeterminacy. When uncertainty is present but unrecognized, it is simply referred to as ignorance. This last case is the most worrisome, as it can result in mischaracterization of risk that systematically underestimates uncertainty, with potentially serious implications for the decision process. 330 A significant problem is ignorance exacerbated by unwillingness to challenge the veracity of existing belief. In this regard, the following nineteenth century saying may be apt: It ain't so much the things we don't know that get us into trouble. It's the things we do know that just ain't so. 331 Ravetz argues for increasing control and quality in scientific information intended for public policy purposes. He contends that the main problem may be in coping with genuine ignorance about possible outcomes. 332 However, the logic of all situations where there is an admission that much yet remains to be learned is that something must be unknown now. Thus, the use of discounted cash-flow analysis that tries to establish the present value of future benefits in the form of information or knowledge is an attempt to defy logic. That is not so much a criticism of benefit-cost analysis as a need for a deeper understanding of why it has limitations. In a report on the effectiveness of benefit-cost analysis in environmental, health, and safety regulation, the authors noted: Benefit-cost analysis is neither necessary nor sufficient for designing sensible public policy. If properly done, it can be very helpful to agencies in the decision making process. … There may be factors other than benefits and costs that agencies will want to weigh in decisions, such as equity within and across generations. … Care should be taken to assure that quantitative factors do not dominate important qualitative factors in decision making. 333 Many national governments in developed countries have ongoing initiatives aimed at improving the performance of government in regulatory processes. The concerns are generally about efficiency and effectiveness within government; and reducing compliance costs and improving outcomes in non-government sectors. 334 These initiatives have multilateral support through organisations such as the OECD and the EU. Increasingly, the role of government and the object of regulation are being linked to risk management. As Quiggin observes:

330 Paul C Stem and Harvey V Fineberg (eds), Understanding risk: Informing decisions in a democratic society , Committee on Risk Characterization, Commission on Behavioral and Social Sciences and Education, National Research Council, Washington DC: National Academy Press, 1996, pp.106-107 331 This is usually attributed to Artemus Ward (pseudonym for Charles Farrar Browne (1834-1867)). The expression with minor variation has also been attributed to Mark Twain (pseudonym for Samuel Clements), Abraham Lincoln and Will Rogers (1879-1935) 332 Jerome R Ravetz, ‘Usable knowledge, usable ignorance: incomplete science with policy implications’, Knowledge: Creation, Diffusion, Utilization , Vol.9 No.1, September 1987, pp. 90-90 333 K J Arrow, M L Cropper, G.C. Eads, R.W. Hahn, L B Lave, R G Noll, P R Portney M Russell, R. Schrnalensee, V.K. Smith, and R.N. Stavins, Benefit-Cost Analysis in Environmental, Health, and Safety Regulation: A Statement of Principles , Washington DC: American Enterprise Institute, The Annapolis Center, and Resources for the Future, 1996, p.10 334 Section 4.5.2 – Better regulation deals with responses of government to needs for better regulation and improvements in Impact Assessment PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 153

Risk and uncertainty, in a variety of forms, have become increasingly salient features of life in the early years of this century. Arguably, ‘risk’ will be a central idea of the early 21st century, just as ‘globalisation’ was the dominant idea of the 1990s. 335 Policy initiatives are often associated with mathematical models that present scenarios of how complex systems might behave with alterations to key variables — as in issues such as population growth, climate change and resource depletion and their economic effects. 336 Accordingly, policy initiatives based on such models are not strictly predictions as attempts to examine possible scenarios and to create a particular future state of affairs. The risk management task becomes one of assessing the option of doing nothing to counter long-term trends compared with various attempts to steer a safer passage into the future.

Much of the current debate is about how much risk ought to be seen as a social responsibility compared to how much ought to be seen as the responsibility of individuals. Community attitudes often reflect how a community perceives individuals as contributing to their own problems; and opinions can vary widely. Thus a child with congenital problems that imposes a lifetime of expensive special care on the child’s family might attract considerable public sympathy — although sympathy does not translate always into practical support. In contrast, accident victims who have contributed in some small way to their own suffering may attract less public sympathy — even where injuries are horrendous. Some of the problems of arriving at consensus for concerted community action are that much depends on the circumstances of each case; and this variety involves considerable complexity in trying to arrive at fair outcomes. In 2006, a UK discussion paper on better regulation opined: There is a sense that the current public debate about risk places an over reliance on Government to manage all risks, at the cost of eroded personal responsibility. Contradictory pressures on those in the regulation business — they are criticised both for intervening and failing to act — have served to emphasise classic regulation as the default response. It is time to step back, explore these dynamics and think differently about the interaction of risk and regulation. 337 In the early 2000s, experience showed that some insurance companies could fail; premiums could escalate to make some insurance expensive or unaffordable; and insurers may be unwilling to offer insurance against some risks at any price. The situation was serious enough for governments to introduce a series of tort law reforms. Added to these difficulties are natural disasters where some people may be uninsured and accept risks because they cannot or do not afford insurance premiums. These are all important issues in understanding how benefits and risks are shared in society. 338

In trying to reduce the effects of expensive errors, some attention needs to be directed towards understanding how people are likely to behave when confronted with complex situations. Some preliminary observations are that: • Some people are prone to error and some situations lead people into error.

335 John Quiggin, The risk society: social democracy in an uncertain world , Centre for Policy Development, Occasional Paper No.2, July 2007, p.3, accessed at URL < http://cpd.org.au/paper/the-risk-society > 336 Section 3.3.3.3 – ‘Science and prediction as aids to design and planning’ following the experience of the Club of Rome 337 Rick Haythornthwaite, Chair of the Better Regulation Commission, ‘Chairman’s foreword’, Risk, responsibility and regulation: whose risk is it anyway? , London UK: Better Regulation Commission, October 2006, p.3 338 Section 4.2.2.2 – ‘Risk allocation through liability rules’; and Section 4.2.2.3 – ‘Private insurance, adverse selection, moral hazard and social security’ deal with these issues in greater detail. 154 CHAPTER 3

• Most production occurs through value adding where people need to rely on things that other people do at various stages of a production process. • Sometimes an error may cause little actual harm although the same error might be catastrophic in different circumstances. Learning all that can be learned from the confluence of simple errors and their circumstances may be important in avoiding catastrophes. In many circumstances, governments seek explanations through standing commissions established under particular statutes; or through ad hoc commissions established according to particular prescribed terms of reference. 339 As examples, the circumstances could include tragedies involving many fatalities; or matters concerned with poor performance by government in reacting to emergencies; or matters where official corruption is suspected. The design of these enquires poses a number of procedural difficulties in trying to learn all that can be learned. Removing these impediments to learning might help in preventing unsafe practices and thus mitigate risk: • Many institutional environments discourage open and candid discussion about mistakes whereas learning through mistakes often requires their open and full acknowledgement. Witnesses may need protection before making open and full disclosures about things that may be seen as threatening to themselves or anyone else. • The mindset of the adversarial system of civil and criminal trial has a virtue in isolating and deciding points in issue when things are simple; but it is generally inappropriate for open inquiry involving expert evidence on complex matters where knowledge is in a state of flux. 340 • Governments are unlikely to feel bound to follow recommendations made in official inquiries. This is particularly so if enquiry recommendations are made independently of a more complete impact assessment of advantages and disadvantages in accepting particular risks. Enquiry recommendations may deserve serious consideration but they should also respect the supremacy of an elected parliament in deciding how revenues are raised and resources are allocated. Historically, many enquiries accepted the idea that nothing needed to be done after someone had been identified as blameworthy. However, an emerging view suggests that causes may lie deeper and much more can be learned from mistakes even where no great harm eventuates: If these were individual accidents, the discovery of unsafe acts immediately prior to the bad outcome would probably be the end of the story. Indeed, it is only within the last 20 years or so that the identification of proximal active failures would not have closed the book on the investigation of a major accident. Limiting responsibility to erring front-line individuals suited both the investigators and the individuals concerned – to say nothing of the lawyers who continue to have problems with establishing causal links between top-level decisions and specific events. Today, neither investigators nor responsible organizations are likely to end their search for the causes of organizational accidents with the mere identification of ‘sharp-end’ human failures. Such unsafe acts are now seen more as consequences than as principal causes. 341

339 Section 3.3.3.6 – ‘Review as part of law enforcement’ discusses these forms of inquiry in the context of monitoring regimes. 340 Section 3.2.2.2 – ‘Being prepared in time to allow multidisciplinary communication’ is a further aspect of attempting to make enquiry to see what can be learned from mistakes. 341 J Reason,. Managing the risks of organizational accidents , Aldershot Hampshire: Ashgate, 1997, p.10, cited in John Dobson, Simon Lock and David Martin, ‘Complexities of multi-organisational error management’, In Proceedings of the 2nd Workshop on Complexity in Design and Engineering, Glasgow, March 2005, Lancaster UK: University of Lancaster, Department of Computing, 2005, PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 155

Increasing sophistication in some systems — notably in delivery of aviation and health services — means that failing to understand the processes and do all that is practicable to limit the effects of errors can be very costly. Sometimes the cost is measured as loss of human life; and sometimes as delays in getting services back to normal. 342 Thus the scope of error management has been described as follows: By error management we mean [the] using all available data to understand the causes of errors and taking appropriate actions, including changing policy, procedures, and special training to reduce their incidence of error and to minimise the consequences of those that do occur. 343 Arguably, a more complete strategy for evidence-based policy making needs to be incorporated into the design of systems. The emphasis on ‘using all available data to understand the causes of errors’ seems to be influencing methodology in integrated impact assessment (IA) in varying degrees in advanced countries. The tendency is to understand social, economic and environmental impacts as integral to planning and design processes. This brings forethought or ex ante considerations into the management of risk. Monitoring as an ex post evaluation can then test the efficacy of risk management design to give a balanced approach to managing errors and associated risks.344

Two design considerations emerge: • What are likely frequencies and severity of losses or damage that are deemed possible? • Who is in a position to take action to limit their frequency and severity?

The idea of the ‘imagined deemed possible’ in technical, economic and socio-political terms applies to design quite generally and includes management of risk. Imagining the worst scenarios may resonate with good design if additional costs in design and construction are seen a small premium to pay in the development of systems that are both robust and safe. Much the same process can identify economic opportunities that may be unrecognised otherwise; and involves a risk of lost opportunity if the design is deficient. However, design needs to include physical, institutional and information infrastructures to give operating systems a well-considered governance structure.

The areas where decisions and actions take place can be considered in terms of: • High level policy — applying to situations quite generally and imposing a general framework of laws relating to liability and personal duty of care. • Specific policies — applying to particular industries or situations; and often influenced by non-government accreditation of safety-testing arrangements. • Responsibility of groups and teams — where group dynamics can work to promote team performance; but where in-group solidarity that can also bias risk assessment. 345

accessed online at URL < http://www.dirc.org.uk/publications/inproceedings/papers/82.pdf > 342 James Reason and Alan Hobbs, Managing maintenance error: a practical guide , Aldershot Hampshire: Ashgate, 2003 343 Robert L Helmreich, ‘Error management as organisational strategy’, Austin TX: University of Texas Aerospace Crew Research Project, Proceedings of the IATA Human Factors Seminar, Bangkok, Thailand, 20-22 April, 1998, pp.1-7 accessed online at URL 344 Section 4.5.2 – and its subsections review these issues in the context of better regulation and innovations in the methodology of impact assessment (IA). 345 Irving Janis, Groupthink: Psychological studies of policy decisions and fiascoes , 2nd edn, Boston MA: Houghton Mifflin, 1982, pp.12-13 156 CHAPTER 3

• Responsibility of individuals — where it is possible to impose stress on individuals who may have little actual control over things that may need to be done to mitigate risk.

The roles of individuals in promoting productivity and mitigating errors are high-level policy issues that impact on individual rights and responsibilities. At a somewhat lower level, the design of particular tasks and the use of particular plant or machinery can occur within a framework of more general laws relating to workplace health and safety, for example. In general, work place health and safety principles usually involve: • Raising awareness of safety issues in the minds of individuals. • Training to meet particular emergencies that may be specific to particular sites or workplace conditions. • Planning to ensure that appropriate equipment is properly maintained and available for use in emergencies. • Design of equipment that militates against mistakes by operators, especially under demanding and stressful conditions.

The role of groups is important in at least two respects. First, individual designers will need to operate as part of a multi-disciplinary group or team if they are to obtain a comprehensive view of the risks involved in the design of various institutions, operations and processes. Second, the success of a team will depend on group dynamics and behaviour. This behaviour involves matters of team leadership, how team agendas and priorities are set, and how in-group behaviours may limit, expand or otherwise bias risk assessment. Accordingly, risk management strategies require a more extensive view of what is sensible or rational, and how people may be able to avoid undue bias in their collective decision making. In short, the social sciences should be asked to provide not just an improved understanding of public perceptions, but also significantly improved quantitative estimates of the probabilities as - well as the consequences of important risks. This will require, however, that all of us explicitly begin to integrate human behaviors into our thinking about ‘technological’ systems — and that we begin devoting approximately the same level of resources to understanding the human components of technological systems as to the hardware. Although often overlooked, human and social factors play vital roles in technological systems; real-world risks, far from being free of such inconvenient "people factors," are indeed often dominated by them. 346 An important analytical problem is where to draw boundaries around systems and subsystems to allow an effective delegation of planning and design tasks. Viewed holistically, planning and design needs to include all issues or variables that can make important differences to outcomes. Unless this occurs, outcomes are left to chance; and mitigation of risk then falls outside the scope of ‘management’ or ‘control’. Risk management is simplified where risks are regarded as insurable, and amenable to a private sector commercial solution. In essence, a person seeking insurance sets out the nature of the risk in the form of an application for insurance and the insurer responds with notice of a premium. Insurance becomes attractive or unattractive according to how an applicant perceives the cost of the premium in relation to the risk that it covers. 347

346 William R Freudenburg, ‘Perceived risk, real risk: social science and the art of probabilistic risk assessment’, Science , New Series, Vol.242 No.4875, 7 October 1988, p.49 347 Section 4.2.2.2 — ‘Risk allocation through liability rules’; and Section 4.2.2.3 — ‘Private insurance, adverse selection, moral hazard and social security’ deal in some detail with the allocation and management of risk. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 157

Where private insurance is unavailable or unattractive, the problem is how to design an alternative. The situation may be complicated by profound differences of opinion regarding the nature of some risks; the frequency of their occurrence; and public debate in the context of intense political rivalry. The influences on public opinion become part of a design problem if a government is to hold itself out as being accountable. Design of a solution depends on an appreciation of the problem; and the behaviour of experts and others claiming expertise becomes difficult to separate from a democratic right of people to have a say on matters that affect them, regardless of how informed they might be.

The ways that scientists describe their activities and communities acquire sufficient understanding are important to the notion of voluntary informed consent within democratic institutions. However, the credibility of scientists is a limiting factor when a public is bombarded with bad news; and the things that different interest groups prefer to hear rather than what everyone needs to hear clouds the debate. This breeds a scepticism that waxes and wanes according to the direction that public debate seems to be headed.

In trying to identify the extent to which planning and design can limit costly errors, the approach of error management is to identify levels of decision making that can influence outcomes. The various entities that make decisions need to use all available data to understand the causes of errors and how they can combine to mitigate the risks encountered in various activities. In this regard, it is possible to recognise first, the roles of individuals: second, the role of groups: and third, the role of those responsible for policies and institutions. Thus, an integrated approach to the design of risk management strategy is warranted, given that decision-making roles tend to overlap in various ways.

Summarising, it is arguable that: • Risk management ought to be an integral part of a design process that tries to understand the circumstances under which human error can occur. This requires particular attention to:
Stressful conditions associated with undue work pressures without satisfactory support or relief.
Inattention induced by workplace routine, boredom and alienation. • Systems design can incorporate economising principles when considering technical, financial, social and environmental risks; thus making ex ante impact assessment of risk an integral part of the design. • Risk assessment depends on the quality of information used as evidence of the likely frequency of particular events. This evidence can be tainted by human fallibilities and conflicts of interest. Design of risk management strategy may need some institutional arrangements that can offset potential for:
Self-deception by observers who misunderstand or underestimate the complexity of some systems.
In-group pressures for conformity that reduce the effectiveness of groups in assessing risks.
Scare mongering or exaggeration of risk to influence demand for particular professional services or to advocate particular policy positions.
Downplay of some risks by parties who may become liable for costs of managing those risks. 158 CHAPTER 3

• Systems design needs to include the mechanisms for ex post assessment to ensure that all that available data contributes meaningfully in ‘learning from experience’. • System design should be introduced into regulatory processes — realising that the viability of knowledge economies and information societies depends increasingly on a high technical and semantic fidelity in how well messages can be sent and received.

3.3.3 Monitoring regimes Planning is about forethought whereas monitoring is about hindsight. Thus, a planning regime involves a structure of information oriented towards using resources in the future. A monitoring regime involves a structure of information oriented towards noting what is actually happening now or has already happened.348 A future orientation involves cognitive processes of imagining what things might be like if particular actions are taken.349 Cognitive processes associated with an orientation in the present and towards the past are those of observing and memorising, consciously or subconsciously, and of realising what is happening or has happened. Monitoring processes become useful if they allow recall of experience in time to improve future decisions and actions. Recall depends on access to experience retained firstly as living human memory and secondly as artificial memory in its various forms.350

The processes of anticipating or imagining what something might be like — and of experimenting to see if it turns out to be true — begins in childhood as ‘learning through experience’ that underpins most learning.351 Indeed the words ‘experience’ and ‘experiment’ have similar origins; and are associated with observing or sensing, often through repeated tests or trials. However, modern psychology recognises that some experience may be subliminal and unconscious. The more conscious forms of learning depend on recognising the significance of an experience, committing it to memory, and being able to recall it in time for future decision making. Terms such as ‘action learning’; ‘learning by doing’; and ‘evidence-based’ policy-making convey much the same idea; and the basic idea features prominently in philosophy and methodology of science and research.

At the level of an individual, the ability to interpret new information depends on prior learning. Some of this prior learning is recognisable as articulate knowledge gained consciously; although misinterpretation can occur less consciously through lack of understanding of words and concepts in multidisciplinary contexts. 352 However, ability to interpret can also depend on tacit knowledge comprising experiences that often defy description. Thus words may simply not exist for the various feelings, intuitions, hunches and a ‘sixth sense’ of which people may be aware; or for forms of subliminal and unconscious experience of which they are unaware, by definition. Experience of which people may be unaware can also influence a person’s decision about what to believe or disbelieve in particular situations.

348 Albert Bandura, ‘Social cognitive theory of self-regulation’, Organizational Behavior and Human Decision Processes , Vol.50, 1991, pp.248-287 349 This is discussed in Section 3.3.2.1 as ‘the imagined deemed possible’. 350 Section 3.3.3.4 — ‘Financial accounting and auditing’ comments on the distinction between stocks and flows; and between ‘living human memory’ and ‘artificial memory’. Diagram 2.1.9 (in Section 2.1.9) illustrates the interactions between articulate and tacit knowledge; and between ‘living human memory’ and ‘artificial memory’ in its various forms. 351 Kenneth J Arrow, ‘The economic implications of learning by doing’, Review of Economic Studies , Vol.29 No.3, June 1962, pp.155-173 352 Section 3.2.1.5 refers to these problems in the context of ‘Complexity in multidisciplinary communication’. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 159

In legal decision making, juries are an example of how the distinction between tacit and articulate knowledge can become institutionalised. A judge may be required to state reasons for deciding one way rather than another. This reasoning — the ratio decidendi — underpins a doctrine of precedent. The written record allows other judges to follow the lines of reasoning used in prior decisions and to apply them in further decision making in the interests of consistency, provided that the circumstances are deemed to be similar enough. Additionally, the reasoning may provide grounds for an appeal against a decision to a higher court on a point of law. Jury decisions do not lend themselves to the same scrutiny. Juries usually decide whether to accept or reject particular evidence; and whether particular witnesses are credible. The protocol is to seek a unanimous decision from a jury panel, or a substantial majority decision when legally permissible, in deciding an issue one way or another. This tends to mitigate or avoid undue bias of idiosyncratic jurors in deciding whether some witness statements are credible.

Some organisation of observations and learning occurs by dissecting information into compartments or tagging it with particular identifiers. Most happenings occur at a particular place and time; and governmental authority tends to be associated with particular geographical divisions. These divisions can reach inwards through sub-delegation of some tasks to regional or local areas, or outwardly to multinational or global coalitions. The effect is to establish a hierarchy of geographical divisions where statistical and other information can be aggregated; and to some extent, disaggregated. In each case, knowledge of how to describe time, place and function is fundamental to classifying, categorising and dissecting other information. This makes recorded information more manageable and comparable in terms of the experience it conveys.

Classification according to function tends to departmentalise people with the necessary planning and monitoring skills. As a corollary, reclassification can provide new forms of organisation and new approaches, with benefits and costs associated with making organisational changes. Departments may reach from being local to global in character, as in many organisations now aligned with the United Nations. Examples include the World Meteorological Organisation (WMO), the Food and Agriculture Organization (FAO); and the World Health Organization (WHO).

‘Monitoring’ has a dual purpose insofar as it relate to prior decisions. It tests: • the predictive element in planning to see if prior predictions are borne out in practice; and • the accountability element in authority regimes to see if people have performed in accordance with the authority they have been given.

Table 3.3.3 shows strong interactions between the cognitive processes involved in planning and monitoring. Monitoring provides the mechanisms for ‘learning through experience’ that allow self-organising and self-regulating to happen.

160 CHAPTER 3

Table 3.3.3 ASSOCIATIONS BETWEEN COGNITIVE PROCESSES IN PLANNING AND MONITORING REGIMES Planning Regimes Monitoring Regimes Ex ante analysis Ex post evaluation Anticipating Experiencing Theorising — hypothesising Experimenting and hypothesis testing A priori reasoning A posteriori reconciliation

3.3.3.1 Structuring of monitoring regimes Mechanisms for monitoring how government activities impact on socioeconomic development can be regular or irregular in their timing; standardised on non-standardised in their information processes; and formal or informal in how they are organised. Monitoring processes may depend on contributions from individuals acting in a personal capacity or under auspices of governmental, commercial and civil society organisations. This identifies four particular types of monitoring regimes among a wider range of possibilities: • Regular and formal — routine statistical collections, routine monitoring for public purposes by specialised agencies, annual reporting, financial reporting, and audits of expenditure according to financial and functional auditing standards. • Regular and informal — principally through regular reviews by mass media outlets; and through news letters and watching briefs maintained by industry associations and various special interest groups and organisations. • Irregular and formal — special commissions of inquiry, official reviews, and court proceedings concerned with alleged breaches of criminal, civil and administrative law. • Irregular and informal — newspaper articles and commentary provided on an ad hoc basis by various academic, industry and not-for-profit organisations.

The parliament can legislate to give authority and funding for the formal aspects of monitoring. A government can also promote an ethos of openness and transparency in the conduct of its affairs and thereby facilitate informal monitoring processes. The legislature’s vesting of authority for formal monitoring of government activity carries with it prospects of planning and designing how monitoring can occur at a whole-of-government level. Accordingly, information processes need to engage second or higher orders of thinking — as in who monitors the monitors? — Who polices the police? — Who regulates the regulators? — Who decides who will decide particular issues as a necessary step in delegating authority?

The nature of a self-regulating democracy means that some measure of control is exercised when government depends on the informed consent of the governed. At this point, it becomes useful to distinguish between: • information produced by government; and • information produced about government by non-government sources.

PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 161

Information produced by government occurs under formal authority and with funding that derives from statutes passed by the parliament. This includes the formal monitoring processes to check against abuse of authority and test the efficacy of planning and resource allocations. Information produced about government usually reaches electors at various degrees of sophistication in its description and interpretation. It influences the formation of political opinions and voting behaviour as reflected in various polls and the ballot box.

Informal non-government monitoring processes provide much of the information on which public perceptions of government are constructed. Favourable impressions provide an ongoing legitimacy for government and its mandate for key policies.353 However, this informal activity is likely to rely on, interpret and misinterpret information that the government provides through its formal processes. People may use a variety of information sources in forming their impressions on the efficacy of their government. However, the discussion herein is directed more particularly towards the following monitoring processes in trying to assess government policy: • Development and maintenance of physical measurement standards. • Statistical and key performance indicators. • Financial accounting and auditing. • Environmental reporting. • Review as part of law enforcement.

3.3.3.2 Development and maintenance of physical measurement standards Careful use of language can promote mutual understandings and cooperation to produce benefits that are unavailable to a person acting alone. In contrast, misuse of language can promote misunderstandings; and people can find themselves at cross-purposes. If conflict ensues, it is likely to waste resources directly; but further losses can occur indirectly as the immediacy of conflict leaves people less able to take advantage of beneficial opportunities. In many respects, the progress of science is intimately bound up in attempts to resolve conflict between theoretical ideas and evidence provided by observations. Crucial issues for science include the development of understandings and agreements; first, in relation to technical issues that leads people to believe that particular things can be described ; and second, about how these things ought to be described . Insofar as measurement facilitates these descriptive processes, questions about what can be measured, how it can be measured, and how it ought to be measured are also crucial issues.

In its simplest forms, demonstration could convey information to an observer through the limited scope of human sensory faculties without the need for words. Thus, the Royal Society adopted Nullius in verba as its motto in 1661. This is usually interpreted as ‘on the word of no one’ and suggests that facts as determined by experience or experiment should speak for themselves. 354 However, innovations in measurement are usually experiences

353 John Keane, ‘Monitory democracy and media-saturated societies’, Griffith Review , Edition 24: Participation Society, accessed through Australian Policy Online at URL < http://apo.org.au/node/14324 >. Keane discusses the evolution of an increasing variety of power-scrutinising mechanisms in modern democracies. 354 Charles Richard Weld, History of the Royal Society with memoirs of the presidents , Vol.1 of 2 Vols. London UK: Parker, 1848. A learned society met for the first time in London on 28 November 1660 and received a first charter as a Royal Society in 1661. Douglas McKie, ‘The origins and foundation of the Royal Society of London’, Notes and Records of the Royal Society of London , vol.15, July 1960, pp.1-37 published in commemorating the 162 CHAPTER 3

that are at the frontiers of science and new to the world. As an example, new trade and professional organisations came into being and new vocabulary about things such as ‘volts’, ‘amperes’ and ‘ohms’ emerged from discovery and new understandings about electricity in the 1800s; and a need to standardise on electrical and wireless equipment specifications in the early 1900s.

The symbolism of the Grecian goddess Themis — depicted in Figure 3.3.3.2 — alludes to evidence as witnessed in an open demonstration. The image has connotations of both persuasive and coercive authority. 355 The blindfold symbolises disinterest or impartiality rather than blindness. The balance as a measuring device held in the left hand is a persuasive authority that demonstrates laws of god or nature. It conveys a perception of an openly demonstrable truth to an assembled audience and underpins an idea of justice in open courts. The sword held in the right hand conveys a sense of coercive authority – a warning of righteous anger and divine retribution for those who disobey nature’s laws. 356 Fig.3.3.3.2 - Themis One of the earliest ideas about justice related to fairness in weights and measures; and it was generally resolved locally within a myriad of separate jurisdictions. However, the importance of standardisation becomes clearer when the problem of non-standardisation is understood. In feudal Europe, the forms of local governance overseen by land lords allowed a proliferating variety of regional differences. On one hand, locally understood weights and measures were a ‘way of life’ and an aspect of local identity that provided resistance to change. On the other hand, numerous inquiries and commentaries occurred over centuries about how the variety of weights and measures had adverse effects on trade. The following passage sets out the general tenor of the problem of interregional trading that needed to be addressed: Hundreds of other units containing thousands of additional variations existed and they made the operation of regional and interregional commerce extremely difficult and complicated. It should appear evident how such a confusing condition contributed to constant fraudulent practices and to continuous misunderstandings in business transactions. The many medieval merchants’ manuals are testimony to the enormous influx of such measures. … It was customary in the Middle Ages to create additional weights and measures to fill ever expanding agricultural and industrial needs by dividing existing units into halves, thirds and fourths, and, where such subdivisions were not practicable or possible, into an irregular assortment of diminutives. 357

In recent times, perceptions of quality and fairness in production have become highly dependent on science and scientific measuring devices. As an example, the idea of a weight was soon recognised through refined measurement as a ‘force’ involving a ‘mass’ subject to ‘acceleration’. Acceleration due to gravity varies from place to place; 358 but a

tercentenary of the Society. The BBC is celebrating the year 2010 as the 350 year anniversary of the Society’s formation. 355 ‘Themis’, Wikipedia , accessed online at URL < http://en.wikipedia.org/wiki/Themis > 356 ‘Nemesis’, Wikipedia . Nemesis was a Greek goddess of righteous anger, and conveys the notion of divine retribution, accessed online at URL 357 Ronald Edward Zupko, Revolution in measurement: Western European weights and measures since the age of science . Philadelphia PA: American Philosophical Society, 1990, pp.13-14 358 National Aeronautic and Space Administration (NASA), ‘Gravity Recovery and Climate Experiment (GRACE)’, refers to current international research into gravity anomalies; information accessible at NASA website through URL PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 163

mass can be subject to accelerations that may occur through movements in measuring apparatus that produce measurement anomalies, intentionally or unintentionally. Where differences can be produced intentionally, they might also be deliberately misleading or fraudulent. Despite the ancient ideas conveyed in the balance held in Themis’s left hand, Australia’s regulations now specifically bar the holding of a device in the hand for measuring mass. 359 Summarising thus far: • Refined measuring technique means that many decisions involving measurement go beyond the range of ordinary sensory perception and place greater dependence on scientific measuring devices and the opinions of scientists. Nanotechnology is only one recent example of a longer historical trend. • The issues of measurement involve not only legal measurement units but also standards concerned with how specimens are prepared and measurements are made. • International standards affecting trade and government regulation need to operate in parallel with international standards pertaining to legal units of measurement. • Conformance with standards becomes increasingly important in global environmental monitoring and the general compilation of comparative national statistics if the numbers are to be meaningful and comparable.

At the time of the French Revolution, scientists suggested a metric system of measurement to facilitate communication between scientists, engineers and administrators. They saw merit in a metric system for counting basic measurement units; and in denominating fractions and aggregations of those basic units. 360 They also saw merit in some natural constant that could be seen as derived from nature and thus belonging to people of the entire world. They proposed that — within a more general programme of reform — a ‘metre’ as a unit of length should be determined as one ten millionth part of the meridian from the North Pole to the equator. 361

The actual work of measuring the meridian arc between Dunkerque and Barcelona began in 1792.362 When this work was nearing completion, Talleyrand — France’s then Minister for Foreign Affairs — invited all allied and neutral states in Europe to meet in Paris in September 1798. Sweden, Portugal and Britain did not qualify as invitees. Following a series of meetings of sub-committees and working groups, two platinum standards representing the metre and the kilogram were deposited in the Archives de la République in Paris on 22 June 1799. Seemingly, these were the first standard weights and measures that could be reasonably described as ‘international’. 363 However, Napoleonic conflicts limited the scope of international diplomacy at that time; and British authorities followed a separate path in promulgating a set of Imperial Standards in 1824. The imperial pound and yard became measurement standards used in Commonwealth countries. However, it became clear in the 1960s that Britain would need to sever preferential trading

359 National Measurement Regulations 2009 , reg.2.2, ‘Measuring instrument used to measure mass not to be held or suspended from hand’ 360 Ken Alder, The measure of all things: the seven-year odyssey that transformed the world , London UK: Little, Brown, 2002, pp.5-6 citing Jean Baptiste Joseph Delambre (1749-1822) as author of Foundations of the metric system (Base du système métrique ) 361 Maurice Crosland, ‘The Congress on Definitive Metric Standards, 1798-1799: the first international scientific conference?’ Isis , Vol 60 No.2, Summer 1969, pp.227-228 362 Ken Alder, The measure of all things , Jean Baptiste Joseph Delambre (1749-1822). Pierre François André Méchain (1744-1804) 363 ibid., p.3. Alder describes this as ‘the world’s first international scientific conference.’ A more detailed account is in Crosland, ‘The Congress on Definitive Metric Standards, 1798-1799’, pp.226-231. 164 CHAPTER 3

arrangements with Commonwealth countries as part of its application to join the European Community.364 This led Australia to consider a more universal measuring system consistent with broadening its trading arrangements.

The pathways leading to and from measurement standardisation are complicated; but they do contain an essence of innovation that proceeds in waves to produce rapid improvements in productivity and living standards. Just as the DNA of a large number of ancestors can converge into the making of an individual and then recombine and diverge into many descendents; socio-economic evolution occurs when a number of influences combine to produce particularly noteworthy ideas, understandings agreements and actions; and then further recombine to make possible a divergence and variety of goods and services that are recognisable as waves of innovation.

A number of influences — some with origins in antiquity — converged in Paris on 20 May 1875 when seventeen nations entered into a multinational diplomatic treaty known as the Metre Convention.365 The International Bureau of Weights and Measures – or Bureau International des Poids et Mesures (BIPM) was created to administer this treaty. The BIPM holds a conference in Paris every four years — known as the Conférence Générale des Poids et Mesures (CGPM). The CGPM considers scientific advances in metrology in the context of changing needs of industry and consumers and makes recommendations for adoption by national measurement institutes (NMIs). The CGPM relies on technical advice from the International Committee for Weights and measures (CIPM) – or Comité International des Poids et Mesures . The CIPM meets annually to discuss progress on contemporary technical issues and in turn receives reports from several working groups. On formation of the BIPM, work began on constructing new international prototypes of the metre and kilogram based on those deposited in the Archives de la République in Paris on 22 June 1799. In 1889 the 1st CGPM sanctioned the international prototypes for the metre and the kilogram. 366

In addition to the Metre Convention, the year 1875 became a somewhat arbitrary marker for the formation of a proliferating variety of scientific associations represented collectively within a Union of International Associations (UIA) that formed in 1907. 367 The so-called ‘global civil society’ included some 200 associations in 1900; about 800 in 1930; over 2000 in 1960 and almost 4000 in 1980. ‘They employ limited resources to make rules, set standards, and propagate principles, and broadly represent “humanity” vis-à-vis states and other actors’. 368 International meetings became easier to organise with the advent of steam navigation and locomotion and the use of telegraph after the 1830s. In 1851, the first Great Exhibition was held in London where a mix of trade, politics, science and

364 Jan Todd, For good measure: the making of Australia’s measurement system , Crows Nest NSW: Allen & Unwin, 2004, pp.1-8. At p.171, Todd notes that by 1966, the metric system was used in 126 countries by 90% of the world’s population and involving 75% of the world’s machine tools. 365 The history is important but there are thousands of scientific and special interest organisation that require too much of a diversion even to obtain a reasonable overview here; assuming such a work is possible. A research paper limited to development of understandings of time and place with reference more particularly to Australia is in progress: John S Cook, ‘ 366 BIPM, 1st meeting of the CGPM held from 24-28 September 1889, Resolution 1, Sanction of the international prototypes of the metre and kilogram 367 John Boli and George M Thomas, ‘Introduction’ in Constructing world culture: international nongovernmental organizations since 1875 , ed by John Boli and George M Thomas, Stanford CA: Stanford University Press, 1999 – the authors use 1875 as a marker and rely on the stocks and flows gleaned from UIA statistics to 368 Boli and Thomas, ‘INGOs and the organisation of world culture’, in ibid., p.14 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 165

technology was brought into focus. 369 Since then, World Expositions have been held every four years; except when prevented by major world conflicts. 370

The science and technology that can advance human well being can also be used in the conduct of war — in use of explosives, and artificial satellites, for example. The science and technology developed to conduct war can also be used for peaceful purposes — in medicine, global positioning and the like. Matters that are ostensibly intellectual in character can become intimately bound up with national defence, geo-political aggrandisement, and nationalistic fervour. Some information can be surrounded with secrecy and become the subject of military and commercial espionage. Unsurprisingly, international tension limits the degree of international understanding, agreement and action that is possible in negotiations over politics, trade, science and the environment.

Global standardisation was attempted in non-electrical fields in 1926 with the formation of an International Federation of National Standardizing Associations (IFNSA). IFSNA lapsed in 1942 with the degree of international mistrust engendered by World War 1. The lapse showed that larger nations could survive using their own national standards to maintain self-sufficiency; albeit with considerably reduced international trading activity. In contrast, some international standards were retained despite the more general breakdown in international relationships as exemplified by the International Electrotechnical Commission (IEC) that formed in 1906. 371 IEC concentrates on developing and publishing international standards in electrical and electronic applications. 372

The immediate aftermath of World War 2 was a time of post-war reconstruction; and for trying to reconcile issues that led to the War. The General Agreement on Tariffs and Trade (GATT) began in 1947. In the same year, Australia signed the 1875 Metre Convention. The Organisation of European Economic Cooperation (EEC) began in 1948. In the same year, the UN introduced the Universal Declaration of Human Rights (UDHR); and metric units became legal in Australia with the passing of the Weights and Measures Act 1948 .373 This Act adopted the metric measures as legal measurement units. However, it retained a variety of traditional imperial units and gave them a legal status by providing exact conversion factors. As an example, one traditional foot became .3048 metre exactly as a matter of definition for legal purposes. When the International Bureau of Weights and Measures (BIPM) adopted the Système International d'Unités (SI) in 1960; the Australian Government adopted the SI formally by passing the National Standards (Weights and Measures) Act 1960 .374 After careful preparatory work and a public information campaign, Australia converted to decimal currency on 14 February 1966. That success was followed

369 Commonly known as the Great Exhibition, but described officially as the ‘Great Exhibition of the Works of Industry of all Nations’ — “Great Exhibition’, Wikipedia , provides a useful overview, information accessible at URL < http://en.wikipedia.org/wiki/The_Great_Exhibition > 370 The holding of World Expositions is now overseen by the ‘Bureau of International Expositions’ (BIE), Wikipedia. The US withdrew its membership in 2001. Information is accessible at URL . See also the List of world expositions’ sanctioned by the BIE including those sanctioned retrospectively since the BIE’s formation in 1928, Wikipedia , accessible at URL < http://en.wikipedia.org/wiki/Bureau_of_International_Expositions > 371 ‘IEC History’, historical information accessible online through URL < http://www.iec.ch/about/history/ > 372 Australian Commonwealth Engineering Standards Australia represented Australia at the inaugural meeting of the International Electrotechnical Commission in 1925. 373 ibid., pp.168-171 374 Australia signed the Metre Convention in 1948. The Australian government passed the Weights and Measures Act 1948 – thus complying with its membership obligations under the Convention and marking the first legislation on weights and measures using its concurrent powers in a matter that had been left formerly to the States. 166 CHAPTER 3

by the Metric Conversion Act 1970 that enabled a plan of conversion to metric measurements; and conversion was deemed complete with the Act’s repeal in 1984. 375

A new international standards association now known as ISO formed as a non- government organisation in 1947; 376 apparently in the spirit of the more general post war reconciliation and reconstruction. 377 This reflected awareness about the importance of production standards to world trade, and may have reflected also the recent experience of standards in conducting global war. In Australia before World War 2, testing for compliance with standards was performed mostly in government and academic laboratories. The war made new demands on access to qualified testing facilities and personnel — to see if munitions were suitable for use in modern weapons, for example. 378 The government arranged to accept certified testing by non-government agencies as a basis for government production and procurement under the war-time emergency conditions. The arrangement was a success; and a 1945 conference on the coordination of testing services led to formation of the National Association of Testing Authorities (NATA) in 1947. 379 Over time, ideas about scientific management, operational research and the quality assurance movement tended to increase the need for accredited testing arrangements.

As a small nation dependent for its well being on external trade, Australia needed to be in touch with world events that could influence trading relationships. Recognising the formation of an International Federation of National Standardizing Associations (IFNSA) in 1926, two standards associations merged in 1929 to become the Standards Association of Australia (SAA). 380 SAA was a founding member of ISO in 1947; 381 and began preparing standards in relation to most types of goods and services. It incorporated under a Royal Charter in 1951; became an inaugural member of the Pacific Area Standards Congress (PASC) in 1973; and changed its name to Standards Australia (SA) in 1988. 382

The BIPM retains an historic link with ‘weights and measures’ in its title. However, the general tendency has been to seek standardisation of terminology on ‘national measurement’ systems and ‘national measurement institutes’ or NMIs. 383 This standardised terminology assists in establishing coherent bilateral and multilateral Mutual Recognition Agreements (MRAs) to allow metrology decisions in various countries to be

375 The Weights and Measures (National Standards) Amendment Act 1984 , No.77 of 1984 repealed the Metric Conversion Act 1970 376 ISO is a trade name rather than an acronym – although often associated with the idea of an International Standards Organisation. 377 Thomas A Loya and John Boli, ‘Standardization in world polity: technical rationality over power’, in ibid., p.173 378 Paul Hasluck, The government and the people: 1939-1941 , Australia in the War of 1939-1945, Series 4 (Civil), Vol.1, Canberra ACT: Australian War Memorial, 1952. Discussion in pp.448-475 relates to Australia’s experience of wartime production and supply. 379 Todd, For good measure , pp.97-101 – ‘The NATA solution’ 380 The Australian Commonwealth Engineering Standards Association was founded in 1922. 381 Standards Australia, ‘Company history’, accessed at URL 382 ibid. 383 The Joint Committee for Guides in Metrology (JCGM) currently comprises two working groups WG1-2. Information accessed in ‘Foreword’ at URL < http://www.iso.org/sites/JCGM/VIM/JCGM_200e.html >. WG1 is active in producing the Guide to the expression of uncertainty in measurement (GUM) . WGs is active in producing Vocabulaire International de Métrologie (VIM), International Vocabulary of Metrology – Basic and General Concepts and Associated Terms, VIM, 3rd edition, JCGM 200:2008. This 3rd edition is also published as ISO Guide 99 by ISO (ISO/IEC Guide 99-12:2007 International Vocabulary of Metrology – Basic and General Concepts and Associated Terms. URL < http://www.bipm.org/en/publications/guides/vim.html> PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 167

accepted without further questioning in other countries. 384 In 1984, Australia replaced references in legislation to ‘weights and measures’ with the terminology of a ‘national measurement’ system.385 In 2004, an amendment to the National Measurement Act 1960 achieved two things in particular. 386 First, it streamlined Australia’s management of legal measurements by replacing three former organisations. 387 Second, the replacement was named as the ‘National Measurement Institute’ (NMI) — a name that is now reasonably standardised in most countries for legal metrology purposes.

The US experience reflects a particular US cultural heritage concerning how individuals relate to government; as well as the problems of disinvestment and reinvestment when particular measurement standards are ‘locked-in’ or embedded in existing manufacturing machinery and processes. In 1866, refusing to trade in metric units became illegal in the US.388 Furthermore, the US signed the Metre Convention as one of the seventeen nations that entered into the multinational diplomatic treaty on 20 May 1875. 389 A variety of traditional units — many as variations on traditional English units — were also given a legal status by providing exact conversion factors to define them in terms of the true metric standards to comply with conditions of being a signatory to the Metre Convention. This did little to remove complexity associated with the variety of measurement units that might be recognised.390 The Metric Conversion Act 1975 (US) was an attempt to increase acceptance of the metric system in the US; 391 but with a traditional cultural inheritance that shuns government intervention, many US industries claimed to be well ahead of official policy. 392 Alder argued in 2002 that a silent revolution may have started. Countries supply goods and expect to receive goods using metric standards and the US will trade at a disadvantage if it cannot respond satisfactorily in a global economy.

384 Bureau International des Poids et Mesures (BIPM), ‘Mutual recognition of national measurement standards’, accessed online at URL < http://www.bipm.org/en/cipm-mra/mra_main_text.html > 385 The title of the Weights and Measures (National Standards) Act 1960 changed to the National Measurement Standards Act 1960 by virtue of the Weights and Measures (National Standards) Amendment Act 1984 , No.77 of 1984, s.4. The change came into effect by proclamation in Gazette No.S353 on 7 September 1984. 386 National Measurement Amendment Act 2004 , No.27 of 2004, Schedule 1 387 National Measurement Amendment Bill 2003, Bills Digest , No.74 of 2003-04, introduced into House of Representatives on 3 December 2003, accessed online at URL < http://www.aph.gov.au/library/pubs/bd/2003- 04/04bd074.htm >. The purpose of the Bill was to combine three existing agencies — the National Measurement Laboratory (within CSIRO), the National Standards Commission and the Australian Government Analytical Laboratories (AGAL). 388 US Metric Association (USMA) is a not-for-profit organisation established in 1916. Its website provides an extensive miscellany of US experience, legislation and technical information pertaining to the metric system. Information on the Act of 1866, together with commentary and links to historical documents is accessible at URL with more general information accessible at and 389 USMA website – ‘Metric Convention of 1875’ containing English translation of the original treaty together with commentary and references to other documentation, accessible online at URL 390 US Department of Commerce, Specifications, tolerances, and other technical requirements for weighing and measuring devices , as adopted by the 94th National Conference on Weights and Measures 2009, ed by Tina Butcher, Steve Cook and Linda Crown, , NIST Handbook 44 2010 edn, Gaithersburg MD: National Institute of Standards and Technology, 2010. Appendix B – ‘Units and systems of measurement: their origin, development, and present status’; and Appendix C – ‘General tables of units of measurement provide an overview of the current situation in the US. Information accessed online at URL 391 US Metric Association (USMA) website - information on the US Metric Conversion Act 1975 and subsequent legislation is accessible at URL < http://lamar.colostate.edu/~hillger/laws/metric-conv.html > 392 Alder, The measure of all things , pp.364-366 describes the American experience of antipathy to regulation and stress on voluntary compliance. It leaves the US as the last major industrial country to procrastinate on metrication. 168 CHAPTER 3

As things stand of course, this conversion is embarrassingly incomplete. Americans became painfully aware of this fact in 1999 with the loss of the Mars Climate Orbiter. A NASA investigation into the satellite’s failure revealed that one team of engineers had used traditional American units, while another had used metric units. The result was a trajectory error of sixty miles, and a $125 million disappearing act. 393 In 2007, the US legislated to amend the 1866 Metric Act with the ‘America COMPETES Act’; described also as an Act ‘To invest in innovation through research and development, and to improve the competitiveness of the United States’. 394 Among other things, the Act replaced and earlier definition of the metric system with the Système International d'Unités (SI) some 46 years after it was approved by the BIPM in 1960. It also officially recognised Coordinated Universal Time (UTC) as the basis for keeping time in the US.395 On this issue, the US itself was a major contributor to the information and communications technology, the atomic clocks and Global Positioning Systems (GPS) technology that makes accurate global time keeping and coordination both possible and necessary.

Measuring standards are a sub-set of standards more generally; and there are parallels and overlaps in how each is organised. Essential steps include: • Standards development — a role for standard setting organisations — where the scope of the standard setting depends on particular knowledge areas such as civil and electrical branches of engineering; and in various sciences with foundations in physics, chemistry and the like. • Standards implementation — where implementation may rely on voluntary acceptance within trade and professional organisations; or where implementation relies on legislation to create legally enforceable rights and obligations to maintain the setting of standards and achieve compliance with those standards. • Standards compliance — where compliance requires an ability to monitor compliance with particular standards and implies traceability to an original standard.

Despite complexity in matters of scientific and technical detail, the fundamental requirements for setting measurement standards follow some simple procedures for communicating messages and being understood within the confines of an interested community. The requirements are that: • A set of basic physical measurement units is the same. • Quantities derived from those basic units are established in the same way. • The name of each unit is the same; or each name has a discrete translation into another language. • The system of counting units is the same. • The names used to describe multiples and fractions of physical measurement units are the same. 396

393 ibid., p.4 394 Public Law 110-69, 9 August 2007, ‘America COMPETES Act’, 20 USC 9801. At s.1 – Short Title, This Act may be cited as the ‘‘America COMPETES Act’’ or the ‘‘America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act’’. Information accessed at USMA website at 395 ibid., 15 USC 205, s.3570 – ‘Metric system defined’ and UTC adopted. 396 Section 3.2.1.5 - ‘Complexity in multidisciplinary communication’ explains the association of a ‘shared experience’ with a ‘shared word’ – and the case of measurement standards is an excellent case study of this phenomenon. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 169

As measurement accuracy increases, prevailing theories are tested more stringently. Stringent testing through increasing measurement accuracy challenges assumptions about things that are believed to be relatively constant in nature and the things that are obviously variable. Over some centuries, observations and measurements showed that the earth is not always well represented by a reference sphere or by various ellipsoids. Anomalies in the earth’s gravity and magnetic fields were shown to be normal rather than exceptional. The earth’s daily rotation on its axis and yearly orbit around the sun were not as regular as previously supposed. The earth’s precession on its axis meant that the North Pole could not be regarded as fixed; and showed as differences in apparent places of celestial objects and in determinations of latitude at particular places over time. 397

Determination of position in terms of latitude and longitude depends on assumptions about reference points and planes in constructing a ‘geodetic datum’. If people are to agree on measurements regarding position at a high order of accuracy, they need to have understandings, conventions and standards about the basis for the measurements. But even then, further complexities arise with intercontinental drift and differential movements in the earth’s crust. The idea that there is a time and place for everything means that spatiotemporal information provides a basis for organising and representing most kinds of information. Thus, information about part or the whole of a geo-political division can be compared to information from other divisions to provide inter-jurisdictional comparisons of performance. The EU INSPIRE Directive exemplifies the fundamental role that mapping has in providing a basis for understanding economic development. While INSPIRE has an initial emphasis in the right of people to know about the suitability of their natural environment for healthy living, 398 the use of base mapping can extend to supporting a much wider variety of statistical and key performance indicators as measures of human well being.

An ability to coordinate the making and merging of observations made over generations by many different observers from many different places calls for particular forms of organisation. These forms have emerged partly by purposeful design and partly by the largely unpredictable processes of learning through experience. Surveyors were among the first expert observers to encounter these organisational problems in trying to construct understanding about the physical world from many pieces of information. The problems of integrating information occurred at international levels in geodetic and hydrographic surveying; at national and local levels in establishing cadastral regimes in new colonies; in various jurisdictional and administrative boundaries and borders affecting new colonies and countries; and in the topographic and other physiographic information needed for economic development and management of the natural and built environments. 399

This analysis points to an important area of information intensive activity that gains some of its importance from the fact that it can be taken for granted. One of the most repeated mistakes is to underestimate the importance of fundamental institutions and their relationship with the development of human capital as part of a larger movement in economic development. As Stiglitz observes:

397 The scope of some of this activity is evident from the International Union of Geodesy and Geophysics (IUGG) website at URL and of its eight semi-autonomous member associations listed at URL . 398 Section 3.5.3 – ‘Environmental objectives’ refers in more detail to the EU’s INSPIRE Directive. 399 John S Cook, ‘Measurement standards as public policy and their effects on the production of spatio-temporal information’, unpublished paper, 170 CHAPTER 3

It is easy for those in the advanced industrial countries to seize the opportunities that the opening up of markets in the developing countries affords — and they do so quickly. But there are many impediments facing those in the developing world. There is often a lack of infrastructure to bring their goods to market, and it may take years for the goods they produce to meet the standards demanded by the developing countries. These are the reasons that when, in February 2001, Europe unilaterally opened up its markets to the poorest countries in the world, almost no new trade followed. 400 This is necessarily a brief introduction to an important aspect of information-intensive activity that underpins the ability to measure physical products in an internationally coherent fashion and to underpin statistics and financial recording. Summarising: • A considerable amount of organisation occurs internationally, nationally and locally in order to develop standards for goods and services. Quality in production often depends in turn on a system of legal measurement units and compliance with measuring standards. • The organisation extends to implementing standards and establishing the legal basis of a trade measurement system though a global alliance of national measurement institutes. • The legal traceability of standards occurs through a system of laboratory accreditation; and Mutual Recognition Agreements (MRAs) promoted through regional trading associations. MRAs and are now an accepted mechanism for products tested to satisfy standards in one jurisdiction to be accepted in other jurisdictions without extensive further enquiry. • Increasing accuracy in measurement of time and recognition of Universal Coordinated Time (UTC) now allows the synchronisation to facilitate international electronic commerce. • Increasing accuracy in measurement of the earth suggests that small crustal movements are more readily detectable. It is now no longer convenient to consider a point as represented by fixed coordinates and it is becoming more important for scientific purposes to recognise points as having shifting coordinates and relative velocities.

400 Joseph Stiglitz, Making globalization work: the next steps to global justice , Camberwell VIC: Allen Lane; Penguin, 2006, pp.62-63 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 171

• Globally, not-for-profit organisations provide intellectual leadership at the frontiers of knowledge in setting a variety of standards and are able to mediate between interests of government and commerce in the design of standards.

Diagram 3.3.3.2 OVERVIEW OF STANDARDS ORGAN ISATION

GENERAL STANDARDS MEASUREMENT STANDARDS

• Standards development • Standards development Internationally – ISO and other international International Bureau of Weights and Measures (BIPM) standard setting organisations – established by Metre Convention of 1875 – continuing Nationally and locally – Standards Australia work through the General Congress of Weights and (SA) and industry or professional associations Measures (CGPM as advised by the International Committee of Weights and Measures (CIPM) and its consultative committees.

• Standards implementation • Standards implementation Voluntary codes operating at industry levels Legislation – National Measurement Act 1960 (Cth) Compulsory codes operating under administered mainly through workings of the National international conventions or treaties, or developing new standards Measurement Institute (NMI). This allows a system of embodied in national or local laws legally recognised and enforceable measurements to Learning from experience as part of operate within Australia.

• Standards compliance Joint Accreditation System – Australia New Zealand (JAS-ANZ) with mutual recognition agreements (MRAs) operating internationally National Association of Testing Authorities (NATA) and some specialised accreditation agencies

On 2 February 2006, the Australian Treasurer requested the Productivity Commission to undertake a review of the Australian Government’s relationship with Standards Australia (SA) and the National Association of Testing Authorities (NATA). Seemingly, this action followed recognition within the Council of Australian Governments (COAG) of the need for a review of the cost of complying with standards as a cost to business. The Terms of Reference were as follows: The Productivity Commission is requested to undertake, in the context of Australia’s need for an effective and internationally recognised and harmonised standards and conformance infrastructure, a research study reviewing the Australian Government’s relationship with Standards Australia Limited and the National Association of Testing Authorities, Australia. In undertaking the study the Commission is to examine and make recommendations on: a. the efficiency and effectiveness of standards setting and laboratory accreditation services in Australia; b. the appropriate role for the Australian Government in relation to standard setting and laboratory accreditation; c. the appropriate terms for Memoranda of Understanding between the Australian Government and its agencies and Standards Australia Limited and the National Association of Testing Authorities, Australia; and 172 CHAPTER 3

d. the appropriate means of funding activities of Standards Australia Limited and the National Association of Testing Authorities, Australia, which are deemed to be in the national interest. In preparing the report, the Commission is to have regard to: • the history of the relationship between the Australian Government and bodies that prepare standards and accredit laboratories; • the cost impact on and benefits to business and the wider community of standards, including in regulation; and • models in operation overseas. The Commission is required to provide a final report within 9 months of receipt of this reference. The report is to be published. 401

In its Final Report, the Productivity Commission produced a summary of its findings in a table of key points as follows: • In general, Australia’s standard setting and laboratory accreditation services are effective, but there is scope for improvement. • The Australian Government should ensure both Standards Australia and the National Association of Testing Authorities (NATA) serve agreed public and national interest objectives by way of the Memoranda of Understanding, targeted funding, representation on governance bodies of both organisations and by recognising the special status of both bodies. Standard setting Standards Australia should make the following improvements: – systematically consider costs and benefits before developing or revising a standard, and publish reasons for such decisions – ensure more balanced stakeholder representation – reduce barriers to volunteer and public participation – improve accessibility, transparency and timeliness, including an improved appeals and complaints mechanism. • All government bodies should rigorously analyse impacts before making a standard mandatory by way of regulation and ensure it is the minimum necessary to achieve the policy objective. Each Australian Government agency should also provide the funding necessary to ensure free or low cost access to such standards, including Australian Standards. • The Australian Government should continue to support Standards Australia’s role in facilitating international standardisation activities. • The Standards Accreditation Board should be renamed the Accreditation Board for Australian Standards to better reflect its role and should be recognised by the Australian Government. Laboratory accreditation • The Australian Government should continue to progress government-to-government mutual recognition of conformance assessment and NATA should continue to progress voluntary mutual recognition. • The Australian Government should continue to support NATA’s international roles. • NATA’s proficiency testing programs should not be funded by the Government unless there are net public benefits beyond those which the market would provide. • NATA’s prime role with regard to proficiency testing should be to set what is required for accreditation and to accredit proficiency testing bodies.

401 Productivity Commission, Standard setting and laboratory accreditation , Productivity Commission Research Report, Canberra ACT, Australian Government, 2 November 2006, p.iv accessed online through URL PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 173

• Governments should only impose a mandatory requirement for NATA accreditation, if a comprehensive assessment demonstrates a net benefit to the community. 402

In April 2008, Standards Australia introduced its New Business Model to its members. 403 The Model was to take effect from 1 October 2008. SA described its new way of working in the following terms: The Business Model: • Enables more strategic and forward thinking engagement with industry, community and government; • Creates a transparent Net Benefit Assessment for each Standards project proposal; • Provides multiple pathways for Standards development; and • Invests in improved technology, processes and staff capability so Standards Australia can deliver better outcomes. 404 As a further outcome of the Productivity Commission’s review, Standards Australia renewed its Memorandum of Understanding with the Commonwealth Government in May 2008. 405 The new MOU recognised SA as the peak standards body in Australia but required Standards Australia to assume new responsibilities aligned to public functions. The Commonwealth also entered into a new Memorandum of Understanding with NATA on 1 April 2008. 406 The Memorandum: • Recognises NATA as the national authority for accreditation of laboratories excepting those defined in the Therapeutic Goods Act 1989 (Cth). 407 • Calls on NATA to help meet objectives of the National Measurement Act 1960 (Cth). • Seeks to provide community benefits and apply innovative techniques aimed at reducing industry compliance costs. • Seeks to promote public accountability.

3.3.3.3 Statistical and key performance indicators in policy evaluation Use of key performance indicators is commonplace in monitoring the performance of complex systems. However, producing these indicators needs to follow some rationale if they are to be meaningful, authoritative and credible in the minds of people who may use them. The following processes can lead towards a systematic framework of performance evaluation: • understanding the purpose or purposes of various systems and subsystems associated with a particular production process or processes;

402 ibid., p.xiv. A more extensive set of recommendations appears at pp.xxxii-xxx-ix. 403 Standards Australia, Introducing a New Business Model for Standards Australia , Sydney NSW: Standards Australia Limited, published April 2008, accessed online at URL < http://www.standards.org.au/downloads/SA_New%20Business%20Model.pdf > 404 Standards Australia, Annual Review 2007-2008 , Sydney NSW: Standards Australia Limited, published October 2008, p. 405 Memorandum of Understanding between the Commonwealth – represented by the Commonwealth Department of Innovation, Industry, Science and Research – and Standards Australia Limited, made on 30 May 2008, accessed online at URL 406 Memorandum of Understanding between the Commonwealth of Australia and the National Association of Testing Authorities, Australia, made on 1 April 2008, accessed online at URL 407 ibid., Article 3 174 CHAPTER 3

• obtaining a degree of consensus over each identified purpose and establishing coherence to avoid people being at cross purposes; • identifying criteria by which it can be decided whether a purpose has been met; • obtaining a degree of consensus to place these criteria for success beyond reasonable argument; • using criteria for success to establish measures of success; and • obtaining a degree of consensus regarding measures of success to place these measures beyond reasonable argument.

The perceived benefits associated with compiling performance indicators needs to outweigh compilation costs if the activity is to be seen as worth doing. In this regard, the consensual elements in the above framework of performance evaluation are important, yet they are regularly overlooked in practice. A degree of consensus influences whether indicators are likely to be respected — and thus regarded as worthwhile. The fierce debate that surrounds the use of some poorly designed indicators undermines confidence in the use of statistics more generally. Seemingly, design of useful indicators needs to be done in the knowledge of any ideological components where people would like to have support for their pet theories and deny evidence to the contrary. Arguably, improved understanding and candour about interdependence in these relationships; and agreement founded on mutual respect and trust may help to change a ‘win-lose’ arrangement into a mutually beneficial ‘win-win’ situation.

Perceptions and attitudes about an organisation are likely to influence the degree of consensus obtainable about an organisation’s performance. Employees might see performance of an organisation in terms of the wages and conditions it offers whereas an employer might see increased wages as reduced profitability. However, if increases in productivity allow increases in net returns, it might be possible for employees to receive bonus payments and employers to receive increased profits. The difference is largely in how employees and employers might change perceptions and attitudes to see their separate purposes as aligned and coherent.

Conflict of interest is likely to lead to corruption of information processes. This kind of conflict can occur when: • people are asked to report on their own performance in the compilation of aggregated performance indicators, and • they also have reason to believe that the resulting indicators will influence how they will be treated by management in the future. 408

The use of performance indicators occurs in many areas that rely on public funding. After they are produced, frequent debate occurs about their capacity to convey useful management information. The focus is usually on how they are interpreted and used in practice and on how they ought to be interpreted and used. Examples include the use of performance indicators in assessing:

408 Richard M Kramer, ‘Trust and distrust in organizations: emerging perspectives, enduring questions, Annual Review of Psychology ’, Vol.50, 1999, pp.569-598 — among other things, this article discusses reduced transaction costs in dealing with trustworthy people at pp.582-3. This is a manifestation of a more general issue associated with information asymmetry and risk management. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 175

• Performance of law courts and judicial officers . A first question is how much by way of resources should be devoted to delivering judgements that may have far reaching consequences. This is, in itself, a further matter of judgement that is similar to most situations that involve investments in learning. 409 A second question is how is it possible to be accountable and allow sensible public debate on emotive issues in an adversary political environment while maintaining judicial independence so far as practicable. • Performance of schools and individual teachers . In Australia, heated debates have centred on publicly funded education and teaching performances as reflected in assessments of literacy and numeracy standards. Literacy and numeracy are important in communication processes where there is a need to describe and interpret things and happenings to develop mutual understandings and agreements. In general, as knowledge becomes more refined, the language symbols used to convey information becomes more specialised and dependent on particular contexts. Accordingly, efficiency in communication processes depends on the quality of the investment in literacy and numeracy. The temptation also exists to manipulate school curricula and allocate public funding to support particular theoretical and ideological arguments.410 Literacy and numeracy skills are important to a healthy democracy where progress depends on a need to share increasingly sophisticated understandings.411 • Performance of academic institutions and individual academics . The quality of research activities in Australian universities has been contentious. As an example, a new government elected in November 2007 rejected the former government’s Research Quality Framework (RQF). The RQF was said to be poorly designed, administratively expensive, and needing a process that ‘ensures valuable research dollars are allocated to the university sector using internationally verifiable measures’. 412 • Performance of the health system . Assessment of health systems began with considerations of physical health indicators; but recently considerations have been extended to indicators of mental health. Acknowledging mental health draws attention in turn to a variety of factors that influence mental health. Physical and mental health have a relatively direct connection to things such as continuity and security in employment, availability of housing, and institutional factors such as workplace discrimination and harassment. Similarly, work and economic activity quite generally can be seen as having a fairly direct link with general social welfare and the maintenance and improvement of a stock of human capital.413

409 J J Spigelman, Chief Justice of New South Wales, ‘Quality in an age of measurement: the limitations of performance indicators’, The Sydney Leadership Alumni Lecture, The Benevolent Society, Sydney, 28 November 2001; and ‘Measuring court performance’, Address given to the Annual Conference of the Australian Institute of Judicial Administration, held at Adelaide SA on 16 September 2006. These articles were accessed online at URLs ; and 410 Jeanette Taylor and Ranald Taylor, ‘Performance indicators in academia: an x-efficiency approach?’, Australian Journal of Public Administration , Vol.62 No.2, June 2003, pp.71-82 411 Ilana Snyder, The literacy wars: why teaching children to read and write is a battleground in Australia , Crows Nest NSW: Allen & Unwin, 2008 412 Senator the Hon Kim Carr, ‘Cancellation of research quality framework implementation’, Media Release, 21 Dec 2007, accessed at URL 413 Section 3.5.1.2 — ‘Physical and metal health objectives’ is also relevant to this discussion. 176 CHAPTER 3

Some international programmes have tried to set goals within programs such as UNESCO’s ‘education for all’ set in 1990 and reaffirmed in 2000; 414 and WHO’s ‘health for all’ program where health was re-affirmed as a human rights issue at an International Conference on Primary Health Care held in 1978 at Alma Ata, USSR. 415 A particular guiding principle that links human rights, social inclusion and open access to public sector information appears in the Alma Ata Declaration as follows: The people have the right and duty to participate individually and collectively in the planning and implementation of their health care. 416 The importance of a monitoring role is apparent in the evolutionary development of health and welfare statistical collections and analyses. Education and health are clearly linked to developing well educated and energetic human resources. Health system performance can be a focal point for collecting and organising a wide range of statistics related to socioeconomic well being.

A remaining factor of production is access to resources and authority to use them for purposes that are beneficial to the individuals concerned and to society as a whole. 417 In responding to these issues, the Australian Government incorporated the Australian Institute for Health and Welfare (AIHW) in 1989 as a body responsible for compiling statistical data related to health and welfare functions. AIHW is largely independent although subject to direction by the TABLE 3.3.3.2 minister after consultation with the WELFARE COMPONENTS AND chair of the AIHW Board and health RELATED INDICATOR TOPICS ministers in the States. AIHW Food, water and air reports directly to the Australian Shelter and housing 418 Healthy living Parliament. Table 3.3.3.2 Health provides an overview of the AIHW’s Safety 419 indicators of Australia’s Welfare. Education and knowledge Economic resources and security Health outcomes depend on Auto nomy and Employment and labour force participation education, economic opportunity participation and sense of security. Since 1995, Transport and communication health issues in Australia have also Recreation and leisure been seen in relation to Family formation and functioning microeconomic reform. The loss of Social Social and support netw orks productive effort and the need to cohesion Trust provide income support might be avoided with better policies based Community and civic engagement

414 United Nations Education and Cultural Organization (UNESCO), Meeting basic learning needs: a vision for the 1990s, background document for the World Conference on Education for All held at Jomtien Thailand on 5-9 March 1990, prepared by the Executive Secretariat of the Inter-Agency Commission (established by UNDP, UNESCO, UNICEF and the WORLD BANK as the World Conference organisers, New York NY: Inter-Agency Commission, April 1990, accessed online at URL < http://unesdoc.unesco.org/images/0009/000975/097552e.pdf >. The principles were reaffirmed at a World Education Forum held at Dakar Senegal from 26-28 April 2000 in a 415 World Health Organization (WHO) and United Nations Children’s Fund (UNICEF), International Conference on Primary Health Care held at Alma Ata, USSR from 6-12 September 1978, Declaration of Alma Ata, accessed online at URL 416 ibid., Article IV 417 Section 4.2.3 — Allocating factors of production provides further comment on information, energy and physical resources as factors of production. 418 Australian Institute of Health and Welfare Act 1989 (Cth), ss.5, 24 and 31. 419 Australian Institute of Health and Welfare (AIHW), Australia’s welfare 2005 , Seventh biennial welfare report of AIHW, AIHW Cat. No. AUS 65, Canberra ACT: AIHW, 2005 — Chapter 2 — ‘Indicators of Australia’s welfare’. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 177

on a greater understanding of psychological and social influences that affect physical health and longevity, and the effects of poverty, drugs, working conditions, unemployment, social support, good food and transport policy. These have all been linked to health outcomes.420 Accordingly, health statistics tend to encapsulate the general well being of a society. Even in the most affluent countries, people who are less well off have substantially shorter life expectancies and more illnesses than the rich. Not only are these differences in health an important social injustice, they have also drawn scientific attention to some of the most powerful determinants of health standards in modern societies. They have led in particular to a growing understanding of the remarkable sensitivity of health to the social environment and to what have become known as the social determinants of health. 421 The UN General Assembly adopted the Millennium Declaration in September 2000. The Declaration committed member nations to renewed efforts to reduce extreme poverty by setting time deadlines for reaching development targets. The Declaration becomes meaningful only if the means exist for discovering whether targets have been reached. The Millennium Development Goals Report 2008 gives some indication of the information structure needed to report on such an ambitious global programme. 422 The structure involves eight Millennium Development Goals as a framework for development activities of over 190 countries in ten regions. The eight Goals have been articulated into over 20 targets and over 60 indicators. The data and analyses are the results of work performed by an Inter-agency and Expert Group (IAEG) on MDG Indicators, coordinated by the United Nations Statistics Division. 423

The linking of monitoring with management and policy outcomes becomes an aspect of governance. The quality of management information will depend also on the capacity to deal with risks and the integrity of information processes. Although the idea of “poor governance” is often still used as a euphemism for corruption in development policy circles, advances in research and measurement have helped outline the many components of governance. The result is the ability to measure the variation in governance indicators across and within countries. Some countries have high scores on an absolute scale while others, led by political reformers, score poorly not because of their leaders’ actions but because of entrenched corruption, possibly as a legacy of past regimes. Still other countries are governed by corrupt rulers, while some countries fall into violent conflict, making good governance difficult if not impossible. … The data also show that almost every dimension of governance is highly correlated with income. This correlation signifies a two-way relationship: good governance helps achieve higher income, and higher income supports better governance. 424

In 2004, the OECD began a Global Project on Measuring the Progress of Societies. Under this Project, a First World Forum on 'Statistics, Knowledge and Policy' was held at Palermo, Italy. Some 540 experts from 43 countries attended; and thousands more

420 Section 3.5.1.2 — ‘Physical and mental health objectives’ provides greater detail on the connection between health and economic objectives. 421 World Health Organization, Social determinants of health: the solid facts , 2nd edition, edited by Richard Wilkinson and Michael Marmot, Copenhagen Denmark: WHO Regional Office for Europe,2003, p.7, accessed at URL 422 The Millennium Development Goals Report 2008 , New York NY: United Nations, 2008, accessed online at URL 423 Millennium Development Goals Indicators, United Nations Statistics Division, Department of Economic and Social Affairs, United Nations, accessed online through URL 424 Jeffrey D Sachs, Director, UN Millennium Project, Investing in development: a practical plan to achieve the Millennium Development Goals, New York NY: United Nations Development Programme, 2005, p.110, accessed online through URL < http://www.unmillenniumproject.org/reports/index.htm >. 178 CHAPTER 3

followed the event through a live web-cast. The theme was 'Key indicators to inform decision making'. 425 The OECD’s Chief Statistician commented as follows: The use of key indicators raises questions about which indicators are chosen, but they can give a broader and more holistic view of what users might see as signs of progress. International and interregional comparisons can allow more significant comparisons on a wider variety of topics and draw inferences concerning the contributions of particular policies, and natural advantages and disadvantages. They are gaining popularity 'because they provide stakeholders with a manageable amount of information whose selection reflects their choices, while providing a yardstick against which performance can be openly scrutinised'. 426 The following three methods of reporting were seen as especially noteworthy: • Traditional economic measures such as GDP and GDP per capita. • Composite indicators of wellbeing that combine detailed information into a single measure - such as the Human Development Index and various quality of life indices. • Key indicators that profile economic, social and environmental domains, without attempting to derive any particular single measure.427

A Second World Forum was held at Istanbul, Turkey from 27-30 June 2007 and attended by some 1200 people from 130 countries. At the end of the Forum, parties issued the Istanbul Declaration. The parties included the OECD, the European Commission, the Organisation of the Islamic Conference, the United Nations, the UN Development Programme and the World Bank. A number of additional organisations signed the Declaration after the Forum. The signatories affirmed their commitment to measuring and fostering the progress of societies in all dimensions with an ultimate goal of improving policy making, democracy and citizens’ wellbeing. 428

Where monitoring is seen as part of the testing of a theory, the input and output variables become dependent on the theory. The theory might relate to a production process that determines what is physically possible; to the environment where natural sciences are relevant; or to economic, political or social factors that relate to sciences of human behaviour. Thus, theory links variables that are measured and controlled with other variables that may be measurable but uncontrolled as causal factors in the production of one or more outputs. This connection has been described as ‘the theory dependence of observation’ and provides a rational basis for structuring data sets as part of a monitoring programme.

In some respects, monitoring of social and economic policy may be likened to conditions that govern trajectories of ballistic and guided missiles. The trajectory of a ballistic missile may be sensitive to an initial orientation and thrust provided by a release of energy; and atmospheric conditions that affect its flight path. This is typical of rifle or pistol shooting where the test is how well bullets hit a target. Typically, only a short time interval occurs between firing and hitting a fixed target. In contrast, the trajectory of a guided missile is subject to feedback mechanisms where properly timed and proportioned feedback can

425 Organisation for Economic Co-operation and Development, ‘Statistics, knowledge and policy’, OECD First World Forum on Key Indicators, held at Palermo, Italy from 10-13 November 2004, accessed at URL 426 Enrico Giovannini, Chief Statistician of the OECD, 'Progress measuring progress', in OECD 2004 at p.2 427 ibid. 428 Organisation for Economic Co-operation and Development (OECD), ‘Measuring and fostering the progress of societies’, 2nd World Forum, held at Istanbul, Turkey from 27-30 June 2007, documentation accessed online through URL PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 179

improve targeting accuracy for firing and hitting fixed and moving targets. This can be seen as analogous to refining policy direction in the light of experience provided by timely monitoring.

Analogies about targets begin to falter when relating to broad social goals where the aims are about improvements in living standards that can occur indefinitely into the future. In these cases the chosen metaphors have more to do with reaching ‘milestones’, crossing ‘watersheds’ or ‘thresholds’ and ‘staying on course’. This might be interpreted statistically as a continuing improvement in particular indicators of human well being. In this regard, the processes become less like the conduct of an experiment and more like an unfolding of human development based on learning through a continuing collective experience. The descriptive metaphors of historical analyses become more appropriate when the circumstances can be subjected to continuing revision. Zhou Enlai gave an indication of a longer-term mindset when asked for his assessment of the 1789 French Revolution. His reputed response was that ‘It is too early to tell’. 429

Performance indicators usually involve observations whose very processes might bring about change in the behaviour that is under observation. 430 The setting of targets may motivate teamwork sometimes. However, compiling information about performance is likely to be met with obstruction if people likely to be affected believe that the results will be used to apportion blame or liability. This situation is exacerbated by the adversarial positions that can be taken in legal proceedings or political posturing in interpreting the results. These processes tend to close-off argument rather than reveal the truth. In addition, those who are likely to be rewarded or penalised by performance indicators, statistics and league tables may be able to manipulate information to create illusions about ‘performance’. Another form of manipulation is to devote efforts to activities that show up in statistics to the detriment of fundamentally important activities that defy measurement. 431 Arguably, the various kinds of manipulation are forms of corruption if they reallocate resources to diminish effective performance and allow people to be treated in ways that they do not deserve.432

Technological change involves learning about how to use the technology and how to exercise control over its misuse. Where ideas about controlling such misuse translate into government policy, policy implementation implies action to secure compliance. The policy itself has inherent expectations that the implementation will yield particular desired outcomes. In effect, the expectations resemble a theory that may be testable in principle. Whether it is testable in practice depends on ex ante statements and evaluations that articulate the theory as part of the planning process. The ex post assessments as parts of a policy monitoring regime complete a cycle of learning through experience. Arguably, the efficiency and effectiveness of government depends on the efficiency and effectiveness of these learning experiences. The Productivity Commission’s 2007 report on public support for science and innovation endorsed the idea of policy evaluation as a mechanism for policy learning.

429 Zhou Enlai (1898-1976) as first premier of the People’s Republic of China is reputed to have made this comment in answer to a query. However, there are some variations about whether the query was made by Henry Kissinger as US Secretary of State in 1971 or by President Nixon in 1972. 430 These issues were discussed in Section 3.3.2.2. 431 This may be likened to ‘mission drift’ - when external or internal events cause an organization to depart from purpose and core values. 432 Section 4.2.2.6 discusses this issue in the context of ‘Information asymmetry and official corruption’. 180 CHAPTER 3

One of the Commission’s key concerns in some areas of policy is that the feedback mechanisms are not always candid or deep enough to encourage such learning. This for example, appears to affect program evaluations for business programs. 433 At its meeting on 29 November 2008, the Council of Australian Governments agreed to enter into a new Intergovernmental Agreement on Federal Financial Relations. 434 Taking effect from 1 January 2009, the aims were to establish collaboration on policy development and service delivery; and to facilitate the implementation of economic and social reforms in areas of national importance. 435 Schedule C to this Intergovernmental Agreement is entitled ‘Public accountability and performance reporting’. The following extract from Schedule C deals with ‘Performance indicators’: 436 C6 The purpose of the performance indicators is to inform the general public about government performance in making progress towards identified outcomes. Performance indicators will provide a clear picture of the achievement of governments in delivering services. C7 Accordingly, the Parties will ensure that performance indicators will be meaningful, simple and comprehensible to members of the public, that there is underlying data to support the indicators, that the indicators meaningfully measure what they purport to measure and are reliable. C8 The effectiveness of the reporting framework also depends on the quality of the data underpinning each indicator. The Parties agree that the underlying performance data should have the following characteristics: (a) meaningful — to improve public accountability, data must be reported in a way that is meaningful to a broad audience, many of whom will not have technical or statistical expertise, and validly measures what it claims to measure; (b) understandable — the data will be accessible, clear and unambiguous so that the community can come to its own judgements on the performance of governments in delivering services; (c) timely — to be relevant and enhance accountability, the data published will be the most recent possible — incremental reporting when data becomes available, and then updating all relevant data over recent years, is preferable to waiting until all data are available; (d) comparable — data must be comparable across jurisdictions and over time — where there are no comparable data for a particular performance indicator, the Parties will work together with assistance from technical experts to develop common definitions, counting rules and measurement standards so that data can be provided on a comparable basis; (e) administratively simple and cost effective — the costs involved in collecting data will be proportionate to the benefits to be gained from the resulting information; (f) accurate — data published will be of sufficient accuracy so that the community has confidence in the information on which to draw their analysis; and (g) hierarchical — high-level performance indicators should be underpinned by lower level (more detailed but consistent) performance.

433 Productivity Commission, Public support for science and innovation , Research Report, Canberra ACT: Australian Government, 9 March 2007, p.137 Documentation accessed online at < http://www.pc.gov.au/projects/study/science/docs/finalreport > 434 Council of Australian Governments’ Meeting, held in Canberra ACT on 29 November 2008, accessed online at URL 435 Council of Australian Governments (COAG), Intergovernmental Agreement on Federal Financial Relations , documents accessible through URL 436 Intergovernmental Agreement on Federal State Financial Arrangements, Schedule C – Public accountability and performance reporting, Sections C6-C8, pp.C2-C3 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 181

Overall, the Inter-governmental Agreement focuses on human well being and quality of life issues. 437 However, at some stage on a pathway to personal development, individuals may feel that their basic needs or material needs have been met. It is commonplace for them to express a desire for higher levels of human satisfaction;438 and contemplate things such as the purpose of life, what makes life worth living and whether their personal lives are worth living. Arguably, this is part of a life experience as people feel the loss though death of people near and dear to them; see the courage of many people who face disability and trauma; acknowledge the fortitude of helpers of those who need help; and ultimately confront their own frailty and mortality.

Some modernisation theorists argue that economic development brings pervasive cultural changes;439 although the meaning of ‘economic development’ is intimately bound up in learning to do new things; and learning to do new things falls within the meaning of ‘cultural change’. The connection may be more tautological than empirical. Other theorists argue that cultural values are an enduring influence on society. 440 Although these views may seem to be opposed, the course of history is often described in terms of change and continuity; and science is intimately bound up in recognising things that are variable compared to those that seem to be invariable. Societies that may be regarded as secular often relate to long-term religious influences in their attitudes and values. The law of liability and the duty of care as it evolved in England and Commonwealth countries owe much to the parable of the Good Samaritan. Seemingly, the biblical idea of having life and having it more abundantly has been transformed or secularised into a broader human rights issue and became a tenet of personality theories and humanistic psychology. 441

The question of measuring the performance of a society depends on what people regard as desirable; and this depends in turn on a society’s attitudes and values. Insofar as attitudes and values are learned, and learning depends on devoting resources to formal and informal education, learning is endogenously determined and the system becomes self-referential. Higher levels of sophistication are needed in monitoring regimes to determine not only whether people are satisfied but also the dynamic processes that lead to them being satisfied.

Sociologists have paid increasing attention to surveys that might provide evidence on which to base conclusions about human well being. The following citation gives a concise description of the European Values Study (EVS) program that began in 1981. The European Values Study is a large-scale, cross-national, and longitudinal survey research program on basic human values. It provides insights into the ideas, beliefs, preferences, attitudes, values and opinions of citizens all over Europe. It is a unique research project on how Europeans think about life, family, work, religion, politics and society.

The European Values Study started in 1981, when a thousand citizens in the European Member States of that time were interviewed using standardized questionnaires. Every nine years, the survey is repeated in an increasing number of countries. The fourth wave in 2008 will cover no

437 IGA at section 8, p.4 438 Section 3.1.3 – ‘Living systems’ refers to theory of Abraham Maslow on basic and higher level motivations. 439 Ronald Inglehart and Wayne E Baker, ‘Modernization, cultural change, and the persistence of traditional values’, American Sociological Review , Vol.65, 2000, pp.19-51 include Karl Marx and Daniel Bell as modernisation theorists. 440 ibid., citing Max Weber and Samuel Huntington as holding that ‘cultural values are an enduring and autonomous influence on society’. 441 Bible, John 10:10. This biblical idea may be shared with a number of religions; but the notion of the full development of the human personality is clear is clear in the Constitution of UNESCO. 182 CHAPTER 3

less than 45 European countries, from Iceland to Azerbaijan and from Portugal to Norway. In total, about 70,000 people in Europe will be interviewed. 442 A World Values Survey (WVS) also began in 1981 as an attempt to overcome the Euro- centric approach inherent in the European Values Study. Data from the WVS is available online without charge to users. In a summary view of the state of research — often called ‘happiness studies’ — the author comments as follows: Happiness research has chiefly been concerned with levels of subjective well-being (SWB). Scholars gain public attention easiest when they produce league tables of nations and ranking places from "good" to "bad". Using the power of large comparative surveys, considerable efforts have been made to find out what distinguishes the happiest from the unhappiest places … Although these macro-level comparisons give us a rough picture about societal conditions that are conducive to happiness, they can not dig very deep into the question of what actually makes people happy. So far, scholars have spent less effort on uncovering what can be labeled the happiness recipe – the contribution of specific life domains and concerns to overall appreciation of life. Are the concerns that determine people's happiness basically the same everywhere due to human universals? Or do they vary systematically across space and over time? Currently, we know surprisingly little about these fundamental questions. 443 If evidence-based policy is to have any practical meaning, the ex-post results obtained through monitoring may need to reflect eventually in the methods adopted in ex-ante assessments of development or regulatory proposals. Insofar as economic theory attempts to explain or predict how people might behave, the work of economists will need to reflect what people actually think about progress if it is to remain relevant in providing policy advice. 444

The capacity to learn useful things through experience is diminished if monitoring regimes lose their credibility. In contrast, credibility increases if information remains open to review and criticism. This is the ethos of science, notwithstanding some corrupting influences arising from the self-interest and idiosyncratic behaviours of some individuals and groups. These behaviours also need to be exposed if they are to be recognised and understood.

3.3.3.4 Financial accounting and auditing The development of agriculture increased the productive capacity of land and more complex social arrangements became necessary to cope with this technological change. While understanding of these developments remains open to new interpretation, Wittfogel provides useful historical analysis that associates the development of accounting practices with the need to control water and defend territory. The masters of hydraulic societies were great builders because they were great organizers; and they were great organizers because they were great record keepers. 445 An ability to describe the characteristics of physical goods helps to quantify work involved in production and transportation processes. Quantities such as length, area, volume and

442 ‘About EVS’, European Values Study Website, Tilburg University, The Netherlands, accessed online at URL < http://www.europeanvaluesstudy.eu/evs/about-evs/ > 443 Jan Delhey, ‘From materialist to postmaterialist happiness? National affluence and determinants of life satisfaction in cross-national perspective’, World Values Research, Vol.2 No.2, 2009, p.31, accessed online at URL 444 Alan S Blinder and Alan B Krueger, 'What does the public know about economic policy, and how does it know it?', National Bureau of Economic Research Series, Working Paper 10787, Cambridge MA: NBER, September 2004 accessed at URL < http://www.oecd.org/dataoecd/59/49/39562109.pdf > 445 Karl A Wittfogel Oriental despotism: a comparative study of total power , New Haven CT: Harvard University Press, 1957, p.50, referred to also in Section 3.2 – ‘Governance and technological change’. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 183

weight make it easier to prescribe quantity and quality in organising piece work; determining unit prices; and administering contracts. Nowadays, the law requires many contracts to be in writing, and formal legal arrangements vest authority in various officers operating on behalf of a principal or a contractor to do the following: • On behalf of the principal — to enter into contracts — involving specification of quantities, quality and timeliness in the provision of goods and services, and the selection of a contractor to perform the work. • On behalf of the contractor — to enter into contracts; make claims for payment; and raise invoices for work performed. • On behalf of the principal — to make payments on being satisfied that the claims for payment are justified. • On behalf of the contractor — to issue receipts as documentary evidence that the contractor has actually received contract payments.

These documents encapsulate key elements of various transactions and provide evidence — which is essentially cogent description — for financial accounting and auditing purposes. However, accounting depends on something to count. Accounting and auditing procedures are applicable to management of systems quite generally and are not limited to financial statements reckoned in terms of money. Physical attributes may be described objectively in terms of physical measurement standards; but measuring something abstract is more subjective as observers try to assess what someone else may have in mind. This abstraction applies especially to ideas about value; the appreciation or depreciation of value over time; the question of how trustworthy an individual or institution might be over time; and the risks associated with some ventures. A maxim attributed to Einstein is apt — ‘Not everything that counts can be counted, and not everything that can be counted counts’. 446

Differences between still and moving pictures indicate two particular descriptive concepts. The scientist’s static model or the statistician’s ‘stock’ concept may be likened to a still picture taken at an instant of time. The scientist’s dynamic model or the statistician’s flow concept may be likened to a moving picture that is an event with distinct starting and finishing times. Studying still pictures may reveal things not readily observable in moving pictures; and moving pictures may reveal things not readily observable in still pictures. This is somewhat reminiscent of Heisenberg’s uncertainty principle. There may be cognitive limitations in trying to observe position and velocity simultaneously. 447

Summarising, the stock concept refers to measures that help to describe the state of a system at a particular time. The flow concept refers to flows into and flows out of the system over a period of time. Thus, human or livestock populations can be measured as a number at the end of an accounting period such as a year. The inward flows result from immigration or purchases; and births as a natural increase over an accounting period. The outward flows result from emigration or sales; and deaths over the period.

Stock and flow measures are reconcilable in principle through the following relationship:

446 This was said to have been on a sign hanging in Einstein's office at Princeton, and is often quoted as a statement by him; although there seems to be some uncertainty about whether it actually originated with him. 447 Section 3.3.2.2 — ‘Science and prediction as aids to design and planning’ refers to Heisenberg’s uncertainty principle in quantum physics. Some people have speculated about whether there are wider implications philosophically. 184 CHAPTER 3

Stock at the beginning of an accounting period + Inflows over the course of the accounting period — Outflows over the course of the accounting period = Stock at the end of an accounting period

This is essentially the task performed in bank reconciliations; and in stocktaking to reconcile physical product. Table 3.3.3.4 gives examples of associated stocks and flows.

Table 3.3.3.4 STOCKS AND FLOWS IN MEASUREMENT OF QUANTITIES STOCKS FLOWS Human population at the time of a census Net natural increase and net immigration between censuses Livestock numbers at the time of a muster Net natural increase, and purchases and turnoff of stock Statement of assets and liabilities at the start Statement of revenues and expenditures or end of an accounting period during an accounting period Inventories - stock on hand as raw materials Purchases and additions to stock - sales and or finished products - stock on hand in losses in damaged or pilfered stock. wholesale and retail outlets Water in dams and reservoirs Channelled inflows and outflows with losses due to seepage and evaporation Knowled ge retained in living human memory Flows of information inwards can add to a as human capital stock of knowledge but a flow outwards does not generally deplete the stock of knowledge Data and information retained as coded Flows of data and information inwards and material in ‘artificial memory’ outwards but outward flows of copied material does not generally deplete the stock of data or information held in ‘artificial memory’

Generally, reconciliation may be recognisable in principle, but exact reconciliation is not always possible in practice. The practical difficulties reside in problems of counting and measuring. Although counting discrete units can be done exactly, the first difficulty is to obtain a complete muster of the things to be counted as stocks and flows. The extent to which stocks and flows do not reconcile is an estimate of unaccounted losses. As an example, pilfering and shoplifting may go undetected and uncounted; but stocktaking and reconciliation may provide some estimate of losses due to this illegal activity

Measurements of physical quantities involve things such as mass, length or time or derivations of these measurement units. Derivations include measures of area as squared units of length; and velocity as distance per unit of time. Measurements of physical quantities are continuous variables that allow fractions of units to be estimated. Measurements are subject to random errors; and measuring devices can be subject to zero and scale errors. Measurements are also subjects to systematic errors such as failing to allow for variations in stockpile volumes due to swelling or compaction, or variations in length due to compression or tension under force, or to expansion or contraction with variations in temperature. Limits to accuracy and precision of measurements of physical quantities impose limits on the degree of reconciliation that is possible in practice. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 185

The market-based activity of an entity engaged in producing and supplying physical goods can be quantified in money terms and represented concisely as financial statements. The need for these statements to be understood globally led to the adoption of internationally recognised standards for accounting practice. 448 Financial data is often aggregated for statistical purposes into industry sectors, and the usefulness and comparability of these statistics depends on standardising sector descriptions in ways that can be recognised and understood nationally and globally. 449

While stock and flow concepts apply notionally to data, information and knowledge; measurements and reconciliations are rarely possible. Knowledge contained in living human memory is distinct from coded material held in ‘artificial memory’; but both may be considered as stock concepts. The term ‘artificial memory’ as used herein extends the notion of ‘memory’ as it is currently used in relation to computer terminology. Artificial memory includes repositories of coded material and visual displays that are ‘informative’ — as in archives, museums, art galleries, libraries and paper records. 450

Measures of artificial memory often take the form of metres of shelving, volume of display space; and units such as megabytes, gigabytes or terabytes of space occupied on computer discs or magnetic tape. A difficulty with these measures is that the space occupied by coded information is quite unrelated to its potential to inform human actions and contribute to human memory. Coded information does not necessarily become less informative through innovations that save space. Such savings occur in microfilming of paper records or data compression techniques in computer files, for example. Some conclusions that follow from an absence of meaningful physical measurement are as follows: • Physical measures of artificial memory and the costs of acquiring it have no particular relationship with:
The stock concept — considered as the price that someone might be prepared to pay to own media with coded information and rights to say how that information can be copied and used.
The flow concept — considered as utility stemming from being able to copy, re-copy and disseminate snippets of information disseminated as a flow of coded information over a particular period. • Mere supply of coded information does not ensure its beneficial use. Benefits depend on how a user decides to use it and the context in which its use becomes possible. Much depends on opportunity arising from access to resources and permission to use them.

448 Australian Government, Financial Reporting Council, ‘Adoption of international financial standards in Australia, Text of a joint letter sent on 20 October 2003 by Mr Jeffrey Lucy, Deputy Chairman of the Australian Securities and Investment Commission (ASIC), and Mr Charles Macek, Chairman of the Financial Reporting Council to the Chair of the Boards of all publicly listed companies and 200 of the larger private companies. Accessed online at URL < http://www.frc.gov.au/reports/other/letter.asp > 449 Australian Bureau of Statistics and Statistics New Zealand, Australia and New Zealand Standard Industrial Classification (ANZSIC), ABS Cat. No. 1292.0, Revision 1.0. ANZSIC is generally compatible with the International Standard Industrial Classification (ISIC), Revision 4 released 11 August 2008, produced by the United Nations Statistics Division to facilitate international comparisons of national statistics. Information accessed online at URL’s and < http://unstats.un.org/unsd/cr/registry/isic-4.asp > 450 These repositories are represented in Diagram 2.1.9 of Section 2.1.9 — ‘Summary of conclusions regarding terminology and methods’. 186 CHAPTER 3

• The value of information — first in the hands of a receiver and then in the mind of a new owner or user — can change as its significance is realised. In some instances, this realisation may have characteristics of ‘missing link’ information, a ‘Eureka moment’ or ‘a penny that drops’ in the context of a particular problem. 451

Most analyses consider the marginal cost of supplying an additional copy of a parcel of information as a cost to the sender. However, receiving information also entails costs that are described herein as ‘receiving’ and ‘assimilation’ costs. Receiving costs involve technical issues whereas assimilation costs involve cognitive issues. They include: • Capital costs of a receiving device — a radio, television, telephone or networked computer — for example. • Capital costs of learning how to perceive; translate and interpret articulate and tacit information. • Current costs of receiving processes — a transmission of information that occurs over time and is a function of channel capacity. • Current costs in cognitive processes — in perceiving, translating, interpreting and committing key aspects of the transmission to memory.

The distinction between current and capital costs is often blurred. Sometimes information is assimilated and acted upon fleetingly — albeit advantageously — on a single occasion. Signalling at traffic lights is an example where information may not be memorised because it is not seen as worth remembering. However, the directional signs on a route that may need to be travelled again may be seen, acted upon and consciously committed to memory because a missed turn-off can result in wasted time. Observing for the single occasion is a current cost whereas observing and remembering has dual attributes of current and capital cost. This dual aspect of receiving and assimilating information occurs in situations that are often described variously as on-the-job learning’, ‘action learning’, ‘learning by doing’ and ‘learning through experience’. Although an investment, project or experiment may incur costs if it fails, the loss may be offset, at least in part, if it produces valuable learning through the experience of failure.

An estimation of value to a user of information requires some guess about how it may be possible to use it. The ‘imagined deemed possible’ involves going beyond what is known to jump to some conclusions.452 Thus knowing how to dig for gold may have limited utility without knowing where to dig, and vice versa. The combined knowledge of how and where to dig (A & B combined) may have a value that is greater than the sum of the parts (A in isolation) + (B in isolation) by an amount that can be considered as synergy (s). This can be represented as (A & B) = A + B + s. However, accounting methods have no easy way of bringing synergy to account. Similar accounting problems occur in allowing for ‘depreciation’ that may be a combined effect of general ‘wear and tear’, obsolescence or inadequate maintenance. In assessing a return on current activity, the question arises about how much of the synergy is a return on recent information compared to how much should be apportioned to the prior information. In many cases, the novelty attaching to the later information has an effect of drawing attention away from the prior information. As an

451 The legendary ‘Eureka’ – from the Greek ‘heureka’ meaning ‘I have found it’ - is usually associated with a sudden realisation by Archimedes that an upthrust in water is equal to the volume of water displaced. Thus by weighing an object, and then weighing it in a liquid such as water, the volume of a irregular object such as a gold nugget could be determined and its purity assessed. 452 Section 3.2.2.2 — ‘Science and prediction as aids to design and planning’. This section refers to Polanyi’s notion of a ‘logical gap’ where ‘discovery’ is not logically deducible. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 187

example, the boundary between ‘prior’ information and ‘new’ information affects the administration of patent law. The creation of doubt can effectively lock-up prior information by confusing it with the intellectual property actually owned by a patent holder. 453

The knowledge contained within living human memory is part of an information-processing component that combines with an energy component to make up human capital. However, measures of the stock of knowledge contained in living human memory are at least problematical. Seemingly, the frustration arises mainly from trying to measure the unmeasurable. In practice, usable human knowledge depends not so much on a stock of memory but what is available as a flow of information in being able to remember in time for decisions and actions. 454 Notions of sufficiency or demonstrable competence are used regularly in trying to assess whether people have enough knowledge for particular scholarship awards, and entry to professions and occupations. Credibility or confidence in the manner of personal presentation may be persuasive; but it can also be deceptive or misleading. Apparent sophistication in delivering information or opinion may be legitimate behaviour on the part of a specialist; but it can also be part of the modus operandi of a confidence trickster. Moreover, receivers of information — including experts — often possess a capacity for self-deception. 455

A flow of information involves a quantity of information transferred over a period of time through a communication channel that has an upper limit of channel capacity. The idea of information in a technical sense as code within telecommunications and computer systems is quantifiable in terms of ‘bits’, ‘bytes’ of information and memory; and in rates of information or data transmission or baud rates. However, these measures have limited usefulness beyond their technical application to pieces of code and bear no relationship to the sharing of meaning or understanding.456 Other measures of channel capacity include words per minute of typing speed and reading speed. The rate of computer downloads may be measured in units such as megabytes per second.

An individual has channel capacities associated with flow rates of information through sensing, recognising and remembering; and in the signalling for motor responses that fire muscular activity. 457 Establishing interpersonal communication channels and networks requires investments in knowing who can be expected to provide authoritative and reliable information on particular matters; and in knowing their language and any specialised vocabulary in which meaning and understandings can be communicated. Ultimately, the nature of investing in channel capacity reflects in the timeliness of adequate responses to

453 Peter Drahos and John Braithwaite, Information feudalism: who owns the knowledge economy? , London UK: Earthscan, 2002. This is one of many texts referring to the how patent law can lock-up – or at least make determining the boundary the subject of an expensive legal challenge. An important US legal decision germane to this issue appears in Association for Molecular Pathology, et al. v. US Patent and Trademarks Office , United States District Court, Southern District of New York, 29 March 2010, accessed online at URL < http://www.aclu.org/files/assets/2010-3-29-AMPvUSPTO-Opinion.pdf > 454 George A Miller, 'Information and memory', Scientific American , Vol.195 No.2, August 1956, pp.42-46 rpt in The psychology of communication; seven essays , ed by George A Miller, Harmondsworth Middlesex: Penguin, 1967 pp.11-20 455 Section 3.3.2.6 – ‘Design of risk management strategy’ refers to groupthink and the dynamics of self-deception in groups of people. 456 Warren Weaver, 'Recent contributions to the mathematical theory of communication', (1949) in Claude E. Shannon and Warren Weaver, The mathematical theory of communication , Urbana IL: University of Illinois Press, 1964, pp.4-6. Weaver analyses communication at ‘technical’, ‘semantic’ and ‘effectiveness’ levels. An online version is accessible at URL 457 George A Miller, 'The magical number seven, plus or minus two: some limits on our capacity for processing information', Psychological Review , vol.63 no.2, March 1956, pp.81-96 rpt in Miller, The psychology of communication , pp.21-50. Online version accessible at URL < http://www.musanim.com/miller1956/ > 188 CHAPTER 3

opportunities and threats. Arguably, the specific nature of these channels is an important investment affecting a capacity to organise; regardless of whether the nature of the investment can be quantified with any accuracy in physical or money terms. These channels — often understood as ‘personal contacts’ — become the building blocks for communication networks and are a further aspect of investment in organisation.

The term ‘knowledge’ as used herein describes the unique observations and experiences contained within the living human memory of an individual. Knowledge is thus a stock concept that is a consequence of learning. However, there is no simple process of addition to or subtraction from a stock of knowledge within human living memory. Flows of information into human memory do not follow any simple value adding process because they may consist of additions to prior knowledge; corroboration of existing knowledge or conflicts with the prior state of knowledge. 458 Flows of information out of human memory do not necessarily deplete the store of knowledge; and the regular recall of particular information may actually enhance the channels through which recall occurs. The following factors also limit attempts at quantifying the stock of knowledge as human capital: • Some knowledge may be ‘tacit’, where words are not available to describe some things that are known at a conscious level. • Some knowledge may be held subconsciously and a person may not be able to recognise or describe it through conscious thinking. 459

Many ideas about property, accounting and taxation have their origins in land; and produce that derives from land. The ideas have been refined by a long history of recorded judicial decisions in many jurisdictions involving disputes over land values. The cases are usually related to matters of land taxation based on land valuation or production; and compensation for compulsory acquisition of land or interests in land. The reasoning in these decided cases has contributed to well-established principles of land valuation.460 It also links with a body of economic theory related to land rents and values. Direct sales of comparable lands become evidence of value, and land sales occur in open markets, often at auction, but mostly in circumstances where sale prices become known to interested people. In principle, land can reach its ‘highest and best use’ as reflected in market prices; although this may be qualified by many practical considerations involving property rights, town planning and development laws, and provisions related to taxation. A particular land parcel may have advantages and disadvantages associated with its proximity to other land and socio-economic activity; together with the effects of planning permissions affecting the subject land and other lands in its vicinity. 461

Land valuation principles are not readily transferrable to matters involving information. As an example, the Copyright Act 1968 (Cth) gives a number of public agencies a statutory licence to use the copyright of private persons. This statutory provision resembles a compulsory acquisition of a right that the owner would ordinarily have to determine the conditions and the financial arrangements of a transaction involving copyrighted

458 Section 3.1.5 – ‘Novelty, corroboration and conflict in governance systems’ discusses these issues in greater detail. 459 Mohan P Pokharel and Karen M Hult, ‘Varieties of organizational learning: investigating learning inl local public sector organizations’, Journal of Workplace Learning , Vol.22 No.4, 2010, pp.249-270 elaborates further on the more subtle aspects of learning by individuals within an organisational context. 460 R O Rost and H G Collins, Land valuation and compensation in Australia , Sydney NSW: Commonwealth Institute of Valuers, 1971, 461 These are known variously as ‘side effects’; ‘neighbourhood effects’; ‘betterment’ and ‘worsement’; and positive or negative externalities. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 189

information. 462 However, unlike land, information is non-rival in consumption. A broad dissemination increases the chances that individuals might find a ‘best use’ for particular occasions. The possibilities for multiple re-use for lawful and beneficial purposes will usually be unknown.

In allowing particular public agencies to use private information without reference to the copyright owner, the Copyright Act converts the copyright owner’s rights in relation to the used information into a right to compensation. In 1985, the Australian Copyright Tribunal considered the question of valuation for information compulsorily acquired by public sector agencies and schools in what is now known as the First Schools’ case . In the absence of evidence of comparable sales that would usually apply in the compulsory acquisition of property such as land, it is usual to consider the notion of the willing, but not anxious, licensor and a willing, but not anxious licensee in a hypothetical bargaining position. However, in the absence of a market and comparable sales evidence, the determination becomes a matter of ‘judicial estimation’.463

In 2002, the Copyright Tribunal revisited the notion of ‘judicial estimation’ in what is now known as the Second Schools’ case. To some, the concept of a tribunal engaging in guesswork may not be particularly satisfactory. Perhaps a more palatable description, but one which does not alter the underlying function, is that coined by Lord Wilberforce in General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1976] RPC 197 at 214 and accepted by Sheppard P in the First Schools' case, namely that the process is "one of judicial estimation of the available indications". What is to be estimated is the value (in money) of the thing compulsorily supplied by the copyright owner - the right to copy his material. The process will involve giving a value to the utility the educational institutions will obtain from the use of the copyright material, taking into account the disutility the copyright owner suffers on account of providing that material, and the circumstances in which the supply occurs. 464 In effect, ‘judicial estimation’ of ‘equitable remuneration’ is a determination by order or command rather than by a ‘market-based’ decision. Whatever reservations the Tribunal might have expressed regarding the rationale that underpins a determination of ‘equitable remuneration’, the High Court expressed confidence in the Tribunal’s ability to determine what is fair. Accordingly, it rejected the notion that a government’s use of plans of survey held in land registries arose out of ‘necessity’ and could be used without equitable remuneration within limited circumstances under an ‘implied license’. 465 ‘Necessity’ implied that there was simply no alternative. Such necessity does not arise in the circumstances that the statutory licence scheme excepts the State from infringement, but does so on condition that terms for use are agreed or determined by the Tribunal (ss 183(1) and (5)). The Tribunal is experienced in determining what is fair as between a copyright owner and a user. It is possible, as ventured in the submissions by CAL, that some uses, such as the making of a "back-up" copy of the survey plans after registration, will not attract any remuneration. 466 Australia’s Productivity Commission also encountered the question of trying to value information in a 2007 research report concerned with the public funding of science. The

462 This refers to a statutory licence acquired under provisions of the Copyright Act 1968 (Cth), s.183 463 Copyright Agency Ltd v Department of Education of NSW [1985] ACopyT 1 (20 March 1985) per Shepherd J as President, accessed online at URL < http://www.austlii.edu.au/au/cases/cth/ACopyT/1985/1.html >. 464 Copyright Agency Limited v Queensland Department of Education [2002] ACopyT 1 (8 February 2002), para.16 per Finklestein DJ, accessed online at URL < http://www.austlii.edu.au/au/cases/cth/ACopyT/2002/1.html > 465 Section 5.3.3 — ‘Copyright in surveying and mapping processes’ refers to the circumstances of these cases in more detail. 466 Copyright Agency Limited v State of New South Wales [2008] HCA 35 (6 August 2008), at paras.92-93, referred to also in this report at section 5.5.3 — ‘Copyright in surveying and mapping processes’. 190 CHAPTER 3

Commission was concerned with the role of science in informing public policy, and drew attention in particular to the changing nature of science where advice was subject to significant shifts of position. Therapeutics provides an example. On its discovery, thalidomide was seen as a successful treatment for morning sickness in pregnant women. Later it was understood to cause infant abnormalities. It is currently a frontline treatment for leprosy. It is thought to have considerable potential in treating HIV and cancer. 467 On this basis, the Commission argued: The implication is that any valuation of knowledge should be seen as highly uncertain. While the apparent benefits of widespread policy adoption of research findings may be high, it raises the potential costs if the research results are actually wrong (for example, an educational policy implemented across all schools that results in poorer literacy outcomes for hundreds of thousands of children). … One of the major benefits of sophisticated research capabilities and rich feedback mechanisms between policy makers and researchers is that these uncertainties can be reduced more quickly, lowering the potential costs of mistakes — this capability has a high option value. 468 The apparent and growing complexity of changes brought about by innovations in information processing and communication technology led to a large volume of multi- disciplinary literature that tried to describe and analyse various aspects of these changes. Some 20,000 publications were noted in a narrowly defined economics of information by the early 1980s. 469 Notwithstanding this attention, some of the issues appear to be intractable. The OECD sees the ‘knowledge-based economy’ as one that is ‘directly based on the production, distribution and use of knowledge’. In one comment from a 1996 OECD Conference it was said that: In general, our understanding of what is happening in the knowledge-based economy is constrained by the extent and quality of the available knowledge-related indicators. Traditional national account frameworks are not offering convincing explanations of trends in economic growth, productivity and employment. Development of indicators of the knowledge-based economy must start with improvements to more traditional input indicators of R&D expenditures and research personnel. Better indicators are also needed of knowledge stocks and flows, particularly relating to the diffusion of information technologies, in both manufacturing and service sectors; social and private rates of return to knowledge investments to better gauge the impact of technology on productivity and growth; the functioning of knowledge networks and national innovation systems, and the development and skilling of human capital.470 One of the conference participants noted that: … traditional measures of input and output are designed for a world with a fixed list of goods and services with well defined prices. In that world, durable goods have known and stable life expectancies and growth is essentially duplication. Performance can be quantified by levels of input or input-output proportions. … Economists have realised for some time that traditional measures don’t always measure what we care about. For example, since household activities are excluded from Gross Domestic Product (GDP), that measure counts the transfer of individuals, particularly of women, as a net increase in production. ‘Hidden unemployment’ and ‘discouraged workers’ lead many to question the meaning of the unemployment rate. Regional and sectoral differences in price

467 Productivity Commission, Public support for science and innovation , Research Report, Canberra ACT: Australian Government, 9 March 2007, p.171 Documentation accessed at < http://www.pc.gov.au/projects/study/science/docs/finalreport > 468 ibid. 469 Don Lamberton and Max Neutze, Measuring the knowledge-based information economy , Urban Research Program, Australian National Univeristy, report prepared for the Australian Bureau of Statistics, March 1999, . 470 Organisation for Economic Cooperation and Development, The knowledge-based economy , OCDE/GD(96)102, Paris France: OECD, 1996, p.8, accessed online at URL PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 191

movements limit the significance of a general price index. And we know that a given level of aggregate GDP has very different welfare implications depending on its distribution. 471 The practice of accounting has generally been workable when considered in terms of private ownership of resources and how they are described qualitatively; thence quantitatively by counting units or through using measurement standards; and thence quantitatively once more in purchase or sale prices established in market-place transactions. Some market-place transactions involve purchase of income producing assets such as land and appear on a balance sheet as a stock concept. Other transactions such as the rent paid on land apply to use of land over a period; and appear on a statement of income and expenses as a flow concept.472 A remaining difficulty is to reconcile balance sheet values with the true value of the entity that the balance sheet is supposed to represent. This introduces new issues of maintenance, depreciation and obsolescence; as well as the possibility that some assets may increase in value over time.473

The concepts of marginal revenues and costs as used in economic theory do not find a practical application in accounting practice. The profit on individual products becomes difficult to determine in a multiproduct firm especially where items of return on capital and current costs are shared in various proportions;474 and it is practically impossible to know if a firm has successfully ‘optimised’ anything of importance. Understanding of the physical world may proceed from assumptions of point mass and frictionless bodies. However, the physics of road transport needs to admit that friction has advantages as well as some disadvantages when rubber tyres interact with a road surface — under dry or slippery conditions, for example.

In a similar way, information has advantages in giving direction and emphasis to particular tasks as part of a production system — but there are disadvantages insofar as it incurs costs. Information costs tend to be drawn together as unspecified overheads or merged in unspecified ways into other activities. Accordingly, the general notions that there is to much or too little of something might encourage the idea that there is an ideal; but it might depend in practice on a kind of dynamic balancing such as that required for successful tightrope walking. Just as the tight rope walker might have difficulties in gusty conditions, or a human might not be able to cope with extreme heat or cold, the actual management of firms may be more about strategies to retain cash flow and solvency; given legal penalties for trading while insolvent. Survival of managers might also depend on maintaining relationships with shareholders and customers as well as suppliers of goods and services as inputs.

471 Anne P Carter, ‘Measuring the performance of a knowledge-based economy’, Employment and Growth in the Knowledge-based economy, Paris France: Organization for Economic Cooperation and Development, 1996, p.61, reproduced in The economic impact of knowledge, ed by Dale Neef, Tony Seisfeld and Jacquelyn Cefola, Resources for the knowledge-based economy, Woden MA: Butterworth-Heinemann, 1998. 472 However, a lease agreement to pay a fixed rental over a stipulated schedule of payments can have value as an asset if the rental is less than could be obtained if the lease were renegotiated. The lease is a liability if it ‘locks in’ a rental at more than the ‘going rate’. 473 Increases in value might be due to increasing scarcity or antique value yielding a capital gain or decreasing value of money as a measure due to inflation. T A Lee, Income and value measurement: theory and practice , 2nd edn Wokingham Berkshire: Von Nostrand Reinhold, 1980, pp.47-104 deals with traditional accounting concepts of book value incomes and current value incomes that provide different bases for income measurement. 474 Thomas A Lee, ‘Financial accounting theory’ in The Routledge Companion to Accounting History , ed by John Richard Edwards and Stephen P Walker, London UK: Routledge, 2009, pp.139-160 provides an overview of theorising in financial accounting. Issues associated with return on investment in the context of competitive neutrality are addressed in Commonwealth Competitive Neutrality Complaints Office (CCNCO), Rate of Return Issues , CCNCO Research Paper, Canberra ACT: Productivity Commission, December 1998, pp.vii-viii 192 CHAPTER 3

In a 1937 article, Coase outlined the role of transaction costs in influencing the structure of a firm’s organisation. 475 In a 1960 article, he contemplated a situation where zero transaction costs would overcome some external costs that were clear departures from the Pareto Criterion for efficiency in allocation of goods and services. 476 Later, this work gave insights into how surveillance and computer technologies could detect trespass and apply ‘user pays’ principles to problems of resource allocation. However, ‘user pays’ principles applied in recovering costs — in computerised recognition and billing of road users on toll roads, bridges and tunnels, for example — does not overcome market imperfections of price setting by monopolistic service providers. The cost recovery resembles a form of taxation on users, and the prices need not reflect ‘value’ to user. Accordingly, accounting and accountability become more tenuous when the means of measurement and particular conditions for a competitive market do not exist. 477 The output of knowledge workers in particular defies the workability of many popular ideas about monitoring and assessment.

Regardless of market theories, some goods are not bought and sold for socio-political reasons. In many cultures, an offer to pay for something given freely might be seen as an unfriendly act; and an attempt to quantify the value of such a gift might be seen as insulting. Although it may be possible to deliver a service in technical terms and parties may be willing to trade, contracts for criminal activity are generally outlawed and are not legally enforceable. Murder and kidnap are examples. Similarly, contracts for child surrogacy or adoption; or trade in things such as body parts or blood for use in transfusions might be regarded as socially unacceptable and legally unenforceable in some jurisdictions. The market is one system; the polity another. Use of the market and its language leads to results which offend our intuitions; so does the use of political language. Looking at policy issues from the point of any one system is likely to lead to unsatisfactory conclusions somewhere. 478 In 1999, the Australian Bureau of Statistics (ABS) received a report it had commissioned entitled ‘Measuring the knowledge-based information economy’. 479 In 2002, the ABS published a discussion paper entitled ‘measuring a knowledge-based economy and society: an Australian framework’. 480 Although attempts have been made to measure the size of an information sector and attempts continue in trying to estimate the size of a spatial information sector, 481 it is doubted that these studies lead to much practical advice in relation to information policy in general or spatial information policy in particular.

Money is not an absolute necessity because some kinds of interpersonal transactions can take place without it — typically in bartering for goods and services, the giving of gifts and the sharing of information. Money is a therefore a human invention and the institutions that

475 R H Coase, ‘The nature of the firm’, Economica , New series, Vol.4 No.16, November 1937, pp.386-405 476 R H Coase, ‘The Problem of social cost’, Journal of Law and Economics , Vol.3, October 1960, pp.1-44 477 Section 3.3.3.2 — ‘Development and maintenance of physical measurement standards’ and Section 4.2.1 — ‘Classification of resources’ 478 Kenneth J Arrow, ‘Invaluable goods’, Journal of Economic Literature , Vol.35 No.2, June 1997, p.765 479 Don Lamberton and Max Neutze, Measuring the knowledge-based information economy , Urban Research Program, Australian National University, report prepared for the Australian Bureau of Statistics, March 1999. No page numbers provided in original. The cited material appears under a paragraph heading ‘The Information Revolution’. 480 Dennis Trewin, Australian Statistician, Measuring a knowledge0based economy and society: an Australian framework, Canberra ACT: Australian Bureau of Statistics, 2002, accessed online at ABS website 481 ACIL Tasman, Spatial information in the New Zealand economy: realising productivity gains , report prepared for Land Information New Zealand; Department of Conservation; Ministry of Economic Development, August 2009, accessed online via URL < http://www.geospatial.govt.nz/productivityreport/ > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 193

have built up around its use involve human conventions. Things that have been invented and established through conventions can also be reinvented and re-established through new understandings and conventions. Invention implies purpose and purpose implies design; but in institutional matters an original purpose and design can easily become lost in history as people forget why things are done in particular ways. Usually, historical analysis is the best that can be offered by way of explanations. However, those who benefit from conserving particular institutions may wish to describe these institutions as ‘natural’; or as part of the human condition; or as part of the grand design of some deity. These are attempts to close off discussion about how institutional arrangements involve learned attitudes and behaviour whereas the nature of financial dealings is actually culturally determined and can be re-determined.482

Money is a medium of exchange that overcomes some of the constraints imposed by a barter system. 483 Among these constraints is the need to find two parties that are willing to exchange the particular items in the particular proportions that each has to offer. A priori , the chances are that barter may operate with some success where there is not much diversity of regularly-used goods and services. However, barter involves particular costs in establishing and using the required communication channels to search for opportunities and actually transact business. Participants in a barter system would soon reach constraints on cognition, communication and various costs of information-intensive activity in a complex economy of sophisticated and diversified goods and services.

In much the same way that an agent can reduce transaction costs between trading entities, 484 money has found acceptance since antiquity as an intermediary or medium of exchange to facilitate particular social and trading arrangements. Primitive forms of money have included cattle, cowries and whales teeth. Insofar as a particular token possesses a denomination — which is essentially a naming convention with an associated number — it resembles a physical measurement unit that can also provide a basis for counting. The twin developments of denominated tokens and arithmetic underpin accounting and accountability in modern financial systems. The abacus as an aid in performing arithmetical operations evolved into modern computer systems. The chequered cloth on which money could be sorted and allocated to deal with various departments and circumstances evolved into the office of the Exchequer and modern departments of budget and finance. The associations of the chequered cloth with board games and their various rules, board rooms, gamesmanship and game theory can become quite divorced from the goods and services needed to promote human well being within a whole community.

The link between measurement units and money was preserved in the ‘Shekel’ that was both a unit of weight and a unit of money; and in the pound of Sterling silver that survives as the English monetary unit. Coinage was used to divide the larger monetary units for trade in small commodities where exact divisibility by integers such as 2, 3, 4 and 5 helped to fix denominations of coinage as purchasing tokens. Sovereigns understood that revenue as well as power could be derived from holding a monopoly over so-called ‘royal

482 Percy S Cohen, ‘Economic analysis and economic man: some comments on a controversy’, Association of Social Anthropologists of the Commonwealth Monographs, Michael Banton (General Editor), Vol.6 - Themes in economic anthropology, ed by Raymond Firth, London UK: Tavistock, 1967. This is a further example of ‘anonymous authority’ as discussed in Section 3.1.7. 483 Richard Britnell, ‘Markets and incentives: common themes and regional variations’, Chapter 1 in Agriculture and rural society after the Black Death: common themes and regional variations , ed by Ben Dodds and Richard Britnell, Studies in regional and local history Vol.6, Hatfield Hertfordshire: University of Hertfordshire Press, 2008, pp.1-2 484 Section 5.3 – ‘The role of copyright as it relates to government information’ considers the role copyright collecting societies in reducing the transaction costs of communication channels in copyright administration. 194 CHAPTER 3

metals’ and the striking of coins. 485 Coinage generally used metals with sufficient malleability to allow ‘striking’ as a means of forming images and messages.

Coinage was often susceptible to tampering though shaving, filing and clipping of coins to provide a systematic ‘short measure’ in intrinsic value. Over centuries, an offender was regarded as a counterfeiter and risked a death penalty for high treason if detected.486 In the 1600s, royal mints devised milling and other patterns on the edge of coins to make clipping more discoverable. 487 The Crown could profit from recoinage, especially in severing a connection between the intrinsic value of the metal and coin’s denominated value; but minting in itself involved a cost. Thus coins became ‘tokens’ in a technical sense. Private interests also issued tokens with purchasing power for use within closed environments such as gambling casinos. Some firms and industries also used trading tokens or coupons within limited circles. 488 Private tokens depend on their voluntary acceptance within a user community. In contrast, the tokens of an officially issued currency have the authority of a legal tender for use in legally enforceable contracts.

Money serves a useful purpose in facilitating exchange. However, a systemic imbalance occurs if the amount of available money loses a workable relationship with the amount of available goods and services. In general, two kinds of imbalance can occur: • Too much money chasing too few goods and services — with a potential to:
Raise market prices of particular commodities or in particular sectors of the economy; and motivate increases in production of those commodities or sectors; but subject to technical and socio-political constraints and time delays.
Raise average prices across sectors more generally albeit with different rates of increase across the sectors. • Too little money chasing available goods and services — leading on average to under- employment or unemployment although with the possibility of substantial variations from the average across different industries and sectors.

These systemic arguments are largely a matter of logic, and some adjustment can occur within the ability of firms and consumers to manage the instability, mainly through the so- called ‘price mechanism’; and in the prudent use of savings and loans. However, collective actions are likely to be considered when individuals face perturbations that become harder to manage. Remedial actions then become matters of public policy and need a proper analysis of why, in particular situations, there is: • Too much or too little money in the system — this is a matter of monetary policy and its administration where controls are essentially political or command mechanisms affecting the banking system.

485 Pierre Riché, Daily life in the world of Charlemagne , (Paris, 1973), translated from the original French with introduction and expanded footnotes by Jo Ann McNamara, Philadelphia PA: University of Pennsylvania Press, 1978, p.123 486 As an example, the Treason Act 1415 (3 Hen 5 c.6) recognised coin clipping as a high treason punishable by death. William Oldnall Russell, A treatise on crimes and indictable misdemeanors , London UK: Butterworth & Son, 1826, Book 2 — Of offences principally affecting the government, the public peace, or the public rights, Chapter 1 – Of counterfeiting or impairing coin – of importing into the kingdom counterfeit or light money — and of exporting light money. This work provides a more extensive review of crimes relating to the currency. 487 Peter Laslett, ‘John Locke, the great recoinage, and the origins of the Board of Trade: 1695-1698’, William and Mary Quarterly , Third Series, Vol.14 No.3, July 1957, pp.370-402. 488 B W Barnard, ‘The use of private tokens for money in the United States’, Quarterly Journal of Economics , Vol.31 No.4, August 1917, pp.600-634 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 195

• Too few goods and services — this is a matter of production capacity and depends on a myriad of factors that can affect production involving particular firms, industries and sectors of the economy.

Imbalances in the supply of commodities can occur through a variety of circumstances that affect the transformation and transportation processes of production. Without attempting to be exhaustive, these factors could include: • Meteorological — in rains, floods, droughts and wind storms. • Geological — in earthquakes or volcanic eruptions. • Biological — in plant and animal diseases; and in pests and pestilence. • Political — in denying access to particular resources such as oil or minerals; or in other barriers that limit what people are permitted to do with resources.

In earlier times, the need to borrow money reflected an element of scarcity in the supply of money in the form of bullion or coinage. Thus, money also found a purpose in rationing supply of commodities that were produced in varying quantities over time. Rationing occurred when money became an enumerator or numéraire to provide a commodity ‘price’ as recognised between a vendor and purchaser. In this regard, workers are both producers and consumers and unemployed workers also suffer perturbations in their purchasing power. Bankers and banking institutions can perform a stabilising function in smoothing these perturbations through receiving deposits and making loans for producers and consumers. However, in admitting that loans may be necessary in a money economy, new arrangements are called for to establish a basis on which loans can be made. Typically, in making a loan, a money lender might incur cost components that include: • A cost in establishing and operating the interface between a pool of savings under control of the lender and potential borrowers. • A cost associated with a risk that a borrower may fail to repay a loan — in effect, an actual or notional insurance premium. • A management cost in receiving one or more payments to redeem the loan. • An interest charge – known historically as ‘usury’ – and representing the willingness of the lender to forego use of the money during a loan period.489

Most political, religious and intellectual authorities admitted that a lender was entitled to recover costs in the first three areas. However, the morality of charging for the interest component involves argument that dates from antiquity; 490 and is recorded in religious and philosophical writings such as in the Old Testament;491 and works of Aristotle.492 In 325 AD, the Council of Nicaea banned usury between clerics. 493 Under Charlemagne, prohibition on usury extended to laymen – with usury defined simply as asking more than

489 This assumes that the loan is not repayable on demand. 490 Carl F Taeusch, ‘The concept of “Usury”: the history of an idea’, Journal of the History of Ideas , Vol.3 No.3, June 1942, pp.291-318. 491 Biblical examples appear in Exodus 22:25; Deuteronomy 23:19-20, and Leviticus 25:35-37. Jews were forbidden to lend at interest to one another, but not to foreigners. 492 Clyde G. Reed and Cliff T Bekar, ‘Religious prohibitions against usury’, Explorations in Economic History , Vol.40, 2003, pp.347-368 493 The Council of Nicaea 325 was the 1st Ecumenical Council of the Roman Catholic Church, translation of the original decree is accessible at URL < http://www.piar.hu/councils/ecum01.htm > 196 CHAPTER 3

is given. 494 In 1139, the Lateran Council in Rome saw usury as ‘theft’ and required restitution from those who practiced it. In 1311, the Council of Vienne declared that denying that there was sin in usury should be punished as heresy. 495 Other religions also treated usury as sinful and many Islamic countries retain reservations about the practice today.

In England, usury was an object of hatred before 900 AD; and these sentiments persisted into the 1600s. ‘Alive or dead, the usurer was the object of spiritual or royal vengeance’. 496 Sometimes, this hatred was expressed towards Jews whose religious teachings barred usury in dealings with other Jews but not with foreigners. However, while the Christian church preached that avarice was one of seven deadly sins, bishops associated with the Christian Church in Rome generally lived and worked in splendour. Some of the Church’s wealth was attributable to indulgences sold to usurers. The Church therefore profited fairly directly from the sin of avarice that it outwardly condemned. 497 Luther attributed the splendour — at least in part — to sale of indulgences. He began a Protestant movement by posting his 95 Theses as a protest on the church door in Wittenberg, Saxony in 1517.498 Ideas were communicated rapidly through use of the newly invented printing presses, and the challenges to religious authority changed the nature of political power and the conduct of government and commerce thereafter.

In England, Christian influence was divided between the Established Church, the Catholic Church and a number of Protestant movements. Arguably, the moral authority of the Christian faith was then divided and effectively conquered; and the inherent instability of the monetary system under unhindered forms of capitalism began to reveal itself. 499 Attempts to control interest on loans were always difficult to oversee in practice. 500 Charges in interest on a loan were not easily separable from transaction costs in administering the loan or allowances for risk in making loans. Attitudes justifying the charging of interest began to emerge in the 1600s, and by 1682, Petty had redefined usury to mean ‘interest’ or the rent on money. 501 What reason there is for taking or giving Interest or Usury for any thing which we may certainly have again whensoever we call for it, I see not; nor why Usury should be scrupled, where money or other necessaries valued by it, is lent to be paid at such a time and place as the Borrower chuseth, so as the Lender cannot have his money paid him back where and when

494 Riché, Daily life in the world of Charlemagne , p.123 495 The Council of Vienne 1311-1312 was the 15th Ecumenical Council of the Roman Catholic Church, translation of the original decree is accessible at URL < http://www.piar.hu/councils/ecum15.htm > 496 Robert Buckley Comyn, Treatise on the law of usury , London UK: Pheney, 1817, p.1 497 R H Tawney, Religion and the rise of capitalism , Harmondsworth Middlesex: Penguin, 1937, pp.23-24 498 Martin Luther, Disputatio pro Declaratione Virtutis Indulgentiarum’ (1517), Works of Martin Luther, ed and trans from Latin by Adolph Spaeth, L D Reed, Henry Eyster Jacob et al, Philadelphia PA: Holman, 1915, Vol.1, pp.29- 38, republished online by Project Wittenberg at URL 499 Perhaps the first example of a new age phenomenon was the speculative bubble known to history as Tulipmania that occurred in Holland around 1637. A combination of factors such as access to money, tradeable securities and newly found attitudes towards accumulation of wealth were contributors. ‘Tulipmania’, Wikipedia , accessed online at URL < http://en.wikipedia.org/wiki/Tulip_mania > 500 Tawney, Religion and the rise of capitalism , pp.23-24 501 William Petty, A treatise of taxes & contributions, shewing the nature and measures of Crown lands, assessments, customs, poll-money, lotteries, benevolence, penalties, monopolies, offices, tythes, raising of coins, harth-money, excize, etc. With several intersperst discourses and digressions concerning warres, the church, universities, rents & purchases, usury & exchange, banks & lombards, registries for conveyances, beggars, ensurance, exportation of money & wool, free-ports, coins, housing, liberty of conscience, etc., London: Brooke, 1662, para.5 of Chapter 4, republished in ‘History of economic thought’ archive by Economics Department, McMaster University, Hamilton ON; accessible online at URL< http://socserv.mcmaster.ca/econ/ugcm/3ll3/petty/taxes.txt > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 197

himself pleaseth, I also see not. Wherefore when a man giveth out his money upon condition that he may not demand it back until a certain time to come, whatsoever his own necessities shall be in the mean time, he certainly may take a compensation for this inconvenience which he admits against himself: And this allowance is that we commonly call Usury. 502 This justification was continued with some variations by Locke;503 and through cautious observations of Adam Smith. Smith saw interest as necessary within limits.504 In 1787, Bentham — a leading proponent of utilitarianism and the idea of ‘the greatest happiness for the greatest number’ — published an article defending the practice of charging interest on money. 505 The traditional arguments deferred to an ancient wisdom about a sin of avarice whereas the new thinking was about free trade and exploitation. In 1836, Whipple offered a penetrating analysis of the role of money that was also a critique of Bentham’s view on usury.506 Whipple commented: If 5 English pennies... had been... at 5 per cent compound interest from the beginning of the Christian era until the present time, it would amount in gold of standard fineness to 32,366,648,157 spheres of gold each eight thousand miles in diameter, or as large as the earth. 507 In terms of modern measurements, the earth’s mass approximates 5.98 × 10 24 kg and an Australian one dollar coin weighs 9 grams. One dollar invested at 5% compound interest for 1266 years would weigh more than the earth. At 2000 years, the mass would be 2.15 × 10 41 kg — the earth’s mass multiplied by an astronomical number. Whipple argued that money is unlike other articles of merchandise. His arguments may be paraphrased as follows: 1 The origins of money and merchandise are different in that money is created by government whereas merchandise is created by industry. 2 The object in creating money was to create currency for the convenience of everyone whereas the object in business is to advantage individuals acting alone. 3 Title to merchandise is absolutely individual whereas title to a portion of money is qualified and no one has a moral right to defeat the object for which money was created. 4 Money differs from merchandise in the power that is inseparable from it; and having conferred such power, government has a duty to see that the power is not abused to the detriment of the public. 5 Power is conferred upon holders of money as a matter of public policy, but is indispensible to the conduct of business more generally. 6 Money being generally in the hands of a few, those few have a much greater opportunity to create artificial shortage of money than is possible in the case of merchandise.

502 ibid., para.1 of Chapter 5 503 Peter Laslett, ‘John Locke, the great recoinage, and the origins of the Board of Trade: 1695-1698’, William and Mary Quarterly , Third Series, Vol.14 No.3, July 1957, pp.370-402. Laslett shows how the economic views as well as the political views of John Locke were important through the direct personal connections Locke maintained as an adviser to people in powerful positions. 504 Joseph M. Jadlow, ‘Adam Smith on Usury Laws’, Journal of Finance , Vol.32 No.4, September 1977, pp.1195- 1200. 505 Jeremy Bentham, Defence of usury, shewing the impolity of the present legal restraints on the terms of pecuniary bargains in a series of letters to a friend , (first published in 1787), London UK: Payne and Foss, 1818 506 John Whipple was an American lawyer who used the nom de plume of ‘A Rhode Islander’ in a written rejoinder made in 1836 to Bentham’s defence of usury first published in 1787. Text of the article is available at URL . 507 Cited by Stephen Zarlenga in his talk entitled ‘The usury problem remains’, given to Lord Sudeley's ‘Monday Club’ discussion group at London's Carlton House on 5 May 2004, text accessed online URL< http://www.monetary.org/usurytalk.htm > 198 CHAPTER 3

Whipple showed that long term interest using coinage was unsustainable. If people persist with the expectation that saved money should increase exponentially, other mechanisms must come into play in trying to retain some connection between coinage as a symbol of purchasing power compared to whatever the supposed purchasing power can actually buy by way of goods and services. Historically, the following systemic features reflect attempts to address the inherent instability of exponentially rising money values in a finite world: • Over time, the format of purchasing power symbols has undergone changes:
To larger denominations of coins — with an increase in the weight of coins offset to some degree in using higher value metals — usually from copper to silver and thence to gold.
To the use of bank notes — redeemable as bullion if and when presented to a bank. The need for standardisation occurred especially in international transactions and led to formal agreements to use gold as a standard for bullion.
To the use of notes alone — thus severing the connection with the gold standard and relying on symbolism based on the integrity and credibility of a centralised banking system; and with fixed international exchange rates adjusted from time to time but more recently with floating exchange rates determined in foreign exchange markets.
To the use of numbers alone — as record in computerised accounts using electronic funds transfer (EFT) — where dramatic falls as registered nowadays on share and commodity exchanges are a combined effect of computers, telecommunications, rapid online transactions and automated stop-loss features designed to protect leveraged investments. 508 • Over time, the price of goods and services has undergone a general rise.
Some of the general rise is often seen as ‘natural’ or as a tolerable or ‘target’ rate of inflation.509
A general rise of wages is interdependent with a general rise in prices; usually without any clear direction of causation one way or the other. This is due to the dual role of wages as costs to producers and purchasing power to workers. Some workers may gain more than average. Those who receive less than average need not go backwards in nominal wages if the loss is concealed in the real rate of wages after a correction for inflation. 510
Progressive rates of income tax lead to ‘bracket creep’ for ‘pay as you earn’ workers to provide a systematic diminution in purchasing power of workers unless offset by changes to the tax rates. • Over time, the general rise in wages might be sustained by an increased output per worker of available goods and services through improved productivity.

508 Numerous accounts and explanations have been given regarding dramatic gyrations that deviate substantially from growth in Gross Domestic Product. However, useful discussion appears in George A Akerlof and Robert J Shiller, Animal spirits: how human psychology drives the economy and why it matters for global capitalism , Princeton NJ: Princeton University Press, 2003, especially in Chapter 11 – ‘Why are financial prices and corporate investments so volatile?’, pp.131-148 509 Stephen Bell, Australia’s money mandarins , Cambridge UK: Cambridge University Press, 2004, pp.81-86. Bell cites a 1998 survey indicating that 50 out of 90 central banks surveyed had explicit inflation targets – typically of 1 to 3 per cent. The Reserve Bank of Australia (RBA) indicates that ‘The Governor and the Treasurer have agreed that the appropriate target for monetary policy in Australia is to achieve an inflation rate of 2–3 per cent, on average, over the cycle’, RBA website, Monetary policy, ‘Inflation target’. accessed online at URL 510 A substantial body of literature exists in relation to this behavioural phenomenon that is called a ‘money illusion’. Akerlof and Shiller, Animal spirits , pp.41-50 provides a useful overview. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 199

• Periodic ‘corrections’ become necessary to maintain a nexus between the ‘book value’ of assets and what people are actually prepared to pay for them.

Orderly saving and lending makes enterprises more manageable and tends to stabilise socio-economic systems. In contrast, speculative activity that results in booms and busts tends to destabilise them. A speculative boom occurs when buying and selling of income- earning assets bids up asset prices to a point where the ratio of prices paid for assets compared to the earnings obtainable from those assets is too high. 511 The realisation that prices are too high leads to a scramble to sell at the top of the market that produces a rapid fall in prices where assets are oversold and become available at bargain prices. The sensitivity of markets to undue optimism and undue pessimism is reminiscent of a measurement instrument that will not settle and where some damping is needed if the instrument is to provide useful measurements.

When asset prices fall to a point where they no longer provide sufficient security to cover loans obtained to purchase these assets, the losses sustained by asset owners may lead to insolvency. Insolvency becomes more likely with highly leveraged buying and selling that magnifies gains with rising prices but also magnifies losses with falling prices. Losses are then distributed throughout the socio-economic system according to rules of insolvency erected on principles of limited liability. The losses are dispersed to various unsecured creditors as well as some creditors who might have thought wrongly that they were secured. Thus, instability ripples through the larger socio-economic system. The problems are exacerbated if bank customers believe that banks might fail and a run on banks to withdraw deposits actually causes them to fail.

In times of jittery share markets, how can an auditor claim that assets as shown on a balance sheet represent ‘fair value’?512 The question has a particular resonance in a dynamic Chinese economy interacting since the 1990s within a framework of global financial institutions. The need is to find some compromise between the relatively static concepts of traditional accounting methods and the increasing values of assets in enterprises undergoing considerable growth. … time and uncertainties have essentially disappeared from the apotheosis of a price system driven by neoclassical financial economics, but they remain the concerns of everyday business activity. The problems of how to account for their influence on the ongoing economic process are central to the development of accounting and lead to the dynamic accounting view of the special economy of the firm as an entity. Dynamics inscribes every complex business activity into a special economic process of becoming, and accounting has to cope with this entity’s process … . 513 A further factor affecting reference to trading in shares and other securities is that it redistributes wealth by producing gains that are offset exactly by losses in a ‘zero sum game’. This win-lose situation of redistribution differs importantly from transactions where people trade to mutual advantage in a ‘win-win’ situation as is likely to occur where saving and lending tends to promote stability. Since ‘zero sum’ redistributions incur transaction costs, the activity results in a net loss to society — even though people may appear to be busy. The gambling industry produces similar results although it is arguable that some

511 How many years ir would take for the rent from land to pay for the purchase price referred to as the ‘years purchase’ in relation to land valuations; and the price/earnings ratio in share trading. It is the reciprocal of ‘return on investment’ 512 Yuri Biondi and Qiusheng Zhang, ‘Accounting for the Chinese context: a comparative analysis of international and Chinese accounting standards focusing on business combinations’, Socio-Economic Review , Vol.5 No.4, October 2007, p.697 513 ibid, p.720 200 CHAPTER 3

people may regard gambling as ‘entertainment’; or as a round-about way of donating to charity or some beneficial not-for-profit activity.

In practice, financial accounting methods are usually unable to determine how benefits and costs are distributed throughout society. The contribution that so-called ‘money mangers’ make to society is certainly questionable. Their political and economic power to control accumulations of funds is authorised through public policies. Most risk management strategies and social security arrangements depend on depositing funds in income-earning investments and either selling the investments to have funds available for a rainy day or retaining the investments to secure a stream of income. Examples include workers’ compensation, health insurance and the interaction between superannuation and aged pensions.514 The ability to manage these investments is severely tested in superannuation for example. Deciding when to retire can be affected materially by a stock market in steep decline; and oscillations in asset prices and economic activity complicate calculations about income and return on investment.

Money is a symbol of purchasing power that underpins financial accounting as a form of description. However, money symbols are capable of arithmetic manipulation that can be isolated from the reality just as alphanumeric symbols can be manipulated to produce gibberish. The situation is exacerbated by calculations using undisclosed formulae that are automated within computer systems. If accounting is meant to test theory or predictions, faith firmly founded in reason needs to prevail over blind faith and unquestioning allegiance to past practices or professional claims to ‘best practice’. Seemingly, financial accounting is important in testing the efficacy of government policy regarding superannuation and the funding of retirement incomes for example. Ideas that a person’s a person’s retirement savings in the form of money is ‘working hard’ or even working at all is fanciful. Yet advertisers try to attach a ‘work ethic’ to the kind of usury that was an object of hatred through centuries. Insurance against failures needs to contemplate the possibility that insurance schemes may also fail.

The Great Depression followed the Great Crash when stock prices on the New York Stock Exchange fell dramatically in November 1929. The effects reverberated globally and lasted until around 1939. It remains as the longest and most severe depression ever experienced by the industrialised world. 515 Attempts to describe and understand the circumstances of the 1920s and 1930s included experiments in aggregating accounting records into national data. This statistical work owed a great deal to pioneering work of Colin Clark in the UK and Simon Kuznets in the US.516 Some theorists argued that labour markets would clear and unemployment would end if wages were allowed to fall. However, problems of wealth distribution and redistribution become socially divisive in a climate where those with access to savings can afford to wait and see what might happen next while people without savings might be unable to buy food or pay rent.

The ability to create activity and keep people employed with government expenditure is amply demonstrated by World War 2 and post war reconstruction in Europe that covered a period from 1939 to around 1960. Activity may have some effects on employment but it

514 Section 4.2.2.3 – ‘Private insurance, adverse selection, moral hazard and social security’ 515 Christina D Romer, ‘Great depression’, article prepared for Encyclopaedia Britannica , 20 December 2003, accessed online at URL 516 George Peters, ‘Colin Clark (1905-1989) economist and agricultural economist’, QEH Working Paper Series No.69, Oxford UK: Oxford Department of International Development, University of Oxford, April 2001, accessed online at URL PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 201

does not necessarily lead to productivity or ‘growth’ in anything that is useful. The idea of paying people to dig holes and fill them in again may reduce unemployment but it also shows that arguments can often be reduced to absurdities. 517 Yet the absurdity may evoke a desirable response if it can encourage people to consider alternatives such as simply making welfare payments or trying to find work that is beneficial. The destructive World War 2 and the reconstruction of the post-war period produced low levels of unemployment and recorded levels of growth in GDP that might seem to be ‘respectable’. However, the numbers conceal the real costs of war in human suffering; 518 and the lost opportunities of failing to make a satisfactory peace after World War 1. The things that needed to be done then from a human welfare point of view are represented largely nowadays in various international conventions concerned with human rights.

While money may facilitate exchange as a primary purpose, exchange may be frustrated by people using money as a store of wealth as a secondary purpose. 519 Policy making needs to be directed at greater understanding of the socio-economic system as a going concern that supports human life. However, use and misuse of national accounting numbers has encouraged two schools of thought — a Keynesian school and a monetarist school. These schools have dominated economic thought since the 1930s. Progress in understanding has been stymied by seeing these theories as fundamentally opposed rather than trying to see where they might provide additional insight — as in using two eyes to appreciate a third dimension. 520

Bartlett offers useful insight into how to see these schools as complementary rather than opposed and its ramifications for economic policy: Once I learned what economists were saying and doing in real time, it was clear there were no essential differences between Keynes, the arch fiscalist, and Fisher, the arch monetarist and the Milton Friedman of his day. Their positions reinforced each other and both were needed to deal with the Great Depression. While the basic problem was monetary, Fed policy was impotent because the economy was at a dead stop. Money was unable to circulate and the Fed’s efforts at trying to expand the money supply were like pushing on a string. Fiscal stimulus was necessary to compensate for the collapse of private spending in the economy, and thereby mobilize monetary policy. Once fiscal policy got the economy off dead stop, monetary policy would again become effective, ending the deflation and the depression. 521 Neither national accounting figures based on recorded economic activity nor asset prices as indicated by stock market prices are necessarily reliable as indicators of human well being. Human well being is an indication of living standards and the question becomes one of how well can people be in their own minds. Does their learning allow them to have fair and reasonable expectations? Arguably, a more strategic approach should distinguish more clearly between factors of continuity and change. A factor of continuity involves a ‘metabolic cost’ to sustain a human population at a particular population level. Factors of change might be gradual and imperceptible from day to day but can ultimately reflect in

517 Seemingly, this was suggested by John Maynard Keynes to evoke discussion on unemployment during the 1930s. 518 The true costs of war are seldom revealed but there are some who win in making loans and manufacturing armaments while many who lose in suffering that is not recorded. Joseph E Stiglitz and Linda L Bilmes, The three trillion dollar war: the true cost of the Iraq conflict , New York NY: Norton, 2008 goes some way in addressing this area of ignorance in relation to recent conflict in Iraq. 519 People are thus at cross purposes in their use of money. This contradiction is known alternatively as the paradox of thrift. 520 The merging of additional information to achieve more complete description is recognisable in stereographic visual representations and in stereophonic sound recordings, for example. 521 Bruce Bartlett, The new American economy: the failure of Reagonomics and a new way forward , New York NY: Palgrave Macmillan, 2009, p.4 202 CHAPTER 3

taking stock over longer time intervals. Metaphorically, it resembles accretion and erosion in the banks of a watercourse. Periodic stocktaking may be the most direct means of determining human well being and the legacy of resources available to human beings.

Multiple factors of change can complicate the problem of trying to decide whether the overall legacy is improving or deteriorating in terms of the opportunities it provides to future generations in their quest for survival. Factors of continuity and change can be described briefly as follows: • Metabolic cost — to maintain individuals and a working society as living organisms — regardless of whether individuals are actually in the work force. In such a schema, the metabolic costs include things such as:
Costs of defending the country militarily and maintaining diplomatic and other external communications; and in maintaining law, order and working relationships internally.
Costs of educating a workforce through successive generations to meet the requirements of government, commerce and civil society.
Costs of maintaining physical and mental health within a community – including institutions that maintain fair, reasonable and trustworthy relationships in dealings with individuals; especially in matters of employment and social security. • Legacy – Legacy assessments involve periodic stocktaking of usable resources. These resources are inherited from past generations; retained under the custodianship of a present generation; and are then capable of being inherited by future generations. As an inheritance, they comprise:
A cultural heritage — that is global insofar as it is accessible across national boundaries and can be interpreted by whoever has sufficient prior knowledge to interpret it.
A genetic heritage — where the earth’s living flora and fauna provides the basis for agriculture, pharmacy and medicine and for human appreciation of other forms of life.
A physical heritage — comprising a natural heritage apart from biodiversity; especially in geomorphology; 522 and a built environment of public and private resources that include stocks of residential, commercial and industrial buildings; plant and machinery; and various items of infrastructure such as roads, railways, water supplies, communication systems, sanitation systems, and sea and airports.

Many quality of life issues are bound up in the concept of metabolic cost and reflect ultimately in standards of living. However, it is the quality of the activities rather than activities per se that determine whether the outputs are desirable. ‘Digging holes and filling them in’ may create activity, reduce unemployment, redistribute wealth and relieve social tension but it wastes time and resources. Increasing expenditure on food and using labour saving devices may satisfy hunger and save human energy but it may also lead to obesity and health problems rather than improvement in the overall well being of individuals. Ultimately, the management problem is to understand activity in terms of its contribution to human well being.

522 ‘Geomorphology’ includes the atmosphere and oceans as fluid resources maintained within limits by natural atmospheric and hydrological cycles; and the various resources of fuels and minerals that are created in geological time and thus regarded for practical purposes as ‘non-renewable. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 203

There are at least two reasons for believing that ‘economic growth’ as traditionally measured might not be a fair and reasonable indicator of improvement to human well being. First, the accounting methods fail to bring important activities to account unless they are recorded and measured — as in domestic chores and minding children. Second, the methods fail to distinguish wasteful activities from activities that are actually beneficial. The idea of the triple bottom line has a virtue in at least thinking about rather than completely overlooking social and environmental costs. However, in the absence of a means of quantifying the items on a comparable scale such as that provided by money, the problem becomes one of subjective weightings and judgements that might not be easily shared in collective decision making. The problem of ranking can only be avoided if there is no deterioration in cultural, genetic or physical heritages in terms of the opportunities provided to succeeding generations. This seems to accord with ideas about sustainable development.

The problem of distinguishing beneficial from wasteful activities occurs also in relation to government regulatory activity. Accounting systems often record such items as ‘overheads’; and some see ‘reducing overheads’ as the key to improving efficiency. In a living system, regulatory activity is essential to efficient metabolism. In the individual, the ultimate loss of coordination occurs with the complete absence of brain wave activity that indicates ‘brain death’. This failure may be associated with trauma through brain injury, or with energy issues – in failing to maintain blood temperature, nutrients and oxygen supply within operating boundaries. The circumstances that provide food, avoid malnutrition, prevent atrophy through lack of exercise and provide shelter are matters of continuity and sustenance rather than ‘growth’.

Many of the metabolic issues that occur at the level of the individual have counterparts at the levels of government and society. In countering the moves to suffocate or starve government agencies for resources or information to perform their functions, a common response is to look to benchmarking to justify resource allocations. This may be convenient within a complex budgeting process but it is also invites systemic inefficiency by doing nothing to avoid wasteful activity. Just as an individual can learn how to improve knowledge, skills and physiological health and motivation, small investments may be possible within teams to improve teamwork if an institutional framework can allow it to happen.

Improving teamwork, governance and government is likely to require learning how to do things better. This provides an improvement in a cultural heritage provided it is retained and perpetuated. If actions lead to better chances of survival of a genetic heritage and do not detract from a physical heritage, there is unambiguous improvement. If there is improvement in some areas and deterioration somewhere else, the difficulty will be with how it can be decided unambiguously that society is better off. Seemingly, this points to some analysis of things that are likely to be accepted as authoritative compared to things that may be more subjective. The actual weight to be accorded to various items in an impact assessment may vary with particular circumstances with the greatest weight given to elements whose credibility is not under suspicion or challenge. Consideration could be given in turn to: • Objective physical measurements when there is sufficient redundancy to check against gross errors and where information tends to be beyond reasonable doubt. • Subjective responses to surveys and polling that reflect how people feel about things that affect them. 204 CHAPTER 3

• Subjective measures of value using prices – with more weight attaching to prices established in competitive markets than to prices established under exercise of market power or by bureaucratic or political fiat. • Expert commentary that reflects scientific opinion.

In Australia, a number of initiatives do align with a balance sheet approach. Examples include ‘state of environment’ reporting and reporting by the Australian Institute of Health and Welfare. Much of this work is underpinned in turn by work of various surveying and mapping agencies to reflect conditions in various territorial divisions. The difficulties of integrating more components into a more complete description of the ‘legacy’ are in making parcels of information capable of being integrated to yield synergy. This depends on interoperability between various information systems, file formats and information transfer and exchange protocols. 523

3.3.3.5 Environmental reporting Access to information about the status of the human environment has developed into a human right to know about environmental impacts on health and well being. 524 As an example, the Aarhus Convention agreed to by EU ministers in 1998, gave the following objective: In order to contribute to the protection of the right of every person of present and future generations to live in an environment adequate to his or her health and well-being, each Party shall guarantee the rights of access to information, public participation in decision-making, and access to justice in environmental matters in accordance with the provisions of this Convention. 525 The United Nations Secretary-General commented on the Aarhus Convention as follows: Although regional in scope, the significance of the Aarhus Convention is global. It is by far the most impressive elaboration of principle 10 of the Rio Declaration, which stresses the need for citizen's participation in environmental issues and for access to information on the environment held by public authorities. As such it is the most ambitious venture in the area of environmental democracy so far undertaken under the auspices of the United Nations. 526 Principle 10 of the Rio Convention reads: Environmental issues are best handled with participation of all concerned citizens, at the relevant level. At the national level, each individual shall have appropriate access to information concerning the environment that is held by public authorities, including information on hazardous materials and activities in their communities, and the opportunity to participate in decision-making processes. States shall facilitate and encourage public awareness and

523 Licensing within the framework of copyright law is of fundamental importance in this regard. Chapter 5 of this work deals with supply protocols. 524 Discussion on this issue appears in Peter H Sand (Institute of International Law, University of Munich), ‘The right to know: environmental information disclosure by government and industry’, Revised version of a paper presented to the 2nd Transatlantic Dialogue on ‘The Reality of Precaution: Comparing Approaches to Risk and Regulation’, Warrenton VA, 15 June 2002, and the Conference on ‘Human Dimensions of Global Environmental Change: Knowledge for the Sustainability Transition’, Berlin, 7 December 2002 accessed at URL < http://www.inece.org/forumspublicaccess_sand.pdf > 525 United Nations Economic Commission for Europe, Environment for Europe Process, Convention on access to information, public participation in decision-making and access to justice in environmental matters , made at Aarhus, Denmark, on 25 June 1998, and coming into force on 30 October 2001 accessed at URL < http://www.unece.org/env/pp/documents/cep43e.pdf > 526 Kofi A Annan, Secretary General, United Nations, cited in ‘Environmental rights not a luxury: Aarhus Convention enters into force’, Ref:ECE/ENV/01/15, Geneva, 29 October 2001 accessed at URL < http://www.unece.org/env/pp/press.releases/01env15e.html > on 27 July 2008 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 205

participation by making information widely available. Effective access to judicial and administrative proceedings, including redress and remedy, shall be provided. 527

A major issue in environmental reporting is how to interpret evidence. A considerable scope for differences of opinion and bias can arise through uncertainties in assessing some environmental outcomes; complexity in assessing their social and economic impacts; and the potential for bias in interpreting and reporting on technical enquiries and reports. The reporting function can shade over into environmental advocacy. Moreover, a decision one way or another based on interpretation of evidence can have significant economic consequences in considering matters of liability, damages and compensation. 528

Beder commented in the following terms on a 1990 review of changes to Sydney’s sewerage outfalls, their potential to contaminate fish, and appropriate policy responses by government: Clearly, various players in the debate over whether Sydney fish are contaminated chose to interpret the two bioaccumulation studies according to their own interests and to further those interests by restricting (or increasing) the flow of information and attempting to ensure that their interpretations of the studies were accepted. Each participant in this controversy implicitly acknowledged that the truth did not automatically emerge from the data obtained in the studies but was up for grabs to whomever could successfully get their own interpretation accepted as the 'truth'. Science is a resource in the political arena and those who have best access to it and most control over it can shape interpretations and meanings. Criticisms of the media for false, inaccurate or distorted reporting are often made by disgruntled players who have lost power over interpretation or those who do not understand the game. 529 In many instances, the cost of information may be a minor consideration compared to the cost of misinformation. The more general issues emerging from these kinds of circumstances include: • The problem of trying to learn from experience when the experience is uncertain, ambiguous or hard to access because information is subject to significant secrecy, censorship or filtering. • Respect for the right of people to know about things that affect them. • Public perceptions regarding official secrecy or silence on matters of public interest compared to candour in making information openly available for people to interpret as best they can.

Systemically, the loss of biodiversity is a matter for concern because it implies deterioration in the capacity of the biosphere to perform functions; and increases the chances of critical breakdown in a complex system. Much of the world’s biodiversity occurs at a microbial level that is difficult to observe, describe and understand. However, human health depends on nature’s work in the human environment. Important factors contributing to this problem are climate change and loss of habitat.

527 Global Development Research Centre, ‘The Rio Summit’s Principle 10 and its implications’, accessed online at URL < http://www.gdrc.org/decision/principle-10.html > 528 Section 3.2.1.5 — ‘Complexity in multidisciplinary collaboration’ — contains detailed discussion of these issues. 529 Sharon Beder, ‘Science and the control of information: an Australian case study’, Ecologist, Vo.20, July-August, 1990, pp.136-140, accessed at URL < http://homepage.mac.com/herinst/sbeder/sewage/ecologist.html > 206 CHAPTER 3

3.3.3.6 Review as part of law enforcement In seeking compliance with laws, the work of law enforcement is information-intensive activity that falls within the scope of a monitoring regime. Evidence is essentially information; and it is necessary to substantiate allegations about present or past human behaviour that is said to breach criminal, civil or administrative law. Whether someone can be blamed and penalised for actions proscribed by law usually involves determining the truth about some matter, so far as it can be ascertained. While some aspects of civil law might be initiated and funded in part through private initiatives, some costs of the court system depend on public funding. Issues of who pays and who benefits from these actions become difficult to determine. In addition, costs associated with a police force, other investigators and regulators; public prosecutors and defenders; allocations for legal aid; and allocations for various courts and tribunals depend significantly on public funds.

Changes in policies generally involve changes to the rights and obligations of individuals. This can occur through a change in laws as made by a legislature, or it may occur within the scope of delegated legislation. Sometimes, change can occur with an administration’s increased determination to enforce existing laws. Activity in law enforcement and court and crime statistics reflect not only the extent of compliance with particular laws in question. They may also convey information about civil disobedience, general social conditions and social cohesion.

Where penalties for infringement are small in relation to the costs of investigation and the prescribed penalties — as in traffic and parking fines — prosecution might be pursued as misdemeanours and dealt with summarily. Where more substantial penalties are involved, law enforcement might involve criminal proceedings. Depending on the outcomes of any ensuing court proceedings, some issues might proceed to civil litigation where victims may claim compensation for harm that they have suffered. Some of these decisions might be referred on appeal to higher courts, subject to limits on the kinds of matters that can be referred and time limits before which these referrals needs to occur.

Quality, relevance and admissibility of evidence are important issues in legal decision making. The sensitivity associated with evidence in criminal proceedings becomes clear in famous cases involving miscarriages of justice. 530 The problems of evidence extend into other areas of the law enforcement; but the quality of information is an issue for decision making more generally. Where ‘good information’ is identified directly with a ‘good decision’ or a ‘good outcome’, the description has become tautological. The ‘good outcome’ gives meaning to the idea of ‘good information’ within a particular decision- making context.

Notwithstanding a general reliance on adversarial systems, Anglo-American traditions also recognised a need for official inquiry. The inquest or coronial inquiry was instituted in Norman England and remains as a standing arrangement conducted by officials operating under the authority of statute law. The finding of a corpse or an unexplained death was sufficient to set in train an enquiry conducted locally to discover the cause of death. The modern-day equivalent has developed some variations around roles played and names given to qualified legal and medical examiners.531 Traditionally, the approach has been

530 Gary Edmond, ‘Negotiating the meaning of a “scientific” experiment during a murder trial and some limits to legal deconstruction for the public understanding of law and science’, Sydney Law Review , Vol.20 No.3, September 1998, accessed online at URL < http://www.austlii.edu.au/au/journals/SydLRev/1998/16.html > 531 A reference to the Crown in the office of Coroner has retained currency in many parts of the United States despite its strongly avowed republican status. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 207

towards obligations of government, the issue of death certificates and recommendations regarding prosecution where appropriate. Recently, more attention has been given to improving the quality of investigations; and the need to understand and respond adequately to the plight of the bereaved. 532 Local rules may extend the role of the coroner to inquire into fires, explosions and personal injuries.

Apart from the standing arrangements pertaining to coronary inquests, matters may be referred to suitably qualified persons to conduct special inquiries. Officials attached to government departments; or specially appointed commissioners independent of the administrative arm of government and directly responsible to the parliament may be asked to conduct enquiries. In English history, notable enquiries include the Domesday Inquest of 1086 that may have been aimed strategically at assessing the availability of resources for defence of the realm. 533 A famous inquest of 1274-5 was directed towards resources for local government where processes of official enrolment in the Hundred rolls were aligned to the work of local courts and administration. 534

The combined effect of the English Revolution in 1688 and the Acts of Settlement in 1702 entrenched the independence of the judiciary as part of the separation of powers doctrine. 535 Seemingly, the appointment of retired judges to conduct inquiries is a response to a popular call for Royal Commissions to investigate important contentious administrative issues and for these Commissions to be overseen by judges. Arguably, this call is a mark of public respect for the impartiality of judges generally. However, appointing retired judges preserves the judicial independence of sitting judges whose responsibility is to the parliament and the people in interpreting and upholding the law rather than to an executive branch of government formed by a majority party for the time being.536

Public inquiries vary in their powers to grant indemnity to witnesses in disclosing information that might otherwise be challenged as defamatory and in compelling witnesses to give answers that might be seen as self-incriminatory. They also vary in their access to resources that enable independent investigations by experts or by police. Apart from Royal Commissions that can often command witnesses to testify, public inquires can be constituted variously as ‘task forces’, ‘committees’, ‘reviews’, ‘working parties’, ‘commissions’ and the like. Since World War 2, some reaction to increasing complexity of government is apparent in an increasing incidence of inquiries into the machinery of government. Important issues are how executive government operates and how it might be improved. 537

532 A 2006 proposal by the UK government documents discussion of the issues. Coroners Division, Department for Constitutional Affairs, Regulatory Impact Assessment, 12 June 2006, 533 Military leaders seldom reveal their actual purpose or strategy for rivals to see. Seemingly, the actual purpose of the Domesday Inquest is now a matter of surmise where much might be gleaned by reading between the lines. A number of websites are devoted to archiving original sources and presenting commentary. One example is the Domesday explorer online help manual , accessible at URL 534 Helen M Cam, The hundred and the Hundred rolls: an outline of local government in medieval England , London UK: Metheun, 1930 535 George Burton Adams, Constitutional history of England , 1921, revised by Robert L Schuyler, London UK: Jonathon Cape, 1935, pp.373-376 536 Sir William Irvine commented on this issue in 1922 as follows — “that the misuse of judges to inquire into administrative matters frequently involving issues of deep political controversy or suspected breaches of the criminal law, which was perhaps worse, would in the long run inevitably draw the judiciary into the realm of public econtroversy and criticism with danger of loss of public esteem and respect.” — cited by Scott Prasser in ‘Quotes on public inquiries’, accessed online at URL < http://www.publicinquiries.com.au/quotes.htm > 537 R L Wettenhall, ‘A brief history of public service inquiries’, Public service inquiries in Australia , ed by R F I Smith and Patrick Weller, St Lucia QLD: University of Queensland Press, 1978, pp.14-32 208 CHAPTER 3

In January 2009, the Australian Attorney General asked the Australian Law Reform Commission to report on options available to the government in relation to the conduct of inquiries. 538 The ALRC reported in October 2009 with a comprehensive list of recommendations. Briefly, the report recommended a clear distinction between ‘Royal Commissions’ to be appointed by the Governor General; and Official Inquiries that might be appointed at the direction of a minister. 539 It also recommended publication of an Inquiries Handbook in Recommendation 6-2 to provide guidance in the establishment and conduct of inquiries. This recommendation reads as follows: The recommended Inquiries Handbook should address when it is appropriate to establish a Royal Commission or Official Inquiry. This guidance should include a consideration of: (a) the level of public importance—matters of substantial public importance being more appropriate for Royal Commissions and matters of public importance being more appropriate for Official Inquiries; (b) whether powers are required and, if so, which powers are appropriate, having regard to the subject matter and scope of the inquiry; (c) whether the recommendations of a Royal Commission or Official Inquiry will facilitate government policy making; and (d) whether a Royal Commission or Official Inquiry is the best way to achieve the Australian Government’s objectives, or whether it is more appropriate to achieve these objectives in another way—for example, through an inquiry by an existing body or through civil or criminal proceedings.

A capacity to make worthwhile enquiry needs to be accompanied by a capacity to make worthwhile decisions. These capacities can be reviewed if they are perceived as unreasonable. A number of initiatives that were international in character were introduced by developed nations in a relatively short period after the mid 1970s to improve the chances for individuals to redress genuine grievances against decisions of government agencies. 540 In Australia, these initiatives included: • Ombudsman Act 1976 (Cth). • Administrative Appeals Tribunal Act 1975 (Cth). • Administrative Decisions (Judicial Review) Act 1977 (Cth). • Administrative Review Council – provided for under Part V of the Administrative Appeals Tribunal Act 1975 and commenced its operations in 1976. • Freedom of Information – first mooted in 1972; enacted as Freedom of Information Act 1982 (Cth); and currently subject to review under a ‘right to information’ philosophy.541

The office of ombudsman institutionalised a form of inquiry with origins in Sweden that date from 1809. Many jurisdictions across the developed world have adaptations of this office. The general idea is that the ombudsman is a state-appointed official who operates

538 Australian Law Reform Commission (ALRC), Making inquiries: a new statutory framework , ALRC Report 111, October 2009, ‘Terms of reference’, pp.7-8 accessible online at URL 539 ibid., ‘Executive summary’, key recommendations at p.31 540 John McMillan, Politics and Public Administration Group, ‘Parliament and administrative law’, Research paper 13 2000-01, Parliamentary Library, parliament of Australia, 7 November 2000, provides an authoritative overview of events to 2000, accessed online at URL 541 Australian Government, Department of Prime Minister and Cabinet, ‘Freedom of Information (FOI) Reform’, accessed at URL . PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 209

as an independent agent in resolving dissatisfaction with a government agency. The ombudsman is often described also as a ‘parliamentary commissioner’ who reports directly to parliament and is seen as independent of the executive branch of government. 542 In Australia, the Commonwealth Ombudsman officiates also as Defence Force Ombudsman, Immigration Ombudsman and Taxation Ombudsman, among other things. 543 Apart from the ‘parliamentary commissioner’ role, the term now refers also to industry-based ombudsmen in matters of consumer protection and dispute resolution. This is encouraged by government and is consistent with industry self-regulation.544 It now includes offices such as energy and water ombudsman in various States, a financial industry ombudsman investigating complaints about, banks, insurance companies and other financial institutions; and a telecommunications industry ombudsman, to name a few examples. 545

A not-for-profit association known as the Australia and New Zealand Ombudsman Association (ANZOA) was formed in 2003 as a peak body for ombudsman in Australia and New Zealand. 546 This reflects the more general approach to developing, implementing and overseeing compliance with standards regarding regulatory and commercial activities;547 and trends towards globalisation are clear from the formation of similar associations in other countries and regions. 548

The role of the ombudsman is part of a broader area of administrative law that has some continuity with ancient rights of citizens to petition and seek redress of grievances. 549 World War 2 exemplified a widespread inability to redress grievances; and the UN was formed in its aftermath to protect human rights and try to keep peace globally. A number of treaties and conventions are now described collectively and unofficially as an International Bill of Human Rights. They include the Universal Declaration of Human Rights (1948); the International Covenant on Economic, Social and Cultural Rights (ICESCR) 1966; 550 the International Covenant on Civil and Political Rights (ICCPR) 1966; 551 the Optional Protocol to the International Covenant on Civil and Political Rights; and the Second Optional

542 ‘Omdudsman’, Wikipedia , accessed online at URL provides a useful overview of the ombudsman as an institution. 543 ‘Our legislation’, Commonwealth Ombudsman website, enumerates a range of special investigative responsibilities, accessed online at URL < http://www.ombudsman.gov.au/pages/our-legislation/ > 544 ‘Foreword’ in Benchmarks for industry-based customer dispute resolution schemes , Canberra ACT: Consumer Affairs Division, Department of Industry, Science and Tourism, Released by the Hon Chris Ellison, Minister for Customs and Consumer Affairs in August 1997, p.4, accessed at URL < http://www.anzoa.com.au/National%20Benchmarks.pdf > 545 Australia and New Zealand Ombudsman Association (ANZOA), ‘About ANZOA’, accessed online at URL 546 ibid. 547 Section 3.3.3.2 — ‘Development and maintenance of physical measurement standards’ — sets out some of the historical evolution of not-for-profit organisations in relation to global standards. 548 ‘Ombudsman associations’, Commonwealth Ombudsman website, provides a list of associations, accessed online at URL < http://www.ombudsman.gov.au/pages/related-sites/ombudsman-associations.php > 549 Parliament of Australia, Making a difference: Petitioning the House of Representatives , Canberra ACT: House of Representatives Standing Committee on Procedure, tabled on 17 September 2007, Appendix B — ‘Historical development’ accessed at URL < http://www.aph.gov.au/House/committee/proc/petitioning/report/fullreport.pdf > 550 International Covenant on Economic, Social and Cultural Rights (ICESCR), adopted and opened for signature, ratification and accession by General Assembly resolution 2200A (XXI) of 16 December 1966, entry into force 3 January 1976, in accordance with article 27, entry into force for Australia on 10 March 1976, Australian Treaty Series, 1976 No.5, accessed online at URL < http://www.austlii.edu.au/au/other/dfat/treaties/1976/5.html > 551 International Covenant for Civil and Political Rights (ICCPR), adopted and opened for signature, ratification and accession by General Assembly resolution 2200A (XXI) of 16 December 1966, entry into force 23 March 1976, in accordance with Article 49, entry into force for Australia on 13 November 1980 with reservations; accessed online at URL < http://www.austlii.edu.au/au/other/dfat/treaties/1980/23.html > 210 CHAPTER 3

Protocol to the International Covenant on Civil and Political Rights (aimed at abolishing the death penalty). 552

Although Australia signed the ICESCR in 1972, it did not enter into force until 1976. 553 However, signing usually implies an intention to comply with treaty obligations and it may have been a catalyst for a number of mutually supportive Acts involving Commonwealth, State and Territory jurisdictions that date from the mid to late 1970s. The ICCPR entered into force for Australia on 28 January 1993 and the Australian Government established the Human Rights Commission in 1986. 554 This Commission is empowered to hear complaints, make investigations and launch prosecutions where it finds evidence of discrimination that denies opportunities to individuals inappropriately on the basis of race; sex; age or disability.555

Reporting requirements under human rights conventions allow international comparisons on how countries perform in protecting human rights. 556 Countries tend to regard a good ‘human rights record’ as a badge of honour and a poor record as reducing a country’s moral authority in the context of trade and other international negotiations. In Australia, states and territories also have anti-discrimination legislation; and the number of agencies is often multiplied in federal systems. An employer conducting business in more than one state or territory may have to cope with different requirements in the various jurisdictions. Both the Administrative Review Council (ARC) in a Better decisions report of 1995;557 and the Australian Law Reform Commission (ALRC) in its Managing justice report of 2000 recognised a need to support the various tribunals.558 Governments responded with the formation of a Council of Australasian Tribunals (COAT) in 2002.559 Seemingly, this arrangement can address issues of intellectual authority, consistency and coherence in review processes.

Although the monitoring processes associated with law enforcement entail considerable complexity, they embody the fundamentals of learning through experience that underpin all human progress. The global, national and local activity involved in promoting human rights

552 Office of the United Nations High Commissioner for Human Rights (OHCHR), ‘International law’, provides lists of instruments comprising the international Bill of Rights; core human rights instruments; and monitoring bodies. Information accessed online at URL < http://www2.ohchr.org/english/law/index.htm > 553 Signed for Australia on 18 December 1972, instrument of ratification deposited for Australia on 10 December 1975, entered into force generally on 3 January 1976, and for Australia on 10 March 1976. 554 Australian Human Rights Commission Act 1986, s.7. (The Commission was known formerly as the Human Rights and Equal Opportunities Commission). The International Covenant on Civil and Political Rights is reproduced as Schedule 2 to the Act. 555 Commonwealth legislation administered by the Human Rights Commission includes the Racial Discrimination Act 1975 (Cth); the Sex Discrimination Act 1984 (Cth); the Disability Discrimination Act 1992 (Cth); and Age Discrimination Act 2004 (Cth). 556 Australian Government, Attorney-General’s Department, ‘Human rights’ notes that Australia is a party to seven key human rights treaties and gives details of international human rights instruments and their reporting requirements, 557 Administrative Review Council, Better Decisions: Review of Commonwealth Merits Review Tribunals, Report No. 39, 1995, para.7.48, Recommendation 85, accessed through URL 558 Australian Law Reform Commission (ALRC), Managing Justice: A Review of the Federal Civil Justice System , Report No. 89, 2000, para.2.230, Recommendation 10. Documentation is accessible through URL < http://www.alrc.gov.au/inquiries/title/alrc89/index.htm > 559 Administrative Review Council (ARC), Report on the establishment of the Council of Australasian Tribunals , Report No.45, October 2002, ARC documents are accessible online at URL . The COAT website is at URL < http://www.coat.gov.au/ > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 211

through administrative review is consistent with comments in this work on social and behavioural sciences in the design and planning of institutions and policy. 560

Social cohesion depends on a fair and reasonable use of authority; especially in the institutions that exercise control over the benefits that individuals receive; the direct costs that they are called on to pay; and the indirect contributions in efforts and resources they give voluntarily or are otherwise expected to make to society. In complex decision making, the evidence regarding who is doing good, causing harm or taking unacceptable risks becomes multidisciplinary in character. This suggests that developing a collective competence in deciding things in ways that are fair and reasonable deserves special emphasis. Each new generation needs to learn about the proper use of authority by individuals. An important part of this learning can be exemplified and demonstrated in official inquiries and decisions made in an open environment where ‘sunlight is the best disinfectant’.561

3.4 INTERGOVERNMENTAL RELATIONSHIPS A government’s constitution sets out its powers to make laws within territorial and functional limits. The territorial limits depend on geographical boundaries to identify an area where the government has authority to make laws. The functional limits identify the kinds of things about which a government has an authority to make laws. In a federal system, a person residing in a state can be governed by laws of the relevant state government on some matters and the laws of the federal government on other matters, according to a constitutional agreement of the states in forming the federation. Under Australia’s federal system, the Commonwealth has sole responsibility for government in particular territories ceded by South Australia and New South Wales; and in some offshore territories. In the Australian States, local government derives from laws of the relevant States. Powers to constitute local governments within federal territories derives from the Commonwealth Government.

A consequence of trying to establish and maintain peace globally is that international negotiations become necessary to establish commonality of purpose on a global scale on a variety of issues. Much of Australia’s part in these negotiations now occurs through its membership of the United Nations (UN), the World Trade Organisation (WTO) and other multinational organisations. A consequence of Australia entering into binding agreements with other nations is that State, Territory and local governments need to comply with higher-level policies to maintain coherence and consistency across all levels of government.

The United Nations came into existence officially on 24 October 1945. It followed formative negotiations at Dumbarton Oaks in 1944, 562 a further conference held in San Francisco between April and June 1945, and subsequent signing of the Charter at San Francisco. The Australian Parliament affirmed Australia’s membership by passing the Charter of the

560 Section 3.3.2.4 — ‘Science in policy design’ 561 This expression is attributed to US Supreme Court Justice Louis Brandeis, ‘What publicity can do’ as Chapter 5 in Other people’s money , published by the Louis D Brandis School of Law, Lousiville KY: University of Louisville, accessed online through URL < http://www.law.louisville.edu/library/collections/brandeis/node/191 > 562 Washington Conversations on International Peace and Security Organization Conference held at Dumbarton Oaks, Washington DC from 21 August to 7 October 1944 — ‘Dumbarton and Yalta’, History of the Charter of the United Nations, accessed at URL < http://www.un.org/aboutun/charter/history/dumbarton.shtml > on 17 April 2008 212 CHAPTER 3

United Nations Act 1945 (Cth). 563 In Article 1(3), an objective in forming the United Nations was: to achieve international cooperation in solving international problems of an economic, social, cultural, or humanitarian character, and in promoting and encouraging respect for human rights and for fundamental freedoms for all without distinction as to race, sex, language, or religion. 564

Article 55 contains more specific socio-economic objectives as follows: With a view to the creation of conditions of stability and well-being which are necessary for peaceful and friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, the United Nations shall promote: a. higher standards of living, full employment, and conditions of economic and social progress and development; b. solutions of international economic, social, health, and related problems; and international cultural and educational cooperation; and c. universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language, or religion.

The formative negotiations of the 1940s identified education as a key requirement for a peaceful international coexistence. Education has recently re-emerged as a key objective in discussion about information and knowledge economies and societies. Thus ideas about learning and knowledge production merge into ideas about education and the formation of human capital. ‘Education’ has a meaning derived from ‘leading out’; and is often associated with development of human personality and realisation of ‘human potential’.

3.4.1 Regional relationships The Australian colonies and New Zealand developed historically as separate legal entities; but they shared many attitudes and values derived from their common British heritage. Representatives from New Zealand participated in National Australasian Conventions of the 1890s, 565 but New Zealand did not join in an Australasian federation. 566 However, Australia and New Zealand had a common concern with territorial defence. Their military forces acted in unison as the Australia and New Zealand Army Corps in a British inspired Dardanelles campaign in 1915. This began an ANZAC tradition and gave both countries an entitlement to representation as independent dominions of Britain; as signatories of the 1919 Treaty of Versailles; and as members of a League of Nations. 567

A number of agreements recognise a special relationship between Australia and New Zealand. They include the 1966 New Zealand Australia Free Trade Agreement (NAFTA); a 1973 free travel agreement; and a 1983 Closer Economic Relations trade agreement that

563 The Charter of the United Nations Act 1945 reproduces the Charter as a Schedule to the Act. 564 Charter of the United Nations, as amended (including Statute of the International Court of Justice), [1945] ATS 1, Article 1(3), done at San Francisco CA on 26 June 1945, Entry into force generally: 24 October 1945, Entry into force for Australia: 1 November 1945, accessed at URL < http://www.austlii.edu.au/au/other/dfat/treaties/1945/1.html > 565 Parliament of Australia, Parlinfo Web , ‘Records of the Australasian Federal Conventions of the 1890's’, accesed at URL < http://www.aph.gov.au/senate/pubs/records.htm > 566 Geoffrey Sawyer, The Australian Constitution , Australian Government Publishing Service: Canbera ACT, 1975, p.18 567 Yale Law School, ‘The Versailles Treaty’, 28 June 1919, Avalon Project — documents in law, history and diplomacy, accessed at URL < http://avalon.law.yale.edu/imt/parti.asp > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 213

built on the previous agreements. Following the adoption of competition policy in Australia, governments in Australia and New Zealand entered into a Trans-Tasman Mutual Recognition Agreement in June 1996. This agreement implements mutual recognition principles applying to sale of goods and registration of occupations; and aims to remove regulatory barriers and facilitate trade in goods and services. 568

Australia played a leading role in the formation of the Asia Pacific Economic Co-operation (APEC) in 1989. APEC acts as a forum for Pacific Rim countries in encouraging non- discriminatory trade liberalisation. Some members of APEC are also members of the Association of Southeast Asian Nations (ASEAN), and the agenda of both APEC and ASEAN has recently extended beyond issues of trade to include matters such as climate change. 569

3.4.2 Federal interactions A federal system of government provides a measure of decentralisation in responding to local issues, but also poses particular problems of coordination across the borders of its member states. As a consequence, member states exhibit rivalry in furthering economic development within their borders; but they also exhibit cooperation in promoting activities that provide for trade and federal government services across and beyond their borders. 570

The Australian Constitution gives the Commonwealth a few exclusive legislative powers, but Commonwealth and State governments have concurrent powers on a variety of matters including taxation. Direct conflict in concurrent lawmaking is resolved in favour of the Commonwealth, to the extent of any inconsistency. 571 Resolving inconsistencies in favour of the central government reduces the complexity of arrangements that might occur otherwise. This systemic resolution of inconsistency leads to a steady accumulation of power in the central government, especially to deal with international aspects of government loan raising and national defence. 572 As a consequence, overall government financing in Australia has required particular cooperation in federal and state financial arrangements. The Constitution also gives the Commonwealth an international identity that allows it to enter into international agreements and treaties. Compliance with some treaty obligations and international agreements often requires substantial cooperation and mutually supportive legislation between the Commonwealth and States. Examples include conventions relating to human rights and the environment; and membership of the World Trade Organisation. 573

568 Arrangement between the Australian parties and New Zealand relating to Trans-Tasman Mutual Recognition, signed 9-14 June 1996, accessed online at URL < http://www.dfat.gov.au/geo/new_zealand/ttmra.pdf > 569 Department of Foreign Affairs and Trade, Asia-Pacific Economic Cooperation (APEC) — Overview”, Australian Government, accessed online at URL < http://www.dfat.gov.au/apec/apec_overview.html > on 9 December 2008 570 Productivity Commission, Productive reform in a federal system , Proceedings of a round table conference held in Canberra on 27-28 October 2005, Australian Government: Canberra ACT, 2006 — the proceedings deal at length with economic issues inherent in the Australia’s federal system. Documents obtained at URL accessed 14 January 2008 571 Australian Constitution , s.109 572 Australian Constitution , s.105 — s.105A added after a Referenda on 13 April 1910 allowed Commonwealth takeover of State debts; 17 November 1928 formalised the position of the Loan Council 573 Marrakesh Agreement establishing the World Trade Organization (WTO Agreement), Marrakesh, 15 April 1994, Entry into force for Australia and generally: 1 January 1995, Australian Treaty Series 1995 No.8, accessed at URL on 14 January 2008 An overview of WTO documents appears as ‘WTO legal texts’ accessed at URL < http://www.wto.org/english/docs_e/legal_e/legal_e.htm > on 15 January 2008 214 CHAPTER 3

An Australian Council of Australian Governments (COAG) became a new vehicle for cooperation between Commonwealth, State, Territory and local governments when it met for the first time on 7 December 1992. 574 COAG replaced previous systems of premiers’ conferences and Special Premier’s Conferences. However, it included Territory Governments and a representative from the Australian Association of Local Governments — being a part of Australian government that had been previously excluded. While COAG developed protocols for meetings between heads of government on a range of issues other than financial arrangements, these protocols were also used in ministerial councils where ministers from Australian governments meet to discuss issues that are common to their portfolios. 575 In some instances, membership of ministerial councils extends to New Zealand and other nearby Pacific nations in the interests of international cooperation at a regional level.

3.5 HIGH LEVEL SOCIO-ECONOMIC POLICIES Increasing complexity emerges in considering how a society learns how to behave. Just as an individual needs to resolve inner conflict to be effective as an individual, a group of individuals needs to resolve inner conflict between its own members if it is to be effective as a group. But groups can be parts of larger groups and conflict can manifest itself with increasingly destructive potential — as in family feuds, gang wars, tribal wars and wars between nations. As a corollary, energy wasted in human destructiveness can be oriented towards human creativity and productive effort to make life a better experience for larger and larger groups of people. 576 Socrates captured something of his personal orientation towards all people in the world in saying ‘I am a citizen, not of Athens or Greece, but of the World’.577 Thus the idea of world government that can transcend differences between nations in resolving disputation has an attractive simplicity.

The closest thing to world government occurs when nations agree to be bound by their collective decisions made through auspices of the UN. Since these policies are made at the highest level of a world organisational hierarchy, they deserve to be called ‘high level’ policies. The legal instruments that embody international agreements about principles and policies are the various international treaties that create a body of international law.

In practice, younger people acquire rights to self-determination when they reach an age of majority; but this involves an inheritance of laws that they have had neither the time nor the maturity to consider in detail. The problem of self-determination is about being able to agree to a body of existing law or to change laws that are deemed unsatisfactory. The strength of a democracy depends on a collective competence in understanding and accepting these high level policies or in establishing a rational basis for the agreements to be challenged and changed. Given the complexity of some problems affecting the global community, the gaining of wisdom about the rights and responsibilities of citizens and how

574 Council of Australian Governments, ‘Council of Australian Government’s Communique 7 December 1992’, available online at URL < http://www.coag.gov.au/meetings/071292/index.htm > accessed on 9 January 2008 Joanne Scott, Ross Laurie, Bronwyn Stevens and Patrick Weller, The engine room of government: the Queensland Premier’s Department 1859-2001 , St Lucia QLD: University of Queensland Press, 2001, pp.407-408 Anne Twomey, The Constitution of New South Wales , Annandale NSW: Federation Press, 2004, pp.849-850 — ‘Premiers’ Conferences, COAG and Ministerial Councils’ 575 Council of Australian Governments, ‘Ministerial Councils’, available online at 576 Section 3.2.2.1 — ‘Simplifying description of activities and identifying consistency of purpose’ deals with the importance of avoidning situations where people are at cross purposes 577 Socrates, Plutarch, De Exilio , v, cited in J. M. and M. J. Cohen, The Penguin dictionary of quotations , Harmondsworth Middlesex: Penguin, 1960) p.369, para.31 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 215

they fit within a framework of responsibilities to the world at large is essentially a life-long education process.

3.5.1 Social objectives Citizens contribute to a collective competence when they are: • sufficiently educated to appreciate their own work and the work that other people do; • healthy in body and mind and thus capable of productive work; and • able to work together to promote common objectives and complement each other’s work. Collective competence allows a society to deal with issues of production and distribution of goods and services as well as its own good government. Accordingly, policies in education and health are especially important in facilitating the development of this collective human capacity. Development of people with a collective competence becomes both a policy objective as well as a means of achieving that objective.

3.5.1.1 Education objectives Education objectives were affirmed as a global issue in the aftermath of two World Wars interspersed by a fragile peace. Delegates to a conference held in London on 16 November 1945 agreed to constitute the United Nations Educational, Scientific and Cultural Organisation (UNESCO) as a specialised agency of the UN as permitted by the UN Charter. 578 Australia accepted the Constitution on 11 June 1946. The Australian Parliament approved this acceptance formally in passing United Nations Educational, Scientific and Cultural Organization Act 1947 .579 The UNESCO Constitution captured the prevailing ethos of leading nations in declaring with power and eloquence: • that since wars begin in the minds of men, it is in the minds of men that the defences of peace must be constructed; • that ignorance of each other's ways and lives has been a common cause, throughout the history of mankind, of that suspicion and mistrust between the peoples of the world through which their differences have all too often broken into war; • that the great and terrible war which has now ended was a war made possible by the denial of the democratic principles of the dignity, equality and mutual respect of men, and by the propagation, in their place, through ignorance and prejudice, of the doctrine of the inequality of men and races; • that the wide diffusion of culture, and the education of humanity for justice and liberty and peace are indispensable to the dignity of man and constitute a sacred duty which all the nations must fulfil in a spirit of mutual assistance and concern; • that a peace based exclusively upon the political and economic arrangements of governments would not be a peace which could secure the unanimous, lasting and sincere support of the peoples of the world, and that the peace must therefore be founded, if it is not to fail, upon the intellectual and moral solidarity of mankind. 580

The preamble to the UNESCO Constitution expresses a belief in ‘full and equal opportunities for education for all’; ‘the unrestricted pursuit of objective truth’, and ’the free exchange of ideas and knowledge’. UNESCO’s purpose was centred on improving communications between people to develop deeper mutual understandings that could

578 Referred to in Article 57 of the Charter 579 United Nations Educational, Scientific and Cultural Organization Act 1947 , (Act No.24 of 1947), s.2 and Schedule 580 ibid. 216 CHAPTER 3

promote international peace and the common welfare of mankind consistent with the UN Charter.

The General Assembly adopted and proclaimed the Universal Declaration of Human Rights (UDHR) on 10 December 1948. Member States pledged themselves to cooperate with the United Nations in promoting universal respect for fundamental human rights and freedoms. These rights included a right to an adequate standard of living and social security in Articles 22 and 25; a right to education in Article 26; a right to work and to equal pay for equal work in Article 23; and a right of minorities to enjoy their own culture, religion and language. The notion of a right to share in the benefits of science appeared at Article 27. 581 Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits. 582 The Declaration also envisaged progressive national and international measures to improve the quality of life for all people in the world. The 1976 International Covenant on Economic, Social and Cultural Rights reasserted provisions of the 1948 Declaration by calling on parties to the Covenant to recognise the right of everyone to take part in cultural life, enjoy the benefits of scientific progress and its applications, and benefit from ‘the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author’. 583

Everyone has a right to an education; with free and compulsory education at elementary and fundamental stages; and accessibility to higher education ‘equally available to all on the basis of merit’. 584 The UNESCO Constitution affirmed a basic tenet of humanistic philosophy in suggesting that: Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace. 585

3.5.1.2 Physical and mental health objectives Maintaining a healthy community becomes an object in itself since it deals directly with quality of life issues. Insofar as prevention is better than a cure, education, risk management and preventative measures can improve the efficiency of health services. However, the ability to pay for these services depends increasingly on knowledge workers who are also healthy in body and mind. These workers can contribute to areas that complement health services and enhance quality of life by improving productivity in the economy more generally. As an example, workforce participation rates for working age Australians who have a mental illness are only half those for people of comparable age

581 Universal Declaration of Human Rights, adopted and proclaimed by the UN General Assembly on 10 December 1948, Article 27 < http://www.un.org/Overview/rights.html > 582 ibid., Article 27(1) 583 United Nations International Covenant on Economic, Social and Cultural Rights, Adopted and opened for signature, ratification and accession by General Assembly resolution 2200A (XXI) of 16 December 1966; entry into force 3 January 1976, Article 15(1) < http://www.unhchr.ch/html/menu3/b/a_cescr.htm > 584 Universal Declaration of Human Rights, Article 26(1). International Covenant on Economic, Social and Cultural Rights (ICESCR), Australian Treaty Series 1976 No.5, Entry into force generally on 3 January 1976, Entry into force for Australia on 10 March 1976. Article 13 expands on aspects of education — accessed at URL on 16 April 2008 585 ibid., Article 26(2) PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 217

who do not have a mental disorder. 586 Recognition of the complementary nature of these issues is evident in the adoption by the Council of Australian Governments (COAG) on 10 February 2006 of a ‘new National Reform Agenda’ comprising three streams — human capital, competition and regulatory reform. 587

Australia’s health care system is a large employer of knowledge workers with a diverse range of specialisations. The resulting information-intensive activity is complex in its totality and poses particular problems of organisation not only within and between governments but also across commercial and civil society organisations. The system is acknowledged as delivering some of the world’s best health care outcomes in terms of human longevity — at 81.4 years, second only to Japan; and with declining death rates for many key areas of health concern. 588 However, concerns about equity in the distribution of benefits and costs of the health care system remain. In a summary overview prepared in 2008, Australia’s health care system was described thus: The Australian health care system is one of Australia’s largest and most complex industry sectors. It employs over 850,000 people and delivers services to a diverse population of approximately 21.3 million residents across a very wide range of geographic and socioeconomic settings. Services are provided by a complex network of largely autonomous public and private care providers working across over 1,000 public and private sector hospitals and tens of thousands of additional general practice, clinical specialist, community health, allied health and aged care settings. In 2005-06 Australia spent one in every eleven dollars on health which equated to nearly $87 billion or approximately nine per cent of GDP. 589 In many respects, the ‘new National Reform Agenda’ reaffirmed and continued COAG’s previous thinking and directions concerning economic and health policy. COAG decided at its meeting on 25 February 1995 to consider widespread public concern and needs in achieving a more efficient system of health and community services. 590 On 11 April 1995, the Council adopted a national competition policy and also agreed to launch major long- term reforms of health and community services with in-built incentives for effective use of funds. 591 COAG endorsed a reform plan prepared by officials that recognised not only significant strengths in the system but also some weaknesses. Recognised weaknesses included a focus of too much attention on service providers and institutions rather than people’s needs. 592

The plan envisaged systemic reform to reduce complexity in information about and access to alternative services from a user’s point of view. More than 60 discrete government

586 Mental Health Standing Committee of the Australian Health Ministers’ Advisory Council, Council of Australian Governments National Action Plan for Mental Health 2006-2011: Progress Report 2006-07 , report to COAG endorsed by Australian Health Ministers, February 2008, in foreword, accessed online on 2 January 2009 at URL 587 Council of Australian Governments’ Communiqué, 10 February 2006, accessed online on 2 January 2009 at URL 588 Australian Institute of Health and Welfare (AIHW), Australia’s health 2008 , 11th biennial health report, Cat No.AUS99, Canberra ACT: AIHW, 7 May 2008, pp.xi and 6-7 accessed online at 589 Victorian Department of Human Services, National e-health strategy summary prepared by Delloite on behalf of the Australian Health Ministers’ Conference (2008), Melbourne VIC: Australian Health Ministers’ Advisory Council (AHMAC) Secretariat, December 2008, p.1, accessed online on 1 January 2009 via URL 590 Council of Australian Governments' Communiqué, 25 February 1994, accessed online at URL 591 Council of Australian Governments' Communiqué, 11 April 1995, accessed online at URL 592 Council of Australian Governments' Meeting, 11 April 1995 - Attachment B - Key Decisions on Health and Community Services, accessed online at URL 218 CHAPTER 3

programmes were potentially available. However, each programme had its own boundaries and was poorly integrated and not well linked to other programmes. In attempting reform from the viewpoint of governments as funders of these services, the focus needed to shift to outcomes, and effectiveness of investments in health education, early intervention with preventative strategies, and in maintaining continuity and coordination of care. 593

On 14 June 1996, COAG held its first meeting after federal elections of 2 March 1996. The Council seemed anxious that the new Commonwealth Government should affirm its commitment to Medicare on which health funding had become dependent. 594 In most other respects, health objectives retained continuity with the past, and efforts were directed towards planning for implementation. The implementation processes were overseen largely by Australian health ministers as advised by the Australian Health Minister’s Advisory Council.

The COAG meeting on 25 June 2004 began to address issues that had been a concern of Health Ministers. First was a problem of educating health care workers, especially for health care work in rural areas. Second was the availability of general practitioners in or near hospitals on weekends and after hours. The Council agreed to undertake a study of these issues. 595 The Productivity Commission was asked to undertake the study on 15 March 2005; 596 and it delivered its final report on 22 December 2005. 597 On 10 February 2006, the Council supported key findings of the Productivity Commission’s report, endorsed a National Health Workforce Strategic Framework (NHWSF); and agreed to a national assessment process for overseas qualified doctors. 598 It asked senior officials to provide detailed information on student placements needed to ameliorate the situation. 599

The Australian Senate created a Select Committee on Mental Health on 8 March 2005 that tabled its first report on 30 March 2006 and its final report on 28 April 2006. 600 The urgent need for reform became apparent as the inquiry progressed. COAG agreed in February 2006 to expedite discussion with an action plan to be developed by June 2006. New commitments were needed to bolster an existing area of specialised health care that had been part of a National Mental Health Strategy since 1992. Health workforce issues re- emerged at the COAG meeting on 14 July 2006 that endorsed a National Action Plan on

593 ibid. 594 Council of Australian Governments’ Meeting, 14 June 1996 — Attachment B — ‘Reform of health and related community services’, accessed online at URL 595 Council of Australian Governments' Meeting, 25 June 2004, accessed online at URL 596 Peter Costello, ‘Productivity Commission health workforce study’, press release No.015, 15 March 2005, accessed online on 2 January 2009 at URL 597 Productivity Commission, Australia's health workforce , Research Report, Canberra ACT: Australian Government, 22 December 2005, accessed online via URL < http://www.pc.gov.au/projects/study/healthworkforce/docs/finalreport > on 2 January 2009 598 COAG announced agreement on a national accreditation plan with implementation by July 2008 at its meeting on 13 April 2007, accessed online at URL < http://www.coag.gov.au/coag_meeting_outcomes/2007-04-13/index.cfm > 599 Council of Australian Governments’ meeting, 10 February 2006, accessed online at URL 600 Australian Parliament, A national approach to mental health — from crisis to community , Final Report of the Senate Select Committee on Mental Health, Canberra ACT: 28 April 2006, accessed online on 3 January 2009 at URL PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 219

Mental Health. The Action Plan depended on sufficient people with sufficient education and training to provide early intervention and treatment of mental health problems. The Plan aims to improve mental health and facilitate recovery from illness through a greater focus on promotion, prevention and early intervention; improved access to mental health services, including in Indigenous and rural communities; more stable accommodation and support; and meaningful participation in recreational, social, employment and other activities in the community. Improving the care system will involve a focus on better coordinated care and building workforce capacity. 601 The Action Plan broke new ground in addressing not only immediate health needs but also things that were seen as causing or exacerbating mental health conditions. These things include housing, employment, education, correctional services, substance abuse and the like. The chances of success for the Plan depended on multidisciplinary collaboration across sectors and governments. Knowing whether or not the Plan had been successful depended on efforts to compile health information. A list of actions in progress by the Department of Health and Ageing as the Commonwealth component of the Action Plan gives insight into the complexity inherent in the Plan. 602

Elections on 24 November 2007 brought about a change of government and COAG discussed new ideas at its 20 December 2007 meeting about how it should conduct its affairs through 2008. The Council decided to form working groups on Health and Ageing; the National Health and Hospitals Reform Commission; the Productivity Agenda; Climate Change and Water; Infrastructure; Business Regulation and Competition; Housing; and Indigenous Reform. 603 A press release of 25 February 2008 announced formation of the National Health and Hospitals Reform Commission. 604 Terms of reference for this Commission asked for advice on a framework for the next Australian Health Care Agreements (AHCAs) by April 2008. The Commission delivered its advice in its Beyond the Blame Game report on 30 April 2008. 605

3.5.2 Economic objectives The economic system involves the processes that produce and distribute goods and services to sustain human life. Governments produce and receive goods and services in their own right as legal entities; and they provide a legal framework for production and distribution of goods and service by non-government entities. Thus, all arrangements that can be regarded as ‘legally enforceable’ are underpinned by formal authority that is traceable to the work of government.

Economic policy is usually considered in terms of microeconomic and macroeconomic objectives. Generally, microeconomic policies have their rationale grounded in microeconomic theory and sciences of human behaviour. They relate to the conduct of firms in producing satisfactory outcomes for consumers; and the interactions with

601 Council of Australian Governments (COAG), National Action Plan on Mental Health 2006-2011 , 14 July 2006, accessed online on 1 January 2009 at URL < http://www.coag.gov.au/coag_meeting_outcomes/2006-07- 14/docs/nap_mental_health.pdf > 602 Accessed online at URL < http://www.health.gov.au/internet/main/publishing.nsf/Content/mental-coag-prog > on 1 January 2009 603 Council of Australian Governments’ Meeting, 20 December 2007, accessed online at URL 604 Joint announcement by the Prime Minister and the Minister for Health and Ageing of a Cabinet decision to form the National Health and Hospitals Reform Commission, NR08/24, Canberra ACT: 25 February 2008 605 National Health and Hospitals Reform Commission, Beyond the Blame Game: Accountability and performance benchmarks for the next Australian Health Care Agreements , Woden ACT: 30 April 2008, accessed online via URL < http://www.nhhrc.org.au/internet/nhhrc/publishing.nsf/Content/commission-1lp > on 2 January 2009 220 CHAPTER 3

consumers in gaining satisfactions from the provision of goods and services. Microeconomic policy can apply to the efficient and effective operation of government with particular attention to its role in establishing the legal framework for private sector commercial operations.606

Macroeconomic policies relate to actions of government in maintaining stability of the economic system as a whole. Of particular importance are overall levels of employment and unemployment; and stability of the currency that provides legal tender for transactions involving most traded commodities within a jurisdiction. Much of the current thinking on macroeconomic policy grew out of the experience of the Great Depression. Panic selling of shares on the New York Stock Exchange in October 1929 was an historical marker of the Depression;607 but economic instability transmitted globally and continued through the 1930s. Indecision on how to deal with this economic instability became politically destabilising within European democracies and eventually contributed to the outbreak of World War 2.

Macroeconomic policies are usually categorised as fiscal or monetary policies. Fiscal policies relate to a government’s raising of revenue through taxes and charges and its appropriations to maintain the processes of government; its transfer payments for purposes of social welfare; and its investments in public infrastructure. Keynesian economic policies provide for the revenue and expenditure processes of government to operate as far as practical in a counter-cyclical fashion to smooth perturbations in the market-based private sector. Monetary policies are concerned with a government’s control over its issue of legal tender that provides the basis for financial transactions. However, international transactions usually involve different currencies issued by more than one government.

The Australian Government established a Reserve Bank as an independent statutory authority to be a banker to the government. The bank operates under direction of a Reserve Bank Board that has a degree of autonomy in managing monetary and banking policy. The Reserve Bank Board's obligations with respect to monetary policy are set out in the Reserve Bank Act 1959 (Cth). Section 10(2) of the Act is often referred to as the Bank's 'charter'. It states: It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank ... are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to: (a) the stability of the currency of Australia; (b) the maintenance of full employment in Australia; and (c) the economic prosperity and welfare of the people of Australia. 608

In a federal system, control over monetary policy usually passes to the central government, especially where the federation is formed with a view to facilitating trade between the member states. However, the issues of control are complicated by external trade that may use foreign currencies and involve issues of foreign exchange. Further complications arise in dealing with insolvency when creditors can exist in more than one

606 D M Lamberton, ‘Regulatory systems design’, Prometheus Vol.13 No.2, December 1995, pp.184-190 607 John Kenneth Galbraith, The Great Crash 1929 , first published in 1955, republished in 1997 with a new introduction by the author, Boston MA: Houghton Mifflin, 1997. At pp.88-9 asserts that the ‘Great Crash’ is usually dated from the commencement of panic selling that occurred in New York on Thursday 24 October 1929, 608 Reserve Bank Act 1959 (Cth), s.10 (2) PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 221

country. 609 Accordingly, some aspects of macroeconomic policy need international agreements to coordinate policy between nations regarding foreign currency exchange and international trade.

3.5.2.1 The knowledge economy Although ideas about information or knowledge economies or societies enter increasingly into public policy discussions, basic conceptual misunderstandings are common. 610 Ultimately, meaningful policy discussions depend on knowledge about knowledge — such as how it is acquired, used and valued. 611 This requires a higher level of conceptual thinking, and is reminiscent of a series of governance issues related to self-referential and self-governing systems — such as who polices the police, who teaches the teachers, what governs the government. 612

The 1950s saw the growth of new technology founded at first on producing semiconductors to replace thermionic valves. These developments soon merged into integrated circuitry and miniaturisation of radio, television, measuring devices and a variety of control equipment. Popularisation of computers led to the metaphor of an ‘electronic brain’ as a form of description. Enthusiasm for this terminology began to wane when computer programmers were confronted by problems of recognition that could be done easily by small children. Technically, automatic sensing devices can transmit data to automatic recording devices that are in essence artificial memories linked to automated control mechanisms. However, the design, construction and implementation of these devices and systems depend on human ingenuity. Human belief and judgement remain to provide the ultimate test of whether devices and systems perform satisfactorily.

An economy based on production of physical product relies on incremental value-adding in processing and transporting physical goods. The effect is that machines replace human labour with machine energy. This relieves individual workers of hard manual labour but places emphasis on knowledge, skill and dexterity in machine operation. Sometimes, though not always, operation too can be automated. The tendency is that in a knowledge economy, ‘knowledge production’ or learning depends on a new kinds of human-machine interaction where machines do what machines do best and humans do what machines cannot do. All in all, the knowledge economy acknowledges a higher level of knowledge tasks. 613

Generally, work is amenable to pre-programming when it follows easily discernible or routine patterns. However, where the prospects are that knowledge workers will actively seek innovative ways of performing existing tasks or in finding new and worthwhile things to do, outcomes are no longer amenable to pre-programming. The task remains of how to promote efficiency and effectiveness among knowledge workers.

609 J J Spigelman, Chief Justice of New South Wales, ‘Cross-border insolvency: co-operation or conflict?’, address given at the INSOL International Annual Regional Conference held at Shanghai, China on 16 September 2008, accessed online via URL 610 David Rooney, Greg Hearn and Abraham Ninan, ‘Knowledge: concepts, policy, implementation’, in Handbook on the knowledge economy , ed by David Rooney, Greg Hearn and Abraham Ninan, Cheltenham UK: Edward Elgar, 2005, pp. 611 Steve Fuller, ‘Social epistemology: preserving the integrity of knowledge about knowledge’, in ibid., pp. 612 These are often referred to as second or higher order problems in cybernetics. 613 Brian Chi-ang Lin, ‘A new vision of the knowledge economy’, Journal of Economic Surveys , Vol.21 No.3, 2007, pp.553-584 222 CHAPTER 3

While there may be no way of knowing which future pathways will be worthwhile, it may be possible to identify some lines of thinking that are consuming time, energy and other resources in seemingly fruitless endeavour. In this regard, the following observations seem apt: • In general, it may be possible to say what helps people to be innovative but it must always be impossible to predict what the ‘new’ outcomes will be — otherwise the very ideas about ‘new’ outcomes and innovation have no real meaning. • The human capital available to the economy as a whole increases as individuals learn new and useful things — even though the knowledge may not be new to other people who are already ‘in the know’. Moreover, knowing that some things do not work is useful insofar as it allows efforts to be concentrated in areas where prospects may be better. • A social system that comprises living individuals and is open to new learning experiences cannot be at equilibrium insofar as information activity is concerned. Imposing severe restrictions on information activity or ceasing it altogether within an organisation or social system is somewhat analogous to ‘sensory deprivation’ or ‘brain death’ at the level of an individual. • A system open to new learning and able to reappraise prior learning cannot be said to ‘optimise’, ‘maximise’ or ‘minimise’ in any absolute sense of choosing ‘best’ options. Hindsight allows the possibility of seeing that things might have been decided differently and done better. Decisions remain open to review, and reviews themselves can be subjected to further reviews. In the absence of these possibilities, ideas about ‘learning through experience’, ‘learning by doing’ or ‘learning from mistakes’ make no sense. • The inability to know in hindsight whether a best option has been chosen compares also with the cognitive difficulties associated trying to consider all available options beforehand – consistent with a view of ‘satisficing’ rather than ‘optimising’. • Information asymmetry is an essential feature of a social system where individuals engage in specialised tasks and each can learn off each other. This is a source of ‘market successes’ if people gain mutual advantage out of transactions; and may be a source of a ‘market failure’ if one person gains advantage at the expense of another. • Feelings of trust in institutional arrangements and in consistent ‘fair dealing’ may be of growing importance in knowledge economies. Knowledgeable people can use their knowledge as a means of retaliation against perceived unfairness.

If analysis is to inform decision-making related to a ‘knowledge economy’, new economic theory and methods will be necessary. There is no reason to believe that neo-classical theories of allocation by firms, government and consumers will prove adequate in dealing with the activities and satisfactions of knowledgeable workers and consumers. In drawing boundaries around a ‘knowledge economy’ as a system for purposes of analysis, it is important to decide what variables can be described as ‘exogenously determined’ and outside considerations of resource allocation compared to what can be described as ‘endogenously determined’ and within the framework of resource allocation. 614 Theory is bereft from a management and policy-making viewpoint if variables that can make important differences to outcomes are left outside its framework. The neo-classical economic theory omits consideration of what would seem to be key variables affecting performance.

614 Jason Potts, ‘The Prometheus School of information economics’, Prometheus , Vol.21 No.4, December 2003, pp.477-486. Although these points have been made by a number of eminent authors at various times, Potts gives an interesting overview of the methodological issues at pp.480-483. PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 223

Perhaps one of the more interesting aspects of the knowledge economy is that by understanding where theory cannot be expected to be predictive as a matter of logic, it allows a clearer focus on where failure in systemic performance is largely predictable, also as a matter of logic. 615

3.5.2.2 World trade Promoting free trade as a means of improving human well-being gained a renewed impetus in the aftermath of World War 2. The failure to maintain peace between 1919 and 1939 was seen as attributable, at least in part, to restrictive trade practices and ‘beggar- thy-neighbour’ attitudes that followed the onset of the Great Depression. The 1944 negotiations at Bretton Woods envisaged an International Monetary Fund (IMF), an International Bank for Reconstruction and Development (IBRD) and an International Trade Organization (ITO).616 While the IMF and the IBRD survived, attempts at establishing an ITO failed.617 A General Agreement on Tariff and Trade (GATT) emerged as a multilateral agreement among 23 participating nations at Geneva in 1947. 618

The GATT operated in practice by attempting to reduce barriers to trade through successive rounds of negotiations. The seventh round — the 1986-94 Uruguay Round of negotiations — ended with an agreement at a ministerial council in Marrakesh on 15 April 1994 to form the World Trade Organisation (WTO). The WTO commenced on 1 January 1995 as the legal and institutional foundation for a new global trading system. The aims were to reduce trade barriers, liberalise trade, and reduce instances of price discrimination. Establishment of Australia’s National Competition Policy occurred at much the same time and it was consistent with Australia’s joining of the WTO.

The documentation relating to WTO membership is extensive. An Agreement on Trade- Related Aspects of Intellectual Property Rights (TRIPS) is set out as Annexure 1C to the Marrakesh Agreement. The TRIPS Agreement requires WTO members to adopt particular minimum standards regarding intellectual property. 619

Negotiations on the Australia-United States Free Trade Agreement (AUSFTA were finalised in February 2004 after 11 months of negotiations. The final text of the AUSFTA was signed in Washington DC on 18 May 2004 and entered into force on January 1, 2005. 620

World Trade depends on non-market activity performed by national and international organisations that are both non-government and not-for-profit. The socio-economic impact

615 Section 4.2.3 – ‘Allocating factors of production’ deals with some of these issues in more detail. 616 The IBRD is the founding institution of the World Bank that is now part of the World Bank Group. This issue is discussed also in Section 4.5.2.1 — ‘Industry regulation in Australia’. 617 Douglas A Irwin, ‘The GATT's contribution to economic recovery in post-war Western Europe’, Chapter 5 — pp.127-150 in Europe's postwar recovery , ed by Barry Eichengreen, Studies in macroeconomic history series, Cambridge UK: Cambridge University Press, 1995. 618 ibid., pp.131-133 619 World Trade Organization, Understanding the WTO , 3rd edn, previously published in September 2003 as Trading into the future , Geneva: WTO, 2007 accessed online at URL < http://www.wto.org/english/thewto_e/whatis_e/tif_e/understanding_e.pdf > 620 Australia-United States Free Trade Agreement, Australian Government, Department of Foreign Affairs and Trade (DFAT), documentation accessible through URL 224 CHAPTER 3

of these organisations resides largely in reach of their influence. The Social and Economic Council of the United Nations recognises some 3051 non-government organisations as having and official consultative status which says something about their influence. 621 The socio-economic importance of these organisations is evident in their capacity to influence particular issues as political agenda items and public policy. These influences operate at global, national, state and local levels in matters such as socio-economic development, human rights and the environment.

3.5.2.3 Microeconomic reform Viewed holistically, ‘microeconomic reform’ could mean a systematic improvement in the delivery of goods and services in satisfying human needs by individuals and organisations in government, commerce and civil society. In practice, much of the reform effort has been concentrated in policy related to competition, innovation, and requirements for better government regulation as it affects government and commerce. However, the higher-level or global policies generally relate to a need for fair competition in international trading relationships.

Prior to 1991, the Australian Government’s microeconomic policy was governed mainly by the Trade Practices Act 1965 (Cth) but a considerable amount of trading activity occurred outside the purview of this legislation. A new relationship with State Governments was seen as necessary to allow mutually supportive federal-state legislation. On 21 June 1991, Prime Minister Hawke made a ministerial statement on ‘Building a Competitive Australia’; 622 and a meeting of Premiers and Chief Ministers endorsed the need for a competition policy on 21-22 November 1991. 623 This was given effect when Prime Minster Keating announced the establishment of an Independent Committee of Inquiry into National Competition Policy on 4 October 1992. 624 This Committee delivered its Report − generally known as the Hilmer Report − to the heads of the nine Australian Governments on 24 August 1993. 625 COAG adopted the Hilmer recommendations in principle on 25 February 1994; 626 and entered into an agreement to implement the National Competition Policy and related reforms on 11 April 1995. 627

621 United Nations, Department of Economic and Social Affairs, ‘NGO related questions and answers’, accessed at URL < http://www.un.org/esa/coordination/ngo/ > 622 John Kain, Indra Karuppu and Rowena Billing, ‘Australia’s National Competition Policy: its evolution and operation’, Parliament of Australia, Parliamentary Library, e-brief online only issued June 2001, updated 3 June 2003, accessed online at URL < http://www.aph.gov.au/library/intguide/econ/ncp_ebrief.htm > on 6 May 2009 623 Queensland Department of Premier and Cabinet, Leaders' Forum Communique - 21-22 November 1991 — Adelaide, available online at URL 624 Statement by the Prime Minister, the Hon P J Keating, ‘National Competition Policy Review’, 4 October 1992, accessed at URL 625 Frederick G Hilmer (Chair), Mark Rayner and Geoffrey Taperell, National Competition Policy Review , Australian Government Publishing Service: Canberra ACT, 1993. Letter of transmittal dated 25 August 1993 reproduced as pp.iii-iv − accessed at URL < http://www.ncc.gov.au/pdf/Hilmer-001.pdf > 626 Council of Australian Governments, ‘Council of Australian Government’s Communiqué 25 February 1994’, available online at URL < http://www.coag.gov.au/meetings/250294/index.htm > accessed on 9 January 2008 627 ‘Council of Australian Governments' Meeting 11 April 1995’, accessed at URL on 14 January 2008 John Kain, Indra Kuruppu and Rowena Billing, ‘Australia's National Competition Policy: Its Evolution and Operation’, E-Brief, Australian Parliamentary Library, published June 2001; updated 3 June 2003, accessed at URL on 9 January 2008 PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 225

The National Competition Policy package required the Commonwealth Parliament to pass a Competition Policy Reform Bill 1995; and for Commonwealth, State and Territory Governments to enter into: • A Competition Principles Agreement . • A Conduct Code Agreement . • An Implementation Agreement — an Agreement to Implement the National Competition Policy and Related Reforms. 628

The Competition Principles Agreement set out obligations in the areas of prices oversight of State and Territory government business enterprises (in clause 2); competitive neutrality (in clause 3); structural reform of public monopolies (in clause 4) and legislation review and reform (in clause 5). Reforms were to apply to local government (in clause 7). The Agreement set out a (non-exhaustive) list of 'public interest' factors that governments should consider when assessing the costs and benefits of a particular policy or course of action (sub-clause 1(3)); and established arrangements for access by third parties to services provided by significant infrastructure facilities (in clause 6 and in Part IIIA of the Trade Practices Act as amended).

The Competition Principles Agreement required State and Territory Governments to bring their business activities within the purview of Part IV of the Trade Practices Act 1974 (Cth). Part IV deals with restrictive trade practices. As an example, the Queensland government enacted the Competition Policy Reform (Queensland) Act 1996 to establish a Queensland Competition Code. 629 Other States and Territories have similar competition codes. These codes are administered uniformly by the Australian Competition and Consumer Commission (ACCC) as though they were Commonwealth law. 630

The Conduct Code Agreement committed State and Territory governments to extending the prohibitions against anti-competitive behaviour in the Trade Practices Act to virtually all businesses in Australia. It also requires each government to notify the Australian Competition and Consumer Commission when it enacts legislation that relies on section 51 of the Trade Practices Act . Section 51 enables State and Territory Governments to exempt conduct from the prohibitions against anti-competitive behaviour as set out in Part IV of the Trade Practices Act .

The Implementation Agreement set out reform obligations covering national markets in electricity and gas, water reform and national road transport regulations; and provided for payments by the Commonwealth to the States and Territories where they achieve satisfactory progress with the implementation of the National Competition Policy and related reforms. 631

As a consequence of National Competition Policy, government agencies need to consider the extent to which competition ought to be permitted or encouraged in meeting the

628 These agreements are reproduced by the National Competition Council as Part 1 in Compendium of National Competition Policy Agreements , 2nd edn. accessed at URL 629 Competition Policy Reform (Queensland) Act 1996 , s.4 630 A 1995 amendment to the Trade Practices Act 1974 (Cth), s.6A established the ACCC to administer the Trade Practices Act 1974 and other acts 631 National Competition Council, Assessment of governments’ progress in implementing the National Competition Policy and Related Reforms: 2004, Vol.1, Chapter 5, ‘The conduct code and implementation agreements’, accessed at URL < http://www.ncc.gov.au/ast6/Ch5Code.html > on 1 January 2009 226 CHAPTER 3

purposes of government. In this regard, the importance of borderlines between non- contestable and contestable areas of production; and avoidable and unavoidable costs begin to become apparent.632

3.5.3 Environmental objectives The period after World War 2 saw increasing concern about the state of the human environment. A number of non-government organisations raised their concern within their communities and national governments; and began to organise themselves as international organisations. These concerns were more formally accepted as international issues when the United Nations sponsored the United Nations Conference on the Human Environment (UNCHE) at Stockholm in 1972.

The 1972 United Nations Conference on the Human Environment (UNCHE) issued a declaration that reached a new milestone in international relationships.633 The United Nations accepted that environmental issues were within its Charter, and responded by establishing the United Nations Environmental Programme (UNEP).634 UNEP began a program of global environmental monitoring that continues to the present day. As a signatory to UNCHE, the Australian Government began to use its external powers to legislate on environmental issues.635 This created tensions between the Commonwealth and States because most of the legislative powers related to natural resources and development had formerly resided with the States. The Premiers and the Commonwealth reached agreement on Principles and Procedures for Commonwealth-State Consultation on Treaties in 1982. On 14 June 1996, the Council of Australian Governments agreed to form a Treaties Council that could improve processes of consultation between Commonwealth and State governments prior to Commonwealth entering into treaty 636 obligations.

In 1983, the UN approved the establishment of a World Commission on Environment and Development (WCED) to ‘propose long-term strategies for achieving sustainable development to the year 2000 and beyond’. 637 After four years of study, the 1987 WCED report, generally known as the Brundtland Report, began popularising the notion of ‘sustainable development’ in the following terms: Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: the concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and the idea of limitations imposed by the state of

632 These issues are revisited in Section 4.5.1 on ‘Efficiency and effectiveness’ and in Section 4.5.2 on ‘Better regulation’ 633 United Nations Documentation: research guide , United Nations Dag Hammarskjöld Library, ‘Introduction’, accessed at URL on 25 August 2008 634 United Nations Environmental Programme (UNEP), Organization profile , Nairobi Kenya: UNEP, 2006 pp. accessed at URL < http://www.unep.org/PDF/UNEPOrganizationProfile.pdf > 635 Soon after the UNCHE, the Australian Parliament passed the Environmental Protection (Impact of Proposals) Act 1974 , the Australian National Parks and Wildlife Conservation Act 1975 , the Great Barrier Reef Marine Park Act 1975 and the Australian Heritage Commission Act 1975 . 636 Council of Australian Governments' Communiqué, 14 June 1996 — Attachment C — ‘Principles and procedures for Commonwealth-State consultation on treaties, accessed online on 19 January 2009 at URL 637 United Nations General Assembly Resolution 38/161 of 19 December 1983, p.131 accessed on 25 August 2008 at URL < http://daccessdds.un.org/doc/RESOLUTION/GEN/NR0/445/53/IMG/NR044553.pdf?OpenElement > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 227

technology and social organization on the environment's ability to meet present and future needs. 638 The UN General Assembly responded to the Brundtland Report in 1998 by noting ‘that poverty and environmental degradation are closely inter-related’. It resolved to convene a United Nations Conference on Environment and Development (UNCED) of two week’s duration to include World Environment Day on 5 June 1992.639 UNCED, also known as the ‘Rio Conference’ and the ‘Earth Summit’, reflected a need to consider concern for the environment as part of a concern for development.

The first meeting of the newly formed Council of Australian Governments (COAG) on 7 December 1992 took place six months after the Rio Declaration and Agenda 21. COAG endorsed the development of a National Strategy for Ecologically Sustainable Development (NSESD), and a National Greenhouse Strategy (NGS). Excepting Tasmania, the Council also agreed to and signed the National Forest Policy Statement. 640 In June 1993, COAG supported the Commonwealth in its move to ratify the International Convention on Biological Diversity. 641

The National Strategy for Ecologically Sustainable Development commits all Australian Governments to the following three core objectives: • to enhance individual and community well-being and welfare by following a path of economic development that safeguards the welfare of future generations; • to provide for equity within and between generations; and • to protect biological diversity and maintain essential ecological processes and life-support systems. 642

Guiding principles for the Strategy were given as follows: • decision making processes should effectively integrate both long and short-term economic, environmental, social and equity considerations; • where there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation; • the global dimension of environmental impacts of actions and policies should be recognised and considered; • the need to develop a strong, growing and diversified economy which can enhance the capacity for environmental protection should be recognised; • the need to maintain and enhance international competitiveness in an environmentally sound manner should be recognised; • cost effective and flexible policy instruments should be adopted, such as improved valuation, pricing and incentive mechanisms; and

638 World Commission on Environment and Development (WCED), Gro Harlem Brundtland (Chair), Our common future , Oxford UK: Oxford University Press, 1987, p.43 639 United Nations, General Assembly, Resolution 44/228 adopted on 20 December 1988, accessed online at URL < http://www.un.org/documents/ga/res/44/ares44-228.htm > 640 Council of Australian Governments' Communiqué, from meeting held in Perth WA on 7 December 1992, accessed at URL < http://www.coag.gov.au/coag_meeting_outcomes/1992-12-07/index.cfm > 641 Council of Australian Governments' Communiqué, from meetinmg held in Melbourne VIC on 8-9 June 1993 accessed at URL < http://www.coag.gov.au/coag_meeting_outcomes/1993-06-08/index.cfm > 642 Australia, Ecologically Sustainable Development Steering Committee, National Strategy for Ecologically Sustainable Development , endorsed by the Council of Australian Governments (COAG) on 7 December 1992, Canberra ACT: Australian Government Publishing Service, 1992, at Part 1 — ‘Introduction”, index to online version accessed at URL < http://www.environment.gov.au/esd/national/nsesd/strategy/index.html > 228 CHAPTER 3

• decisions and actions should provide for broad community involvement on issues which affect them. 643

The first of these guiding principles recognises the multifaceted nature of many development processes. The second is generally referred to as ‘the precautionary principle’. 644 Other principles refer to the need for a diversified and competitive economy with better forms of regulation. However, the last principle has continuity with the UNESCO Constitution whose principles were affirmed by the Australian Parliament in 1947. UNESCO’s Constitution expressed a belief that peaceful coexistence for all the world’s people could not depend only on political or economic ideas. It needs also to be firmly founded on the ‘intellectual and moral solidarity of mankind’.645

Socioeconomic development can be socially divisive if benefits and costs of development are distributed inequitably. Two sources of inequity are especially noteworthy. The first relates to differences in rewards paid for similar work available to some producers and workers in firms operating under conditions of market power compared to those paid to workers in firms operating under competitive conditions. 646 The second relates to environmental damage that is mainly an unintended side effect of pollution from agricultural and industrial activities. Social cost that is either immeasurable or unmeasured leads to a general tendency to overstate the efficiency and effectiveness of some industries. The effect is often to redistribute income and wealth towards polluters and away from people who are adversely affected by pollution.

Since the 1992 UNCED Conference, progress in implementing Agenda 21 as an action plan was reviewed after five years in 1997.647 The United Nations saw the occasion of the new millennia as an opportune time to reaffirm its principles and goals in relation to human rights and development in its Millennium Declaration.648 In 2002, marking ten years after international commitment to Agenda 21, a further World Summit on Sustainable Development produced the Johannesburg Declaration of Plan of Implementation.649 Building on this Declaration and Chapter 36 of Agenda 21 as adopted in 1992, the United Nations General Assembly adopted Resolution 57/254. This new Resolution designated the decade 2005-2014 as the 'United Nations Decade of Education for Sustainable Development' (UN-DESD); and UNESCO as the lead agency to promote the education programme. 650 In 2005, UNESCO issued its Plan for implementing an education programme to fulfil the goals of the Decade of Education for Sustainable Development (DESD). The Plan proclaimed a vision of a world where everyone had an opportunity to

643 ibid. The UN has declared 2010 as the International Year of Biodiveristy. 644 Environment Protection And Biodiversity Conservation Act 1999 (Cth), s.391(2) 645 United Nations Educational, Scientific and Cultural Organization Act 1947 , (Act No.24 of 1947), s.2 and Schedule — discussed in Section 3.5.1.1 646 On this issue, Section 4.5.1.2 — ‘Technical or X-efficiency’ cites work by Akerlof & Yellen, ‘Fairness and employment’, American Economic Review , Vol.78 No.2, May 1988, p.14 647 Rio+5 was held from 7-25 April 1997 in New York. Conference documents are accessible at URL 648 United Nations, Millennium Declaration, adopted by General Assembly Resolution 55/2 of 8 September 2000, accessed at URL < http://www.un.org/millennium/summit.htm > on 17 August 2008. Further discussion on this issue appears in Section 3.2.1.7 649 UN Department of Economic and Social Affairs, Division for Sustainable Development, Johannesburg Plan of Implementation, proceedings of World Summit on Sustainable Development (WSSD) held at Johannesburg, South Africa from 26 August to 4 September 2002, accessed online on 11 April 2009 at URL 650 United Nations, General Assembly Resolution 57/254 of 20 December 2002, ‘United Nations Decade of Education for Sustainable Development’, accessed online at URL < http://www.un-documents.net/a57r254.htm > PURPOSE OF GOVERNMENT AND NEED FOR INFORMATION 229

learn about the values, behaviour and lifestyles required to transform societies and establish a sustainable future. 651

A Ministerial Council of the European Union adopted the Aarhus Convention in 1989 as an environmental policy initiative that was separate from but consistent with the global initiatives that followed the 1992 Rio Declaration and Agenda 21. The Aarhus Convention recognised in particular that people had a right to know about health and environmental issues that affected them. 652 As an additional initiative, the European Commission published a proposal for a directive for a Directive establishing an Infrastructure for Spatial Information in the Community (INSPIRE) on 23 July 2004.653 The intention was to focus on environmental data, but the proposals recognised the more general application of a spatial data infrastructure (SDI) for other purposes such as agriculture, energy and transport. 654

On 14 March 2007, the European Parliament passed Directive 2007/2/EC with a requirement for member states to effect stages of implementation according to a timetable and with full implementation by 2019. 655 Viewed holistically, policies directed towards sustainable development require particular coordination and cooperation — and thinking that is encapsulated in part by the expression ‘think globally and act locally’. 656 The overall aim of international understandings and agreements is to promote an intellectual and ethical framework in which economic development can occur and with which people concerned can concur.

3.6 SUMMARY The purpose of government and its needs for information may be summarised as follows: • The purpose of government is set out in broad terms by its constitution and generally requires it to do all things for the ‘peace, order and good government’ of society. • Governments are living systems — organised politically and constituted legally with perpetual succession where the knowledge of how to govern becomes part of a cultural legacy passed on to succeeding generations. • The essence of a federal system of government is that member states assign some legislative responsibilities to a central government and, in the process, provide it with a national identity through which it can relate externally to the other nations. Internally, the central government is constituted to deal in particular with matters that transcend the boundaries of member states.

651 UNESCO, Framework for the UN DESD International Implementation Scheme , ED/DESD/2006/PI/1, Paris France: UNESCO, 2006, - ‘Introduction’, pp.9-11, accessed online at URL < http://unesdoc.unesco.org/images/0014/001486/148650E.pdf > 652 Section 3.3.3.4 — ‘Environmental reporting’ discusses aspects of the Aarhus Convention. 653 Commission of the European Communities, Proposal for a Directive of the European Parliament and of the Council establishing an infrastructure for spatial information in the Community (INSPIRE) , COM(2004) 516 final, 23 July 2004, accessed at URL < http://inspire.jrc.ec.europa.eu/proposal/EN.pdf > European Commission Joint Research Centre, Consultation paper on a forthcoming EU legal initiative on spatial information for Community policy-making and implementation , European Commission, 29 March 2003, Accessed at URL < http://inspire.jrc.ec.europa.eu/reports/INSPIRE-InternetConsultationPhaseII.pdf > 654 ibid., Proposal for a Directive , p.3 655 Directive 2007/2/EC of the European Parliament and of the Council of 14 March 2007 establishing an Infrastructure for Spatial Information in the European Community (INSPIRE), Official Journal of the European Union, Vol.50 L108, 25 April 2007, accessed online at URL 656 Suggestions about origins of this expressions appear in the article ‘Think globally, act locally’, Wikipedia , accessed at URL < http://en.wikipedia.org/wiki/Think_Globally,_Act_Locally >

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• Governments are obliged to deal with everything within their purview in circumstances where failure to demonstrate competence is likely to result in loss of authority to govern and a change of government. • The movement towards higher standards of living where the benefits and costs are part of complex systems of production and distribution depends ultimately on what people in a democratic society are prepared to accept. • What people are prepared to accept depends on what they have learned to see as fair and reasonable; and what they are able to learn regarding fairness and reasonableness depends in part on the examples that opinion leaders actually demonstrate in everyday discussions on public affairs. • Culturally determined ideas about the benefits of competition need to be seen also in the context of benefits in cooperation — for it is in a sprit of cooperation that people establish the ground rules about what can be regarded as fairness in competition and the operation of markets.