Tasmania has a long history of making policy decisions and commitments on the back of public opinion.
In Tasmania it can be seen that many policy and strategic decisions have been made for emotive reasons without taking into consideration a wide range of external impacting factors.
Take the recent decision to re-sponsor the Hawthorn Football team over the Kangaroos team in Tasmania.
While there has been some analysis on the benefits and costs of the sponsorship deal with Hawthorn there has been no rigorous comparative analysis between the offers presented by the two clubs. Such an analysis could have identified the separate benefits of both deals, and opportunities and costs that both options would have given.
In a similar vain is the recently controversial decision by the State government to allocate Princess Wharf Shed 2 for the development of the University of Tasmania’s Institute for Marine and Antarctic Studies (IMAS).
While undoubtedly there will be significant economic, educational and scientific benefits of collating the centre with the existing CSIRO, the question must be raised: Has there been sufficient – if any – rigorous analysis as to the comparative costs, benefits and opportunities of utilising this prime space for other commercial and/or tourism ventures?
These recent decision made by the current government highlights the need for full economic, social, and budgetary analysis of major decisions that effect Tasmanians lives. Policy and investment opportunities need to be scrutinised in a rational format that leave emotional decisions at the door. The best method for analysing a decision and the options available is to do a cost benefit analysis (CBA). It would be preferred that these analyses are done by independent bodies that have no conflict.
A CBA looks at the different costs associated with a project, the benefits that arise from it and any opportunities that could occur instead of the proposed project. This enables any decision making process to be less emotive as it looks at the facts of a project and not the public or private opinion. While there are social aspects involved in any decision making process a CBA puts these aspects into perspective and provides a rational and informed frame work for decision making.
The Tasmania public would benefit greatly by having a standard decision making process that could be implemented quickly and efficiently with all major projects that arise. Take, for example, the light rail projects, while there have been studies on the costs of the proposed light rail line, there have been no benefit studies or opportunity studies. This light rail line decision could benefit greatly by analysing the potential benefits (including take up, consumer behaviour), opportunities and weaknesses to ensure that the decision is made on sound economic and rational information.
Another type of analysis that should be taken into account in policy decision making is an economic impact analysis (EIA). EIA examines the effect of a policy, program, project, activity or event on the economy of a given area. The area can range from a neighbourhood to the entire globe. Economic impact is usually measured in terms of changes in economic growth and associated changes in jobs and income.
The analysis typically measures or estimates the level of economic activity occurring at a given time with the project or policy occurring, and calculating the difference from what would otherwise be expected if the project or policy did not occur.
EIA differs from CBA in one sense, EIA is broader in that it counts business relocation and resulting spending multiplier impacts on a given area, while CBA is usually not constrained to any specific study area and thus ignores effects of business activity shifts among locations. On the other hand, CBA is broader in that it also counts non-economic benefits that have a value to people though they do not directly affect the flow of money in the economy (such as the value of effects on personal travel time savings, safety, security and quality of life improvements).
Large organisations generally require these types of analysis before undertaking any new major investments.
It is interesting that the Government requires similar analysis before providing funding or assistance to a project, but it is not an obligatory requirement for internal decisions surrounding major investment.
Tasmanians need to call for stronger, rational frameworks for analysis that can be soundly justified when making decisions that affect all Tasmanians.
