Shorewalker On Reports

Former Grattan Institute CEO John Daley explains why and how think-tanks, government departments and other report-writing bodies should prioritise. To most influence people's lives for the better, they must ask: which issues should we go after?

David Walker: In this episode of Shorewalker on Reports, we’re going big-picture. We’re going meta. We’re looking at two public reports which are about public reports. In particular, they’re about how to choose the subjects for public reports.

Our guest again is independent policy consultant John Daley, who also joined us on episode 7. Episode 7 went through John’s process for writing a report. But in this episode John and I look at a decision you need to make before you start. How do you decide which problems to examine?

Here’s a taste of how John discovered the scale of the problem:

John Daley: I was fascinated to discover that there is very, very little in the public sector literature about prioritisation. It's a huge contrast to the private sector literature. And what does exist? A lot of it sort of concludes, “look, your priorities should be, whatever are the priorities the day”. And I sat there and thought: “Well, as a think tank, that's not very helpful.”

David Walker: Now, John Daley’s had a rich and varied career. For example, he’s worked as a McKinsey consultant and as an ANZ Bank senior executive. In both those jobs he learnt some of the techniques that he talks about in this podcast. Having learnt those lessons, John put them into action when he became founding CEO of a new independent Australian public policy think-tank, the Grattan Institute.

While he was at Grattan, John Daley wrote two major reports that set out how report producers should go about choosing their topics – that is, how they should prioritise. The first of those two reports was written near the start of his time at Grattan, and was titled Game-changers: Economic reform priorities for Australia. The second report, written near the end of his time at Grattan, he called Prioritising a Government’s Agenda.

Prioritisation is a vital question for leaders in just about every field. It matters for leaders of think-tanks, and for leaders in government departments, in academia, and in private businesses just as much as anywhere else. It certainly matters whenever the organisation is considering producing any report on an issue of public interest. At think-tanks, in particular, your choice of the problems to tackle makes or breaks you. My own view is that it’s the decision that many Australian think-tanks do worst at making.

Back in 2010, Grattan started out with natural advantages in the think-tank contest. It was a large think-tank by Australian think-tank standards: within a year, it employed more than 20 people. It had a certain amount of credibility because of its early government and private-sector backing.

Nevertheless, Daley believed that to really establish itself, Grattan  needed to understand how it could best play its role. That role was to contribute to Australia’s growth and prosperity. But how best could Grattan contribute? For a start, it could figure out where public policy research would have the greatest impact.

John Daley: In my time at McKinsey, you spent a lot of your time when you were doing corporate strategy essentially helping senior executives think through all of the stuff on their plate. What really matters? What should they do more of? What should they do less of? And there’s lots and lots of frameworks floating around in the private-sector context for helping people to think about prioritisation. And there’s also a lot of work floating around talking about the importance of prioritisation to success in corporate life.

And then when I was at ANZ, running strategy for group – same thing. A lot of the work that I did with various the business units at ANZ was essentially helping the head of the business unit think through of all of the stuff that they were doing, what was the stuff that really mattered that they should really focus their energy on? What was the stuff that didn’t matter that they should do their level best to turn off?

David Walker: So Daley headed to the world of think-tank reports with a default strategy that went like this: survey the field of issues; decide where you can make the biggest impact; work on those issues. But in think-tank world, a surprise awaited him.  

John Daley: When I started at Grattan Institute … inevitably, the first thing you worry about as the head of a brand new think-tank is “what should I work on?” – and implicitly, you're asking the same question as: “where should government be focusing?”

And I went looking at the literature, and I was fascinated to discover that there is very, very little in the public sector literature about prioritisation. It's a huge contrast to the private sector literature. And what does exist? A lot of it sort of concludes, “look, your priorities should be, whatever are the priorities the day”. And I sat there and thought: “Well, as a think tank, that's not very helpful.” You know, if a government minister or prime minister comes to me and says “well, what should my priorities be?”, it's not very helpful if I say “well, whatever your political priorities are, your political priorities should be”. Hopefully, I've got an answer that says: “I think that what you should focus on is A, B and C”. And they may or may not take that advice. But at least you've got a point of view.

But of course, without any published frameworks, it's actually quite hard to think about: “Well, you know, government's responsible for a huge number of things; how would you decide where it should focus?” And so that was always something I was interested in.

And it also came together with me going to a number of conferences, and everybody sitting there talking about how governments weren't making enough progress on productivity growth, and we needed to increase, you know, economic growth, etc etc. And when you sort of asked “well, how?”, they'd wave their arms and they'd sort of mutter a number of things. And my intuitive reaction to a number of things was: “a) that's been around for a long time as an idea; b) some of those ideas don't look all that large in the overall scheme of things – is that really the best we can do?”.

David Walker: Can we do better? Daley’s answer is set out in a report he wrote called Game-changers: Economic reform priorities for Australia. Grattan published it in 2012. Game-changers represented John Daley thinking out loud about the principles that would drive Grattan’s choice of topics. And he believed that this choice of topics would drive Grattan’s success.

John Daley: The aim of that first project, Game-changers, was, in a disciplined way, to go through all of the bright ideas that people had about how you would promote economic growth, and say: “Well, which of these should you focus on?” Because it was clearly true that there hadn't been a lot of progress for quite some time. And it struck me that the sort of techniques that were very well evolved in the private sector in terms of “work out what's big, really put energy behind a small number of things, and make them happen” was probably something that would work for government as well.

David Walker: The really big step that the Game-changers report took was this: it looked both at the size of potential gains from a reform, and also at how confident people could be about the success of that mooted solutions. It did that for a range of reforms. And in doing that, Game-changers owned up to the reality that we don’t always have certainty that a particular solution is going to work that well. And then it sought to incorporate that uncertainty into the prioritisation process. That struck me as very unusual in 2012, and I think it’s still very unusual today.

John Daley: Yeah. And I think one of the reasons for that is that in the public sector, people are really reluctant to put numbers on something unless they can prove it to three decimal places. And there’s this whole sort of ethic that Treasury won’t put anything up unless it can be super-confident about the numbers. And consequently, if you’re not super-confident that the number is right to three decimal places, you don’t put any number on at all.

John Daley: And one of the things that I had learned at McKinsey was the enormous power of putting rough numbers on things. Because actually, you usually don’t care whether or not something is 250 million or 280 million. You care whether or not it’s 250 million or 2.5 billion or 25 billion, because that’s what tells you how important it is.

And I’d seen this in action, or at least heard about it. Apparently Richard Pratt, when he was running the Pratt Group, used to make all of the business decisions, not on the basis of learned board papers, but on, literally, a whiteboard. And … they would sit there as a senior executive team and and say: “Look, here’s this opportunity that someone’s got. Roughly speaking, how big is it? Roughly speaking, what’s our cost of capital when we do the numbers on this? Is this something that looks big and wildly attractive, or is this something that looks kind of marginal, or is this something that looks like a really dumb idea?”

And of course, one of the insights was, if it was only marginal, they just didn’t do it. So they didn’t spend lots more time refining the numbers to discover it was just better than their cost of capital. They said: “Look, if it’s marginal, then forget about it. If, on the other hand, it’s got a profit margin of 40%, it’s a really good idea – and rather than spending another six months proving it up, we should spend six months getting it to happen.” And so they were, at least at that stage, a very agile and of course, it turned out to be an extremely successful company through that period.

And I’d seen the same thing play out at ANZ, as I had worked with a lot of these senior executives on their strategies. Although it was often hard to get numbers accurate, to do this to two decimal places, it was usually pretty easy to say: “Roughly speaking, this bright idea that you’ve got, what’s the interest margin? How many customers do you realistically think you could get? What does a sensible cost to income ratio look like? Okay, this looks like something that could make you an extra ten million … At a very attractive margin, that looks like a good idea. And alternatively, this looks like something that, if you’re lucky, will make you half million bucks a year. And given the number of people will have to be involved to make it happen, that’s marginal. So what you should do right now is just forget about it.”

And that rough sizing is really important, and it and it’s surprising how little it gets done. And I guess I had seen this relatively early in my tenure at Grattan.

One of the things that was always on all of those Productivity Commission-type lists of, you know, good economic reforms you should do, was around the parallel importation of books.

And this is now, given the way the Internet has gone, sufficiently far from anyone’s memory that may not remember. But once upon a time, there was a big controversy in Australia about the fact that we had copyright laws that said, not only did you have to have the copyright to be allowed to print the book, but you also had to have the copyright to be able to publish it – i.e. to distribute it in Australia, as opposed to in the United Kingdom, as opposed to in the United States. So even though the book had been legitimately printed and was being sold in the United States, you weren’t necessarily allowed to import it into Australia. And this used to get the economic types really, really upset, partly, perhaps, because they were the kinds that bought a lot of books.

And Kevin Rudd wound up, at one stage getting behind this and trying to change these laws, which effectively acted in the benefit of Australian publishers, because it meant that they got a clip if you wanted to … buy that particular book in Australia. And of course, publishers are a very bad lobby group to get offside – because they’ve got lots of authors, and so it’s very easy for them to get lots of people to write things in the newspapers about how terrible this policy change will be and how it will lead to the death of Australian literature and so on, all of which may or may not be true. I have my doubts, frankly, but even if it is true, actually, if you sat down with it, you would realise pretty quickly [that at] absolutely tops this economic reform was worth maybe $150 million a year in an economy of $1.5 trillion. In other words, [it was] way, way, way too small to move the dial. Now, maybe I’m wrong. Maybe it wasn’t $150 million. Maybe it was $200 million. But either way, it was that order of magnitude. And yet, the Rudd Government spent several months in which this was literally a front-page issue many days of the week because, of course, the publishers were outraged and were getting all of their authors to write about it. And it really struck me that they had just picked the wrong issue – that on any view of life, this was just not big enough to care, and therefore not something that they should have been spending a lot of their time on.

And so I think that that’s one of the reasons that one of the things that Game-changers did was say: “Let’s just, roughly speaking, work out how big these things are – and if they’re not big enough to care, then say so.”

Interestingly, there were some things that dropped out of that analysis – particularly around female workforce participation – that were not really on the political agenda at the time, but which we put onto the agenda because we said: “This one is big enough to care”. You know, the evidence is pretty good that … it’s principally women who are second-income earners. So how much extra money do you take home from working an extra day a week, but having to put the kids into childcare? … People’s decisions at the margins are really sensitive to that, which is not wildly surprising, but it’s one of those things you can improve. And you do the rough numbers, and you go, this is worth potentially $25 billion a year to the Australian economy, and that’s kind of big enough to care. And so it the opportunity of the framework was to say: “Don’t spend your political capital worrying about these things that are worth $120 million a year and that cannot possibly change the overall shape of the economy. Spend your time worrying about these things over here that are worth $25 billion a year.” So in other words, they’re 100 times larger, and that therefore really can change the outcomes.

David Walker: And 12 years later, female workforce participation is one of the few changes in Australian society that you really can see just with a glance at the GDP numbers.

John Daley: Yep, that’s exactly right. And, and interestingly, you know, maybe it was Grattan, maybe it was other things, but that is one which we did succeed in getting a lot more government focus on. Governments of both sides of politics have continued to upgrade and change the way that the childcare benefits work. And the consequence has been that it has materially changed people’s decisions at the margins. And therefore there’s materially … it’s not so much more women working, but it’s more women working more days per week.

David Walker: So we’ve talked about the need to look at the size of the stakes in various public policy challenges. We’ve seen the need to concentrate on the issues that will really make a difference. But in his Game-changers report, Daley also confronted another issue: there were a lot of activities where the impact of government policy might be large, or it might be small, and we really didn’t have the data to tell which.

John Daley: That’s right. And that was the second thing we looked at. Because if you don’t know, well, then it’s probably not where you should be spending. You shouldn’t be spending your energy to implement something if … you’re not pretty confident that it will work. And I guess that’s partly something that maybe came from my scientific background, which is that it is possible to separate that question of, you know, “what’s our best guess about the right answer here?” [from] our analysis about “well, how good is the evidence?”

And there are some things in public policy where we can say there’s really strong evidence here that is a very high probative value. And there’s some things where you say the evidence is inherently not particularly strong – it may well be true, but we should be honest about the fact that the evidence is not strong. Now, that requires quite a lot of intellectual humility, to say “I don’t think the evidence is all that good”. But I think it’s a really valuable step. And it was one of the things that was quite unusual about Game-changers in terms of its methodology … to say: “Let’s also look at all of these ideas that people have got and ask, ‘how good is the evidence base?’ And [to] say for things that might be big, but where your evidence base is weak, “well, that that prioritises your research agenda” – very useful if you’re running a think-tank, but it probably shouldn’t drive your agenda as a government about what you’re going to do. And of course, it drives your research agenda in two ways, because if you don’t know and something is big, then that’s something you should work on. If you don’t know, when something is small, then that’s fascinating and interesting, but you shouldn’t do any work on it … If government has scarce resources, think-tanks have even scarcer resources. You should spend the scarce resources of your think-tank working on the problems that are really going to make a difference, where the evidence is weak, rather than the problems which, even if you get terrific evidence, the bottom line is, it’s going to not make much difference to the society.

David Walker: In the example you just talked about, regarding parallel book importation, one of the features of that was, I think – on your analysis anyway – that it was not only taking up the government’s time, but it was depleting political capital for very small gain: that $150 million a year, if it had been gotten, would have been gotten at this cost of a lot of angry letters and essays in periodicals about the government’s war on literacy and the like. And that seems to you to be something that is again, underrated by the sort of people who generate policy in the first place.

John Daley: Well, it’s certainly not something they talk about very much. And I think that that’s partly because, at least in theory, those political questions are not something that public servants are supposed to turn their minds to very often – and it’s supposed to be just things that their political lords and masters worry about. But of course, the world is, in fact, not that pure and not that simple.

And you’re right that that question about political capital was, in fact, the way that we ran the prioritisation – well, first for one of the Orange Books that Grattan used to write before the Commonwealth elections, talking about, you know, “where should the next Commonwealth Government focus?”

So that was the first time that we applied this framework. And then, in Prioritising a Government’s Agenda, we actually wrote it out in a rather more formal way so that it was bit easier for people to follow what we were doing.

The essential idea … was, if anything, a sort of an update to the Game-changers framework, over 12 years. You know, I’ve learned a little bit, and I had thought it through a bit more carefully. And I think if one of the things that you care about when you’re prioritising is, “well, how big is it? how much of difference will it make?” [then] the other thing is, ultimately, not just simply “how good is the evidence base?” but more generally “how much political capital will it consume?”

And I guess the thinking behind that was that the scarce resource in government – the scarcest resource – is fundamentally political capital. You’ve only got a finite amount of it. Paul Keating was very articulate about this idea, but so have many other people been:

And then one of the other things that we did in prioritising a government’s agenda was to actually break down, well, what are the sort of components of political capital? What is it that makes a policy more or less expensive in terms of political capital? And again, this is not something that you can put beautiful numbers around. But you can definitely say this is high, medium, low. And that’s, I think, quite helpful.

And so we’ve broken it down into its components …

All of these different components go into thinking about, “is this a reform that’s going to be easy for a government or hard for a government?”

David Walker: As an aside, did you have to do much work to get Grattan to adopt this sort of approach to think-tankery?

John Daley: Well, I had the advantage that Grattan at the time I started, you know, consisted of me, plus a board. And by the time I had finished, it consisted of about 25 people, plus me, plus a board. And I guess it was a group of people, including the board, who are really interested in this slightly technocratic approach to policy, understanding that politics matters, and understanding that we were partly talking to politicians – and therefore, if we were ignoring their language, we were not helping them – but at the same time that if we could provide them with a really clear way of thinking about things, that might be helpful. So no, it was not a difficult sell at Grattan.

And indeed, I think one of the things that you know it’s been distinctive about Grattan is it’s always had this quite disciplined way of thinking about its own agenda and where it goes. We had a saying while I was there, which is that we didn’t get out of bed for less than half a billion dollars a year. And that was the sort of prioritisation thinking: if you do the quick back of the envelope in the first half an hour and come to the conclusion that this thing is terribly interesting, but can’t possibly be worth more than $50 million a year to the economy and has no particular cultural benefits, then cross it off. It’s interesting; it may well be fascinating; it may well get you published in a learned in a learned journal. But it’s not the kind of thing that a think-tank should spend its very scarce resources on.

David Walker: One reason that people seem to so often avoid prioritising is that they underrate the effort that’s going to be needed to get people in behind a change once they recommended. You’ve talked about the way Peter Costello spent a lot of time arguing the case for the GST as an example of somebody doing it right.

John Daley: Yeah. And I think that’s because if you’re doing things that are expensive in terms of political capital, then what you do have to do is argue for them really hard. And you’re going to have to. You’re not going to win everyone over. It doesn’t work like that. There is no example of a tax reform in Australia in the last 50 years, a major tax reform that has had bipartisan support. Not one. It’s always controversial, to take tax reform in particular. That doesn’t mean that tax reform hasn’t happened. But it does mean that every time it has happened, a treasurer has had to go out and argue for it really, really hard. And yes,  Peter Costello notoriously did nothing for 12 to 18 months but walk up and down the country and at every opportunity explain what the GST was, how it was going to work, why it was a good idea, why people were going to be better off, and so on. And they didn’t necessarily completely win that argument, in the sense that Howard very nearly lost the subsequent election. But of course, it did happen as a policy change. It has materially and permanently changed the face of tax policy in Australia for the better. And that’s a very good outcome.

I think that that’s just a demonstration of the way that, when you say that something is going to be expensive in terms of political capital, what that means is, in order to make it happen, some senior politician – possibly several of them – are going to have to spend a lot of their time arguing for it and trying to push it through. And that’s hard.

I think the other reason that prioritisation doesn’t happen is the opposite reason – which is that any time that you prioritise, sure you’re saying: “These two or three things matter a lot; we’re going to put lots of energy behind them”. But inevitably, what you’re also doing is saying: “All of these things don’t matter so much”. And if you really want to do prioritisation properly, then what you do is you say: “we’re going to turn them off, and we’re going to put all of the resources that are currently being put into these things that either don’t matter or are never going to happen into this small number of things that are going to happen, but which are hard”. And the problem is that every single thing that you want to turn off or deprioritise is bound to be somebody’s pet project, and they’re going to be very upset when you take the thing that they’ve been working on personally for how many years, and say “we’re just not going to do it”. And so it’s really, really hard to take that step. And that is a crucial part of prioritisation – because unless you do that, all of those little projects keep running, and they keep sending stuff up the line, and they keep clogging up all of the scarce management resources that you need in order to make things happen.

David Walker: Am I right that in ANZ, you came across a rather nice way of making this problem less of a problem?

John Daley: I came across two. One was a fantastic story about a CEO of Barclays Bank, who had come in and after a couple of weeks had issued this thing saying: “Right, the following five projects are the key priority projects for the bank. If you’re working on these, carry on. All of the other things are to stop now.” And then, a week later, he put out another thing, saying: “I really meant it. If you have been working on any of these things for the last week and haven’t transferred to one of the other projects, then you do not have a position at this bank.”

But of course, what it did was that it liberated enormous amounts of energy behind the five things that really mattered. So that’s the kind of rip-the-band-aid-off approach, and you probably need to be a somewhat forceful character to get away with that.

The alternative way to do it ... I was running eTrade Australia at the time, and Brian Hartzer was the head of retail banking. And ... I’d followed my own recipe, and I’d come to him and said: “Brian, I think this is what my priorities should be. And implicitly, that means that the following things are not going to be pursued by eTrade Australia.” And I said: “And one or two of them are, you know, projects that various other people elsewhere in the bank care about a lot.”

And he said: “John, no problem”. He said: “The things that you think are important, I totally agree”, he said, “and those are Phase One”. And he said “all of those other things, that you think are less important – and I totally agree, but other people care about – those are all Phase Two. And obviously you’re not going to start phase two until you’ve [finished] Phase One, and you’re going to reassign the resources that are currently working on Phase Two projects onto Phase One projects.”

And it was a very valuable lesson that that sometimes you can frame things in a way that will keep a lot of people happier. You’re not throwing their work away; you’re just saying it’s part of Phase Two. Now, Brian and I both knew perfectly well that most of the things on Phase Two were, in fact, never, ever, ever going to happen. But the fact that we called them Phase Two meant that a lot of people were a lot less unhappy about it than they would have been otherwise.

David Walker: With your reports about prioritisation, both Game-changers and Prioritising the Agenda  — do you look back and think they moved the dial, or do you look back and think “I wish they’d had more of an effect”?

John Daley: So one of the kind of frustrations of running a think-tank is that you never really know whether or not you made a difference. Because, as the saying goes, success has lots of parents, and failure is an orphan. So anytime that you push something as a think-tank, and it actually happens, inevitably lots and lots of people are involved. And proving that you were actually a key player, as opposed to just going along with what everyone else was saying, is always hard.

That said, I think there’s a number of things at Grattan – and female workforce participation is definitely something where we were a very early voice to be pushing that – where not a lot of other people were particularly interested. Maybe it would have happened anyway; you never know. But definitely, we were very early onto the bandwagon, and arguably, getting it started. So I am pleased … I look at Game-changers, it effectively pulled out three things. It [argued for] female workforce participation; that was a tick. It [argued for] older age workforce participation, and in particular, [for] pushing up the age at which you can get access to the pension and to your superannuation. And that was one of the few things that Kevin Rudd really did that really pushed through: he pushed up the progressively the retirement age from 65 to 67 in Australia, which I think would just about as of this year, have come fully into effect. And over the long run, that makes a big difference. No question, in an ideal world, it will go up higher, but at least it went in the right direction. And I think that was possibly also influential in encouraging the Abbott-Hockey government to push the same type of reform: they wanted to push it further from 67 up to 70. Unfortunately, that one didn’t go so well. But there are a lot of things in that Abbott-Hockey budget that didn’t go so well, so that that might have been the reason. So we made progress on that.

And we also identified tax. Now, the reality is that tax reform has not made a lot of progress in the last 15 years. That’s an interesting one on which, to some extent, I’ve changed my mind. I haven’t changed my mind that tax policy really matters. At the time, though, we said that the key thing that made it would make a difference is essentially reducing corporate income tax rates. That was the consensus at the time. It looked like the evidence was pretty good. In fact, it was something I subsequently did some work on. I discovered that everybody was referring to everybody else, and that when you actually dug into the work to find out “how good is the underlying research to show that in Australia, with a dividend imputation scheme, reducing corporate income tax rate will make a really big difference”, that evidence is actually pretty weak. And so I am much less convinced than I used to be that simply changing the corporate tax rate in Australia will, in fact, help. And in fact, we did some work while I was at Grattan, partly leveraging some work that the Australian Treasury had done, to show that the impact of that reform would be quite a lot less in terms of its impact on people’s incomes than a lot of the historic literature had said in Australia.

David Walker: My own experiences running policy and advocacy for public policy organisations have convinced me that John Daley is right. No organisation has the resources to talk authoritatively about everything, or to act everywhere. Effective organisations prioritise their agendas. Only then can they hope to change the game.  

Independent policy consultant and former Grattan Institute CEO John Daley explains how to write persuasive reports so that decision-makers can use them to actually make policy. (That's what we want, right?)

David Walker: In this episode of Shorewalker on Reports, we talk with an independent policy consultant – John Daley.

Now, John Daley looms large in the world of reports. That’s in part because he was the founding head of an independent, centrist Australian policy think-tank called the Grattan Institute. He spent a decade running Grattan, and building it. He thinks more analytically about the report-production business than just about anyone else I know.

One of the most important points that John Daley makes in this podcast is that reports have to be written for decision-makers, with an eye to letting them make a decision as soon as possible. So here’s a preview, where Daley explains the situation of the people who probably commissioned that report from you, or asked someone else to.

John Daley: You’re talking to senior decision-makers. The thing that is invariably true about senior decision-makers is they are really, really time-poor. They just don’t have time to do anything. And they certainly don’t have time to get across the detail very much. And consequently, they are paying you to get across the detail and to think through that detail and synthesise it and realise that the consequence of all that is, you know, a conclusion. But what they want is the conclusion. And of course, that business of writing an elevator pitch is actually much harder than it looks.

David Walker: We’ll return to those time-poor decision-makers. But first, let’s go back to the start of John Daley’s career and find out how he gathered all that expertise at creating persuasive reports.

John Daley: I grew up in Canberra. Aged 17, I caught the first bus out of Canberra to go to Melbourne University. I did a degree in science and law, which, in retrospect, meant that I was one of those unusual people who both gets taught how to put together an argument, and who gets taught how to manipulate data and numbers. That turned it out to be very useful later on, when I wound up in the policy game. Also did a lot of music and theatre at university ...

David Walker: After earning university degrees in both science and law he chose a startling variety of different posts.

John Daley: And after finishing up at Grattan, after 12 and a half years, I went to EY Port Jackson Partners, as a consultant there for a bit – and then early in 2024 have set out on my own as a consultant, able to focus on things that I really want to do. So I’m doing a mixture of tax policy work, higher education policy work, some stuff on a brand new industry called online conveyancing, which has, if nothing else, the interest that it’s a brand new industry ... And so when we’re looking at how to regulate it, we really are working it out as we go along.

So one thing you can take away from that is that I have a very short attention span, and have moved from one thing to another as I found them really, really interesting.

David Walker: That’s John Daley. Few people bring as much experience to bear on the report-authoring business. So it makes sense to ask for his insights on how to make reports work.

 If you’re in charge of writing a report – for a senior executive, or a department head, or a minister who will have to publish it – John Daley lists three vital tasks at which you must succeed. They can make or break the project.

John Daley: You've got three things you've got to worry about when you're writing a report.

The first is making sure you are asking, and therefore answering, the right question. Secondly, you've got to do the analysis that actually answers the question. And then thirdly, you've got to communicate whatever you found in a way that's effective.

John Daley: So to take the first of those: in terms of asking the right question, it's always worth, I think, spending quite a lot of time with the person who is commissioning the report, talking to them about: what do they really care about, what's their understanding of the problem, and being prepared to go back to them and say: "You think that your question is x, but actually I think your question is something slightly different, because this slightly different thing is, in fact, going to solve your real life problem, even though that's not necessarily how you might have characterised it to start with."

And that process – of really sitting with someone and understanding what problem are they trying to solve and getting clarity on it – takes longer than most people think.

But it's really worth the investment. Because if you get that wrong, or you don't get it quite right, then you wind up either doing a lot of work that you didn't need to do, or not doing a lot of work that you should have done. So that's part one, get the right question.

There's a lovely sort of one-page format that McKinsey used to use around the problem statement that was aimed at getting clarity around the question. I found it a really useful framework.

One of the most important parts of that framework was getting clarity about what was out of scope. So write down the things that, as you've heard it, you don't need to worry about. And make sure that the person who's commissioning it agrees that those indeed are the things that are out of scope. And that to-and-fro about what's in and out of scope, I think, can be really helpful.

David Walker: As you start your report project, you also need to establish a basic project management structure: you need to establish who has what kind of say in the project, what resources you control, the time you have before delivering the report, and how you will check in with the decision-makers while you are carrying out your investigation.

John Daley: Some of your listeners may be familiar with the so-called RASCI framework around just getting really clear about who’s got decision rights, who has the power to recommend, who has the power to advise, who has the right to be consulted (and) whose views are influential because they’re their views (even if they’re wrong), who has to be informed afterwards, but otherwise doesn’t need to know. Just getting really clear about who is in each of those categories is very helpful up front. [RASCI stands for Responsible, Accountable, Supportive, Consulted, and Informed.]

And then, of course, the other kind of classic project management things are around getting clarity around what resources you’ve got, what timeframe have you got, when are the check-ins? What is the routine that you want to set up so that you can keep bringing the emerging thinking back to the decision maker? Because the last thing you want is to go away for four months and then kind of come back with a finished report that’s actually probably going to be useless.

What you want to do is routinely engage with them to say: “This is how things are going”. Because, by definition, the person who’s commissioned the report is working in this area. They know a lot. They’ve got very good priors. They probably know more than you do. They’ve certainly probably got better instincts than you do, and being able to engage with them regularly on how things are emerging means that you get the benefit of those instincts and those steers around: “You’ve missed the following argument; you haven’t spoken to the following person; your evidence says this, but the real thing that’s going on is something completely different”. You know, you need a process that allows you to engage with your senior commissioner, that enables you to extract all of that out of their head. And they may not be particularly good at giving you that up-front. They may need you to kind of routinely be engaged with them to make sure that that gets extracted.

David Walker: And while you’re doing all this, Daley suggests you should remember an important rider: the people who commissioned you are paying you to provide an answer, not a book.

John Daley: You’re talking to senior decision-makers. The thing that is invariably true about senior decision-makers is they are really, really time-poor. They just don’t have time to do anything. And they certainly don’t have time to get across the detail very much. And consequently, they are paying you to get across the detail and to think through that detail and synthesise it and realise that the consequence of all that is, you know, a conclusion. But what they want is the conclusion. And of course, that business of writing an elevator pitch is actually much harder than it looks.

I wrote a thesis on why you should obey the Australian Constitution, to which my elevator pitch is now, “because that means, if you do obey a constitution, fewer people get shot and more hospitals get built”. Now as an elevator pitch, that’s very short and sharp – but it did take me about four years to get there.

So that business of sitting back and working out, “how do I compress what I want to say for a senior decision-maker” actually takes real time. So make the time – and that goes also for the summary of a report.

If you look at Grattan reports, you will discover that the first page, the summary page, is literally one page. It is only ever one page. It has never been more than one page. No matter how big, how complicated the report, we set ourselves a limit, which was that you only get one page. And if you can’t fit it onto one page, rewrite it. And it was an immensely powerful discipline in terms of thinking through, “if I have really limited time with a decision-maker, what am I going to tell them?” And I think that that’s a really good discipline for reports – that your executive summary, your true executive summary, should be literally one page. And because of the way that Grattan’s technology worked, there was no way to change the margins or the font spacing or anything like that. You couldn’t do any of those kinds of cheats. You just had to get it down to one page.

That spending the time to do that is really important. It will take way longer than you think it will. That’s the thing over which most of the arguments will happen within your team. That’s fine. That’s normal. Make sure you have those arguments and work it through. And that’s hopefully what will be really important and valuable to a decision-maker. And if they want to dive into detail, you will be fine, because you’ve written 80 pages, or whatever it might be, about all of the detail, and invariably, you will know way more about the detail than they do. And so if they’ve got questions, you can go there. But actually getting that top-level argument right is important.[DJW1] 

I think the other thing is making sure you’ve really thought about where is the audience coming from. And again, I think one of the vices of academia and policy and all the rest of it is that we do tend to think about logos [as the ancient Greeks called it] the whole time. You know, what’s the logical argument? And don’t get me wrong; I love a logical reasoned argument. It’s definitely better than the opposite.

But you also must think about the ethos and the pathos. What are the values that the decision-maker brings to this? What are the emotions that they bring to this? And how are you going to deal with those? You know, it’s an interesting reflection that up until the 18th century, you know, rhetoric was considered a major area of it was, in fact, considered a major discipline in its own right. It’s effectively now more or less disappeared. But all of the things that are in Aristotle’s rhetoric and were taught for literally thousands of years still work. The fundamental things that cause people to change their minds are not just the logical arguments; it’s also the values and the emotions. And if you haven’t figured out where your audience is coming from and how your argument and how your presentation is addressing those emotions and values, chances are they’re not going to change their mind.

David Walker: So now you’ve set up. You’ve found out what questions you need to answer. You’ve established your management framework. You’re working with a summary in mind.

Now it’s time to actually figure out what it is that someone should do about your problem.

John Daley: So then the second thing you've got to do is, actually having worked out your question, do the analysis. And that's looking at the literature, and doing surveys, or running analysis on the numbers, or whatever it might be.

The trap here, I think, is that it's very easy to go and do the things where you know you've already got the data, or you know you've already got access to the right people, and you can write a whole lot of things down. The trap, however, is that those may or may not answer the question – and therefore they may or may not be particularly helpful. And it is very easy to think: "I'm being, you know, paid a bunch of money to do this; therefore I need to show that there's lots of activity; and if I look at this data source, which is readily available, I can produce lots of pages very quickly. And that is, you know, demonstrating my value." And the catch there, of course, is that that's really just an anxious parade of knowledge. It's not necessarily helping the person who has commissioned you.

And so starting with that question that you've established as part of the first step and saying "What analysis will really help to answer this question?" ... And one of the ways that I try and think about that is: "Let me just imagine what the possible answers of this analysis might be, the extreme answers – it might be 10, it might be 1. If it were 10, would that change my answer to the overall question, compared to if the answer was 1?"

And if the analysis is not going to change your answer to the overall question, well, don't do the analysis – because it's, by definition, not necessary.

So that business of just, before you start doing the work on any particular piece of it, asking "Is this going to change the answer", I think is really also very valuable. It's one of the things that keeps scope manageable and means that you don't burn your team on the way through.

But it's psychologically difficult, because psychologically, we'd rather do things that look familiar, and where we know where we're going. And often the things that are going to answer a difficult question are precisely the things where we don't know where we're going. So having the self-discipline to ask "is this analysis going to change the answer" I think really makes a difference. And that means that maybe you spend more time doing analysis that's a bit tedious and where the data sources are a bit ropey, and where it's hard to kind of get at it. But if that's the work that's really going to answer the question, well, that's where you should spend the time.

David Walker: Daley particularly advises you to beware filling your report up with data that merely describes the problem.

John Daley: I think the problem description trap is a real problem. Problem description is usually, as the name suggests, a description about the world. And we've got lots of data about what the world looks like – and usually describing the world is relatively uncontroversial. We are simply saying: "Here are the facts that we can observe about the world – lots of data, lots of numbers." We can draw pretty graphs and so on. But of course, for most people who are commissioning a report, they don't want a description of the world. They want to know: what should they do? And that's a much harder question in some ways, because that is inherently a normative question, not a descriptive question. It's one that asks not "what does the world look like", but "what should the world be".

That's inherently a much more controversial question. It invariably involves, to some extent at least, some value judgments. As soon as you start making those kind of value judgments, people start shooting at you. As soon as you say, not just "this is how the world is", but "this is how we ought to make the world different", people tend to start shooting at you. And so we tend to spend a lot of time describing the problem and then keep the "therefore this is what you should do" pretty short. And unfortunately, I don't think that that's usually the right balance.

And out in the real world, you can see this happening a lot. The New Democracy Foundation did a lovely piece of work where they commissioned two different think-tanks – one on the right, one on the left – to look at a whole series of legislative processes and ask, how had the problem worked? How had the policymakers worked through it? And despite the fact that the think-tanks were coming from very different ideological positions, they came to very similar conclusions – that by and large, on each of these individual measures, there had tended to be a lot of discussion about what the problem was, often quite a lot of discussion about "therefore we should do X", but very little discussion about: "What are the different things that we could do to solve this problem, what is the evidence that one of them might be better than the others, and therefore, which answer should we choose?" And I think that's also true in policy work, it's very easy to spend lots of time on description and then jump to a policy answer that sounds as though it's got something to do with the problem we've just described, and then declare victory.

And often you don't find much time working through given the problem you've described: "Here are the various plausible policy levers that might help, here are the pros and cons of each of those levers, and given all of that, this is the best lever we should choose."

Now, all of the sort of regulatory impact statements and all of those kinds of processes are designed to try and make people do that process properly, of thinking through the alternatives. But that is the step in the process that people most often jump over, because it's hard, and often the evidence is pretty ropey. But the fact that it's ropey doesn't mean that you shouldn't do it. It just means that you've got to give it the best shot you can and be as disciplined as you can – so that at the end of the day, instead of just coming up with something where you say, "Well, this policy action seems to have something to do with the problem I've described", instead, you're saying: "This policy action is one that is most likely to actually improve the world, given the problem I have described in the first half of the report." So yes, I think there's a real danger of falling into the trap of spending way too much time describing the problem and not nearly enough time working through what are the different policy solutions that might help – and of those, which would be the best one in terms of really solving the problem that's been identified.

David Walker: Now, say that you’ve accepted that you can’t just answer the question with problem description. You’ve accepted that you really need to come up with answers. Now your task may suddenly feel much more intimidating. You will have to perform some real analysis that has real explanatory power. How do you go about that?

John Daley uses one technique which is remarkably straightforward: start ranking your potential answers according to the various impacts they will have. He argues the powerful explanation may jump straight out at you when you finish this exercise – and if it doesn’t, this technique will at least point you to places where you need to do more research.

John Daley: The thing I found most useful is a bizarrely simple tool which says: "What are the various criteria that we care about in terms of the policy solutions?" How much, for example, is it in fact going to improve housing affordability, if that's the problem we're trying to solve? So, if you want to put numbers around that: How many people will be able to buy houses that couldn't buy houses before? How many people will spend less on their housing than they used to, and by how much? But then we also care about – because it's always the collateral impacts that kill us – how much is this going to cost the budget? What is its economic effect going to be? How will it change distribution? Will it make distribution more unequal or less unequal, and all of the other things that you might care about. And then for each of your policy solutions, just rank them on each of those criteria.

[That] is not particularly complicated. One of the things that I think that people get very hung on about is that they need to be able to weight all of these criteria, and they need to be able to add them up to come up with a single number. And of course, the problem is that often these criteria are very difficult to add. I actually think that by and large, you do better not to worry about that weighting. Just describe each of these policy solutions against each of these criteria.

And often what happens is that the answer is then blindingly obvious. For example,  I've got lots that are going to have no impact, or at least very little impact, on housing, on the number of people that buy houses, or on the percentage of people's income that they're spending on housing. So we can knock all of those out to start with. I've got a number that have got horrible economic impact. So we can probably knock those out. Let's see what's left. And so that simple table – here's all of down the left hand side, here's all of my policy solutions, and this is how they rank on each of the major criteria that I care about – [is] often not actually particularly hard to do, and it can make the answer to your problem much, much clearer, very quickly. And occasionally, there's some analysis that you could do that will say: "to what extent will these things really help?" And then you've got to go and do that analysis.

[INSERT GRATTAN HOUSING REPORT TABLE]

David Walker: So you go and do the analysis. Are you finished now? Not even close. Because your analysis is not the main product that the people who asked for the report really want to see. Most of all, they want the answer to their problems.

John Daley: And then thirdly, of course, you've got to communicate about the answer. And of course, here, the problem is that we tend to communicate the answer back essentially replicating the steps we went through in order to answer the question. And that, if you were trying to guide a future researcher who was replicating your project, would be really helpful. But by and large, that's not our audience. By and large, our audience is someone who's asked the question, or someone like someone who's asked the question. And what they want to know is the answer.

And so usually the way we should communicate back the answer is completely different from the steps that we went through in order to come up with the answer. And of course, that's completely different to your typical scientific or economic report, where ... you try and make it easy for someone to replicate it. You say: "Here's my question, and here's my literature review, and then here is my methodology, and then here is my data sources, and then here is the numbers that pop out of the data, and here's my analysis – and then finally, here are my implications, the things that I think might be the implications for the real world, and what you ought to do." That may or may not be a good way to write an economics paper, but it's a terrible way to communicate anything to busy decision makers who usually don't have a lot of time. And you will help them most, and they will be probably most grateful, if you walk in and say your question was X, and the answer is Y, and the key reasons are 1,2,3. And then if they want to dig into the methodology, off you go. But make sure that you communicate in that way, which is very much answer-first.

David Walker: John Daley wants to warn you that communicating your answers may be a new sort of challenge. For a report, you construct your argument backwards from the answer you’ve reached. That’s the opposite of how you probably do it most of the time.

John Daley: This is something that academics really struggle with, because if you look at the typical learned journal article report, it basically says, you know: “We’ve thought up this interesting question. Our methodology for attacking this question is A, B and C. So we’ve gone and collected a lot of data according to the methodology that we’ve just laid out in enormous detail. And here are our kind of complicated tables, and here’s all of the statistical analysis. And the conclusion of this is that A is better than B.”

And so that is effectively the process that you go through in terms of analysing a question. So in terms of working out “well, how should I go about doing the analysis”, that’s actually not a bad description. But in terms of communication, it’s terrible – because, of course, in terms of communicating it, what you should be doing is saying “you’re probably interested in this question and A is better than B. The reasons that A is better than B is 1-2-3, and the methodology that’s led me to 1-2-3 is here, if you’re really interested, but you’re probably not.”

So the communication strategy is totally different from the report strategy.

But if we go back to that report strategy, the way that I always think about it is also slightly reasoning from the answer, which is to ask: “What is the choice that the policy maker faces?” As Paul Keating would put it, what are the policy levers they’ve got ... Their choice is between pulling policy lever A and policy lever B. Then your report is essentially about asking: “Is A better than B?” And then you go and ask: “What is all the evidence that ... would lead me to conclude that A is better than B, or not?” And then go and collect that evidence and then find out what it says.

Now that’s partly an iterative process. As you get into it, you discover that there are things that influence whether or not A is better than B that you didn’t start off with. But ... you at least start with: “Here are all of the dimensions on which you know we can compare A and B. Let’s go and find out about each of these dimensions, how A compares with B, and then off we go from there.” Now that’s a very simplistic thing, where you’ve kind of got something that’s very binary. If you’ve got something a lot more complicated, like housing affordability, then you start off by saying: “Lots of people care about housing affordability. Well, question one, what do they mean by housing affordability? Well, we can break that up into several different ways of thinking about that. Then let’s go and get the evidence about which of those things is, in fact, getting worse or not. Then let’s go and get the evidence about which kinds of policy levers might affect that. Let’s then get the evidence about which of those policy levers would work best. And then we can bring that all together at the end and say, if you care about housing affordability, then this is the policy lever that will actually help.” So that’s, I think, how you attack the report.

One of the other things that you need to do is, in that process – and this is very much something I learned at McKinsey – before you do the analysis, actually sit down and think: “If I do this little piece of analysis, or big piece of analysis, let’s imagine the possible answers – and if the answers are kind of at one end, how will that change my ultimate conclusion, and if the answers are at the other end, how will that change my conclusion?” And if you think about that thought experiment and say, “you know, it doesn’t actually matter whether the data comes out at the far right-hand end or the far left-hand end; I’m going to do the same thing in terms of the policy answer”, well then – and this is the crucial piece – don’t do the analysis. It’s not going to change the answer.

… And what that leads you to do is you do a smaller number of pieces of analysis. Often they’re the really hard ones, but by definition, there are the things that might actually change your view about what is the right thing to do as a result. And it’s one of the things that’s very different from academic analysis. In academic analysis, if you can find out something that’s interesting about the world and get the right kind of statistics behind it, then it’s publishable and it’s a good idea. Whereas, if you’re in the business of policy report writing, inherently, you’re in the business of practical action; you’re in the business of trying to explain to people why they should do A not B. And so the mere fact that a piece of analysis is fascinating and interesting is not good enough if it’s not going to help people decide whether or not they should do A rather than B.

David Walker: Let’s look at how some of this works in real life. Daley led Grattan’s 2018 work on an emerging policy problem: Australian housing costs too much. This work was, we can see now, among Grattan’s most successful. It influenced other work. All that work eventually led the New South Wales, Victorian and federal governments to change their minds about housing. By 2024, they embraced the idea that Australia’s housing problems would best be fixed by … yes, building more housing. That sounds simple. But it represented a huge and pivotal change in policymakers’ mindsets

This report has a lot to teach about how you address a complex subject and make governments change their actions. This one also has a lot to tell us about surprises: reports don’t always stick to the neat process we’ve just talked about.

John Daley: We wrote 177 pages for our housing affordability report, which I think at the time was a Grattan record by way too much. And ... given that I was the principal author on that report, there was an edict that went out from the CEO shortly afterwards to say that no Grattan report was to be more than 100 pages ever again. But it was partly because housing markets are genuinely extremely complicated – and interestingly, in Australia, and somewhat bizarrely, given how important they are, somewhat under-researched. For whatever reason, there had not been a lot of academics doing work in that space. The Reserve Bank had done a lot of very fine work, but there are limits to how much the Reserve Bank can publish, and government departments had published very little, and academia-wise not that much [research had been done]. And so there was a lot of things to work through. We did work through as many of the elements as we could. We spoke to a lot of people. So every time someone came up with a new objection, we chased it down. But we did come to the end of that report, and then when we came to write the summary of it, my summary in one line was: “If you want housing to be more affordable, you should build more of it”. Now there’s actually a very profound truth to that claim. Bizarrely, there are actually quite a lot of people, most of whom live in planning departments, who actually think that that claim is untrue. And so the report is partly 177 pages trying to show them why they’re wrong, and that if you do, in fact, build more housing, it will be more affordable. But given all of the noise in housing affordability and the way that many of the policy responses that governments come up with sound terrific, but unfortunately do not involve building more of it, almost inevitably they don’t in fact make housing more affordable. And so that’s why sometimes you have to do the very thorough analysis at enormous length. And it’s only after you have done that that you can do something very simple at the end of it. But every time you get challenged, you can go another level down and another level down, another level down, to show that this overall answer is, in fact, right.

David Walker: Once you’ve done all this research and analysis, you have a draft to circulate – to colleagues, and to trusted third parties who you’ve been consulting with. John Daley advises you not to treat this stage as a formality. Sometimes it can start your report in a new direction. That was the case for Grattan’s 2018 housing affordability report.

John Daley: So we’d written a draft. We circulated the draft to lots of people, because one of the ways that you find out all the ways that you’re wrong or things you missed, is to circulate people to draft report and ask them what they think – and then take their answers seriously. So one of the things that that means is: Don’t circulate a draft report and then plan on publishing it four weeks after you’ve circulated it. Circulate your draft report and plan on publishing it three months later, because it will genuinely take you that long to really think about, incorporate, where necessary change, where necessary go and do more research, all of the things that come back, and that’s the difference between not a bad piece of work and a really robust piece of work.

And so we put out a draft, and one of the things that came back was: “Look, you’re saying that, you know, it’s all hopeless, and no one’s actually doing any substantial development in middle rings of Sydney and Melbourne. But actually, that’s not true. In the last two or three years, we’ve actually done a really good job in Sydney.” And we went: “Okay, okay, well, we better go and find out whether or not that’s true.” So we went and found a dataset and came to the conclusion that actually we were wrong, and that particularly in the previous two or three years, there’d been a lot of development in Sydney, particularly in the middle suburbs. We thought, “well that’s interesting”. And so we certainly brought that up and showed that this had really changed things. And then we ... I can’t remember how I found it, but I stumbled across a map of where all of the cranes are in Sydney and Melbourne. Someone puts out this regular report, literally mapping them ... and the patterns were really different. So in Melbourne, basically there were a stack of cranes in inner Melbourne, central Melbourne, so obviously in the CBD, but particularly in Southbank, as all of those towers, accommodation towers were going up in in Southbank, but, but frankly, not very much anywhere else. Sydney, the map was opposite. There was almost nothing going on in central Sydney. But there were these lines of cranes basically on all of the major transport routes out of Sydney, out of central Sydney, so all of the big roads into the suburbs. And by definition, a crane is building a building, at least for probably more like about 10 stories. And so we went and talked to some people about in Sydney, and said: “This is the map. Please explain to us what is, in fact, going on here. And by the way, we also see the evidence that there’s lots of new apartments being built in middle Sydney.” And they said: “Oh yeah, what’s happened is that lots of people have been building six- to eight-storey apartments in Sydney along the major roads. Because the planning scheme has always said that that was possible, but that never happened, because local councils always said no, but the New South Wales government has brought in this new independent planning panel, and all of the developers are showing up in front of the planning panel, saying ‘we want to build our eight story development, and by the way, it’s consistent with the planning scheme and what the rules say.’ And the planning panel, which is not particularly responsive to the views of local residents, just keeps saying, ‘well, that’s what the planning scheme says,’ and the planning scheme’s there for good reason [so] knock yourselves out, go and build your building.’ And that’s why so much has been built.”

And without the cranes map, we would probably never have asked the right question. We, of course, did ask the subsequent question, which was: “So was this independent planning panel a brilliant idea of the New South Wales government to solve their housing affordability problems?” And people said: “Ah, no. No, no; the independent planning panel is there because the New South Wales government thought that a lot of the local councils were corrupt and were being excessively influenced by developers.” Can’t imagine why; it would never happen in Melbourne. And consequently they set the planning panel up because it would be less corrupt than the local councils. So ironically, yes, it is true that the planning panel has made a material difference to building in Sydney, and consequently, over the long run, building housing affordability in Sydney is marginally less bad than it would be otherwise. But that was, in fact, not the problem that government was trying to solve at the time. And, you know, would not be the first time that we had done the right policy thing for the wrong reason.

David Walker: One of the lessons of that is that to really understand the problem, you just have to get inside it and walk around a bit looking for interesting things.

John Daley: Yeah, and in particular, you have to look for things that that that are different from your priors. I mean, we were talking earlier about, you know, the difficulty sometimes of really incorporating evidence that’s different to your priors. But one of the ways I think about that is if you come across something that you think is surprising, it doesn’t fit your priors. By definition, it’s interesting. You are probably someone who’s been playing this policy game for a while. Your priors are probably pretty good. So if your guess is A and in fact, the evidence turns out to be something completely different. Well, not only is that news to you, but it’s probably going to be news to a lot of other people, and it almost certainly is revealing something which is not obvious about the world, and is therefore probably quite important and quite interesting, because you know, public policy, the thing we all are terrified about is unintended consequences, and the way that you forestall unintended consequences is to find out stuff that is hidden and so looking at those things that are surprises and genuinely understanding them is really important, because by definition, almost they are going to tell not only you but your readers something that they will find genuinely new and different and interesting and probably important. I mean, if it’s contrary to your priors, it’s almost certainly important as well as being interesting.

David Walker: With a full set of facts, analysis and arguments on the Australian housing market, the Grattan team released their housing affordability report to the public. It did not immediately provoke governments to change their housing policies. But Daley did not expect it to.

Daley and his Grattan co-author, Brendan Coates, then set out to both stress-test and publicise their views. And that involved a trip to the bank – the Reserve Bank, Australia’s central bank and the government institution which pays most attention to the dynamics of housing markets. One of the Reserve Bank’s economists was Peter Tulip, who was already thinking along the same lines as the Grattan team.

John Daley: The Reserve Bank, as I said, has always been very interested in housing markets. Lucy Ellis, who, of course, now is at Westpac, but at the time, was very senior at the Reserve Bank, I think is perhaps the most expert of all analysts of the Australian housing market. So we went and presented the draft work to the Reserve Bank, which I think is probably the toughest crowd that one can present in front of in Australia. The senior group the Treasury is pretty close, but the Reserve Bank certainly seems to have a culture, when external people come, of asking a lot of very difficult questions. So we did present it to them. We got a lot of very good questions and a lot of things we had to follow up. But we did also inspire Peter Tulip a little bit, because we said: “There’s this fantastic piece of analysis that’s been done by a guy called Ed Glaeser in America that essentially works out how much of housing prices are essentially because of the cost of building, and how much is essentially the cost of land – you know, per square meter of land – and how much is effectively the scarcity value of being allowed to subsidise. And of course, you can’t change how much land there is, and it’s not easy to change building costs, but you can change how easy it is to subdivide.” And Peter followed up with that, and then promptly did that analysis – which is a long and complicated piece of analysis that requires a lot of detail, a lot of access to data which the Reserve Bank had. And he published it. And it was a fantastic piece of work that proved what we very, very strongly suspected, which is that a lot of the price in Australian major cities, particularly in Sydney and Melbourne – I think from memory about 35 per cent of the price is essentially what’s known in the trade as the zoning value, the fact that you’re not allowed to subdivide, as opposed to the value of the land – and that therefore, changing planning policies, implicitly, will have quite a big impact over the long term on housing affordability.

David Walker: After writing that analysis, economist Peter Tulip wrote or co-wrote more Reserve Bank papers on housing affordability. Then in 2020 Tulip moved to the centre-right think-tank The Centre for Independent Studies, and began advocating for governments to allow more home-building with fewer conditions. That advocacy caught the attention of what was then the New South Wales Productivity Commission, which one of Tulip’s Reserve Bank co-authors had joined. By 2023, a newly-elected New South Wales government had adopted those views as one way to ease the New South Wales housing shortage. The Victorian government soon followed.

Six years after Grattan’s original report, its impacts were still being felt. As Daley points out, public policy moves slowly – but it does move.

John Daley: Governments’ levers are, in a funny way, very large. The cost of missteps is extremely high. And consequently, we have designed ourselves government systems that that are not quick to move. Democracy is not designed to be fast. It’s designed to avoid really bad outcomes. And therefore, if you’re trying to get good outcomes, as the famous Weber phrase goes, it’s slow boring through hard boards. So yes, it’s slow. And ... the cumulative effect of multiple people looking at something and doing their report and saying, “Yup, it really looks like A is going to be better than B”, progressively changes the conversation about something. Certainly at the time that we wrote Housing Affordability, by that stage, the debater got to look you’re probably right that changing planning stuff will make a big difference, but it’s all too hard. And today, interestingly, we’ve got a Victorian premier going full bore on “We’re going to really, really, really change planning policy,” in ways that lots of people in Brighton are very upset about, and which, if it came off, would genuinely make a difference over the long run. So what was politically impossible now has a major political party in power, in Victoria, advocating it full bore. So things do change.

I think it very much fits with some of the work that I did in ... The other report that I wrote in my final year at Grattan was one called Gridlock, which was essentially looking at [the question]: “Why do some policies get changed, and why do lots of good ideas not happen?” And one of the things that we concluded out of that report was that the state of the evidence base makes a really big difference. If the evidence base is weak – if the only thing going for you is a Grattan report – then chances are it won’t happen. And in particular, major lobby groups will almost certainly succeed in overturning it, or at least stopping it happening. Whereas if the evidence base is really strong, then chances are it will happen.

And there’s a lovely case example of this. Grattan, as part of that housing affordability work had done some work on rental conditions in Australia. A third of the population rents. Australia, by world standards, has very, very pro-landlord rental laws, so tenants have relatively little rights. So until relatively recently, for example, in most Australian states, you had no right to hang things on the walls. You had no right to have a pet. The landlord had ability to basically keep the tenants out very easily. And that’s in big contrast to how, for example, a lot of European tenancy works.

In Victoria, partly as a result of Grattan, maybe, but partly as a result of lots of other people, no doubt, the government got interested in this commissioned the consumer affairs area commissioner to do a big report. And they did a very, very large piece of work. They consulted with literally thousands of different people. They wrote literally hundreds and hundreds of pages on this, essentially working through all of the arguments that landlords put up to say that “if you do this, then you know it’ll be the end of the rental market as we know it, and every landlord will sell their property” and so on. And they came to the conclusion that a lot of these rental laws could be changed – that, you know, tenants could have a right to have a pet, and chances are that the sun would still come up tomorrow. And the Victorian Government, in fact, then changed all of the rental laws accordingly.

By contrast, in New South Wales, none of that work got done. This stuff did make it up in front of Parliament. The minister got interested. The landlord groups made a huge song and dance. They scared the government into thinking that maybe this was not such a good idea, and it never happened. And so it’s a really good little case example of the way that the strength of the evidence base can make a difference. And there were lots of other examples we had, but not one that was so starkly different between two different states with two different evidence bases. And I think that’s what goes on in practice and the reason why these reports make such a difference. And I’ve spoken to a number of ministers and public servants about this subsequently, and they’ve all said: “Yes, this is exactly how it works”. So a minister comes up with a bright idea, and inevitably some lobby group hates it. So the lobby group walks into the minister’s office and says, “If you do this, then you know, the sky will fall in and the sun will not come up tomorrow.” And the minister turns around to his public servants, and says: “This is the people who are involved in the industry. You know, they know a lot about the sky falling in and the sun coming up tomorrow in their industry. They must be right  – what have you got? And the public servants go: “Well, it kind of looks right, minister.” And the minister says: “Well, what would you know? You’re a bunch of public servants. This is not your industry.” And so they get scared out of doing anything.

Whereas if, on the other hand, what happens is that the industry comes in and says, “Well, if you do this, minister, the sky will fall in and the sun won’t come up”, and the minister turns to its public servants, and they say, “Well, yes, minister, of course they would say that, but on page 127 of this very learned report written by this person who clearly knows what they’re talking about, and who spent several months looking at this, it says that this is the argument that gets put up, and the evidence why this is, in fact, a lot of rubbish is A, B, C and D, and so minister, we’re pretty confident that you can do this, and the sun will, in fact, keep coming up, and this is just a lobby group talking their own book,” then invariably, the minister turns around to the lobby group and says, “Well, you know, the evidence is in and I don’t believe you, because, yes, you work in this industry, but of course, you’ve got an interest to protect, and you know your interest is being contradicted by the evidence, so I’m not very interested in what you have to say, and so we’re going to do it.” And that, apparently, is the dynamic that plays out just time and time again – that when you’ve got good evidence that’s accessible in a report, when the lobby groups turn up and start saying, “this is going to be a disaster”, if you’ve got that evidence, it’s way, way easier for the minister to face them down. And by and large, they do.

It’s one of the things that I was completely surprised about in that report, that in that Gridlock report, I had expected to find that the opposition of powerful vested interest groups was a really major reason why policy didn’t change. And by the end of the research that we’ve done, I’d come to the conclusion that that was actually not true – that actually, in a funny way, big lobby groups are not that powerful in the face of really good evidence. Now, one of the things that big lobby groups do is convince governments never to collect the evidence in the first place. And of course, that’s much harder to see, and one of the reasons why they can often win. But if you do do the work, and if you do commission the evidence, it’s surprising how powerful it can be. Now, that’s a very comforting thing to find out, as someone who used to run a think-tank. But it’s also, I would add, not something I expected to find. I expected to find that lobby groups would be a lot more powerful. And you know, that’s not what the evidence told us.

David Walker: So you need to anticipate poor arguments and show why your recommended course of action is better. This sounds simple. But in practice, this requires you to do something which runs against much of human nature. You need to show you understand the strongest form of each argument you are rejecting, and explain why you are rejecting it. Only then can you show why the recommended course of action is better on balance. You need effective defence as well as offence.

John Daley: In my time at Oxford – as I said, I was doing work in legal philosophy, which meant I spent quite a lot of time essentially having to argue with the philosophers, and as I said, Oxford philosophy is a blood sport, hunting to hounds has got nothing on it – the way that they used to talk about this was what they call the principle of charity. You have to take your opponent’s best argument; you have to construe it not necessarily the way they’ve put it, but in the way that would be the most powerful that you could possibly make it; and then you need to show why it’s wrong. So that makes the bar really high, but it’s a really good way of writing this kind of report. Work out: what are the arguments against this? How do I how do I pick, not the easy arguments that I can kind of dismiss easily, but how do I pick the arguments that really have weight, that really might sway someone’s opinion? How do I put them the strongest way I possibly can, and then how do I assemble the evidence that shows that you shouldn’t worry about them?

And so absolutely yes, a report has got both offence and defence. It explains this is why we think this is the right answer. And also, here are the major counter arguments, and this is why we think they are outweighed – either because, you know, they’re not borne out by the evidence, or because they’re not as strong as or not as important as the other things that we care about. So yes, that is a really important part of the way that I think good policy work is done. If you haven’t thought about the major counter arguments and explained why they are less powerful than the argument that you’re putting, you’re not really helping.

Because one of the other things that became very obvious to me running Grattan Institute ... One of the things people always ask is, you know, Grattan is 20-odd researchers; how can it possibly have this much impact relative to an army of public servants and veritable armies of academics? And one of the answers to that question is because we thought about it the way that policy makers think about it. And the way that policy makers, whether those are senior public servants or ministers, [think about it] is, every policy decision is an all-in all-things-considered policy decision. You have to consider all of the things that influence you and say: “On balance, I think that A is better than B.” It’s to simply say: “We could minimize the number of homes that get burnt if we build them all out of, you know, reinforced concrete three meters thick”. You know, I’m sure that that’s true. And I’m sure you could do some very elegant academic work to show that building houses three meters thick out of concrete means that they’re less likely to burn down. But that doesn’t help a policymaker. A policymaker has to think about, well, how much does this change how you’re going to build things reduce the fire risk – but also, how much does it cost? And, you know, what’s the carbon impact of that? And what’s going to be the impact on building, the building industry, etc. They’ve got to worry about all of those things.

And so if you’re going to go to them with a recommendation about, look, this is how you should change the ... building laws, in the light of Black Saturday and bushfires. You have to answer all of those things at once. Otherwise they can’t make a decision. Similarly, if you’re going to talk about tax policy, it’s not good enough to say: “Oh, look, this will mean a more equitable distribution of resources.” You’ve got to show that it’s not going to have a terrible impact on the economy. You’ve got to show that it’s not going to have a terrible impact on vested interests, etc, etc. And so thinking about all things considered, including the counter-arguments, is really important, because otherwise you are not really helping the decision-maker, whose job it is to make a decision, all things considered, thinking about all of those different considerations.

David Walker: Why do people find it so hard to come up with those all-things-considered approaches? Why do they so often instead latch onto one particular argument and just pursue that?

John Daley: I think it’s easier. I think we’re hardwired like that. And there’s some elegant psychological theories floating around about why we prefer certainty. We have strong confirmation biases, so we dismiss evidence that doesn’t fit our priors. We put more weight on evidence that does fit our priors, irrespective of the actual strength of that evidence. And we’re hardwired to do that a bit. And it’s more comfortable, right? No one likes changing their mind all that much, so I think it’s very much we’re hardwired, and it’s easier to simply say: “Look, I think that A is better than B, and I’ve just lined up all the evidence I can find showing that A is better than B.” But as I said, it doesn’t actually help, and of course it’s not intellectually honest.

And I think that the the people who are really, really good at this and who really make a difference are the people who have intellectual self-doubt. And, you know, they can sound very convincing and sound as though they’re very sure of themselves, but at the same time, hopefully they’ve got a little voice at the back of their head going: “Yeah, but are you really sure about that? And when so and so has run this argument against you, have you really thought about where they’re coming from and maybe that there might be a germ of truth in that.” That takes quite a lot of humility, and not many people have got that humility. I think partly, in order to counter those biases, it’s about having the self-discipline to find the time where you worry about that stuff. And I think for everyone, that’s different. For me, I do it in the shower, and I do it when I’m swimming, and I let those kind of thoughts bubble up to the surface about the things that I’m worried about.

And when you’re worried about it, the trick is not to kind of stop worrying about it and push it aside. The trick is to actually look at it in the face and say: “Why am I worried about that? What might I have missed here? Let me really try and get inside the shoes of the person who’s making this argument and understand where they’re coming from.” And I think that’s one of the other reasons why this is hard. That business of ... I mean, we all talk about walking a mile in someone else’s shoes, but actually not that many people do it. And that’s what’s involved, is getting inside somebody else’s worldview and asking understanding where they’re coming from and really understanding their argument.

Now you may well do that and come to the conclusion that now you really understand where they’re coming from, you really understand the fundamental mistake they’ve made, and now you can explain it to them. But maybe you’ll explain understand also or differently, that there’s a germ of truth in it. So I think that that’s why it requires humility, it requires making the time, it requires fighting against our own instincts. All of those things are hard, but they are what leads, I think, to really high-quality work in the long run.

David Walker: As Daley points out, policy evolves in such a way that you can rarely pinpoint one moment or one person or one document that made it happen. But more than most, John Daley knows how to create reports which persuade decision-makers.

I have to confess: I’m biased towards John Daleys’s perspective. That’s in part because he has had such wide experience. And it’s in part because he brings so much analytical rigour to the task of creating reports. (It’s also because, for better or worse, so many of his views match my own.)

So let’s finish by recapping six of Daley’s key points for report authors:

Former Productivity Commission head Gary Banks explores why reports succeed and fail – and why failure now is not necessarily failure forever.

David Walker: In this episode of Shorewalker On Reports, we hear again from someone who has had a real influence on Australian government policy – former Productivity Commission chair Gary Banks. Gary joined the Productivity Commission’s predecessor, the Industry Commission, in 1990 and in 1998 became its founding chair. The Commission is an independent body and it’s charged with finding out how Australia can have a more productive and efficient economy. That is, in turn, a key to higher living standards.

Gary Banks ran the Commission until 2012. And he established a reputation for being willing to push governments – particularly the Labor governments of Kevin Rudd and Julia Gillard.

In a previous episode of Shorewalker on Reports we heard from Gary about the role that reports play.

In this episode we look more closely at how reports get put together – and at the challenges that people have to confront during that process. And we focus on Gary’s time as the first head of Australia’s national productivity watchdog, the Productivity Commission.

I want to start by replaying comment Banks made in that episode about a principle that he thought was important. A report should often make arguments for particular actions, yes. But a report should also put out the full panorama of evidence on an issue, and let that evidence be examined.

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

David Walker: When the Productivity Commission wrote a report, a crucial issue was often this: how much licence did the Commission have to get a good outcome? The Productivity Commission’s reports to government are limited by their terms of reference – essentially, restrictions on what they can examine. And so many contentious enquiries have to provide their advice rather diplomatically, working within those terms of reference.  

Gary Banks: The way in which that the organisation is being asked to provide that advice can make a big difference to how well you can do it. And so the way in which a study is set up and framed – and it may be by the person who commissioned it, or it could be by the people who are involved in the study – is really crucial, to make sure that it's understood and how it will be how well it will be done. I mean, there's that famous American baseball player called Yogi Berra, who has wonderful and sort of mangled sayings, which always somehow make sense. And he says: “If you don't know where you're going, there's a risk that you won't get there” – or something like that, you know. So I think, you know, clarifying, you know, where you're going and why the study is needed is very, very important at the start. And it's particularly important if you've got a big team working on something that everybody has a common sense of where they fit into the bigger picture. So that is very important. And there have been occasions I think, in the life of the Productivity Commission and its predecessors, where a bit of a tussle has taken place with the treasurer of the day as to how to frame an inquiry to ensure that the Commission had sufficient scope to address the thing properly – In other words, that certain things weren't being ruled out that may well have been crucial to getting a good a good outcome.

David Walker: In 1996, Australia’s new conservative government under John Howard asked the Productivity Commission under Gary Banks to look at Australia’s private health insurance system. The terms of reference specifically asked the Commission not to look at other parts of the health system – which presented in interesting problem.

Gary Banks: So the government at that time had a problem with private health insurance – the same problem it's got right now. And that was that premiums were going up too fast. It's very much a cost-driven system. Costs were going up and that was flowing through into premiums. So the Commission was asked to do an inquiry into private health insurance, and this was in about 1997. But the government didn't want the Commission, you know, wandering all over the health system and making recommendations about things that the government didn't want looked at. So it was explicitly ruled out. On the other hand, it's very hard to do a study of a significant part of the health system, like the private health insurance system, without thinking about the context in which it's operating.

So I headed that inquiry. And my approach to that was to meet the spirit of what the government wanted, but not the letter, in the sense that we looked at different scenarios in which the private health insurance system would operate in the future. So we weren't saying which scenario we thought was the best one. But we said it was better to have a private health insurance system that was robust enough that it could operate in under different systems. We did it that way. And we got away with it. You know, I think everybody understood that how well a particular cog in the machine sentiment depends on how the machine more generally is operating. And people accepted that, including the government.

David Walker: Some years later, Banks headed the Howard government’s regulation taskforce. On this occasion, he knew that the government wanted a fairly small, limited report, with maybe a dozen recommendations. Banks and his taskforce came up with quite a few more than that.

Gary Banks: A lot more. So that was a case where I was, I headed an inquiry and report, but not in my role as chairman of the Productivity Commission. So a task force was created with a number of people to head it up, and I was chairing it. And it was clear that again, the government was on the back foot. Small business always complains about red tape, but suddenly the big end of town was complaining about it. The BCA [peak Australian business group the Business Council of Australia] was complaining about it – you may well remember those days  –  and the BCA was putting a lot of effort into showing what the costs of regulation were. So the government decided that it needed a report to be seen to be responding but also substantively to respond. And at the time, I think the idea was: “We'll get Banks and other members of the task force to do this report; we'll give them three months to do a short, sharp report; and we could imagine them coming out with a handful of recommendations that will be manageable.” As it turned out, we were so successful in getting business engaged in this process – because business is often quite cynical about these inquiries, but on this one, for whatever reason, they were actively involved, and provided all sorts of recommendations and reasons why certain regulations needed to be operated. So we ended up with 126 or so recommendations – not six, which I think the government originally had expected. And in fact, in the end, the government responded to a lot of those recommendations – far more than a half dozen. So in the end, I think the government itself felt that it had been very worthwhile, even though its expectations at the beginning, you know, were for a more contained report. And the other aspect of that was, I think, the politics of the regulatory issues got a lot better, because I think business felt that it had been listened to, which is quite important.

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

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

David Walker: It’s worth taking a look at why reports sometimes do not succeed. Banks, like many others, points to 2010’s report of the Taxation Review – headed by former Treasury Secretary Ken Henry -- as a report that never got the traction it needed with policymakers or the public. Banks has written that the Henry Review was hamstrung by a politically-motivated instruction not to look at the level of Australia’s goods and services tax, or GST. If you’re not allowed to look at important parts of the overall problem, he reckons, you reduce your chances of success.

Gary Banks: So this comes down to that earlier point about the important importance of a study having a sufficient remit to be a ble to look at all the things that are important to the objective of the study. And I felt quite strongly – and I wasn't the only one – that it was unfortunate that if we were having a major review of the tax system, that a key component of the tax system was ruled out. And even though the Henry Review found a kind of backdoor way of addressing some of that, it wasn't the same, and an opportunity was lost. And I think at the time, the government of the day thought that looking at the GST would just be politically too ugly. In fact, I think, you know, it might have been part of a process that could have led to reforms being accepted down the track, if they were part of a balanced package of things. So, so that is a case, I think, you know, if a study or an inquiry report is hamstrung by things being ruled out, it limits what it can do.

And of course, in that case, things were made even worse by the fact that the government of the day cherry-picked the report. And so what was a balanced package of recommendations ended up being an unbalanced sort of policy going forward, which focused just on the mining tax, rather than seeing that as part of an integrated package of reforms. I think it illustrates the point, David, that in some areas – tax is one, industrial relations is another – the politics can be so severe that it can be very hard to get the kind of remit that you need to do the sort of report that that an economist would say ticks all the boxes. But that comes down to ‘Why do a report if it can't address things in a comprehensive way?’ So I'd always be pushing to allow the Commission, for example, when I was there, to have a free rein, and reassure the ministers that that wasn't going to turn out badly for them, because at the end of the day, they make the decisions.

David Walker: Ken Henry’s 2010 tax reform report is not the only report to have fallen short of achieving immediate and lasting results. But some reports fail to achieve their immediate aims, and yet nevertheless have a long-term influence. One report often mentioned here is Professor Ross Garnaut's 2008 climate change review, commissioned by Australia’s main left-wing political party, the ALP, in 2007, and delivered after the ALP won government at the end of that year. The Garnaut review did not immediately achieve a lasting carbon pricing scheme. But it won widespread support from policy thinkers of many different perspectives.

Gary Banks: I thought that was an excellent report by Ross Garnaut. That early one, in some ways that report was better than the more recent work that's been done, because he had a relatively free rein, and you could go back to it. But it does come down to the point that he did that report for Labor in opposition. When Labor got into government, it started to see things rather differently; different pressures came to bear and so on. But the report was still there – and I think has been a valuable contribution that was made at the time.

I mean, the very first report ever done – worldwide, probably, independent report – on what was called greenhouse was done by the Industry Commission. And I led it, back in 1991. That report was done. And it was commissioned by Paul Keating, who was treasurer at the time, ahead of the Rio Summit, which was the first international summit on climate change. And the government of the day wanted to have some information to inform its negotiating position at that summit. So it was a case of, you know, a study informing a government approach to a really important issue. So we started off really well, but I think we lost our way a little bit, subsequently.

David Walker: Some regular reports can over time, simply lose some of their reason for existing. Such was the case with Australia’s series of “intergenerational reports”. They were originally thought up in the 1990s. Their stated aim at the time was to tell Australia’s citizens about the long-term pressures facing the national government’s budget.

Gary Banks: I think the first intergenerational report was excellent, partly because the politics, perhaps, were a bit less constraining at that time. And I think thereafter, either the politics were more constraining, or the politicians involved, you know, wanted to use it as a vehicle in a more overtly political way. I think it has become less useful. I mean, it's still good to hear that information out there. But, for example, the most recent intergenerational report has assumptions about productivity growth that just don't really stack up. And you can see why they're in there, you know, it, it makes things look a little bit more optimistic than perhaps more realistic assumptions would do.

David Walker: Still other reports suffer a different problem: their authors fail to hear the public’s various views on the issues involved.

Gary Banks: I mean, there are public reports and public reports. And those that are made public, but don't have a strong public input along the way – in other words, don't have a process that engages the public – are quite different, and in my view much less effective than the other sort.

David Walker: Now that we’ve looked at the failures, let's look at the successes. For Gary Banks, one standout is the 1993 Hilmer Competition Review, chaired by former Australian McKinsey & Co chief Professor Fred Hilmer. Banks sees that Hilmer report as one of Australia’s most productive public reports of recent decades. And that’s in part because it made competition an easier idea to sell to both parliament and to the public.

Gary Banks: Yes, I think it is a standout. And ... the Productivity Commission did a review of national competition policy when we looked at some of the reasons for that. And it sort of ticked all the boxes in terms of what you'd think of as an ideal process.

And then, of course, when you look at the outcome from that, because it was such a successful process and it build a lot of credibility, the government was able to implement a lot of its recommendations. And it's had quite a significant effect on GDP and on material prosperity in Australia, I think, in areas where we can't go back. There have been ongoing, definitive changes in the way things are done in Australia.

I think the notion that government services should also be in a competitive context, as well as other things, I think was quite important – and infrastructure services in particular. So while there are complaints about different forms of infrastructure, I think the old approach in just about any area you can think of government of almost a government monopoly was very high cost, very unresponsive to consumer demand, and so on. So I think that was that was an important step. But just the notion that the competition was important, and that regulations needed to, in a sense, pass a competition test, rather than just be, you know, promulgated on the basis of the presumed benefits – so looking at both the cost and the benefits – I think was a way of thinking that was broadly accepted as a result of that inquiry. That's not to say that governments have always followed it. But that was quite important, I think.

David Walker: Now before we end this podcast, we need to focus on an idea that is a constant presence in Gary Banks’ writings in this area. It’s the concept of public engagement, which he sees as crucial to the success of public reports. He has argued for processes that have public input right through, including feedback on a discussion paper and a draft report. And he has also argued that face-to-face meetings will elicit information that you can't get in any other way.

Gary Banks: I think for the kind of policy issue or problem where public engagement is important, it's not enough to simply ask people for their views and have them on the website or something like that. It's important to be able to discuss the issues with the public, or the interested public. So that's why I say that face-to-face interaction – going to businesses, going to different regions, talking to different members of society, in a two-way, interactive sort of way – is a really important part of it. And a point that you've raised came up again, and again: in various inquiries and reports that I was involved in, we talked to people sort of off-the-record initially, to get a sense of what they thought was important. And we get wonderful insights, which often were not reflected as well in the formal submission, that was a public document, that came out – often because of reasons you can imagine, you know, a business didn't want to stick its head up too high, and be controversial and so on. So I always felt we got the best of both worlds: we got the insights, which was important in terms of how we directed our research, and we got the formal submission, which sort of clarified some of the broader issues that were important. But we were able to get both. If we just for example, said "this is a public inquiry or public report; anyone who's got any views, send us an email" or whatever, we'd never get that richness coming through. And that richness is important when you have to make a judgement about which way to go in terms of recommendations because it always does come down to judgment. It's never black and white. And so the judgment typically is better if it's been informed by a wide range of meetings and discussions that you've had with a range of people. The inquiry that comes to mind that was most important in that respect was the one we did on the gambling industries, the first one, which was in about 1999. And you might recall at that time, there was a, there was a war between the social welfare community and the gambling industries. And they were at loggerheads. And we had that inquiry. And we were able to bring both sides literally around the table and have discussions – and they were quite well behaved – and we got them to agree, at least, about some of the issues and the problems, which I don't think would ever have happened if it had been a different kind of less public, less interactive inquiry.

David Walker: Banks led several reviews in this way. One was an inquiry into gambling in Australia.

Gary Banks: If we're talking about the gambling inquiry, so here's an interesting thing. I headed that inquiry, with a chap called Robert Fitzgerald, who was the president of ACOSS – he'd been the president of ACOSS, I don't think he was at that time. He approached the issue as "gambling was a bad thing". I approached it more as "well, gambling is something people like to do, so let them do it". So we were kind of at opposite ends, right? We ended up in the middle, where we came to the view that gambling was the sort of area which involved both social costs, but also social benefits, and that the trick in regulation was to reduce the social costs without unduly reducing the benefits to people who aren't harmed by it. And we both agreed on that. And then it was a matter of "Well, what are the particular regulations? How would you frame them?" and so on. And I think that meeting of minds, in my case, anyway, came about through people attending public hearings, and just telling me their story, you know. You can't generalize on the basis of individual stories, but it can help you understand the bigger picture, I think. And so the Commission has the benefit of a research team that can actually pick up an insight that you might have got from an individual related to his addiction to gambling, and think about the wider implications of that and how you could you could generalize a policy response that would help him, but would also help a wider range of people. Now, that's rather different to ... sometimes politicians will speak to somebody in their electorate, who will give them an idea and they'll run with it. Whereas the commission would test that idea through a public draft report. And if we got enough support, and there were no big issues raised against it, it may well find its way into the final report and so on. But it will have been stress tested, which was quite important.

David Walker: Banks argues that reviews often gain from listening to individual members of the public.

Gary Banks: I've still got in my mind a public hearing in Adelaide. And a fellow turned up at the hearings – and it was, it was a public hearing – and he was quite brave to do it, because he told us his story, you know, about how he had become addicted to the gambling. And he said his low point was hocking his children's Christmas presents to get money so he could go and play the pokies. And he was so ashamed of it, you know. And he said: If there only been somebody who could have, you know, he could have gone to and talk to him about his problems and so on. And so he said the sort of things that would have helped him both in terms of counseling, but also in terms of his ability to keep using the ATM when it was, you know, when he was in a gambling fever and things like that. He mentioned a number of things that would have helped him which when we sort of did the research and thought about them a lot more, we felt, you know, would fly more generally. So I do remember that fellow. I wouldn't recognize him if I saw him now, but his words are still in my head.

Professor Paul Cairney reminds us that when we produce solutions to complex problems, our biggest problem still lies ahead: getting people to notice. We should adjust our expectations accordingly, and work patiently.

Paul Cairney argues that we all ignore most information, most of the time – a concept we might well call “Cairney's Law.”

When creating a report or proposal for decision-makers, you need to:

David Walker: Before we start this episode of Shorewalker On Reports, a brief note. We spend a lot of time today talking about government policymaking. But many of the ideas in this episode also apply well beyond the world of government.

And the piece of this week’s episode that I want to play first is an example of this. Here’s our guest, political scientist Professor Paul Cairney, tackling a tough issue head-on: typically, when you publish a report, you don't get listened to. You're transmitting, he says, but your audience is usually, typically, not receiving.

Paul Cairney: So I would say that most conversations are not meaningful, and most intended exchanges of information are ineffective, or they don't happen. And what I usually mean by that, is that I think most people, when they convey information and reports, are just sending that information out into the world. They're signalling as if you could connect your message in a straight line to your audience – you know, direct transmission of information. And I think increasingly, people are much more cognisant of the idea that people will only remember and act on, or really pay attention to, the information you give them if it's part of a meaningful exchange of information, or you have some kind of non-trivial relationship with that person – they know you, or they have some other reason to think of you as an authority, someone to be listened to, and to invest the time [in]. I think otherwise, you're just sort of sending information out into a vacuum.

David Walker: So when do we just send information out into a vacuum? And how can we achieve more than that? Those are the big questions of this podcast. And Professor Cairney has answers – in fact, some of the best answers I’ve heard anywhere. Indeed, Professor Cairney is the source of what I have dubbed Cairney’s Law of Reports.

But before we get to Cairney’s Law, who is Paul Cairney? As you may just have deduced from his accent, he’s a Scottish academic. He works at the University of Stirling. But he also works with UK policymakers and has actually written reports for government.

Paul Cairney: I primarily conduct and teach research, largely at postgraduate level. And I suppose my way into this kind of field was through the study of policymaking, which is useful, but also picking up on the concerns of people outside of policy studies about the weak connection between their research and policy. So there seems to be a space there to translate policy studies insights into how people could understand the use of evidence and policymaking and adapt to suit. I've also, you know, throughout that time, have been involved in regular sort of academic practitioner exchanges, either giving talks or being part of workshops, and I've done things like short courses on civil service training, and I have written the occasional report for audiences and policymaking.

David Walker: You've worked with a bunch of practitioners in the policy field, and you've done this work yourself. Can you give me a very high-level overview of what you think people get right and wrong when they're creating public reports?

Paul Cairney: I don't want to do researchers down too much. But you know, the kind of caricature of a researcher is: they ask their own research question; they produce their own research, and then at the end, they think about who else would be interested in this and they do some recommendations.

Whereas I think the art to writing policy reports is, you start from the other direction. Who is either my client or my audience? What are their beliefs or interests? What will catch their attention? What are their expectations? And how can I tailor what I do to fit with what they are doing? And I think it's just asking for a simple shift in mindset towards what people think they are doing. And a lot of that is about giving up control. You know, I think researchers particularly in my field … like to be in control of the research, whereas this is about really giving up that control and trying to serve some different purpose.

Then I think the usual other advice is about things like plain English, or plain speaking, brevity. Don't write 1000 pages – or if you're going to write 1000 pages, at least provide one page that they’ll actually read. And focus on what people have the capacity to do rather than what you would like them to do. And I think the classic trade-off there is between wanting to look comprehensive – you know, I have covered everything, and I knew all this stuff, and here it all is – and what you can make memorable, which is the opposite of comprehensive – it's the smallest number of things that you can provide them to give them a proper sense of what's going on. Because you know that they'll only pay attention to the small amount, or they'll only remember a small amount of what you've told them.

David Walker: That is a very strong strand in the work of yours that I've read. And it's a really quite striking theme, partly because it's so uncommon. To be telling people that most people are not very interested in most of what you have to say is something people seem reluctant to do.

Paul Cairney: I say it with a smile on my face, usually. I don't think it should be such a hard sell if people just reflect on how they process information or what they pay attention to. Because I think the basic point is, there's an almost infinite or overwhelming amount of information out there. And we only have a finite ability to pay attention to it and process the information. So of course, we're making all sorts of choices. And we're having to ignore almost everything almost all the time to be able to function, to make choices.  So I think it's probably a just a hard sell. Because if you do research or you're looking to provide advice, the inclination, or the incentive, quite rightly, is to produce a comprehensive, thorough report, because policy problems and policymaking is complex and hard to understand. But at the same time, people only have this ability to understand small parts of it. They will interpret it in different ways. So it shouldn't be such a hard sell, I think. It shouldn't be so unusual.

David Walker: Hearing Paul Cairney say this – and hearing him say it this bluntly – was a bit of a revelatory moment for me. “We're having to ignore almost everything almost all the time.” I've decided this really deserves to be called Cairney’s Law.

Now, Cairney argues that Cairney’s Law has been around a long time. He thinks of it as a variant of the economist Herbert Simon’s 1957 concept of “bounded rationality”. But I think he’s being modest.

Paul Cairney: I think that's just me translating the most common insight in policy studies. So in my fields, usually, the phrase we use is “bounded rationality”. And the comparator is this idea of comprehensive rationality, which is we ascribe in people, including policymakers, the ability to process all information, you know, make consistent choices, rank them in order of preference and know exactly what happened when you make choices. And so instead, I think that the person most associated with that, or who came up with that phrase, is Herbert Simon, who talked about what actually happens when you ascribe to people, human abilities or organisational abilities where they can only process a small amount of information. And I think that's just people in my field for decades have just tried to use that basic insight and ask, “what do people actually do with that problem?” You know, how do they combine cognition and emotion to make choices quickly? And how do they decide what or who to pay attention to and who to ignore?

David Walker: These are some of the toughest and most important questions we face. How can decision-makers make choices quickly? How do they choose what to pay attention to? Cairney says that in this time-pressured environment, with limited information, policymakers usually do not take up new ideas straight away.

So policymakers don’t immediately select most of the ideas they’re offered. And over time, Cairney says, most of the people who make a case to policymakers for a particular course of action come to accept this. There’s a gap between what you’d like to happen, and what will actually happen right now.

Indeed, you might call this Jagger’s Law: you can’t always get what you want.

Paul Cairney: I do regularly speak with people who work in government, or with government. And now, this isn't a uniform experience, but it's typical: you have people who have certain expectations before they go in, and they’re high expectations based on what they require from policymaking. You know, they need things to change. Because there are a huge number of policy problems that exhibit crises and inequalities and such-like. So they need things to happen, and they have evidence, or they think they have evidence, on how to solve it. So they go into government or with government thinking “Okay, this process should work this way to get what I want”. But then, whenever I've given a talk or spoken with people who have experience – we actually use the same language – they either talk about this gap between their expectations and what happens, or they talk in a different language about how you really have to come up with ways of working to be pragmatic within these systems, knowing that you can’t just get what you want, that you're going to be in it for the long haul, and [that]people might pay attention to your evidence at some time, but you're not really in control of that. So I think if people are experienced in processes, they come up with a different way to say that thing, and they would give similar advice. I think the only people who don't think that way are people who are … I wouldn't quite say idealists, but they have certain expectations about policymaking that is not tethered to experience or reality.

David Walker: So why is it that people so often can’t get what they want out of policymakers? Why is there such a gap between what the people who contribute to reports want to happen, and what policymakers end up doing? Why do the people who write reports so often feel that they remain unheard?

Paul Cairney: It's funny. So I gave a talk recently, and the feedback was, you know, I was describing a dysfunctional system or a chaotic system or something like that. This is the impression that some people have of policymaking – that, you know, no one's in control, that sort of thing. Or you talk  about the incompetence of politicians, or that they're bad actors, or something like that. And I think what I try and do is separate out two things. One is, what are you experiencing that relates to specific individuals who are not acting in a proper manner – you know, according to your expectations? And what are the things that you have to expect, regardless of the person you're speaking to or in charge? You know, so I would say some of them are individual, but a lot of them are systemic, you know. And so it's the systemic type of factors that I talk about. And I think the most useful, or at least the most frequent, engagement I have with that topic, is I'm often asked to give this talk about, the question is along the lines of: 'why do people ignore my evidence?' Or: 'why do they ignore the evidence, or the best evidence?'

And I think just going through very briefly, three answers to that question would give my sort of position on that sort of systemic thing.

Because the first answer is that we don't actually agree on what the evidence is, or what is the best evidence and how to gather it. You have different people in different fields, who often have very fixed ideas about what is good evidence in relation to the methods they use. But those ideas are not shared across the profession. And they're certainly not shared within policymaking. So I think the classic example is some people think that the gold standard is the randomised control trial [RCT] or the systematic review of those trials. Some people in policymaking either have not heard of RCTs or they have no real experience of them and they don't give them any priority at all. In fact, they would often give much more attention to qualitative evidence or, you know, basic statistics in a spreadsheet ,or that sort of thing. So there's just this basic lack of agreement on what the evidence is. And I think that once you accept that, then the question doesn't make sense anymore. Why did people ignore the evidence? Well, if you can't establish what the evidence is, or you don't recognise that the evidence is contested, the question doesn't make any sense.

The second answer is what we've talked about already, which is, you know, just given the context they face, they have to ignore almost everything almost all the time. And so they're trying to find ways to prioritise some information at the expense of the rest. And I think the best advice is to try and work out how people think so that you can work out how they prioritise information, and fit in.

But the third one is the thing I study most, which is the policymakers are not in control of the policy systems in which they operate. So I think the classic reference point, particularly in Westminster systems, is this idea of a really simple policy cycle where there are clear stages, and you can anticipate the use of evidence. So you know, first produce evidence to determine the size and urgency and scale of the problem, then produce evidence to come up with solutions that will work, then choose the best one, and then use evidence to evaluate. Now I think if the policymaking worked like that, you could be disappointed at the lack of connection between research evidence and policy, because there's a clear process that everyone's involved in. But I think as soon as you give up on that idea, and you accept that policymaking is spread much more over many different venues, and there's no simple process that connects everyone, then I think you give up on the idea that there ever could be this direct connection between the evidence you present in a report, and your audience doing something about it.

David Walker: So here’s where Paul Cairney has taken us so far. Policymakers have to ignore almost everything almost all the time, just to be able to make decisions quickly – that’s Cairney’s Law. And so when you’ve written a report, policymakers won’t usually give you the decisions you want – or at least not right away. That’s Jagger’s Law: you can’t always get what you want. And so most people end up thinking that the policymaking process is dysfunctional, and maybe that politicians are incompetent.

And Cairney’s response to all of this is that you might want to adjust your expectations. The evidence for a particular course is highly contested, and policymakers can’t weigh up all of the evidence with perfect rationality, and there’s rarely any neat, straight-line process that produces the ideal result.

Cairney bases this thinking on the work of a political scientist named John Kingdon, who has – full disclosure – heavily influenced my own thinking about policymaking. Kingdon is famous for an approach called the ‘multiple streams approach’. And Cairney often emphasises Kingdon’s work. I’ll link in the show notes to a paper he co-wrote on Kingdon’s approach  - Paul Cairney and Nikolaos Zahariadis, Multiple streams approach: a flexible metaphor presents an opportunity to operationalize agenda setting processes, 2016.

In that paper with Nikolaos Zahariadis, Cairney argues that policy contributors should remember this:

So what should we do with all this? How should we react to these policymaking constraints?

Cairney argues that policy contributors should prepare themselves for those moments when a window of policy opportunity opens. People need to show patience; those moments can take years to arrive. But when some new problem or crisis does appear, smart contributors to policy should have solutions to policy problems and crises worked out and ready to go. Often they should already have those ideas in circulation in the policy world. Here Cairney talks about Kingdon’s work.

Paul Cairney: So I reckon when I look at studies of the use of policy studies and other fields – so say health, public health, that sort of thing – [then] multiple streams and Kingdon, I think is by far the most popular, I think because it looks like it gives you this hopeful message: if you if you can act like a policy entrepreneur, if you can invest your time to maximise the impact of your solution, you can make a disproportionate difference. And that is about working out how to exploit a window of opportunity. People will pay disproportionately high attention to an issue for a short amount of time. So you have to have the solution available that you can attach to a problem, and hope that they have their motive and opportunity to act and that can all happen in this notional window of opportunity. Now I think the tricky thing is how to convey how that relates to policy studies rather than individual psychology. Because I reckon when people think of a window of opportunity, they think of something akin to an individual exchange …

Now, I think what Kingdon is really talking about is this window of opportunity in a really complex, competitive, huge political system in which you are waiting for, you know, the correct conditions to arise. But he talks about [how] the amount of time you might have to wait can be anything from tomorrow to 10 or 20 years. I think there are those two things. Timing, of course, is important – but that timing is only to some extent in your control. His other metaphor is that these entrepreneurs, [you should] think of them as surfers waiting for the big wave, rather than being in control of the water or the sea.

So I think there is a good double message there, one is about trying to understand the political system enough that you can act effectively in it. But the other is to accept that you may be waiting a remarkably long amount of time for this thing to arise. It's not going to be … you know, you'd be lucky if it's tomorrow, and it might be that you're talking about [waiting] a career for the kind of change you're looking for.

David Walker: I confess I have my own favorite example of waiting a long time for a policy opportunity. It comes from the 2008 global financial crisis, which is still widely regarded as a high point for Australian economic policymakers. The Australian Treasury is the national government’s economic policymaking body, and it came to the crisis still remembering a bad policy call from 15 years earlier. In the early 1990s it had delivered a lot of stimulus in reaction to Australia’s 1990-91 recession. And not that unusually, they had delivered it slowly, so that much of it arrived in 1993 or even later, when the economy was already booming again. What happened next, according to a version I heard during the crisis, was that Treasury took this failure to heart. Treasury decided it needed to do better in the next economic downturn. And a senior economic bureaucrat named David Tune sat down with a few colleagues and wrote a report about what to do in the next big economic slowdown. According to the version I heard, that report lived in a bottom drawer in David Tune’s desk, literally or figuratively, for well over a decade. And then in September 2008, when the global financial crisis hit, they pulled it out. It had a pretty simple set of recommendations – recommendations that got actually transformed into a single phrase. The 1990s experience had taught Treasury that at the start of a slowdown, the government needed to use fiscal policy to quickly pump a lot of money into the economy’s household sector. They distilled that into a six-word imperative: “go hard, go early, go households”. They took that message straight to the Treasurer and the Prime Minister: “go hard, go early, go households”. And that message, delivered with real conviction, actually lodged in the mind of the people who would have to execute it really quickly –  politicians who weren't career economics experts. It was adopted, and policy transformed within just a few weeks. That sort of speed is hard to get from, government, but they got it.

And Australia, almost uniquely among developed nations, didn’t go into recession in that period. So while I’m cautious about declaring government policies successful, it may be that this was indeed a success. And if it was a success, it succeeded because they Treasury had it ready when the need arose, and because Treasury communicated it clearly: “Go hard, go early, go households”.

David Walker: We shouldn’t finish this podcast without a closer look at Paul Cairney’s public policy textbooks and his accompanying blog posts. They’re not merely interesting. They also put some of Cairney’s ideas into action by presenting his ideas in multiple forms. You can buy the full version in print, and listeners to this podcast may well want to. But Cairney’s website also has pages explaining his ideas at less length for a different types of reader. Links to both Cairney’s books and to his blog are on this page.

Paul Cairney: The thing that got most attention outside of students and colleagues is the book called The Politics of Evidence-Based Policymaking. That wasn't a textbook; that was just a short book I wrote in 2016, and it prompted all these talks. The more recent book I've written is called The Politics of Policy Analysis. The difference with that one is, I wrote that as a series of blog posts first, and then I wrote the book. That was the first time I've done it like that. What I thought is that two-audiences idea: one audience will just read the website with the posts and a few podcasts; another audience will read the book. So that's probably the best example of a particular format. And similarly, the book that I've written that I'm most pleased with, that I'm actually proud of – because you know, you’re always a bit a little bit dissatisfied with what you've written – but the one I'm happiest with is called Understanding Public Policy in its second edition. And again, both editions come with a series of 1000-word or 500-word blog posts that explain the same stuff in a shorter and more concise way. So again, you've got a choice: do you want to read it in 500 words to get the idea, or do you want to follow up with a chapter, and a few podcasts. So I would say, if people are looking for a general introduction to the kind of policy concepts of talking about, like bounded rationality or complex systems, then it would be the 1000-word blog posts that are attached to the book that's called Understanding Public Policy.

David Walker: Paul, thank you for that. Reading the website and then talking to you has been tremendously interesting. I'm a newcomer to a field that you've obviously been operating in for a long time, and I'm sure there are other practitioners out there who are very good at what they do in this field too. But in terms of clearly transmitting the ideas – something which I appreciate more and more as I go on in life – you're very good, and it's been an absolute pleasure talking to you.

Paul Cairney: Thank you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Five experts on language and meaning talk about the ways in which how we write shapes our ideas and changes our reports.

David Walker: This episode of Shorewalker On Reports takes a stab at answering an old

But first, let’s ask another, more specific question: for

And we can answer that second question right away: for

So in this episode we’ll hear from a world-famous academic

All of them have the same message: if people are going to

Now, getting people’s attention and having them remember

Professor Deirdre McCloskey has been a professor of economics,

Deirdre McCloskey: Just purely awake. I had a

So try to write in the liveliest way you can find.

Once you’re satisfied your audience won’t doze off, then

Peter Martin is business and economics editor of the

Peter Martin: Being boring isn’t the worst

To write like this requires not just a set of rules, but a

Peter Martin: I’m an extremist on this. And I

Economist and public policy expert Nicholas Gruen has a

David Walker: You’ve been very clear about

Nicholas Gruen:Yeah, yeah. Express yourself in the active tense. If

Saul Eslake has worked as chief economist for companies

Saul Eslake: Where they go well is where they

Saul’s clearly right here: not every expert has the talent

Saul Eslake: Oh, absolutely. I mean, I really

Saul Eslake has spent much of his life communicating with

Saul Eslake: Most people who write things

Obviously we count Saul Eslake as an enthusiast for clear

But does clear communication with the public matter in the

Saul Eslake: Partly by observing more senior

Saul notes that the Australian government’s leading

Saul Eslake: One of the reasons why I used to

Another voice for the real-world value of clear

Gary Banks: When I joined the Productivity

Banks makes an important point about people: it often

Gary Banks: In my experience at the Commission,

Leadership of reports teams clearly matters here. Not

Nicholas Gruen: It means that I can’t read most

So far in this podcast, we’ve heard our experts talk about

This idea is not new. In the past century, it has been

… A man may take to drink because he feels himself to

“If one gets rid of these habits, one can think more

Saul Eslake holds this view strongly. He has found muddled

Saul Eslake: Yeah, I mean, I’ve often found –

Nick Gruen holds a similar view to Saul Eslake on this: figure

Nicholas Gruen: I

David Walker: It’s actually quite a difficult

Nicholas Gruen: What tends to happen is that

And that brings us back to where we started: getting

That’s never easy, but it stands a chance of paying off.

Few people in public life have thought more or more deeply than Deirdre McCloskey about how we can use language to persuade people of public policy ideas.

David Walker: In this episode of Shorewalker On Reports, we’re hearing from a world-renowned thinker – Professor Deirdre McCloskey. Professor McCloskey thinks and writes about economics, English, communication, philosophy, history and classics. Does that seems a broad range? Try this: she’s been a professor in each of those six disciplines, at universities in the United States and The Netherlands. She’s also a Distinguished Scholar at the Cato Institute, which is where she was when we had this conversation.

I first read Deirdre’s book The Rhetoric of Economics in the early 1990s; it was already famous by then. She is well-known for her work on economic methods. She has contributed to cliometrics – that is, the application of quantitative methods to history. She’s a leading scholar of the economic history of Britain’s industrial revolution. In recent years she has become famous all over again for her series of books on the industrial middle class and its values – books with titles like 2016’s Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World.

Of particular interest to us today is her thinking about communication: she has looked perhaps as deeply as anyone else into how the social sciences use persuasive language to spread and advance ideas. She still often refers to this persuasive language by its old name, “rhetoric”. She also calls it, more colourfully, “sweet talk”.

Also relevant to this podcast is one more thing: Deirdre McCloskey is widely regarded as one of the great stylists of economics writing. She’s written a classic book about this too, titled Economical Writing: 35 Rules for Clear and Persuasive Prose. She’s also a powerful speaker, despite the twin handicaps of stuttering and of suffering vocal cord damage later in life.

I’ve now enjoyed several of her books; I have put up a list on the podcast page at shorewalker.net. I’ve also had the pleasure of speaking with her at length several times in recent years. She’s not just hella smart; she’s also a lot of fun.

I started by asking her a fan question: How did she come to be so accomplished in so many areas?

McCloskey: The kind of sober reply is that I had been educated at Harvard in economics back in the ‘60s. And then my first job – and I was tenured there – was at the University of Chicago. And at that time, those economics departments were very far apart. One was Keynesian. The other was, well, you could say monetarist or, or classical, neoclassical. And so I was puzzled at the rhetoric of economics as I came to understand it. And that led me to the study of classical rhetoric – and the whole issue of how scientists or husbands and wives or politicians persuade each other. My kind of smart aleck version of this is that my heroine is the great American vaudeville and movie comedian, Mae West. And she said, “I was Snow White, but I drifted”. So in the end I was a professor of English and communication, economics, and I was a professor of philosophy in Holland. Yeah. All over.

McCloskey’s father was a Harvard political science professor. But McCloskey credits her mother with instilling curiosity in her.

McCloskey: Dad was an expert. And as our President Harry Truman said, an expert is someone who doesn't want to learn anything new because then he wouldn't be an expert. Whereas my mum … she denied it all her life, I kept saying it to her, “You're the intellectual and you're the one who is interested in ideas for their own sake, and are always willing to catch on and inquire into them.” And I saw I think I got that habit from her maybe got it genetically. So that's one thing and then that's I've been everything one could be in a long life and economics from a sort of a wannabe Trotskyist at one extreme, to now an advocate for what I call a humanomics at some other extreme. And I've been everything in between: I've been a Keynesian, I've been a standard issue Democrat, I've been a social engineer, I've been a Chicago School economist. And I don't do this just because I'm crazy, although there's some evidence that I am. It's because I keep seeing new truths, because of this intellectual curiosity that my mother imparted.

As you’re about to hear, McCloskey spent a lot of time talking with me about how we use words to communicate and persuade. In fact, the more I think about it, the more I’ve realised that persuasion is the common thread running right through Deirdre McCloskey’s rich career.

McCloskey’s core contention about persuasion is this: the most important job of an economist, or a physicist, or a doctor, or almost anyone in any sort of thinking job, is to perform rhetoric. McCloskey doesn’t mean windy speechifying. She means rhetoric in the Aristotelian sense. She means rhetoric in the sense of persuasion –, of using, as she puts it, “sweet talk” to change people’s minds.To make her point, she turns – as she often does – to the 18th-century author sometimes called the first real political economist – Adam Smith.

McCloskey: [H]is first job was to teach 14-year-old Scottish schoolboys writing. That was his first academic job. He was a teacher of composition. And what people would like is that they say something and then you just agree with it. Mathematical proof is supposed to be this way. I prove the Pythagorean theorem. There's no persuasion about it, right? Bang, bang, bang. Well, that's never been true. Humans are human … And we need to be sweet-talked, we need to be persuaded of all kinds of things. I mean, the most important thing these days that we need to be persuaded, both in your country and mine, is to continue with the project of a free society. Because there's this terrible temptation, which some of our countrymen indulge in, of admiring the man on the white horse, or the Nuremberg Rally way of being in politics. And that's just terribly dangerous. We have to be creatures of tolerant persuasion.

McCloskey has even co-written a paper (with Arjo Klamer) trying to pin down just how much of modern work is rhetoric – that is, how much is “persuasion work”, and how big is the “persuasion economy”. She argues that this persuasion economy covers everything from lawyers and judges to building site supervisors, from marketers to scientists. And her original paper calculated that persuasion was a big slice of the economy: in rich countries, it was around a quarter of gross domestic product. An Australian Treasury economist, Gerry Antioch, revisited the idea in 2013; he argued that the US persuasion economy had expanded further, to 30 per cent of US GDP. Probably that number is even higher than 30 per cent now.

Now, the idea that persuasion really matters might seem a fine thing for a marketing executive to spout. But the idea that persuasion is central to economics, and to fields like philosophy, probably seems an odd idea to most of us. The model we usually adopt shows persuasion as a sort of add-on. It’s generally assumed that we figure out how we want to say something after we’ve figured out what we want to say to people. So you write up your conclusion; and then you pass those words along to a communications team; and then the comms team changes those words as needed for the audiences; and then the audiences extract the thoughts and feelings that were injected in the first place. This is called the “conduit metaphor”.

But McCloskey points out that among communications academics, almost no-one thinks of communication as just a conduit:

McCloskey: In departments of communication, when we professors of communication are making fun of the naive view of what communication is, we call it the conduit theory. So it's like you do you remember, in the old-fashioned department stores that have those … air tubes, and they would send the receipt to the main office and they'd send it back … And that's not really how communication operates.

(For those who are interested in this area of communications theory, I should mention that the flaws of the conduit metaphor were pointed out back in the 1970s by people like the linguist Michael Reddy.)

So put aside the conduit metaphor. Here’s a more traditional but long-lived concept: in the long term, at least, we win or lose the battle to persuade at least partly through ideas.

Persuading with ideas has two main strands. The first strand is this: how inherently well-suited is an idea to actually solve our problem? The second strand is not separate from the first, but intertwined: how well can an idea be used to persuade people to take it up, to use it?

These two – problem-solving ability and appeal to audience – might be thought of as separate, and they might be labelled substance and style, respectively. But that doesn’t quite get at what’s really going on.

None of this will come as a surprise to those who understand the history of the sciences. From astrophysics to gastroenterology, the “hard sciences” establish the strength of ideas through a huge web of discussions between people. Scientists try to persuade each other. And to do that persuasion, they mix data and interpretation with the techniques of persuasion in speech and writing.

McCloskey points to two of the most famous examples of persuasion in science. These are two of the discoveries which have best withstood the passage of time relatively unchanged: Isaac Newton’s 1687 book, Principia Mathematica, set out the laws of motion and gravitation. And James Watson and Francis Crick's 1953 report in Nature, titled "A Structure for Deoxyribose Nucleic Acid", established out the architecture of DNA – essentially, the underlying structure of life.

Several studies of Watson and Crick's famous 1953 paper have argued it was carefully designed to persuade, using rhetorical techniques such as voice, narrative, irony, and a few others with names like  ethos, Kairos and stasis.

And as McCloskey points out, Isaac Newton chose a particular course to persuade the scientific community of his ideas about motion and gravity. His persuasive strategy included expressing his ideas with less sophisticated mathematics than was possible. He had just invented calculus, but he intentionally kept it out of his masterwork, Principia Mathematica.

McCloskey: Newton, in the Principia Mathematica, purposely expressed all his proofs in geometry, even though he had secretly invented calculus, when there were much simpler proofs of the propositions he was making about celestial mechanics and this, that and the other thing, with this new invention, he and Leibnitz.

And yet, the style was necessary for the audience he was dealing with, for two reasons. For one thing, the best intellects at the time were very much into Euclid. Spinoza was and Bacon was and Hobbes was. They were all Euclideans, and the axiom of proof was how they're going to do things – not simulation of a sort that one does with calculus. And the other reason which he articulated at one point is to keep it secret. You had to be a first rate intellect of the 1680s to understand his book.

So what's style and what's substance here? The style … expresses a view of what science should be …

It’s not just that the ideas are woven into the task of persuasion. The persuasion is also integral to the contest of ideas.

McCloskey: We're – what's the word to use? – we're charming other people. Or we're bringing them on our side. Or – not so nice – we're exercising our authority, our superiority. I'm a Field Medal winner in mathematics, and you're a mere ordinary professor of mathematics: shut up. It's one way of doing it, right? So it's persuasion all the way down. And that's perfectly natural. And there's nothing French or disgracefully postmodern about it. It's the way humans have always been …

We can put this another way. Persuasion, or rhetoric, – is not so much like that  box in which your Amazon parcel arrives. Rhetoric is more like the user interface on a piece of software. The language which expresses an idea, which persuades people to believe the idea, is in continual dialogue with the idea itself. They influence each other. The rhetoric helps to question and fine-tune the idea, pinpointing weaknesses and strengths in the arguments.

As McCloskey points out, rhetoric used to be a starting point for teaching people how to think.

McCloskey: The ancient sophists in Sicily and then Athens were essentially the law professors of their time. And rhetoric was the basis of education in the west, for 1500 years and longer. And they would have exercises like an absolutely standard one, which we ought to do more these days, which is to have the kids, have the young – it would always be boys, of course, they were doing this with the young boys – make a case for one side of the argument, and then say, ‘Okay guys, now make the opposite case’.

I want to pause here to underline a point. This centrality of rhetoric, of persuasion, is not some weird theoretical idea. Lots of people make the point that to have influence, people need not just to dev  elop theoretical models but to tell stories, even when the stories are backed up by models. Economics provides plenty of examples. Here’s one, from Ken Henry, a former Australian Treasury head and later National Australia Bank chairman. He’s talking with podcaster Joe Walker (no relation) about the centrality of storytelling:

Ken Henry: My younger brother said to me somewhat unkindly the other day – and he’s a mathematician, a theoretical physicist – and he said to me, somewhat unkindly, and yet it’s true, he said: ‘Is economics really anything more than storytelling?’ Well, it’s probably not really.

Joe Walker: Storytelling through models.

Ken Henry: Yeah, storytelling through models … It’s the model that’s going to give you some confidence in the intellectual rigour of the argument. But then you have to convert that formalised model into something which is a really compelling story, a story that grabs people’s attention.

You can find a link to the full version of that conversation with Ken Henry, from Joe Walker’s The Jolly Swagman podcast, in the show notes at shorewalker.net.

And to underline the point that storytelling should matter to economists, here’s one of the world’s most admired economists, Ed Leamer, talking in a UCLA video:

Ed Leamer: My view is that in economics we need to create a culture that explicitly expresses our lack of knowledge, and allow people to say: ‘That question is an interesting question but frankly it's beyond the realm of economics in its current state actually to answer.’ We never find that thing, that kind of statement being made, I think it would be better if we added humility to the enterprise and recognised that what we do is patterns and stories. We're seeking patterns in the data sets that we look for, that we're examining and we're telling stories about that …

So it’s not just McCloskey emphasising the importance of telling stories that make a point.

We should probably accept that people in the sciences are telling stories a lot of the time – and especially in the social sciences. That’s not a put-down: in this context, “telling stories” absolutely does not mean “lying”. “Telling stories” means “presenting your arguments in a way that people can understand and retell.

One repercussion of all this seems to be that people should start intellectual projects with a goal in mind – the goal of telling their stories so that people can understand them.

How do you do that? To start on any written work, it’s a good idea to start getting good at writing. And that means … well, writing. Only writing will really let you find out how to write well, to write in ways that persuade people to your arguments. Here's McCloskey:

McCloskey: It's an old cliche of instruction in writing that the best way to learn to write is to write. You want to be a novelist? Well, start writing novels. Come on, guy, apply posterior to chair, find writing implement, write. And I find, and I'm sure you do too, that style of work is intellectually [fulfilling]. Here's an example. It's an elementary proposition in prose style, to express parallel ideas in parallel form. I won't give an example; it'll be too hard. And when you do that, and I find it all the time, I'm forced to see the parallel and to see: ‘Have I got that right? Is it really parallel? Is this an example of that?’ See what I mean? So ideas are forced into existence by writing, speaking ... A famous remark of Francis Bacon: ‘Reading maketh a full man; writing maketh [something like] a precise man.’

The precise expression of an idea through writing somehow shapes the idea itself; it is an inseparable part of the idea. And writing and speaking sometimes force new ideas into existence – and sometimes also force those ideas into a better shape. And sometimes you only actually find out what your argument really is at all when you write it, and then you look down at it, and you get dissatisfied with the bad bits and start improving it. That's not a widely accepted notion, but it nevertheless seems to me to be true. McCloskey again:

McCloskey: It's not only true in the advice I give students and others, it's an experience of my life – and you must have the same experience – that I don't know what I think until I say it. And sometimes I can say it, like in conversation with you, but I don't really get it clear until I've written it very well. I just finished a book called – I keep changing the title a bit, but I think I’ll call it ‘God's Economics: Public Theology for an Age of Innovism’. And it's an attempt to persuade my progressive, especially Anglican believers, that they don't have to be socialist to be Christians. That's the theme of the book. But I didn't get it clear until a seminar we had last year, last November. And then it suddenly clicked and I started to see it and I can write it down. And as I wrote it, you know – writing is thinking, I think is the simplest way of putting it.

Talking is thinking too, if you're honest. If you're just a bullshit artist, and you kind of sweep along on the surface ... I know lots of intellectuals like that are scholars, and it's a great tragedy, because they don't ask themselves: 'Is what I'm saying actually true?' They just say it.

(David Walker: So one of the repercussions of that for practical report-writing is you can't do it from the top. You can't look over something and say: 'We need a report that says this and this and this, and it needs to address that and that and that, and come to this conclusion.' You've got to start with some thoughts. But you've got to accept that the people who do the work may come out with something different at the end of the process.)

McCloskey: Profoundly I don't think most people understand that. Because mostly, they hear the word 'report'. And they remember what they did in high school chemistry, where they would do these phony experiments that everyone knew how they were supposed to come out. And then they would write them up. And, you know, that's not thinking. That's typing. (Laughs) That's a wonderful remark that Ernest Hemingway made about Jack Kerouac: 'That's not writing, that's typing.' And I think that that's right, wait. Amy, what is her name? ...  that excellent writer? Amy something. The sapling at Tinker Creek? What is her name? ... Amy something. But anyway ... she says 'the pen is like a miner's pick'.

(David Walker: Amy Dillard?)

McCloskey: Yeah, that's who it is ... And the next sentence leads on to the next idea. And if you don't let that happen, if in your agency, you think you can impose ideas down on your subordinates, and that's it – they're going to just type, not think – it's pointless. You're absolutely right ... But ... the problem is, there has to be an attitude of honest discourse, or else it's not going to work. Or strategizing, or trying to please the boss, or whatever; it's not going to work.

For several decades now, McCloskey has been writing and expanding her masterwork on writing. It started as an essay; these days it’s a book titled Economical Writing. And since its early days, it has contained an insight you rarely hear talked about. It’s this: far more than we usually think, most readers struggle to keep up with narrative.

(David Walker: One of the most useful ideas in Economical Writing, to me – at least it's in the 35-year-old version – is that readers are sort of lost and unsatisfied a lot of the time.)

McCloskey: All the time.

(David Walker: Almost nobody ever says this.)

McCloskey: You're always confused. I am, aren't you? Yep. I read something; half the time I don't know what I'm reading. I forget – wait, wait, what's, what's this mean, what?

(David Walker: And I discovered slowly a number of things – and one of them was that a lot of people, like me, don't finish many of the books that they start. Tyler Cowen, for instance, I think says he finishes one in 10.)

McCloskey: I don't ever finish a book.

(David Walker: You suggest that writers need to work very hard to keep readers awake.)

McCloskey: Just purely awake. I had a wonderful colleague in the history department at the University of Iowa, Bill Aydelotte. Like me he was a British economic, British historian. And Bill said: 'The big thing in scholarship is to keep awake'. He said: 'If you're going to be a scholar, you're gonna have to read a lot of boring things. So you've gotta learn how to stay awake.' And so vice versa? You gotta – you can't bore people ... ? You know, that seems an awfully harsh standard for some kid who doesn't know writing very well. But you got to keep them awake.

(David Walker: Also, in that book, you talk about how people get lost very easily in the words. You mentioned talking to a graduate student who assumed he had some sort of mental deficiency, because he kept getting lost in the middle of a paragraph.)

McCloskey: That's right. He was amazed when I told him: 'Look, everyone has this problem’. He thought he was just stupid.'

(David Walker: The other aspect of just how badly people deal with the whole issue of reading stuff is … there's a wonderful quote, from The Atlantic, I think, from a woman called Pamela Paul, who was and I think still is editor of the New York Review of Books. And she said, 'look, it's a terrible thing, you know, but I can remember the titles of books and the authors and the dust jackets and the subjects and all of this. What I can't remember is what the book actually said.)

McCloskey: Yeah, it's true … There's a green book. And sure enough, it's a green book, then, let's see, what was that book about? Yeah.

(David Walker: I'm 57, I feel a bit stupid that it's taken me all this time to figure out that an awful lot of what people write and read, just passes through their head, like it was a bird flying through a cloud.)

McCloskey: Look, both you and I have read a great deal in our lives. You know, way above the average for, for people of our society … And I've read a lot of them. And you're right, there is a kind of … But there'll be a gem that you'll get from a book on page 100, though. That'll be it. Umberto Eco had a personal library of 30,000 books. And he was asked, kept being asked by naive people: ‘Have you read all these?’ He finally came up with a very good answer. He said: ‘No, I haven't read all these.  But the next one may be the important one. It's a good answer.’

So people tend to forget what they read. One response to this is to try to repeat your message using this simple formula: ‘tell ’em what you’re gonna tell ’em, tell it to ’em, then tell ’em what you told ’em’.  That is sometimes called the preacher’s rule, because it frequently gets used in church sermons. McCloskey detests this rule, because it makes your writing   dull.

McCloskey: There is a modern disease, which I warn against in the book, of: 'Say what you're gonna say, say it, say that you said it'.

It's claimed that Bertrand Russell formulated this. Now, he never did it. There is no essay or book of Bertrand Russell in which he does this. But someone told me once that he said it, in which case he's burning in hell for it----. Because yes, you've got to keep people apprised – not apprised, that's not a good word – you've got to keep them aware of the forward motion of your argument and your prose. But you can't keep stopping and telling them that. You can't say, you know, now I'm going to tell you about blah, blah. When you're talking about yourself, you're not talking about the subject. So forget about that. Just use your skills as a human being in conversation.

Here's how I would suggest doing it: not by stopping and saying ‘My message is X’, but by subtle repetition. Subtle. And the great advantage of word processing is that you can search your manuscript and find how you to use words and phrases, and I've gotten in the habit of doing that, especially with books, long pieces. Then the only way you're going to achieve any unity is to make sure you're using the same word to say the same thing every time you do it. And that doesn't mean you have to repeat the whole phrase and get monotonous. 'Why is he telling me this again, he already told me that – shut up!' Don't do that. But do watch what you're using.

I mean, for example, in this current book that I mentioned to you, which I just sent off to the press … I worked at lining up my vocabulary. So when I talked about, for example, this word 'innovism' that I use in the title – 'An Age Of Innovism’ – that's a special word that I made up as a substitute for capitalism, which is a scientifically wretched word, it's a silly damn word, it's very misleading about the economics, about how we actually got to be rich, we didn't get to be rich by accumulating capital, we got to be rich by innovating, by thinking of new ways of doing things. And so I made sure that I used the word 'innovism' every time. And then, contrariwise, I wanted to attack the word 'capitalism'. So every time capitalism occurs in my book, which isn't very often – I thinned it very much and didn't mention it much, because I find it disgraceful – but I put scare quotes around it, so they know that I don't like this word.

All this brings us to a key issue for any report: what are the key messages, those few central messages that we want people to remember when they put down the report?

Key messages are what we most want the public to know about a given report or issue. They answer the simple question "what did you find out". And how you answer that question with your key messages will usually make or break your report.

But whatever you are writing, your key messages may take a long time to emerge. The quest to find your central message has no simple shortcuts. McCloskey has written 16 books and almost 400 articles, and she still struggles with it.

And once those key messages do emerge, you need to revise yet again to make those key messages clear.

McCloskey: I usually don't really get the final message until I've written the book.

(David Walker: So you've got to go back and re work.)

McCloskey: That's what you have to do. You have to then say, oops, wait a second … There's a nice expression in journalism, burying the lede. The lede is the basic point of the news story. And if there's this modern convention in journalism, which has gotten worse and worse, of making every news story into a feature, so ‘John was walking down the street and he noticed that there was a dog over to the side and then finally it develops that there was a fire’. Who, what, when, why, how all just go right by the board. It's so irritating. Whereas in the old days, lead bang, it would tell you what the damn point of the story was right away.

So you have to find out: what is the lede to your report; what’s its one central message? Do you start with the end in mind, or find your answer after sorting through the evidence? I asked McCloskey, and found she argues for taking a careful middle course.

(David Walker: In the world that I inhabit, the world of reports, there's an argument that that says, you shouldn't try and do anything too early; you should hold hearings and listen to evidence and weigh all of that up before you start coming to your conclusions. And so it seems to me it's all a rather delicate balance, because trying to do it that way means that you're listening to people sort of in a vacuum: you don't know what your story is, and you therefore don't know what they're contributing to it.)

McCloskey: Exactly right. So that's the problem. If you don't have a hypothesis .– you can put it in terms of this rather foolish notion of the method of science – then you don't know what questions to ask. There is a passage in a Sherlock Holmes story where Doyle has Sherlock Holmes say: 'You mustn't speculate. Premature speculation is death to discovery; you should just look around.' Well, maybe. But then there's a kind of opposite point which a great philosopher of history and archaeologist himself and historian of Roman Britain – whose name I'm going to forget (DW: it was R.G. Collingwood) – wrote in a famous book published after his death in 1945 called The Idea Of History. And there, he said, 'scissors-and-paste history' is just collecting all the data there is and looking around the crime scene and looking aimlessly at everything. Whereas he says, and he's got this long passage about a detective who has a hypothesis of who the murderer is, and he goes that way ... And those are two completely separate ways. And in a way you have to do both.

McCloskey has another lesson to teach: take care to add illustrations, diagrams, charts, wherever they can help. People who want to seem sophisticated sometimes look down on pictures. But they’re frequently the best way of getting a point across. And not just to ordinary people going about their daily business, but also to some of the very smartest people in the world.

McCloskey: For a year, I was at the Institute for Advanced Study at Princeton, the famous Einstein Institute. I was over with the social scientists ... every morning and afternoon, there was a more or less compulsory tea; you had to go and have tea and cookies with the other fellows. And I was very amused to see ... most of the fellows at the Institute are mathematicians, and I could see the mathematicians talking to each other by drawing little diagrams on their palm. I found that very amusing. These are very high-level mathematicians, and they were making those – ‘see, it goes up, and then it goes down’ – they're making very simple points.

We should end by looking briefly at the deep-down problem we’re grappling with whenever we try to persuade people of a case. Professor Deidre McCloskey makes this point with typical force: we have to accept that persuasion is hard. That’s not easy. We live in a world that thinks the opposite, a world that thinks everyone can be persuaded, sometimes against our will, by often dark forces – the advertising industry, the lobbyists, the politicians.

McCloskey: Their word is "manipulation". That's their big word.

But people who actually dig around and find out whether their ad spend works often discover something else: the power of advertising to manipulate us is less than they expected.

McCloskey: If it were easy to persuade people in science, or in marital relations, or in politics, or in buying Lucky Strikes, the ad, the people doing it would be very wealthy. There would be $500 bills lying around all over the place. And it would be just so easy. And it's not. There aren't any $500 bills. People believe there are; they wish there were. And then they develop conspiracy theories about the terrible advertisers or, you know, you remember that old film The Invasion of the Body Snatchers? That's what they think is happening – that the advertisers are taking over our minds. Except what's irritating about that argument is that there's these people who say that advertising is terribly, terribly manipulative and important and the surveillance capitalism and so on. They say: "It's the stupid people who get manipulated. I of course don't. I can see through it. I have special insights.”

(David Walker: So if the power of that sort of commercial messaging is generally overstated, then the corollary presumably, is that the raw power of ideas is understated – that ideas rule us much more than we think they do.)

McCloskey: A great deal more.

That’s one of McCloskey’s core intellectual principles: the ideas really do matter. But still, persuasion is hard. And when McCloskey herself tries to persuade people of something, she does no better than anyone else.

McCloskey: It almost never works. It's very frustrating. I mean, we as scholars, scientists, journalists, politicians, whatever, wives, husbands, whatever we are, we're always trying to get through to people. Not necessarily even to bring them to our side, but to have an intelligent, open discussion. And, well, here's an example. I've been arguing for 40 years, along with many other statisticians, applied and theoretical statisticians, that a certain technique – tests of statistical significance – is bollocks. It's complete rubbish. It makes no sense at all. And this has been known for about 100 years. And yet, some scientists, not too many economists, medical scientists, sociologists, and psychologists and political scientists go on using this machine – because they love machines, it's part of modernism. They found the little machine and they can put three asterisks over a coefficient and it makes them feel very good. It's complete craziness. And I've tried everything to get this across. I've made fun of them. I've tried to sidle up to them and be very friendly and nice. I've tried to compromise. And nothing works. Nothing works.

Abraham Lincoln, in 1842, spoke to the Temperance Society of Springfield, Illinois, as a young man. And ... by that time he was an experienced trial lawyer. And ... to the extent he could, he knew how to persuade people. And he said, "If you want to persuade someone, you first have to persuade them that you are their sincere friend".

If all you can do is what I do with statistical significance, is to say, "You dopes! Don't you see this is ridiculous," Abraham Lincoln says they'll turn away from you. And they won't be persuaded.

But Abraham Lincoln did not say you should stop after you persuade someone you are their friend. He argued you still have work to do. During his famous 1858 debates with Stephen A. Douglas, Lincoln said this: “If a man says he knows a thing, then he must show how he knows it.” Deirdre McCloskey takes the same stance.

McCloskey: Here's the answer though. The liberal approach to another human being is to treat them like reasonable adults with ethical standards. And whether it works or not, frankly, I don't care too much. I feel that it enacts liberalism in a deep sense – not just the Liberal Party of Australia or something, but real liberalism. But the great ethical, political turn that made us who we are, made us the egalitarians that Australians are, more than Americans of course, and made us respect each other, that makes intellectual conversations such as we're now having possible, is to treat each other as though reason, evidence, sober consideration of the pros and cons was what how we should make decisions. Now whether we actually do or not is, alas, not as common as it should be. So there's kind of a liberal program in good writing, in honest persuasion, honest sweet talk, that instantiates – to use what the English professors like to say – instantiates an ethical, liberal, I would say even a Christian attitude towards other people.

This episode of Shorewalker On Reports looks at a foundational question: why do we bother to create public reports at all? With Gary Banks, Saul Eslake, Nick Gruen and Peter Martin.

Presenter: In this episode we mostly talk about policy

Let’s start by addressing the elephant in the room right

Saul Eslake knows this. He’s a consulting economist, and

Saul Eslake: In the British sitcom, Yes,

And there are often reports commissioned by government with

Presenter: Saul Eslake has a list of these examples.

Saul Eslake: Another example was the inquiry which is still

Presenter: So that’s a dark side of public reports. But

Saul Eslake: There can be other occasions when a report is

Presenter: Like Saul Eslake, Gary Banks is an economist by

Gary Banks argues that if reports are done right, they’re an

Gary Banks: There's probably less trust, less acceptance of

… You need to engage with the public so that they can be educated

… Public reports are particularly important, I think, when

… A second, part of the answer to that question relates to

Unfortunately, you know, we've seen over time, you know,

Presenter: So Gary Banks values

Nicholas Gruen is another economist who has served on the Productivity

Like Gary Banks, Nick Gruen wants reports to reflect

But Nick Gruen also emphasises something else: reports can

Gruen points to the attitude of the economist Friedrich

Here’s Nick Gruen talking about Friedrich Hayek’s influence:

Nick Gruen: He said: 'We must not constrain our vision to

That was a perennial chestnut in the Productivity

Presenter: So Nick Gruen argues

The economics journalist Peter Martin makes this argument

Take as an example the Asprey Review of taxation. It

Peter Martin: Reports are not wasted if they're not acted

… The provision of things on the internet, and the fact that

Presenter: So reports will sometime

And that should often influence how you write your report.

How much it should influence your report will depend on both

Gary Banks makes an important point when he says that where