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Risky business

09 October 2013

An increased ability to cope with uncertainty in public policy outcomes could lead to better and more innovative social policy, according to the Executive Director of the HC Coombs Policy Forum at Crawford School.

In a speech given to the Department of Human Services 2013 Accountants’ Network Dr Mark Matthews, discussed leadership challenges for managing innovation and risk in the public sector.

Matthews says that innovation in the public sector presents a very different set of challenges from innovation in the private sector.

“Governments are the uncertainty and risk managers of last resort and, nowadays, operate in a very different environment of transparency and accountability in which risk-taking of any kind can be problematic.

“The risk-reward relationship for the public sector varies significantly from that of the private sector and it’s imperative to recognise these differences in order to enhance the effectiveness of efforts to stimulate public sector innovation,” he said.

Matthews highlighted social policy as an example of a government area where the consequences of not recognising the different risk-reward relationship can be significant.

“Social policy accounts for a very large proportion of government expenditure and future obligations and also highlights the importance of values – ethics and morality in particular – in public policy design.

“If governments are not able to foster the innovations that can increase productivity in the public sector – a third of the economy – then overall national wellbeing will suffer.”

Matthews added that if the public sector can gain a better understanding of how to use uncertainty then the outcome could lead to improved productivity.

“Acceptance of uncertainty can strengthen social capital so uncertainty can be viewed as a benefit not necessarily a problem,” he said.

Matthews also stressed that there is also a productivity dividend.

“If governments are intolerant of uncertainty then they risk locking themselves into financially unsustainable trajectories; it gets more and more costly to collect and make sense of the data that reduces uncertainty over what client groups are doing.

“In contrast, a tolerance for uncertainty provides lower cost pathways to service delivery that also fosters greater self -reliance in the client groups.”

The HC Coombs Policy Forum is a partnership between the Australian Public Service and The Australian National University. It was established to enhance government and academic collaboration through experimental and exploratory work of relevance to government.

View the slides used for the speech:

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