Australian Centre for Evaluation: a quick guide

7 June 2023

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Rodney Bogaards
Economic Policy

In the May 2023 Budget the Australian Government committed to provide $10 million over 4 years from 2023–24 (and $2.1 million per year ongoing) to ‘establish a central evaluation function within Treasury to provide leadership and improve evaluation capability across Government, including support to agencies and leading a small number of flagship evaluations each year’(Budget measures: budget paper no.2: 2023–24, p. 213).

This Treasury evaluation unit to be known as the Australian Centre for Evaluation (ACE) was originally formulated in a Labor election commitment prior to the May 2019 federal election (released on 13 November 2018). At that time Labor committed to creating an Evaluator General based within Treasury. The development of this evaluation model was discussed in a speech Building a better feedback loop by Dr Andrew Leigh (then Shadow Assistant Treasurer).

Thodey Review

The need for better evaluation was raised in the 2019 Thodey Review (p. 221) which conducted a review of the Australian Public Service (APS):

Research commissioned for the review found that the APS’s ‘approach to evaluation is piecemeal in both scope and quality, and that this diminishes accountability and is a significant barrier to evidence-based policy-making’. This is consistent with views from within the service. In a private submission to the review, one APS leader said, ‘While there are some areas in the APS where evaluation is done well, its actual execution is uneven and, in some areas, non-existent.’

The Review (p. 222) proposed that a central enabling function be established to drive a service-wide approach to evaluation and to uphold minimum standards of evaluation:

The main responsibility for evaluations will continue to reside with individual agencies. But the central function should provide guidance and support for agencies on best-practice approaches. It should also develop, for the Government’s consideration, a new strategic approach to evaluation of past, present and proposed programs and policies, with advice on how best to embed mandatory requirements for formal evaluation in Cabinet process and budget rules. Such changes will strengthen the basis on which government decisions are considered and made — and help with explanations when activities cease or change, and when new strategies are pursued.

It commissioned research from the Australia and New Zealand School of Government (ANZSOG) to inform the Review’s deliberations. The ANZSOG research paper (see Appendix B) examined the evaluation framework in the APS and considered that evaluation was hindered by departments:

  • focusing on immediate priorities at the behest of ministers
  • focusing on reputational risk, with efforts and resources dedicated to defending against criticism, rather than learning from experience
  • viewing policy evaluation as a low priority.

Other impediments to effective evaluation in the APS included:

  • accountability misalignment (accountability to government as opposed to wider accountability to the community)
  • the media cycle and immediate community pressures driving ministers to focus on short-term goals while ignoring long-term governance
  • debate over whether evaluation should be in a central department or remain decentralised and undertaken by line departments
  • a preference for promoting successful program evaluations while those that showed failure were restrained due to fear of embarrassing government.

Role of the Australian Centre for Evaluation (ACE)

The new ACE is expected to collaborate with the existing evaluation bodies of the Australian Government including:

However, the focus of the new unit is expected to be on conducting its own policy and program evaluations.

According to the Age, Dr Andrew Leigh (the Assistant Minister for Competition, Charities and Treasury) said in late April 2023 that the rigorous appraisal of policies and programs was fundamental to good government and should lead to better use of public spending and less reliance on private contractors/consultants:

‘‘This unit will conduct high quality impact evaluations of government programs, including randomised policy trials. This will allow government to evaluate the impact of policies with the same rigour we use to test new medical treatments,’’ he said. ‘‘Quality evaluation will save taxpayers’ money and help government design and adapt programs to better serve the community. It’s good for the budget bottom line, and good for all Australians.’’

The move is also aimed at reducing the use of outside contractors. The government spends up to $50 million a year on evaluation reports from consultants.

Randomised policy trials (or, more generally, randomised control trials) are an experimental form of impact evaluation in which the population receiving the policy intervention or program is chosen at random from the eligible population, and a control group is also chosen at random from the same population. One of its strengths is that it provides a response to questions of causality, helping researchers to assess to what extent observable changes and achievements are due to the government policy intervention or program under evaluation, or are due to other factors or circumstances.

CEDA evaluation research

A 2023 Committee for Economic Development of Australia (CEDA) research paper entitled Disrupting disadvantage 3: finding what works indicates that better evaluation may be required in the Australia Government. CEDA analysed 20 federal programs covering a broad range of areas based on Auditor-General performance reports that had been completed in the past decade. Of the 20 federal programs analysed, 19 had not been properly evaluated:

  • 5 had no evaluation framework and
  • 14 were deemed to have either an incomplete, inconsistent, or poor evaluation framework.

CEDA’s analysis found several consistent themes among the evaluations undertaken, including:

  • a lack of clearly defined objectives and outcomes during policy development
  • no evaluation frameworks in place in the design phase
  • incomplete evaluation frameworks
  • poor or non-rigorous evaluation methodologies
  • ineffective evaluations that did not align with the objectives of the program
  • data limitations and poor data management.

CEDA also provided 5 recommendations related to the remit of the new ACE. That is, that the new unit should:

  • champion an evaluation culture throughout the public service
  • provide expert advice and review to departments
  • undertake randomised control trials
  • review data gaps
  • maintain a national repository of completed evaluation accessible by the public.

Evaluation versus audit

It is important to differentiate evaluation from audit. The Australian National Audit Office (ANAO) is tasked with conducting performance audits. However, according to the 2006 ANAO paper Evaluation and performance audit: close cousins or distant relatives? presented to the Canberra Evaluation Forum, while evaluation and performance audit are ‘close cousins’ they have a key difference: an evaluation can question the merits of government policy while a performance audit remains silent:

Evaluation aids in the assessment of program effectiveness, and may cover both policy and administrative aspects of a program. A performance audit is an independent review of the efficiency or administrative effectiveness of a program (or agency) but does not extend to assessing the policy merit of a program.

This difference is important because it allows evaluators the ability to question whether a policy is worth doing rather than just focusing on whether a given policy can be implemented more effectively or efficiently.

Will the ACE be able to embed itself in government for the longer term?

Building evaluation skills in the Australian Public Service has been tried before in relation to regulatory impact analysis. This followed concerns raised by the Taskforce on Reducing Regulatory Burdens on Business that there was a skills deficit within departments and agencies and that more rigorous cost–benefit analysis (CBA) should be used in regulation-making.

In 2006 the Taskforce recommended the Office of Regulation Review (which became the Office of Best Practice Regulation and is now the Office of Impact Analysis) develop in-house CBA skills in departments and agencies (see Recommendation 7.4, p. 150). The Australian Government (p. 77) decided to enhance the regulatory oversight body’s role, with a focus on training departments and agencies in undertaking CBA and developing guidance material on CBA concepts (such as the appropriate discount rate).

The current Office of Impact Analysis website says the ‘Australian Government is committed to the use of CBA to assess regulatory proposals in order to encourage better decision making’. However, there have been no CBA working papers published or CBA conferences (pp. 8–9) held by the regulatory oversight body since 2007.

Small steps or large strides towards better evaluation?

Whilst it appears clear from recent media statements that the ACE will champion an evaluation culture within the APS, provide expert advice to departments, undertake randomised trials and review data gaps, it is unclear whether there will be a national repository under the new arrangements. Establishing a repository would improve transparency and accountability and allow governments to learn from their successes and failures over time. It was also suggested in CEDA’s paper that the Government legislate an obligation to evaluate existing major Commonwealth‑funded programs at least every five years. This would have the positive effect of ‘locking in’ a rolling schedule of program evaluations.

The Productivity Commission’s recently released 5-year productivity inquiry: advancing prosperity also suggested that the new evaluation unit ‘could be a starting point for improving CBA [cost‑benefit analysis] practice (for example, by providing independent evaluation of CBA assumptions and inputs)’ (p. 523). Even if improving the use of CBAs only leads to a slight shift in government decision-making and a small reduction in cost overruns in percentage terms, the Productivity Commission says this would amount to a substantial improvement in resource allocation and efficiency gains in dollar terms given the size of government projects and programs.

The establishment of the ACE seems a positive step to building evaluation capacity within the Australian Government. Time will tell the extent to which it can lead to improved public policy decisions.




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