Digital technologies to boost government accountability: Productivity Commission

Productivity Commission chairman, Peter Harris

Digital technologies offer governments scope to improve service delivery, including better assessment of risk in regulatory activities, integration of human services, and infrastructure management, according to new findings from a Productivity Commission research paper.

“The disruptive potential of digital technologies has become a hot topic in recent years. There are calls for governments to add or remove regulations, invest in digital start ups, and protect the jobs of workers threatened by new ways of doing business,” Productivity Commission chairman, Peter Harris, said in his introduction to the report, Digital Disruption: What do governments need to do?.

The research paper, which reviews expert opinion on disruption in order to inform governments about the policy tasks posed by digital technologies, detailed three key pillars of findings: impacts of disruption on markets and competition; impacts of disruption on workers and society; and impacts of disruption for how governments operate.

Indeed, governments contribute to promoting innovation across the economy by delivering a low-cost operating environment for innovative activities.

“Digital technologies will also make governments more publicly accountable than in times past and raise pressure for greater transparency. By showing leadership in their own practices (designing regulation to enable rather than block the adoption of digital technologies, and mitigate community level risks where practical), governments can do more than they appear to envisage today,” Harris said.

Certainly, governments have a lot of work to do in order to enable the creation and uptake of digital reform opportunities without favouring particular technologies, the research found.

“With a few exceptions, governments across Australia have, to date, evidenced largely reactive responses to dealing with digital technologies. Despite promising statements, we have also been unremarkable in our adoption of technologies to improve public sector processes and service delivery,” he said.

According to the findings, governments need to find ways to: exploit, in their program delivery and policy making processes, the increased transparency that comes with digital technologies; and avoid locking in details of policy responses at early stages without scope for genuine re-evaluation ‘en route’ to the end objective.

“In markets that are currently highly regulated but where digital technologies allow more producers — electricity generation is one such case — governments will need to review the institutional and regulatory arrangements to ensure that new technologies can compete for market share,” Harris said.

“More generally, standards to support interoperability of digital technologies and ensuring investment in enabling infrastructures (such as reliable and readily upgradeable communications networks), can help with rapid technological diffusion.”

With rapid advances in computing power, connectivity, mobility, and data storage capacity over the last few decades, digital technologies offer opportunities for higher productivity growth and improvements in living standards, the research found.

“But they also pose risks of higher inequality and dislocation of labour and capital. Speculation about the effects of technologies often suffer from extreme optimism or pessimism.” Harris said, citing two comical examples of over enthusiastic experimentation with disruptive technologies including the use of rocket technology by several countries to deliver mail in the 1930's, and the delivery of mail via cruise missile, trialled in the U.S. in 1959.

“The Commission has attempted to avoid the overly excited or dire views of the impacts of current digital technologies, while recognising their potential where evident. There is nevertheless a serious debate amongst economists on whether we are extracting less benefit from today's digital disruption than from previous disruptions or industrial revolutions of the 1870s, 1920s or even 1980s,” he said.

“The data suggests this is so — Australia, and indeed other advanced economies, has yet to see digital technologies drive significant productivity growth or result in substantial disruption at a sector or economy wide level,” he said.

Despite promising statements, he said the country has been “unremarkable” in its adoption of technologies to improve public sector processes and service delivery.

Nonetheless, the Commission expects digital technologies to accelerate changes in Australia's economy. “Digital technologies offer greater scope for more distributed production, and facilitate the trend toward more service elements — pre and post production services — in manufactured and other goods,” he added.

“Data is a new source of market power but, in the face of the digital economy, advantage may also only be short lived. How governments deal with market power will be important for both those who control, and those who want to use, data and networks.”

The research also found there will be adjustments that come with digital disruption with some workers struggling to adapt to changes in demand for their skills and new, more flexible but less reliable, work options.

“Australia’s social safety net will remain important in mitigating risks for workers and lessening the effects of a widening distribution in incomes. Broader protections for an individual’s rights (such as with control of personal information) and to support society’s moral and ethical mores (relevant to technological advancements into artificial intelligence, remote sensing and medical research) will require ongoing government attention informed by scientific evidence,” Harris said.