Saturday, 14 June 2014

The Law of the Conservation of Red Tape

You're probably aware of the Law of the Conservation of Energy.  This is a law of physics which states that energy cannot be added to or removed from a closed system.  Energy can change its state or type - for instance, the chemical energy in dynamite can be changed into kinetic energy via an explosion - but overall the amount of energy will remain the same.

You are probably not aware that there is a very similar law in public administration - the Law of the Conservation of Red Tape.  This states that red tape cannot be added to or removed from a system of government.  It can be converted from one portfolio or area of business to another, for instance by changes of law or changes of government, but it cannot be completely removed.  This means that when governments promise you that they will "cut red tape" what they actually mean is that they will cut red tape for some people while increasing it for others.

Red tape is used in government departments to bind files - has been for centuries.  Once upon a time it was used to bind together any collection of documents.  In more recent years, cardboard folders and file pins are the technology of choice where the amount of paper is only moderate, but if there is too much to fit in one folder, the folders are still bound together with narrow, non-adhesive cloth tape.  Don't ask me why it is always red but I have never seen any other colour.  The "green tape" which politicians like to claim they are cutting is entirely mythical.  Public servants do in fact cut this tape all the time, since it comes in large rolls and whenever you need some you simply cut off the desired length with a pair of scissors.  Once you have the right length you tie up the files in a bundle - hence the expression "tied up in red tape".

This tape has come to symbolise the heavy hand of government regulation, draining energy from the economy and sucking the life out of business enterprise while feeding the army of pointless, lazy public servants who administer it.  If government could just get out of their way, our business lobbyists say, then business would be able to get on with creating wealth and everyone would be better off.

This is a huge and deliberate caricature of government regulation.  Regulations are there for a reason and many of them are entirely necessary.  We need to protect the environment, make sure important services like health and construction are carried on by properly skilled professionals, make sure the places our children are cared for and educated are safe and well run, and so forth.  All these things require regulation and the files in which records of this regulatory activity are stored are indeed bound up by red tape for easy future retrieval.  However, most business people would prefer as little scrutiny as possible.

Of course there are bad regulations and there are good ones and there are always cases to be made for regulatory reform.  Nonetheless, our current governments at both State and Commonwealth level talk as if all regulation was bad, and commit themselves to global targets like "reducing red tape by 20%", whatever that means.

Anyway, back to my subject.  The Law of the Conservation of Red Tape clearly teaches that red tape cannot be reduced, only displaced into some other, alternative form of red tape.  In the current environment, with governments at all levels who are very chummy with businesses, the only way to deal with this problem is to displace the red tape onto poorer people and those who work with them.  After all, somebody has to do the heavy lifting.

Recently the Queensland Government tried to displace some of its red tape onto the union movement.  Trade unions, their new law said, would need to ballot their members before spending more than $10,000 on political campaigning or donations to political parties.  Thus, instead of a discussion at their governing council, unions would now have to stage a full scale ballot overseen by the Electoral Commission, at enormous expense.  This could displace the red tape from a significant number of environmental protection regulations, saving our favourite mining companies hundreds of thousands of dollars.

Problem was, the unions and their members are not poor enough for this displacement to stick.  Following a successful High Court challenge to a similar law in NSW last year, the Queensland Government was forced to repeal its new law.  The lesson here?  To be effective, red tape displacement must target those who don't have the resources to fight back.  Fortunately, such people are not in short supply.

The Commonwealth government has made a good start in its recent budget with its changes to disability support payments.  It used to be that once you were assessed as having a permanent disability, this assessment didn't then need to be repeated - after all, a permanent disability is, you know....  But now a large number of those assessed in recent years will have to be reassessed against slightly different criteria.  Some of the surplus red tape will be able to be used to tie those files together.

More of it will be used for young people who are unemployed.  Since they need to "earn or learn", they will need to submit evidence that they are doing one or the other, and no doubt this will need to be certified by the person or people they are earning or learning with - hence both the young person and their relevant organisation will need to submit paperwork.  The stipulation that people under 30 can only get benefits for six months will create a lovely round of paperwork as time is kept on the six months payment, exit paperwork is done at the end of six months, hardship claims are made, justified and considered and re-entry to the system is negotiated at the end of the six-month abstention.  Such lovely piles of paper will have to be bound up with something!  We could even give the whole program a progressive sounding title to make it look like we are doing good - how about "Welfare Reform"?  That sounds warm and cuddly....

Of course I have to mention housing, which has become a hugely fruitful repository of displaced red tape in the past few years.  When I first started working in the field, applicants for public housing filled in a four-page form and produced evidence of their identity, income and current address.  Then they waited in a queue that was essentially ordered according to the date of their application.  When their names reached the top of the list, they got a call and were allocated housing, provided nothing dramatic had changed for them in the meantime.  The only paperwork required of them while they waited was to inform the Housing Commission (as it was then) of any changes - new address, new child, new partner, etc.

Nowadays we are in a world of allocation by need.  This means the application form is now 17 pages long and the required supporting information is varied and voluminous as you have to show how you fit the need criteria.  Is your housing substandard?  Submit some proof!  Do you have a chronic health problem?  Submit a doctors letter.  Are you escaping domestic violence?  Provide a police report, or a letter from a domestic violence service.  The list goes on.

Of course all of this is handled at least twice - the person (and usually the agency helping them, since highly disadvantaged people struggle to get all this together) has to find and submit the evidence, and then someone in the Department of Housing has to assess it against a set of complex criteria.  Then of course if they are not housed quickly it all has to be done again as many of these circumstances will have changed.  This is red tape heaven!

But all this, while highly productive in meeting the government's red tape displacement goals, is not sufficient in itself.  So as an adjunct to the heavy lifting by poor people themselves, the organisations that work with them also need to carry some of the load.

One way they do this is through competitive tendering.  In the old days it used to be that once you were funded to provide a service you would go on doing so until the government decided they didn't want to fund that service any more.  However, as the need to displace red tape has grown in recent years, this process has been deemed too simple, and so now these services are periodically put out to tender.  Someone in the relevant government department writes a specification for what the service should deliver (which roughly matches what it is delivering now) organisations submit a detailed proposal as to how they will deliver this service, these proposals are assessed by a panel of public servants and the tender awarded.  This may in fact go to the original organisation, or it may go to someone else who will deliver much the same service, hopefully better but not necessarily, often after recruiting the staff recently made redundant by the organisation that missed out.  In the meantime the amount of paper generated is colossal and it all has be tied together at the end with ... yes, you guessed it!  Of course since tenders are only let for a period of three years, the process is endlessly sustainable.

The other way to get organisations to share the heavy lifting is through regulatory and accreditation schemes.  These are even more fruitful than tendering processes, because you can make organisations undergo an assessment each year, and the processes inevitably involve huge paper mountains - policies and procedures, record-keeping systems, charters, meeting minutes, complaints and risk registers.  Whole armies of worker ants spend their lives managing these systems and tinkering with them to come up with new refinements of paperwork.

Does all this red tape make us better off?  Well, we don't really know, no-one has ever evaluated its impacts.  Anyway, that's hardly the point.  All that red tape has to go somewhere, and if these people are so busy do-gooding that they don't have time to get real jobs, well they just have to take what they are given, don't they?


Luke Isham said...

I agree it can be a frustrating turn of political rhetoric, "eliminating red tape", as if that statement describes real action and as you pointed out actually hides displacement.

However, you could eliminate some red tape by retreating some legislation. For example owner-builders and houses. Dad and Allan both built their respective homes when you didn't need to submit very detailed building plans. No doubt there were issues in the community with grossly sub-standard houses but every decade the legislation and accompanying red tape increases. Why not retreat some legislation? Fundamentally this means less government involvement in all aspects of our lives, which I admit brings the risk of some harm, but'll always be the case regardless of the amount of legislation.

You don't often see it, but what do you think Jon about retreating some legislation?

Jon Eastgate said...

I agree in general Luke. As I say, "Of course there are bad regulations and there are good ones and there are always cases to be made for regulatory reform." You need to make a good case in each situation. Alan and Steve provide an interesting illustration. If they are building houses for themselves then you could argue that they should take their own risks - if it falls down, they bear the consequence of their own mistakes. However, when they come to sell (and Alan has sold a couple) the buyer might feel entitled to some warranty that the construction is sound. Regulation should protect the weak against the strong, the poor against the rich, the amateur against the professional, etc.

Mike Westerman said...

I suspect the real conservator of red tape is our profound fear of uncertainty as humans. Why is red tape tied? Why are there even sorted bundles? Because to sort, to tidy or tied neatly, to archive are all strategies give us a better sense of where we've come from and where we are, in the vain hope that the past is a guide to the future, so a past better known is a future better forecast. So legislative is much easier to draft than repeal, since repeal suggests future unknown consequences - much scarier than past known failures! And why does the lifting fall to the weakest and poorest? Why learn to bark if you can afford a dog has always been the refrain of those with power. And if education, health and access to the law help keep you on top, fat and lazy, there's not a chance you'll risk your future on popping down to see how the ants are doing.