1. ECONOMIC ISSUES IN FUNDING AND SUPPLYING PUBLIC SECTOR INFORMATION Dr John S Cook 30 July 2009 © 2009 Spatial Information Systems Limited, as trustee for Participants under the Collaborative Research Centre – Spatial Information (CRC-SI) This work is licensed under a Creative Commons Attribution 2.5 Australia License.Creative Commons Attribution 2.5 Australia License.

2. Presentation overview Types of transactions Pricing principles – in situations of no charging and charging for PSI Cost recovery considerations Equity issues – what is fair and reasonable when viewed holistically Efficiency and effectiveness Authority to produce and supply PSI and associated taxation and funding issues Accounting and accountability Slide 2 of 14

3. Types of transactions No Charging – Non-contractual supply of information to anyone. Charging – in circumstances that could involve: –Supply of information by command of a statute to anyone who is entitled to receive it. –Inter-agency transfers and exchanges within a government as a single legal entity. –Transfers from and exchanges between a government as one legal entity in dealing with other governments or statutory authorities as separate legal entities. –Supply of information under terms of a contract with a private person. Slide 3 of 14

4. Pricing principles: no charging No charge should be made for PSI where the government has objectives of informing the public; obtaining information from the public; or securing public cooperation and community engagement. No charge should be made where people are able to re-use PSI for lawful purposes at a negligible cost to the government. Costs to the government are negligible where information is supplied online in a digital format; no representation is made that the information is suitable for any non-government purpose; and access is not restricted by any requirements for privacy or confidentiality. Slide 4 of 14

5. Pricing principles: Charging (a) A charge should be made to conform to the prescribed fee for service as set out in an Act or associated regulation when information is supplied to meet statutory duties and standards of service. A charge may be negotiated for work needed to achieve interoperability and cooperation between the government’s own agencies to meet its own purposes. Generally, details of the proposed work and inter-agency transfers of money and information should be recorded in a memorandum of understanding. A charge may be negotiated for work needed to achieve interoperability and cooperation between governments. The arrangements should be properly set out in an inter-governmental agreement. Slide 5 of 14

6. Pricing principles: Charging (b) Important issues of public policy arise in going beyond prescribed statutory duties and using public resources to service the particular needs of a private person, firm or organisation for information or advice. Consequently, decisions about charging need to be well-informed in relation to the political and economic risks involved. Without attempting to be exhaustive, things that need to be considered include: –A liability regime that compares to private professional practice. –A need for openness and accountability in pricing. –A potential for profit-making to be construed as a form of taxation that should have parliamentary approval. –A potential for non profit-making to be construed as failing to comply with competitive neutrality provisions and a crowding-out of private sector initiatives. Slide 6 of 14

7. Cost recovery considerations Arguments are mainly about efficiency and fairness that may be perceived broadly as: –Efficiency – that may include issues such as effectiveness and synergy in achieving purposes of government, administrative simplification, and the proportion of transaction costs to net revenue after collection. –Fairness – that may include issues such as redistributive justice, administrative simplification and transparency, and reasonableness – a demonstrated ability to give acceptable reasons for decisions to fair-minded citizens to satisfy requirements for social cohesion. Slide 7 of 14

8. Efficiency considerations Generally, macroeconomic efficiency concepts and indicators do not help information policy- making at an operational level. More useful concepts are microeconomic: –Technical or x-efficiency – efficiency improves if the same input can achieve greater output. –Pareto or allocative efficiency – where efficiency improves if people can trade to mutual advantage without harming anyone else – a ‘win-win’ situation. –Dynamic or adaptive efficiency – where efficiency improves if resources can be readily adapted to new tasks. Slide 8 of 14

9. Market v command decisions Some adaptation of market-oriented efficiency concepts is required for command type activities of public and private bureaucracies. –Efficiency – doing things the right way – which aligns more or less with technical efficiency. –Effectiveness – doing the right things – where market-oriented decisions about allocation are replaced by collective or command decisions and appropriations. Slide 9 of 14

10. Fairness as a policy issue The idea of fairness is associated with: –Reasonableness – an ability to give reasons that can be accepted by intelligent and fair-minded people as ‘reasonable’. –Redistributive justice – where people get rewards or penalties that they deserve; and do not get rewards and penalties that they do not deserve. –Openness and accountability – allowing ready access where justice can be seen to be done. –Administrative simplification – where seeing that justice is done depends on accounting systems that avoid unnecessary complications. Slide 10 of 14

11. UK 2008-9 OPSI - Re-Use PSI COSTS:££ Salaries771,000 Property & Infrastructure184,000 Other Running Costs218,000 TOTAL COSTS1,173,000 INCOME: Royalties(101,000) Admin. Charges(6,000) TOTAL INCOME(107,000) TOTAL NET COSTS1,066,000 Slide 11 of 12

12. Information & learning Public policy is inconsistent, incoherent, inefficient and ineffective when: –Governments promote activities associated with education, training, research, public libraries and archives at considerable cost in the hope that individuals will be able to use the information for personal and social advantage; and –Governments fail to promote learning opportunities associated with re-use of PSI on an as-is basis when it can be achieved at a ‘negligible cost’ to government. Slide 12 of 14

13. Authority to produce & supply Authority to produce PSI can be: –Explicit - either mandatory or permissible without being mandatory - as in various forms of registration, and formal monitoring and reporting processes. –Implicit - as a necessary element in performing an authorised activity. Authority to supply PSI can be: –Explicit – as in requirements for some information to be publicly available or open to inspection. –Implicit – as a necessary element in performing an authorised activity. In the absence of formal authority and funding, either producing or supplying PSI may be illegal. Slide 13 of 14

14. Accounting and accountability If learning contributes to knowledge and human capital, who owns it; and does ‘knowledge management’ have any practical meaning? Acknowledging investment costs and current costs in producing and conserving ‘informative symbolism’, are the symbols worth anything without living human knowledge to aid in its interpretation? Is information-bundling a form of value adding; and if the sum is worth more than its parts, how can the elements of the bundle be valued - separately and in combination? Given conceptual and measurement difficulties in saying what knowledge is worth, does the idea of return on capital have any practical meaning? If not, why use the idea? What does it mean to ‘maximise’ and how can it be decided that an information policy will actually ‘maximise’ something – ‘value’ or ‘opportunity’, for example? Is human cognitive capacity a scarce resource, and what can be done to make people ‘quicker on the uptake’? – Should this be a central organising principle of information policy within a ‘knowledge economy’ and an ‘information society’? Slide 14 of 14