Treasury on BERL report
June 29th, 2009 at 4:13 pm by David FarrarI covered a while back the evisceration of a BERL report into the social costs of alcohol. This report inflated the cost by around 3000% (or $4.6b), and was being cited by the Law Commission as rationale for all sorts of law changes.
NBR reported at the end of last week that Treasury has now expressed concern about thre reliance being placed on reports such as this (which costs the taxpayer $135,000). NBR quotes Treasury Deputy Secretary Peter Bushnell:
The Berl report into the social costs of alcohol being used by the Law Commission is work that doesn’t look like it meets the “normal standards you would expect”, according to Deputy Secretary of the Treasury Dr Peter Bushnell.
There were numerous problems cited in the report by its academic reviewers, including:
“I think the points they’re making are sound about adding the costs of production into the cost of it, and not counting any benefits. In a market if you’re selling something that people are prepared to pay for, then they’ve at least got that much benefit, otherwise they wouldn’t have bought the stuff. So if you exclude the benefits then you’re clearly only looking at one side of the story.”
And as I have said previously,far too many Government reports look at costs only, and not benefits.
However, the mere fact Law Commission president Sir Geoffrey Palmer is seeking out economic advice is positive, “because in the past lawyers often assumed that economics had nothing to do with it.”
That said, the onus should be on the Law Commission to be rigorous Dr Bushnell said.
“Sir Geoffrey’s reputation is reduced [if] he’s putting weight on something that actually doesn’t stack up. So the Law Commission ought to … build in processes that give adequate QA and so on.
“What we’re saying is it’s your reputation that’s at risk here. It doesn’t reflect well on the Law Commission if it … backs [work], that doesn’t have a sound basis.”
That is a pretty undiplomatic serve. Basically saying if you use shoddy reports you’ll get a shoddy reputation.
I’m actually a fan of much of the work the Law Commission does (I like the fact they are pro-active not just reactive) but Ministers will not be as inclined to listen to them if they don’t make sure any reports they use as justification hold up to scrutiny.
Tags: BERL, Law Commission, Peter Bushnell, Treasury
June 29th, 2009 at 5:02 pm
I said right from the start when you first posted on this issue that the Law Commission should not be dealing with this issue. That its respose to alcohol abuse was a rather superficial tax and regulate response to a very complex problem. This is the “social intervention” side of Geoffrey Palmer. Now the Treasury has weighed in and basically said the work of the Commission on this issue was fairly shoddy. The Law Commission is simply not the best organisation to make a series of changes to the Law on a very complex social problem. The law is actually quite simple stuff, the issue it purports to deal with conversely is quite difficult. The Law Commission is actually better placed to deal with matters that are socially simple but legally complex. That is its brief.
Vote:June 29th, 2009 at 5:49 pm
I thought it had already been established that Mr Palmer is a complete retard, so why are we surprised?
Vote:June 29th, 2009 at 5:53 pm
I’m actually a fan of much of the work the Law Commission does (I like the fact they are pro-active not just reactive) but Ministers will not be as inclined to listen to them if they don’t make sure any reports they use as justification hold up to scrutiny.
As far as I can see, Ministers have never paid too much attention to the Commission, preferring instead the advice of departmental officials. This sort of thing is not particularly going to help the Commission, noting especially it is carrying baggage from the previous government such as the whiz-kid who is able to write ‘section 7′ reports for the Justice Minister (or Attorney General?) saying that even the most repressive bill passes muster with the Bill of Rights Act.
Vote:June 29th, 2009 at 6:00 pm
3000% isn’t much of a variation really.
Statistically relevant still? A Rank Spearman Correlation of?
And for how much?
Why don’t they get Post Grads to do the base number work?
Vote:June 29th, 2009 at 7:16 pm
“And as I have said previously,far too many Government reports look at costs only, and not benefits.”
Or, in the case of the Emissions Trading Scheme, they don’t look at either in any great detail (costs or benefits).
If ever there was a proposal that needed fact checking, maths checking and a true cost benefit analysis, (potential half a degree fall off in average temperature over 100 years at a cost of billions) it is this load of utter crap, so skewed and outright daft it would make the Berl Report look meticulously accurate.
Vote:June 29th, 2009 at 11:56 pm
so skewed and outright daft it would make the Berl Report look meticulously accurate.
That’s a big call! At one point BERL accidentally deploys Marxist economics (the labour theory of value) to add $800 million to the headline figure.
Can anything, even the ETS, top that?
Vote:June 30th, 2009 at 7:23 am
Perhaps I have missed it, but I wonder if BERL has ever attempted a response to the criticism of this report. Has anyone a link?
Vote:June 30th, 2009 at 7:31 am
Hmmm … to answer my own question, I see Ganesh Nana of BERL made what appears to be a less than wholehearted defence:
“BERL economist Ganesh Nana, one of the authors of the report, defended his work, saying the university economists had “a different world view” from his colleagues.
“We used the method used by all in the field looking at the cost of alcohol and other addictive substances. That method has been used widely across the world,” he said.
“It really does depend on whether you believe, in a nutshell, that consumers are rational in their decisions about how much alcohol to drink. “Most of us are we’re not saying we aren’t but there is a significant subset of the population who aren’t, and that’s where the costs lie.”"
Apart from that the silence on the part of the authors and those who commissioned the report has been deafening.
[DPF: Indeed, I have been amazed they have not done a point by point response. Especially as the issues raised by Crampton and Burgess were not just stuff like not counting benefits, but double counting of costs in some areas etc]
Vote:June 30th, 2009 at 2:10 pm
They’re presenting their costs report at the New Zealand Economics Association meetings tomorrow morning. Perhaps they’ll address some of it then.
Vote:June 30th, 2009 at 7:51 pm
And you will, I sure Eric, have lots of fun when they do present!
Vote:June 30th, 2009 at 8:13 pm
I heard Dr Nana on National Radio this afternoon. His position (as I understood it) was that the report was specifically commissioned as a statement of costs, deliberately excluding benefits. On those grounds he believes that his report has been unfairly criticised. I hope I don’t misrepresent him.
Vote:July 2nd, 2009 at 5:29 pm
Check http://offsettingbehaviour.blogspot.com/2009/06/jim-mora-on-berl-report.html . The RFP asked only for costs. But BERL was all too happy for their report to be misrepresented as a welfare study by the Law Commission. They of course do more than leave benefits to one side: they specifically say that benefits are zero. Check page 173.
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