Choosing in uncertainty
Chapter five
Making decisions is hard in uncertain times. Despite having more hard and soft data than ever before, we will never have perfect insight, nor complete confidence in our assumptions. The possible futures are hard to quantify and compare. Complexity means there will be valid disagreements about courses of action – genuine trade-offs and compromises that must be understood, justified, and engineered for us to move forward together.
Capability 1: Building aligned choices with diverse voices
Broadly speaking, Aotearoa does well in measures of public and democratic engagement. We are third in the OECD Better Life Index for Civic Engagement – voter turnout is higher than average, as is our engagement with stakeholders on developing regulations.38 We are doing well in diversity of representation. This year we celebrated 61% of our Members of Parliament being women;40 and the largest Māori39 and Pacific caucuses we have ever seen.40
But there is also less positive news. In 2022 we experienced a record low of 40.44% of eligible New Zealanders casting their vote in local elections.41 Māori, women and other diverse candidates have experienced abuse.
Our system is intended to provide all New Zealanders with the opportunity to participate and have their say. We know in practice this is not happening. We are already missing voices and perspectives when we make decisions about complex issues for Aotearoa. We should not be making decisions about communities without them. This is especially true of future generations who will wear the success or failure of our choices. Young people are marching to shed light on our biggest issues, but many who march are not legally permitted to participate in our civic and democratic processes. A Government commitment in November 2022 to introduce a bill to lower the voting age was reversed in March 2023 due to the lack of required numbers (75%) required for the bill to pass in parliament.42 The Government announced its focus had turned to lowering the voting age for local body elections only.43 Just a few months later an independent electoral system review potentially re-ignited the issue, recommending the voting age be lowered to 16.44
The issues we need public engagement on are complex and increasingly require technical and scientific understanding. There are genuine options in the paths we could take, the potential consequences of which can be difficult to imagine and the trade-offs neither simple nor binary.
Proliferating technology has fragmented where and how we get our information and engage on the issues that matter to us. On the one hand, this has created connection and communities where they were once hard to find. On the other, it has made it difficult to find a single source of truth and has created the breeding ground for misinformation and disinformation. All of this is further compromising our ability to connect on issues and hold the space for a fuller set of opinions and for nuanced decisions.
Our public engagement capability needs to enable us to connect with a fuller set of voices that are truly representative of our communities and population. This must include enabling participation and access for the people most impacted by the big decisions – both systemically marginalised groups and future generations. Deeper changes may also be needed to modernise how we engage: broadening voting channels, extending voting rights, using behavioural nudges, facilitating and supporting broader representation in local and central Government.
This asks for new capabilities from us all. We need to equip and empower citizens and communities to participate. Building education and trust are the best inoculations against misinformation and disinformation. Our aim should be to better inform communities. Communicating complicated ideas has never been more important, and in some ways, easier. There is a voting generation who rightly expects information to be made easily available and digestible – plain, compelling messages that connect with people. Communities expect and deserve informed and insightful content, leveraging participative technology along the way. We need to deliver information that is evidence-based and de-politicised in the context of a core set of agenda items that should underpin our engagement in the long term. This would enable us to build a strong, consistent narrative and avoid overwhelming communities.
We need new ways to connect with people on their terms. Typically, we expect people to leave their contexts and safe spaces to participate in civics and democracy. This approach risks our ability to engage with a full set of people and communities. We are increasingly hearing about digital enablers for participatory democracy, community-level and delegated decision-making models that could enable us to move past periodic elections and enable micro-engagement of diverse communities for decision-making.
“We don’t need a Tik Tok or an Instagram for Aotearoa’s democratic engagement, but we do need to use community and peer-based digital spaces for fact sharing in a way that makes people feel informed. We should be asking ourselves: how do we keep it snackable?” Izzy Fenwick – founder of FENWICK and Find Me, and Emerging Director for Aotearoa Circle.
We must explore democratic processes that engage representative populations in a deep and informed way. This doesn’t mean engaging many and all to make decisions; it means using channels that enable narrow-and-deep engagement to help inform policy and options. Citizens’ assemblies (forums of randomly selected citizens who deliberate on important public questions) create space for citizens to think deeply, with access to technical and specialist expertise where needed, and deliberate on complex issues. They may have decision making rights, or the outcomes can be used to frame broader policies and agendas. These sorts of channels give us engagement depth on big issues and complement the use of technology to connect with and inform communities – which broadens the diversity of people engaged in civics and
democracy.
The public sector also needs new skills to engage with communities in a different paradigm; in their recent report ‘Make the Move’, Inspiring Communities sets out a series of necessary shifts for the public sector, including repositioning policy workers as conduits and facilitators.45
Building our public engagement capability will shape better solutions. Better public engagement methods catalyse a broader set of ideas and, through that diversity, bring innovation. Evidence from citizens’ assemblies suggests that they are successful in finding consensus even on divisive issues.46 It will also build a mandate for bolder solutions. Embracing complexity rather than simplifying to binary choices provides the opportunity to have more nuanced discussions. If we can do that in safe places for communities, we can hope for more courageous and insightful direction.
Critically we increase trust, creating a virtuous loop. Successful public engagement could go a long way in combating degrading public trust and confidence. Communities are increasingly likely to engage if the government can convert perspectives collected through better public engagement into solutions and real-life outcomes for people.
Spotlight: Engaging communities on the future of Auckland’s water supply
Auckland faces a major challenge in the coming years as its population continues to grow rapidly and its existing water supply reaches capacity. In an uncertain and resource-constrained environment, how can it safely and sustainably provide water to meet the needs of Aucklanders in the decades to come?
Questions like these are all too often answered in closed decision-making environments, with engagement used only to inform decisions, rather than make them. Koi Tū, the University of Auckland’s Centre for Informed Futures, flipped this approach on its head in late 2022 by convening a citizens’ assembly to determine, openly and collectively, the future of Auckland’s water supply.
After sending invites to 12,000 randomly selected Watercare customers, 37 volunteers were chosen who represented Auckland’s wide range of ethnicities, ages, genders, educational backgrounds, and other demographics. Over a two month period, the group talked with independent experts from across the water industry and considered six options. Koi Tū facilitated collaborative workshops to ensure that everyone was able to express their views and consider the key issues at play.
Through this inclusive workshop process, the group identified the environment and affordability as their most important considerations. This perspective shaped the group’s decision that purified recycled wastewater was the best option for future-proofing the Auckland water supply – the option tipped to be most controversial at the start of the project.
The feedback on the process from both participants and Watercare leadership was highly positive. The participants felt empowered by the consideration of real options in a major community decision, rather than feeling like contributors to an already-determined outcome. Several commented on the value brought by having so many different perspectives at the table.
Koi Tū Associate Director Dr Tatjana Buklijas says the assembly highlights the potential of this approach to improve decision-making on key issues. While politicians often lack courage on climate change for example, she says, “in the hands of everyday people, given opportunity to learn and deliberate, we might see progress.”
With more and more people having the opportunity to participate over time, we may see a ‘snowball effect’ as the movement gains momentum. The citizens’ assembly on Auckland’s water supply is a homegrown example of deliberative democracy. It demonstrates how consensus can be reached on difficult topics when we engage diverse communities deeply.
“We don’t need a Tik Tok or an Instagram for Aotearoa’s democratic engagement, but we do need to use community and peer-based digital spaces for fact sharing in a way that makes people feel informed. We should be asking ourselves: how do we keep it snackable?” Izzy Fenwick – founder of FENWICK and Find Me, and Emerging Director for Aotearoa Circle.
Deloitte Director, Cassandra Favager on the three strategic capabilities to choose during uncertainty
Capability 2: Agile and future-fit investment decision making
Our current physical infrastructure crisis – and investment debt – is the result of decades of short-termism and under-investment. What we are experiencing now is the outcome of those choices, exacerbated by recent severe weather events. Our digital infrastructure – and digital equality – has also lagged. Technology innovations and the quickening pace of obsolescence are shining a light on those gaps.
Despite our rapidly changing context, how we make investment decisions hasn’t evolved much. Too frequently, we focus on the issues of today when our reality requires long-term situational awareness, investment, and planning. Business case cost-benefit analysis has become smarter, but in an era of increasing shocks and instability, our assumptions are becoming unstable and less reliable. Our assumptions do not consider a broad enough mix of possible futures, risking the longevity of our investment decisions. Despite a growing ESG agenda in the private sector and wellbeing budgets in the public sector, our investment decisions still struggle to articulate and weigh up non-financial value. In the public sector, investment decisions that span departments and sectors in pursuit of collective outcomes are still challenging to develop and approve. Investment decision-making can be a painfully slow process.
“To make decisions we look at the relative costs and benefits of policy options. We take an ‘all else being equal’ approach – but all else is not equal, and it’s changing fast… We need to look beyond costs and benefits and also put a greater emphasis on the risks and opportunities. This takes us from a space of looking at predictable cost/benefit returns, an orthodox accounting view, to looking at risks and opportunities over the long term and seeking out low probability high return options – taking a more entrepreneurial approach.” David Hall – Climate Policy Director at Toha and Adjunct Lecturer at AUT University’s School of Social Sciences & Public Policy.
Investing in what we value must consider a broader set of investment impacts: climate, economic and social wellbeing, equity, and resilience. The benefits and outcomes we ground our investment decisions in do not go far enough in prioritising a range of considerations. Non-financial outcomes are often too lightly weighted or insufficiently articulated to influence the decision outcome.
A longer-term lens on outcomes is also critical to see beyond an investment pipeline focused on maintaining degrading infrastructure and servicing near-term demand. For example, in light of changing demographics, different solutions are needed. There are several Pacific-led social housing initiatives underway – including the Ministry for Pacific Peoples’ Pacific Housing Initiative – that look to design homes that are fit for purpose and meet the aspirations and needs of Pacific families – focussing on building communities (not just houses) that reflect the way Pacific families live, move and play. How we frame those outcomes is critical to avoid short-termism in what we invest in. Investing in a charging network for EVs makes car use more sustainable; precinct planning that facilitates walkable cities would reduce the need for all kinds of private vehicles.
To be successful in uncertainty, we need investment frameworks and models that look forward. Green technology investment provides inspiration. Using a traditional cost-benefit approach, projecting out historic and current numbers, significant investments in green technology have not stacked up. Greater consideration of the risk (what will happen if we do not invest) and the opportunities (what future the investment could create, including spillover benefits) at the system level can help to shift that equation.
When reviewing clean energy technologies offering the cheapest ways of producing electricity and light across much of the world, EEIST (Economics of Energy Innovation System Transition) asserted “the most widely used economic framework for public policy appraisal, cost-benefit analysis, did not recommend the use of any of these critically important policies. In general, these policies were implemented despite, not because of, the predominant economic analysis and advice.”47
For the government, this can also support choices to move beyond today’s pull factors and make bold choices – that is, help shape society and more deliberately choose our direction – if this is a role we want the government to play.
Greater agility is needed to shorten decision and implementation cycles. Better use of data and technology will be a key enabler (see Capability Three[BR1] ). We must take a product management approach in our investment decision-making. This means learning and improving as we go rather than undertaking a linear decision-making process that risks locking in a long-term, big investment commitment that might not remain fit for purpose. This will continue to be challenging in infrastructure where lifespans and delivery times are long. A decision to place a road, cycleway, or town centre has repercussions for generations when the context of the way people live is shifting in the space of years. However, more can be done to create more modular and agile solutions that create greater flexibility in our infrastructure, for example, building homes designed for changing family sizes and needs.
Critical for government investment decisions is the capability to invest strategically as an integrated public sector. The nature of the outcomes we are seeking to achieve, and the contextual trends that will impact them, do not land neatly within a public sector department – or even between opex and capex. Investment decision-making at the outcome level requires strategic forecasting and analysis, investment models, budgets, and approvals to be held across delivery accountabilities.
Decision rights and investment resources need to be held in the correct place in the system. Many issues we face reflect the locus of decision-making being held in the wrong place. We get the wrong solution – or fail to get traction – without the involvement of communities, organisations and individuals who have the most to gain.
Strategic investment creates the resilience that will insulate us from shocks and determines the wellbeing of our future generations. A future-focused investment capability will broaden our definitions of value and better align what we spend with what matters. Reducing the time it takes to release the value of our investments – coupled with ‘big bet’ investments aligned to our shared vision – has the potential to create leapfrog transformational moments.
Spotlight: A broader definition of value applied to Kāinga Ora’s housing development investment pipeline
As of January 2023, the average house price in Auckland was 1.6x higher than the national average, 1.5x higher than Wellington, and two times higher than Christchurch. The lack of affordability is putting pressure on the social housing waitlist and is contributing to significant emergency housing costs, both for the Government and the whānau living in motels.
To support the rapidly growing Auckland city, Kāinga Ora has been developing several business cases to refresh, renew and intensify large existing land holdings in Mount Roskill, Oranga, and Tāmaki. In its entirety, Kāinga Ora plans to deliver over 40,000 new, warm, and dry homes throughout the country via its large-scale urban development projects over the next 20 years.
To enable the urban development programme, Kāinga Ora built a Cost Benefit Analysis (CBA) Model and Framework to enable it to evaluate the merits of the urban development projects consistently and robustly. A joint Treasury and Ministry for Housing and Urban Development Steering Group was established to ensure transparency of model specifications, assumptions, and sensitivity testing.
To illustrate the broader set of investment impacts the projects are expected to deliver, the model estimated not only the traditional economic benefits associated with new housing but also the monetised social, health and environmental benefits too. To ensure the model and framework were both forward- and backward-looking, it included associated capital costs incurred to date and projected capital and operational costs for land development, new infrastructure, and housing and maintenance costs over 60 years.
The model demonstrates effective expansion of how we might assess value and over what time horizons when making investment decisions. Over the next several months, the urban development model and framework will be used to evaluate three more developments across Auckland and Tauranga and further support Kāinga Ora with its investment strategy. It has potential application beyond the housing developments and demonstrates an ability to make investment decisions for the future based on a broader set of investment impacts.
Capability 3: Bringing choices to life with new technologies
Advances in technology continue to accelerate. Collectively, technology and data are revolutionising how we live and will play a powerful role in helping us make decisions in uncertain times. But it also brings new challenges, including addressing the tensions of leveraging the capability and risks that AI brings.
Things that were once unimaginable are increasingly possible. We have more data than ever before, we are hyperconnected and we are increasingly enabled by Artificial Intelligence (AI). Technological breakthroughs in the energy and food production sectors, 3D printing, AI, quantum computing, drone and robot capability, augmented reality, virtual reality, digital twins, and the Internet of Things are recent megatrends influencing how governments, businesses and communities operate. The edge will keep shifting.
We focus here on how new technologies – and data – can bring choices to life. Technology can already enable us to simulate, explore and learn about possible futures. Predictive analysis can forecast potential outcomes and data-driven scenario planning can simulate and test action pathways. Real-time monitoring can detect early warning signs and identify vulnerabilities in operations and supply chains. Not only can we use data to diagnose, test and support decisions, but we can conceptualise and communicate more effectively than ever.
One of the biggest challenges to quality decision-making in times of volatility is the lack of timely, accurate data – both in terms of diagnosis and in terms of monitoring, learning, and changing. Yet we live in a more data-rich environment than ever. Our reality is that we need to find ways to work with imperfect data. The Te Waihanga (the New Zealand Infrastructure Commission) mission to regularly release a complete view of planned public infrastructure activity in Aotearoa shows just how challenging it presently is to have all the information and bring it together. The Pipeline was first published in 2020 with a subset of planned infrastructure projects. Te Waihanga is still working to build a full set of planned projects. Its list of contributing public sector partners continues to grow, but the data is disparate, and gathering it reveals the multiple systems, people and approaches that must be navigated to build a view of the pipeline. To harness data and digital to build insight-driven organisations and insight-driven governments, we must optimise how we collect and use data. The focus needs to be on collecting the right data (including considering how we will bridge information gaps), so we have the evidence we need to make informed, timely decisions with confidence. This prevents us from drowning in data and being unable to make a decision.
Technologies such as AI, virtual reality and digital twins can help us visualise information and perform simulations.48 This offers powerful – and rapid – means of modelling our choices and creating compelling and accessible visual models to engage a wider range of partners and participants. Platforms like UrbanistAI are already using generative AI for participatory planning and co-design, bringing to life what spaces could look like in the future.49 Pockets of vision and innovation exist in Aotearoa, but work is required to moderate the perception of risks when it comes to using these solutions and better integrating them into our systems. Affordability is a challenge for many, but we should soon be able to prioritise using these types of technology as it becomes more affordable through advancement, increasing competition and growth of onshore capability.
To use data to create insight and inform decisions in the ways we have proposed, interoperability is a key enabler. The reality is we don’t have standardised data, and we haven’t integrated our data (because it is difficult and costly). We will learn as we go, and we can use our learning and leverage technology as it develops to improve our ability to collect, share, and use data. This requires long-term commitment and investment.
“Data is the engine that makes everything happen, but it sometimes feels like we are missing 60% of the data we need to make a decision. This is a huge gap, and filling it is expensive. We need to set up a long-term plan and it needs to be funded. We know what we are going to be spending on Superannuation for the next 30 years, but we don’t know what we will be spending on data a year from now.” Hon. James Shaw – Co-leader, Green Party.
None of this will come easy – especially for the public sector. Globally, the public sector is rarely viewed as a leader in the technology landscape, and in recent years it would appear Aotearoa has lagged behind its global peers. Ideas and concepts that were being discussed a decade ago (such as integrated services experience centred on major life events and RealMe identity) have not achieved traction across the sector, and other jurisdictions have gone ahead and implemented concepts that we have not. But citizen expectations of how technology and data are applied have increased, and the capabilities it provides us in a high-change environment are valuable.
Technology itself also contributes to a context of uncertainty, and the government will also need to play a unique role in governing how technology impacts us as citizens. The government will need to invest and regulate for digital equity to ensure equal access and capability to a technology-enabled future workforce. Safeguarding Aotearoa against bad actors and international threats, managing the security and safety of our data streams, and using them responsibly to support our long-term outcomes are critical, as is regulating new and emerging technologies. The use of AI in particular presents ethical issues and risks – will we wait for other global actors to regulate AI, or will we take a position ourselves (and thereby speed up our ability to use and benefit from AI)?
