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A Framework for cross-government digital investment oversight  A Framework for cross-government digital investment oversight Any government seeking to develop world-leading digital services needs to make the right digital investments. Developing a government digital investment oversight framework (the ‘Framework’) could provide a structured process for a government to guide the digital investments necessary. As well as the Framework, governments will need to ensure an appropriate oversight function exists within government. This function could be established within an existing central government finance function or as a new purpose-built digital investment function. With either approach there will need to be close alignment with the core financial/treasury function. It is critical that the oversight function has clear, appropriate authority and the resources to undertake the role. The following high level George James Consulting report discusses a Framework that governments could consider adopting to support digital government outcomes. What should be in the Framework? A Framework to guide government digital investment needs to be an end-to-end process that reflects the full investment and project lifecycle. This means from the inception of the idea responding to the business challenge, through the pre-budget planning processes, decision making components, to implementation and delivery. The Framework is the interface between the oversight function and the agencies required to follow it and guides their respective responsibilities. In this Framework the phases can be broken down as follows: Phase 1 – Strategic (pre-budget): Used to define the Government’s strategic direction for its digital and investments. Corresponds to an agency’s strategic ‘thinking’ work. Phase 2 – Prioritisation (pre-budget): Refinement of choices with the prioritisation and alignment with strategic direction. Corresponds to an agency working through investment planning. Phase 3 – Decision (budget): Ensures proposals are sound and meet wider government expectations. Supports decision makers to consider options with reference to government digital requirements. Phase 4 – Sourcing (implementation): Supports government to obtain efficient (value for money) and effective wider government digital investments outcomes (enabling cross agency collaboration). Phase 5 – Assurance (implementation): Provides assurance to the Government that investments are on-track to deliver expected benefits/throughout their lifecycle. Phase 6 – Operations Collection of intelligence on the ongoing hygiene of the Government's investments to support management of risks. Criteria for application of the Framework The Framework should ideally be applied to all government digital investments that meet the criteria determined by the oversight function . This includes investment that utilises technology as the primary means for achieving expected outcomes and benefits and could include investments which are: transforming the way people and businesses interact with government; modernising government in a way that improves the efficiency and effectiveness of government operations; within a defined threshold or investment category . For example this could be a monetary threshold (all digital investments over $100,000) or category (all Financial Management Information Systems). Strategic ph ase The Strategic phase (1) of the Framework is used to outline the overall direction for the government’s digital investment portfolio. What happens at this phase? The strategic phase is used to articulate the direction for a government’s investment in digital. This direction will guide expectations around how digital investments will deliver services and outcomes for the government and citizens. The strategic phase should closely reflect the government’s overarching ‘Digital strategy ’. Why is this important? Strategic planning can support a government build the capability needed to deliver digital objectives. The oversight function can use the data from this phase to develop understanding of its current and future investments and emerging capability gaps. By having an agreed direction (digital strategy) and supporting architecture and a shared view on opportunities and risks, the oversight function is able to provide the Government with a clearer pathway to deliver its digital transformation. The strategic phase ensures the Government’s investments in digital reflect cross government strategic digital priorities, and how they are supported by individual agency projects. What do investing agencies need? Agencies must ensure digital investment proposals support the outcomes of existing cross government strategies. The oversight function should provide guidance to agencies on how they should align proposals with the strategic direction set by Government, and ideally address cross agency capability gaps. What the oversight function could do To support the government achieve its outcomes the oversight function could work with agencies to identify key capability gaps across the government landscape as well as opportunities for sharing capability and the reuse of digital solutions and platforms. The identification of key capability gaps or risks will form the basis for prioritisation of digital investment. Prioritisation phase T he prioritisation phase (2) of the Framework supports the prioritisation of digital investments across the government. What happens at this phase? As part of the prioritisation process, the oversight function should work with government agencies to: identify the pipeline of proposed medium-longer-term digital investments ; analyse the cross-agency pipeline of investments to identify gaps and reuse opportunities and improve the visibility of future projects across government; prioritise investment proposals against the Government’s digital objectives; through the pipeline, deliver a cross government multi-year investment plan with a 3-to-5-year horizon to support the Government strategically plan what to invest in and when. What do agencies n ee d t o do? The prioritisation process relies on agencies engaging with the oversight function as early as possible when developing proposals that need to come through the budget process. This will help to identify a 3 year, 5 year and 10-year pipeline view. The pipeline can then reviewed by the oversight function with the respective agencies as part of the prioritisation process in order to provide advice to decision makers. What the oversight function could consider: The prioritisation process should include the assessment of investment proposals using agreed cross agency criteria. This could include elements such as: Enabling easier engagement with government for individuals Whether the proposed digital investment makes it easier for individuals to engage with government services. Investments are more likely to be supported where they include: support the ongoing modernisation from analogue to digital; those that are easier to use and are more accessible; the ability for individuals/citizens to engage in an end-to-end way centred around key interactions and/or life events; where they are consistent/standardised with under centric design; clearly demonstrate reduction of duplicative data/information or processes for individuals to increase the efficiency of the interaction(s). Enabling more efficient engagement with government for businesses Where the proposed digital investment is likely to support broader businesses, industry and non-government entities to be more efficient and productive through easier and more effective access to services via the (proposed) digital asset. This could be reflected with: the transition from analogue to digital; solutions that make it faster and easier for businesses to engage with government; the removal of duplicative processes and interactions for businesses; increasing accessibility of government to a wider cross section of society; new opportunities for business to contribute more and innovatively; reduction in the costs of compliance and administrative burden (i.e. red tape) on businesses. Improving government productivity Whether the proposed digital investment improves the overall productivity and/or efficiency of government. This could be reflected with: quantifiable value or productivity improvements for digital efficacy that offsets implementation costs particularly where it is cross government; the re-use of existing digital capabilities from across government; supports interoperability with digital capabilities from across government; This may include specific common or shared capability approaches; new digital capabilities that could be provided for cross agency sourcing, shared capability, or high potential future re-use. Enabling the modernisation of government Whether the proposed digital investment further enables the government to continue modernisation in the digital age in a flexible manner that takes advantage of emerging digital opportunities and potential challenges. This modernisation may also include the decommissioning of legacy platforms or services where this offers transformational and/or risk reduction opportunities. Investments can be reviewed against cross government digital, data, cyber security strategies, as well as broader digital economy direction. Where the investment uses and/or supports priority re-useable cross government capabilities. Where the investment supports government use of emerging digital technology including Industry 4.0 capabilities. Ensuring government systems are secure Whether the proposed digital investment enhances the security of government digital and data resources or mitigates risks that would make government vulnerable. Investments may be encouraged that contribute to the protection of networks, enhance cyber security and incident response capability, and contribute to the management of government security risks. Improving government reputation Whether the proposed digital investment supports or enhances the reputation of the government, including the likes of privacy and security, as well as outcomes such as trust and confidence. Investments in this category could directly strengthen the confidentiality, integrity, or availability of data and the digital systems they utilise. This could be more broadly reflected as increasing the underlying resilience of government. Decision phase The decision phase (3) of the Framework is designed to validate that digital investment proposals being considered are sound and meet government standards. Decision makers should be provided good information on the investment proposed, a cross agency perspective, and the evidence base to make confident decisions. What happens at this phase? The oversight function works with government agencies on digital investment proposals and reviews them against cross government digital policies, best practices and standards to ensure they are aligned strategically with the government’s stated objectives. The oversight function provides feedback to the proposing agency on any actions required to better align the investment and make it more generally sound. The oversight function will also provide advice and recommendations to the decision makers as to whether this should support the proposal. What do agencies need to do? Agencies need to engage with the oversight function oversight function as early as possible when developing a digital investment proposal for the government's consideration. Agencies need to provide the oversight function with evidence the proposal seeking funding aligns with cross government digital strategies, policies and standards, and that the proposed initiative can be successfully delivered. Additional evidence to support a new digital investment proposal could include the following: Business cases; Technical details – design and architecture; Risk management plans; Sourcing strategy and procurement plans; Assurance plan; Benefits management plan. What the oversight function will be doing The function providing oversight of the Framework will need to work with the government agencies to assess proposals against-government digital policies and standards. This ensures that the proposals are sound, evidence-based and will achieve stated benefits. The oversight function should also consider assisting proposing agencies in developing adequate assurance plans. Digital policies and standards The oversight function will usually have direct and/or ancillary policy responsibility for a range of digital domains. The kinds of policies and standards that could be used to assess the proposed investment could include: Digital service standard - A set of best practice principles to help agencies design and build digital services that are simple, clear and support the needs of users. By following a Digital service standard, agencies can make sure digital services provide public value. Digital re-use policy - The direction that agencies must consider how the proposed investment supports reuse of the services or tools by the agency and/or cross agencies, that the proposed investment is designed and build for reuse from the outset, and that the agency is actively enabling other agencies to reuse the asset. Digital sourcing policy - Guidance for agencies that follows principles including: being user-centred and usability; allowing for innovation by outlining business needs rather than a prescriptive way to promote discovery and innovation; early engagement and wide consultation of stakeholders; considering whole-of-life costs rather than just initial costs requiring new funding; and aligning with cross government requirements to ensure that digital investments deliver outcomes at lowest cost and effort. Secure cloud strategy - the cross government digital policies and standards that the DTA uses to specifically assess whether a digital investment proposal adequately considers the risks and issues with cloud-based solutions and follows country specific policies (such as data sovereignty, and cloud hosting requirements etc). Cyber security policy - the cross-government security policies and standards used to assess whether a digital investment proposal is robust and secure. An assurance framework – Guides work to provide assurance over the delivery of digital investments so that they: are well planned; fit for purpose; support decision making by Senior Responsible Officials (SROs) and porting delivery; support escalation processes to help minimise risk of not delivering benefits; and provide a flow of good information on the status of major investments to senior decision makers overseeing the digital investment portfolio. Benefits Management Policy – This should define how benefits will be managed across the digital portfolio. The policy supports agencies understand the requirements to successfully deliver the outcomes sought and the oversight and reporting required. strategic Prioristisation Decision assuranc Assurance phase The assurance phase (4) of the Framework provides assurance to decision makers that investments will deliver expected benefits. What happens at this phase? During this phase, the oversight function will provide decision makers and key stakeholders confidence that the assurance arrangements are adequate. Why is this important? The purpose of this phase is to ensure assurance is effectively undertaken to support the implementation of investments. In this phase, agencies will be supported to: activate the assurance arrangements identified during the decision phase; support targeted and assurance, with the use of assurance information to improve the quality of decisions by officials and governance boards; maximise the value of assurance in supporting successful delivery, including through ensuring agreed recommendations are implemented; apply clear escalation protocols which support decisive early action to recover investments at higher risk of not delivering expected benefits; provide reporting major investments with supporting analysis for the decision makers responsible for the digital investment portfolio. What do agencies need to do? Agencies need to ensure that they can meet the requirements for good practice assurance planning. There may be specific government direction and guidance around assurance. The nature, scale, and risks of the investment may require the agency to undertake additional activities during the operational phases such as regular updates to the assurance plan, getting independent assurance reviews and including the oversight function on governance committees. What the oversight function will do Once an in-scope investment is agreed by the government, the oversight function begins monitoring the implementation of assurance arrangements and verifying that minimum requirements continue to be met. Sourcing phase The Sourcing phase (5) of the Framework ensures the government gets ‘value for money’ digital procurement arrangements. The oversight function may also be responsible for cross government digital procurement. In some jurisdictions the government may coordinate cross agency procurement functions/panels. These functions can streamline the procurement process for agencies and save time and effort by providing standard contracts with lower costs and better offerings. Where the oversight function does not coordinate cross agency procurement, the onus will be upon the proposing agency to show how its sourcing plan supports cross agency objectives. Operations phase Regular data collection will provide intelligence on the size, health and maturity of the Government’s digital investments. This process also allows for the long-term progress against the government’s digital transformation to be tracked over time. This includes collection of information relating to: Adoption of emerging technology. Reuse and shared capabilities. Project delivery status and confidence Capability allocation (such as staffing levels and use of third party resources). Insights from this data supports the oversight function in its ongoing role with digital projects under assurance. Insights from data collection will inform best practice approaches in the future delivery of digital assets. operations Sourcing

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Governments will use different assurance methodologies at the All-of-Government level to provide confidence across the overall government digital portfolio. There are, however, some core components that should be included. The following is an adaption of a model All-of-Government assurance Framework that could be used as a base to guide a government developing a new or refreshed assurance framework. All-of-Government assurance framework for digital investments Governments will use different assurance methodologies at the All-of-Government level to provide confidence across the overall government digital portfolio. There are, however, some core components that should be included. The following is an adaption of a model All-of-Government assurance Framework that could be used as a base to guide a government developing a new or refreshed assurance framework. An All-of-Government Assurance Framework’s purpose is to maximise the likelihood of the successful delivery of digital investments within government agencies. The All-of-Government framework should aim to: Enable the government to confidently invest in digital capabilities that support its All-of-Government digital strategy and achieve its desired outcomes; Support well planned and fit for purpose assurance for the digital investments within scope of the Framework; Enable decision makers including Senior Responsible Owners (SRO) and governance Boards to make quality decisions based upon good information; Maximise the value of assurance processes in supporting service delivery , including through agreed time bound recommendations; Provide escalation processes that help agencies take action early to recover investments at high risk of not delivering expected benefits; Support a good flow of data and information on the condition of major investments for the Public Finance and other oversight functions to support reporting and analysis for Ministers responsible for the investment portfolio; Not alter accountabilities for delivery which rests with the line agencies undertaking delivery. It is assumed that any government utilising this or similar assurance frameworks already have appropriate All-of-Government oversight functions in place. These may exist within the central government finance function or a distinct government digital entity with responsibility for oversight of the governments digital strategy. Why is an All-of-Government assurance important? Assurance supports the successful implementation of digital investments. If done well, assurance can support government agencies to: align their digital investments with an All-of-Government digital strategy; mobilise the assurance arrangements identified during the investment lifecycle and as outlined in the assurance plan for the investment; achieve planned, targeted and fit-for-purpose assurance, with appropriate use of assurance information to improve the quality of decisions by Senior Responsible Officials (SROs) and governance boards; maximise the value of assurance in supporting successful delivery, including through ensuring agreed recommendations; apply clear escalation protocols which support decisive early action to recover investments at higher risk of not delivering expected benefits provide reporting on the condition of major investments for central agencies, supporting analysis for Ministers, senior officials and other decision makers. There are four key steps required as part of the All-of-Government assurance framework for digital investments: Step 1 – Confirm the investments priority level Under the Assurance Framework, proposed investments should be assigned a priority level in order to categorise how strategically important, valuable and risky the investment is. The priority level of an investment is determined by an assessment against a number of factors, including the strategic significance of the investment to government, the agencies delivery track record, the availability of required skills and resources, and the maturity of the agency oversight arrangements. Step 2 – Plan for assurance Agencies should already be planning how they will undertake assurance over their investments. As part of this planning, agencies should be aware of the minimum assurance requirements applicable to the Priority level of the investment. Investments at the highest Priority level will be required to plan assurance at the highest level. The assurance plan agreed should be submitted to the oversight function for consideration by Ministers and/or senior officials and approval as part of the process. S tep 3 – Use assurance effectively during delivery The assurance process is not static and agencies need to continue assurance activities through the implementation phases. This means agencies should adhere to the approved assurance plan and meet ongoing reporting and engagement requirements. Step 4 – Follow the escalation protocols (if required) Digital investments frequently face challenges during the delivery phases and should receive additional oversight and support. Escalation protocols should be appropriate for the nature of the challenge and designed to be fundamentally enabling. This could include assistance from the oversight function in the development of remediation plans and undertaking independent reviews. Investment categories for assurance Digital investment needs to be assigned within one of the priority levels determined by the government digital investment oversight function. This will help to prioritise assurance activity on the most important investments. Conversely, it also helps reduce the burden of assurance required over lower risk investments. The priority level of an investment will need to be determined by the oversight function in consultation with the primary responsible agency for designated digital investments. The priority level should be determined during the planning stage of the investment lifecycle and before proposals are brought forward for an investment decision by Ministers. The priority level used should be agreed through a combination of a weighted score and the estimated total cost to implement the proposal. The weighted score could be calculated through an assessment conducted by the oversight function using defined factors to determine implementation risk, complexity, strategic importance, and the consequences of delivery failure. This assessment should be undertaken in consultation with the primary agency involved. The priority level assigned to the investment will determine the level of assurance activity required and escalation planning should significant risks emerge. Assurance for Priority 1 and 2 investments Assurance arrangements should follow good practice for assurance and meet the minimum requirements: assurance activities clearly outlined and with regard to key risks, milestones and decision points; assurance integrated into governance mechanisms; accountabilities clearly identified that are fit for purpose and able to be maintained for the investment. This will require regular review of the assurance plan. For Priority one investments, the plan should generally be reviewed at least every 6 months and Priority two at least once a year; arrangements are put in place to meet the assurance oversight requirements during delivery (including, for Priority one investments, including the oversight function as an observer on primary governance body); a proportionate budget for the assurance activity; plans for routine assessment of delivery confidence to be undertaken by independent expertise against the requirements set by the oversight function. For Priority one investments, this means undertaking delivery confidence assessments quarterly. For Priority two, this usually means having delivery confidence assessments every 6 months. Assurance for Priority 3 investments Assurance arrangements should follow good practice for assurance and meet the minimum requirements: demonstrate arrangements which align with good practice assurance requirements; have arrangements which are commensurate to the risk and complexity of the proposed investment and support decision-making. Principles for good assurance Digital investment regardless of the priority level should already be applying the basic principles when planning and delivering assurance. These principles will provide confidence that government digital investments will achieve their objectives. Leadership sponsorship of assurance It is critical that the leadership within agencies actively engage with assurance activities and encourage a culture of transparency and ongoing improvement. Leadership should see assurance as a means to receive constructive advice that will increase the likelihood of success for their digital investments. It means there should be: clear accountability for achieving and maintaining fit for purpose assurance activity that is promoted as essential for successful investment delivery; transparency displayed by responsible senior officials and the promotion of a culture that welcomes constructive challenge; implementation of agreed recommendations and subsequent monitoring so that escalation occurs when agreed timeframes are not kept; senior responsible officials and governance committee/s engaging with assurance outcomes and processes to ensure they remain fit for purpose during implementation. Intentional planning for assurance Ensuing there is sound preparation and maintenance of appropriate assurance plans. This means there should be: sound formal planning for assurance, with active monitoring to support iteration of the plan during delivery and when the risk context changes; adequate budget and resources for assurance activities are reflected in plans and the Business Case; coordination of all sources of assurance to avoid duplication to ensure the focus of assurance is on the most important areas; assurance activity based upon the lessons learned from previous, similar investments; clear roles and responsibilities for assurance with governance mechanisms and confirmation of specific roles (such as the Senior Responsible Official). Enable good decision making Assurance should be an enabler that uses good information to support sound timely decisions. This means there should be: clear and agreed investment outcomes and expected benefits and assessments of delivery confidence; decisions points around key milestones; clear assurance information that supports informed decision-making using consistent definitions and standards; sound and well-run governance mechanisms so that oversight functions that have the right level of access to transparent assurance activity and can easily determine where to focus escalations. Sharp focus on risk and outcomes Assurance activities should have a sharp focus on assessing the key risks to delivery, and the outcomes being sought. This means there should be: fit for purpose assurance activities that are mapped to key risks inhibiting the realisation of investment goals; forward looking, proactive mindset to assurance centred around supporting the investment maintain delivery confidence. good support to governance committees and the Senior Responsible officials to help them identity high priority risks and prioritise their efforts accordingly. Expert-led and independent Assurance activities needs to be supported by independent expert reviewers . Ideally, the reviewers should have experience with digital investments of a similar scale and complexity. This means that there should be: adequate understanding of assurance activities required so that the expertise of the reviewers matches and that they have the necessary skills and experience; transparency around any possible conflicts of interest so that they can be managed, and the governance mechanisms and Senior Responsible Official are provided with objective and independent advice; access the right people and resources required and the evidence base for their assessments can be validated; reporting standards where required by the oversight function. This guidance can be used in conjunction with other GJC recommendations around government digital investment.

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The basic steps to starting a government AI program Starting an AI program in Government The basic steps to starting a government AI program Key initial focus areas for a Government AI program Drafting an AI working program Establishing an AI working group – template guide Developing interim AI guidance Engaging with stakeholders Next steps Key initial focus areas for a government AI program Drafting an initial AI work program To ensure the government is capable of maximising the opportunities of AI and managing the risks. O utline priority short, medium, and long-term activities. Short-term Develop interim g uidance for government use of generative AI too ls Assess and expand upon the risk classification and assessment in the interim guidance. Develop approach on governance Develop an approach to AI governance that provide s a more consistent and fit for purpose model for agencies. Investigate feasibility of a policy for the responsible use of AI in government Investigate the feasibility of policy development that covers government-specific AI issues and the rules that guide the responsible use of AI in agencies. Medium -term Develop approach on risk management and guidance approach that would help agencies assess AI risk and apply appropriate mitigations. Develop a risk manage ment approach and provide guidance on how to use it. Develop policies relating to the responsible use of AI Develop a policy for the responsible use of AI in government if it is found to be feasible. Establish AI Proof of Concepts Drawing on the expertise of leading agencies already using AI, establish Proof of Concepts (PoC) and /or build on existing use cases across a range of use case categories. Develop technical approaches for rolling out AI tools in government Work with leading agencies to establish case studies for how various categories of technical use cases can be designed, developed and deployed in agencies. Develop approach on preparedness Work with relevant national security and intelligence agencies to prepare a series of patterns / processes for agencies to follow when relevant circumstances arise. Long-term Develop a Data and Digital Workforce Plan to address capability gaps Develop plan and ongoing monitoring and evaluation of government capabilities. Key messages for interim guidance for AI use Note that generative AI offers innovative opportunities for government Due to its rapid evolution and ease of access, there is an urgent need and growing demand for guidance Interim Government guidance for government agencies has been developed for users This is just the start and more guidance will be developed over the coming months Taking a principles-based approach for AI in government Ensure AI use cases are safe, responsible, and ethical Deploy AI responsibly Seek to be transparent and provide explainability Embed privacy and security Use human centred decision making Provide some tactical guidance for implementing the principles and note more will follow When using generative AI platforms, you should: only use your corporate credentials to sign up obtain approval before using review all generated content and consider links and files malicious until vetted report instances where you can’t apply the guidance Next Steps Begin work on the core areas: Governance Risk management Skills and capability Technical Preparedness

Langkawi is already an amazing destination but could be transformed into a national showcase for Malaysia. In our discussion report we note some observations and ideas about how Langkawi could take the next step in its ongoing evolution as a world class tourist destination Langkawi – opportunities for 2023 and beyond’ is an initial, high-level report designed to support Langkawi Island, Malaysia to continue building its reputation as an international tourist destination. February 2023 Introduction Langkawi is in the Northwest coast of Malaysia and part of a group of a99 islands. With its beautiful environment, retail, cuisine, and wide-ranging activities, Langkawi has long been a jewel in the crown of Malaysian tourist destinations. Langkawi has attracted millions of tourists and RM Billions of revenue over recent decades. It was granted Duty Free Zone status in 1987, and in 1990 the Langkawi Development Authority (LADA) was established. The ongoing development of the Island has been included in the national level Malaysia Plan (1991 – 1995) to support economic growth on the island. Langkawi was recognised by UNESCO as a Geopark in June 2007. Since then, Langkawi has evolved rapidly with significant investment in infrastructure to support ongoing development. As with most tourist centric economies world-wide, the 2020 COVID-19 pandemic had a devastating impact on Langkawi. A 2021 Department of Statistics Malaysia study estimated tourist arrivals dropped -83.4% and tourist receipts by -85.3% (to RM12.69 billion) in 2020 alone. This level of downturn has inevitably caused the closure of some businesses, lost or deferred investment, and detrimental economic conditions for the Langkawi community. While the downturn caused by COVID has been consistent with other international tourist destinations, the pandemic has also served to highlight opportunities for a fresh approach in Langkawi. Has Langkawi been too reliant upon particular categories of tourist? Have the tourist products and services become too narrow? Could the current strategy be limiting the appeal of Langkawi internationally? Is this limiting the opportunities for Langkawi and the resilience of the economy? This discussion paper posits that Langkawi could continue its evolution past the so-called ‘consolidation phase’ and into a new era of sustainable development. There is an opportunity for Langkawi to take a fresh approach and build a more resilient future. This could increase the breadth of tourist infrastructure and consequently broaden the positive economic and social impacts for Langkawi. "There is an opportunity for Langkawi to take a fresh approach and build a more resilient future." Strengthen ‘brand Langkawi’ Langkawi is a premier destination amongst many Malaysian tourist locations but this could be accentuated further. From an international tourist perspective, Langkawi is comparable to Indonesia’s Bali and Thailand’s Phuket. A January 2023 Al Jazerra report however recently noted how Malaysia was lagging behind both Indonesia and Thailand in the recovery from COVID. There could be lessons from both Bali and Phuket that could benefit Langkawi. By way of comparison, Bali is an island amongst the thousands within the Indonesia archipelago that has used its unique offerings to its advantage. Despite its relative size and resources, Bali is frequently ranked the number one destination within Indonesia for international tourism. Likewise, Phuket has also grown into one of Thailand’s most successful island destinations with an estimated 9 million plus visitors a year. Phuket continues to be seen as a flagship destination by the Thai government and in 2021 was granted priority status for the receipt of international tourists in the recovery from COVID. Bali, Phuket and Langkawi have similarities. All have distinct island cultures, natural beauty, and numerous tourist offerings. Bali has nurtured its standalone ‘brand’ as a relaxed, welcoming destination that is highly attractive to international tourists. Phuket has similarly evolved its distinct brand for Thailand. Langkawi too has historically developed unique offerings to distinguish its ‘brand’. In 1987 Langkawi acquired duty free status and utilized this as key lever to attract international tourism. The diversity of tourist offerings has also rapidly grown over time from a focus on natural environment to a wide variety of activities. Langkawi could consider undertaking a renewed international marketing campaign to build ‘brand Langkawi’. This campaign would focus upon on Langkawi as a distinct, standalone destination with Malaysia is only highlighted as a secondary, ancillary destination. Langkawi would still provide the unique ‘Malaysian’ offerings – but through a Langkawi lens. It is recommended that: A project is commissioned to rebrand Langkawi as a standalone international tourist destination with lessons drawn from other international destinations; This work could be undertaken by a coordinated local, regional and national level task force to ensure the appropriate resources are brought to bear and Langkawi is considered a strategic priority for Malaysian tourism; Subsequent marketing efforts could focus more on international social media, as well as mainstream media, and tourism sector marketing; The Langkawi re-branding exercise could be used as a case study for a period of time before other Malaysian destinations are considered. Increased national level support for Langkawi Langkawi’s continued evolution as a premier international tourist destination will require a concerted focus by all levels of government including at the national level. This may include funding and support, but most importantly ‘ownership’ as a national priority. While Langkawi has previously been the focus for national level planning, this heightened attention may expedite the ‘cut through’ required for a fresh approach. It is important to note that central government support for Langkawi has not been lacking in the post COVID recovery. Over the last few years a number of support packages have been provided. They have included tax and duty exemptions and deferments, special assistance grants, and other measures. The paper is not recommending these interventions are ineffective or cease. Instead, it proposes the re-imagination of how central government directly supports a strategic Malaysian destination such as Langkawi. It is recommended that: A central government led Langkawi task force is established made up of representatives of all levels of government (local, regional, central); Options for a new Langkawi development fund are developed to support the prioritized projects required to give effect to the refreshed approach; There is a renewed level of senior decision maker sponsorship and support for the taskforce at the national level. This should include decision makers with wider portfolios to allow for a fresh approach; The appropriate planning and policy support required is available to the task force to allow the rapid development of the planning, and policies required. This central government attention need not diminish the level of local input and the focus on sound long term outcomes. The right balance between central and local government needs to be struck. This, however, will require a high level of integration between the planning organizations involved at national, regional, and local levels. More direct international linkages D irect international links (aviation and maritime) with tourist destinations has a clear impact on the volume of tourists and local economies more generally. The establishment of additional international links with target populations will increase Langkawi’s accessibility to international tourists and provide new opportunities for the Island. These direct international links could be developed alongside the refreshed strategic focus on Langkawi. New marketing campaigns could highlight the accessibility of Langkawi as a standalone destination. The Increase in direct international links will also require accompanying logistics and infrastructure. An end-to-end approach should be considered that facilitates seamless transit for tourists from point of origin to Langkawi. This could include dedicated arrangements for tourists destined for Langkawi particularly where a direct is not possible (i.e. such as at Kuala Lumpur International Airport 2). It is recommended that: A rapid assessment report is undertaken of international air and maritime linkages with Langkawi with the identification of new routines, carriers and related logistics and infrastructure; Leadership be provided by a task force who are commissioned with developing options including funding, incentives and other support for new links; Sustainable travel options be promoted as a priority where possible; An end-to-end approach is taken that facilitates seamless transit for international tourists from origin to destination. This may require a separate review and recommendations; Conferences, summits, tradeshows and other means of marketing Langkawi are undertaken to the travel industry, logistics, and infrastructure providers. The enhancement of priority public locations While COVID-19 has caused inevitable deterioration of infrastructure in Langkawi, there is much that could be done to enhance key public locations in Langkawi. The initial focus should be upon public areas with the highest levels of tourist patronage. This could include locations such as Pentai Cenang, Kuah, and the areas with closest access to the beach or fore st. Enhancement projects could be undertaken in multiple stages over several years but will require expedited scheduling to minimize the disruptive impact. This may be where additional support from central government could be helpful and minimize local impediments. Targeted support packages could be offered to Langkawi businesses impacted as required. The design for enhancement could reflect a combination of contemporary international and local influences. Inspiration could be taken from other international locations with enduring tourist appeal. It is recommended that: Prominent landscaping projects be undertaken that include statement elements such as large palm trees, coconut trees, hedges, and other local flora. These could be planted in a uniform or non-uniform manner depending on design; The areas for tourists to sit down and enjoy the environment are increased; New boardwalks are created and existing ones extended along parts of popular beaches, particularly where restaurants, bars or other facilities are provided; More walkways are built between beaches, within the main business areas, and connected to longer nature walks. These walkways need to be well sign posted and/or with colors, lights to make it easy for tourists to navigate; Broken and uneven paving in public areas is replaced and improved; Lighting is used within the primary tourist areas and developed into a feature in its own right. This could include hanging lights, pavement and garden lights and bespoke art features using light. Renewable power sources such as solar should be used where possible; Street art, sculptures and other permanent creative expression could be commissioned. While this should include the distinct Langkawi style, consider attracting international artists to bring fresh ideas; The number of rubbish bins/trash cans in the main thoroughfares is increased to reduce litter and encourage a clean environment; Road design is reviewed in key locations such as Pentai Cenang. This could include considering options to widen pedestrian walkways, increase useable space for restaurants/bars, and lowering vehicle access where possible; The availability of good, free Wi-Fi is increased in public environments to enhance the utility of priority locations for both entertainment and business purposes; The number of good quality public toilets available for tourists is increased. These facilities could be made into unique architectural designs that merit tourist attention in their own right. Attract diverse international workforce Some international tourist destinations have been successful at attracting a diverse international workforce. This workforce can bring new international connections and vibrancy. As well as supplementing the local tourist workforce, a diverse workforce can bring fresh ideas, resources, and international interest. This can help build the diversity, breadth, and value of tourist service offerings. For Langkawi, this workforce could be both Malaysians with international experience and/or international individuals or companies with no previous connection to Malaysia or Langkawi. It is recommended that the international workforce could include: Artists who can develop products and services that draw upon local and international inspiration. These artists could be commissioned to support the reimagination of the built environment and support initiatives such as street art and the establishment of new businesses; Craft experts who could work with local businesses to develop fresh ideas and products that will appeal to international tourists; Commercial property architects and interior designers who could be commissioned to refresh key commercial spaces and bring a fresh, contemporary approach; Restauranteurs, café and bar owners who can bring quality service offerings. Some curation may be required within this category to ensure an appropriate mix of options and price ranges; Music and performance artists who could be encouraged to consider Langkawi as a destination within their itineraries; Boutique accommodation providers who could be supported to create new accommodation options drawing upon lessons learnt in other international destinations. International digital nomads While not directly supplementing the local tourist workforce, international digital nomads should also be considered within Langkawi’s refreshed tourist strategy. Digital nomads are well recognized as bringing enduring economic and other benefits to local economies and Langkawi is well placed to capitalize on this. Langkawi already has many of the attributes of locations that are attractive to digital nomads. This includes the generally low cost of living, safety, natural environment, and the ease with which the digital nomads can establish themselves. While all of the recommendations already noted in this report may enhance the attractiveness of Langkawi to international digital nomads, there are others that could be considered too. It is recommended that: Options for the establishment of dedicated remote workspace environments in Langkawi are developed; An initiative to generate awareness within the Langkawi business community of the opportunity from international digital nomads is commissioned; Targeted support packages for businesses supporting this niche are considered; Langkawi’s connectivity is reviewed and where required, investment is made for the provision of fast, reliable connectivity and Wi-Fi in public locations; A national level pilot program is undertaken to attract international digital nomads using Langkawi as a use case. This program could be a useful initiative for the Langkawi taskforce and used as a case study for other regions in Malaysia. Maximizing the benefit for the local community As with all tourism development it is crucial to consider the outcomes for the local community. Tourism should enhance the wellbeing of the communities it is nested within and not cause economic, social, or environmental harm. With regard to the specific recommendations in this report, local input and ownership will be crucial. It is recommended that: The creation of a standalone brand for Langkawi should include local expertise . This includes within the taskforce, working groups, and other means; New national level funding and support arrangements are made for Langkawi; Local views be included around the opportunities to leverage increased direct international flights so that wider benefits to infrastructure can be accrued ; Local expertise be included in the planning, design and creation of enhanced public locations within Langkawi; The views of the Langkawi community are included with regard to planning to supplement the workforce in Langkawi; Awareness, involvement and support are provided to the local community around the opp ortunity international digital nomads offer so that the community receive the long-term benefits. Summary Langkawi has the opportunity to reconsider its international tourist strategy and build a more diverse, dynamic, and resilient destination. This could improve the economic future of the Island as well as the broader well-being of the wider community. The key recommendations are: The creation of a standalone brand for Langkawi; Increased national level funding and support for Langkawi; Establishing more direct international connections with Langkawi; The enhancement of priority public locations; Diversify the profile of the tourist workforce in Langkawi; Attracting international digital nomads to Langkawi; Engaging local expertise in the development of all options of all new initiatives. ‘Langkawi – opportunities for 2023 and beyond’ is an initial, high- level report designed to support Langkawi Island, Malaysia to continue building its reputation as an international tourist destination. References and further, deeper analysis may be available upon request from George James Consulting. Please contact us via info@Georgejamesconsulting.com . HOME

China has a number of challenging risks to manage through 2023 and the immediate years. Key emergent risks include a significant downturn in the Chinese real estate market, ongoing tension and strategic rivalry with the United States, and tension within regional bi-lateral relationships. China: Risks to watch for 2023 and beyond Contents Introduction Downturn in the real estate sector in China Ongoing tension and strategic rivalry with the United States Regional relationships Systemic risks within China Things to watch through 2023 and beyond Summary “...we must... get ready to undergo the major tests of high winds and rough waves, and even perilous, stormy seas...” President Xi, Ji Ping – June 2023 intro Introduction Understanding the risks associated with the Chinese economy has become paramount for investors, businesses, governments, and other stakeholders. China's rise as a global economic powerhouse that impacts international markets in every sector and industry, necessitates comprehensive ongoing risk assessment. Conducting accurate economic ‘risk assessments’ on China is notoriously challenging however due to difficulties in obtaining reliable data, vested and politicised viewpoints, and the inherent complexities of the Chinese political economy. This abridged George James Consulting (GJC) report touches on a range of current and emerging risks to the Chinese economy that are worth watching through 2023 and beyond. It is recommended that this be used for informational purposes and that further research be undertaken as required on specific risk topics. downturn A significant downturn in the real estate sector in China The real estate sector in China has experienced a period of rapid growth over the last twenty years fueled by significant volumes of speculative investment. Millions of Chinese citizens have invested heavily in real estate as their primary source of household wealth. This arguably peaked around 2017 leaving major cities such as Beijing, Shanghai, Shenzhen, and Guangzhou with astronomical property prices. In 2017, and in response to the clear risks emerging in the real estate market, the Chinese government implemented a number of measures to cool the market. This included purchase restrictions, increased down payment requirements, and tighter lending practices. By early 2019, there were initial signs of slowing demand for property in China. This occurred against the backdrop of a general economic slowdown across China. The COVID-19 pandemic then emerged in 2020 resulting in the temporary halt in property transactions and construction activities across China. Real estate valuations began dropping and reporting surfaced about over leveraged Chinese households. It seemed evident that the Chinese real estate market had become overinflated and was slipping towards a bust cycle. According to the Nomura Group, as of June 2021, the Chinese property development sector had accumulated RMB 33.5 trillion (US$5.2 trillion) in debt . A significant milestone was news that Evergrande Group, one of China's largest property developers, was at risk of defaulting on its $300 billion of liabilities . The Evergrande case attracted considerable media attention and sparked fears of wider contagion in the Chinese real estate market and Chinese economy. Other companies such as Sinic, E-House, Kaisa Group, Central China Real Estate, Xinyuan, Shimao, R & F Properties, China Vanke were also found to be alarmingly exposed and subsequently lost between 30 – 90% of their share value . Other cases such the Fantasia Holdings Group highlighted the existence of large private bond markets in China circumnavigating regulation . In 2022, the Chinese government reiterated its ongoing concerns with the sector and the need for further support and regulation . This included the People's Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission’s (CBIRC) notice to support failing property companies and strengthened borrowing requirements to reduce excessive debt and speculation. Despite these efforts to rescue the sector and achieve a ‘soft landing’, there appears to be increasing recognition within the Chinese government of the inevitably of defaults and consequently the need to ‘manage the risks’ rather than achieve ‘stability’. It is anticipated that the Chinese government will revisit the issue in 2023 and introduce more support packages for the Chinese real estate industry. That said, it also seems likely that there will be a greater level of tolerance for the failure of some real estate developers. In real terms may mean the complete collapse of some developers in the broader attempt to create a more sustainable Chinese real estate sector going forward. Ongoing tension and strategic rivalry with the United States The relationship between the worlds two largest economies, the United States and China is crucial for both nations. The current tensions and increasing geo-political rivalry between China and the US is hence an important indicator for the Chinese economy. This relationship could also be described as a ‘key risk’ for the Chinese economy and should be carefully watched. A high level summary of the US/China relationship over the last twenty years is as follows: 2003-2008: Under the Presidency of George W. Bush and Chinese President Hu Jintao. The Bush administration pursued a policy of engagement with China, seeking to encourage China's integration into the global economic and multilateral political systems. Bilateral trade between China and the US expanded significantly during this period despite US criticism of China for undervaluing its currency. 2009-2016: Under President Barack Obama and Hu Jintao (until 2013) and incoming President Xi Jinping (from 2013). The Obama administration implemented a policy of ‘rebalancing’ towards the Asia-Pacific, with a focus on strengthening alliances and partnerships in the region. Bilateral trade between the countries continued growing, albeit with the US running a significant trade deficit with China. The US continued to press China to allow the Renminbi to appreciate. 2017-2021: Under President Donald Trump (until January 2021), President Joe Biden (from January 2021) and Chinese President Xi Jinping. President Trump adopted a confrontational approach towards China which led to restrictions on Chinese technology companies (such as Huawei), and China being identified publicly as a ‘strategic competitor’. Trade disputes between the countrys escalated with both countries imposing tit for tat tariffs on each other's goods. The US argued that it was seeking to address the trade imbalance by demanding China reduce its trade surplus. The valuation of Renminbi continued to frustrate the US with although it never formally identified China as a ‘currency manipulator’. Military and national security tensions grew during this period. Taiwan continued to surface as a source of tension between the nations with the US providing support for the island nation mainland China claims as part of its ‘one China policy’. The US increased arms sales to Taiwan, fostered greater regional support for Taiwan, and leading political figures such as Nancy Pelosi visited Taiwan. The US also led increasingly frequent freedom of navigation maritime patrols through disputed international waters such as the South China Seas and associated air patrols. Tension and incidents (‘near misses’) over disputed airspace increased with each side blaming the other for recklessness. Both sides have also apparently chosen to publicize these incidents for public awareness. The emergence of the COVID-19 global pandemic added to these strained relations with the Trump administration directly blaming China for its handling of the outbreak. The origins of the virus remain disputed in the public domain as do China’s COVID management policies. 2021-2023: The US-China relationship has remained tense under the Biden administration. Few of the policies introduced under the Trump administration have changed and numerous other issues continue to be contentious including: human rights, China's treatment of Uighur Muslims, cybersecurity, and the ongoing territorial disputes in the South China Sea. The relationship ‘with no limits’ between China and Russia is also a notable drag on the relationship as are ongoing issues such as are intellectual property theft, anti-competitive behaviour and market access. US Risks emerging from deteriorating bi-lateral relationships China's evolution as a regional power is closely linked with its rapid economic growth. As it has industrialized, China’s ambition has also risen and it has been able to assert its regional agenda with increasing boldness. China’s investment in its military capabilities and shift away from a ‘soft power’ model has caused inevitable nervousness amongst China’s neighbours and across the wider region. There are growing risks that specific bi-lateral and/or regional relationships could deteriorate to an extent that significantly harms Chinas interests. In the 20th century, Chinese leader Deng Xiaoping is credited with the early steps in the late 1970’s to make China more externally oriented. Deng initiated economic reforms to open China up to the foreign investment and trade necessary to enable China's rapid economic success. President Jiang Zemin, continued this approach by emphasising "peaceful development" and enhancing relations with China’s Asian neighbours. In the 2000s President Hu Jintao promulgated the idea of a "harmonious world" through cooperation and partnerships via regional stability and economic integration. Current Chinese President, Xi Jinping has maintained China's outward orientation albeit with a stronger nationalist tone focused on strengthening its regional influence. The Belt and Road Initiative (BRI) launched in 2013 includes explicit goals to enhance economic cooperation across Asia and other parts of the world. BRI has also provided China a framework for deepening trade relationships in the region, undertaking infrastructure projects that project Chinas interests. Multilateral organisations such as ASEAN (Association of Southeast Asian Nations) and the EU have been a high priority for China because of their economic and political influence. Relationships with other nations have been carefully curated based upon Chinas economic and developmental goals. China has undertaken significant infrastructure projects globally as a means to build strategic partnerships, gain access to resources, and enable future Chinese expansion. regional Despite sustained initiatives over decades, significant foreign aid, and efforts to use soft power, Chinese relationships with its immediate neighbours and key bi-lateral partners have had mixed results. On one hand, China has consolidated its status in the Asian region and built solid trade relationships across the world. China has been able to achieve many of its developmental goals and establish itself as major power. Conversely however, China has aggravated a number of its neighbours resulting in regional tension, decreasing levels of trust, and the rapid build up of military and regional alliances to counter China’s influence. The further deterioration of some of these relationships could provide problematic to China and create additional risks to its economy. The following are some of the key relationships that could significantly Chinese impact interests. China and Taiwan The relationship between China and Taiwan is at the core of how China views itself and provides a lens for other bi-lateral relationships. The two nations are and defined by their shared history with China viewing Taiwan and an inalienable part of China (‘one China’) and Taiwan asserting its democratic sovereignty. Despite the fact the nations face each other with essentially a war footing across the Taiwan Straits, the relationship between China and Taiwan had been incrementally improving over the years. This has been on the back of significant two way trade and investment activity. Mainland China has subsequently became Taiwan's largest trading partner and many Taiwanese businesses have investments in China. Despite this warming of the relationship, mainland China has assiduously followed a policy of diplomatically isolating Taiwan in an effort to suppress Taiwan gaining international recognition. China exerts significant pressure on other countries to adhere to the "One China" policy and decline Taiwanese efforts for recognition. China’s apparently long standing patience with Taiwan however, is primarily attributed to China’s need to modernize its military and US protection of Taiwan rather than an inherent benevolence. The political environment in Taiwan however has also has been somewhat of a pendulum causing China to continually reappraise its strategy. On one side, the Taiwanese Kuomintang party (KMT) was increasingly softening its stance over time towards China to an extent that seemingly reassured Beijing that ‘unification’ was simply a matter of time. The Democratic Progressive Party (DPP) however, has conversely become increasingly forthright about Taiwanese rights and independence and alarms Beijing. This in shift in Taiwan likely reflecting an increasingly negative sentiment from the Taiwanese public about the Chinese ‘one country, two systems’ and repressive mainland government policies. China’s aggression towards Taiwan could hence be closely associated with whether the KMT or DPP are in power and the degree to which the US government signals its support for the Island nation. The 2022 visit to Taiwan by US speaker of the House Nancy Pelosi’s was a recent example of US action viewed as a provocation by the Chinese side that necessitated a strong response. These conditions have led to rapidly deteriorating diplomatic and military relations between China and Taiwan in 2023. Chinese military exercises have occurred with increasing frequency near Taiwan's air and maritime zones in the Taiwan Straits, as well as significant numbers of cyber attacks. US and allied countries have consequently also increased their military presence around Taiwan raising the likelihood of serious incidents or miscalculations by China, Taiwan or a number of allied countries. China and India Economic and political relations between China and India have expanded significantly over the last twenty years. Bilateral trade in particular grew rapidly with China becoming one of India's largest trading partners with bilateral trade crossing US $100 billion in 2022. India's trade deficit with China however also grew to around US $75 billion and has been a source of consistent concern from the Indian side. India has consequently sought greater market access in China for its goods and services. An area of contention in the relationship has been the presence of Chinese technology companies in the Indian market. Chinese companies including Huawei and Xiaomi have become prominent in India, however there have been growing concerns about the links between such companies and the Chinese government. In response, India has sought to regulate Chinese technology firms, impose restrictions in government projects, and banning ‘high risk’ Chinese apps. Close scrutiny of these companies by India has also led to penalties such as the freezing of US$670 million of Xiaomi funds. China’s relationship with other regional nations such as Pakistan have also been a source of tension for India. In particular, India has expressed concerns over the Belt and Road Initiative between China-Pakistan to build the Economic Corridor infrastructure project. Indian sensitivity relates to the projects location in Pakistan-administered Kashmir and the miliary and economic impacts it could have. It is however, the longstanding territorial disputes in the regions of Ladakh and Arunachal Pradesh that have caused the most tension between China and India. This conflict has been primarily focused around the border areas in the Galwan Valley area (North Eastern Indian/South Western China). The most significant escalation occurred near the so called ‘line of actual control’ in a June 2020 incident where twenty Indian soldiers were killed and four Chinese soldiers. Both countries accused each other of violating territorial integrity and it led to increasing levels of military deployment and strained relations. Further incidents occurred in 2021 and 2022. Overall, it could be argued that China has more to lose should its relationship with India deteriorate further. Following the border tensions in 2020, there was a discernible impact on Chinese companies in India such as Xiaomi who suffered a significant decline in market share. Broader concerns about China have already led to a shift of some manufacturing out of China and some of this could be in India’s favour. Finally, the international support for a more assertive India in the region (as a counter balance to China) is likely to have a negative impact on medium to long term Chinese growth. China and the European Union (EU) China and the EU have maintained a complex and multifaceted relationship over the last twenty years. Trade between China and the European bloc has grown significantly to make the EU China's largest trading partner, and China the EU's second-largest trading partner (after the US). This amounted to around $US 60 billion in 2022 with a trade deficit in China’s favour of around $US 30 billion. Commodities traded are wide ranging including machinery, electronics, vehicles, chemicals, and textiles. Despite the strong economic ties a number of areas of tension have emerged in the China-EU relationship. This includes EU unease about limited market access for European companies in China, intellectual property rights protection, piracy, counterfeiting, unfair trade practices, and investment restrictions. The trade imbalance is an ongoing source of contention. The EU has also become concerned and cautious at a strategic level about China's increasing global influence. This has included reservations with Chinese technology services on security grounds, and Chinese infrastructure investments and the long term challenges this poses to EU influence (economically and geo-politically). This has been borne out with the case of Huawei and ZTE where the EU Commission have now strongly recommended member nations ‘restrict the role of Chinese 5G vendors Huawei and ZTE in Europe’. The EU have also developed policies preventing European companies from making sensitive technologies such as supercomputers, artificial intelligence and advanced microchips in China. The EU have consistently stressed its view of human Rights and the rule of law with China. This includes the treatment of ethnic minorities, freedom of speech, and political freedoms. Most recently, the EU has voiced its disappointment with China’s tacit support for Russia and failure to directly criticise the Russian invasion of Ukraine. Overall, the relationship with the EU looks to be at an inflection point that appears more negative than positive for China. Despite the EU’s reliance upon China for trade, China arguably has more to lose overall from a deterioration in the relationship. The EU have likely noted how US trade disputes have evolved and may consider it the right time to revisit their own concerns and trade imbalance with China. The EU might also see increasing need to more actively shape global technology development and embed democratic and environmental values internationally. China and Japan China and Japan have a long and complicated relationship that includes particularly dark historical episodes in the 20th century. These provide a backdrop for the two regional powers intertwined cultures and economies that are the second (China) and third (Japan) largest in the world. China is Japan’s biggest trading partner, with the total trade between the two having grown over 100 times since 1972 to $US 265 billion in 2022. To date in 2023, China exported $US 13.9B and imported $US 13.2B from Japan giving China a favourable balance of trade. Despite its strong economic inter-linkages, China and Japans political relationship is frequently described as ‘cold’. This could be attributed to a number of factors including historical tensions (particularly World War II) and the Chinese perception of insufficient Japanese remorse or memory of this (i.e. education system); rising nationalism and populism in both countries; economic rivalry within which primarily Japan has had concern with issues such as trade imbalances, market access, and insufficient respect for intellectual property rights. Japan and China also have territorial disputes that raise tensions. This particularly relates to the sovereignty of Islands in the East China Sea, known as the Senkaku or Diaoyu Islands. Both countries claim ownership and this has resulted in ongoing tension and occasional maritime confrontations. Chinese claims over the South China sea and its efforts to secure it through the establishment of island bases, maritime and air patrols has alarmed Japan. Japans political and military alliances are conversely a source of concern for China. Japan has a longstanding security alliance with the United States and this has resulted in the deployment of US missiles, troops and maritime capabilities. Japan has also formed alliances with other nations in the region including India, Australia, India and other South East Asian nations. Most significantly, however has been Japans assertion of support for Taiwan and guarantee of its security. The alliance that Japan has with the US has also had impact in the technological sector. In March 2023, Japan indicated that it would tighten rules relating to the exports of 23 types of advanced semiconductor manufacturing equipment to China. This move was made following US and other nations taking similar measures and is seen by China as an attempt to underline Chinese leadership in emerging technological areas. This is not this first time Japan has aligned with a US assessment of Chinese technology with Japan ceasing procuring of equipment from Huawei and ZTE in 2018. China and Vietnam Vietnam and China have a generally cooperative relationship that has seen increasing competition, and occasionally tense moments. While both countries have a communist government, historical and cultural differences still shape the tone of the relationship. China is Vietnam's largest trading partner, and the economic ties between the two countries is significant with Chinese Exports to Vietnam rising to US$146.96 Billion in 2022. Trade between China and Vietnam includes commodities such as electronics, textiles, machinery, agricultural products, and raw materials. While China and Vietnam have a largely ‘steady’ relationship, Vietnam opposes China's territorial claims in the South China Sea, which directly overlap with Vietnam's. This has led to maritime disputes and heightened tensions between the two countries. Underlying the claims are competing interests around the exploitation of natural resources, such as oil and gas reserves, in the South China Sea. Vietnam has also increasingly received attention and investment from foreign companies seeking to diversify their supply chains beyond China. Examples include Nike, Samsung, Canon, Apple and Foxconn. This interest in Vietnam has been the result of a number of factors including labour costs in China, US-China trade disputes, China’s COVID response, and challenging Chinese policies being applied to foreign companies. Chinese firms are also investing in Vietnam in pursuit of easier access to international manufacturing and trading relationships outside China. China and the Philippines The relationship between China and the Philippines has been generally positive over recent years. Trade between China and the Philippines has grown significantly with China now the Philippines' largest trading partners with bilateral trade reaching around US$87.725 billion. Key commodities traded include electronics, textiles, apparel, machinery, chemicals and food products. Like other South East Asian nations, China's territorial claims in the South China Sea have been an enduring source of tension with the Philippines. This has resulted in a number of maritime incidents and ongoing legal disputes. Conflict has been centred around the Scarborough Shoal that China took control of in 2012 and subsequently stationed maritime capabilities and undertook extensive construction activities. Other disputes include the Second Thomas Shoal, also known as the Ayungin Shoal that is currently controlled by the Philippines military. The election of a new President in the Phiilippines , Ferdinand ‘Bongbong’ Marcos has seen a shift in relations between the US and the Philippines with indications that the Philippines will pursue a stronger approach to China. While clear about the need for a balanced approach, Marcos has stressed his concerns about China and the necessity for stronger military ties with the US. This was recently demonstrated with the Balikatan war games which involved over US and Filipino 17,000 troops. The Philippines government have also made it clear that they will publicise Chinese activities in the area through the media to raise awareness. China and South Korea At a high level, Chinas relationship with South Korea has been largely focused on its strong bi-lateral trade. China is Koreas main trading partner within an economy where exports contribute 70% of GDP. Koreas high tech industry is particularly connected to China with significant Korean investment and sales occurring within China. An example is the South Korean chipmakers. Samsung and SK Hynix who have invested more than $30 billion building fabrication facilities in China. Current Korean President Yoon Suk Yeol has largely followed the decades long Korean stance towards China. This could be described as being cautious and the maintenance of status quo. That said, Yoon has concerned Beijing by seeking to strengthen South Korean ties with NATO, re-build its relations with Japan, and strengthen its cooperation with the US in deterring North Korea. The deployment of the Terminal High Altitude Area Defense (THAAD) missile defense system in South Korea by the US was not well received by China who saw it as a security threat. The risks to the relationship between South Korea and China significantly relate to North Korea and whether North Korean military recklessness causes an incident and/or conflict with South Korea. A serious incident arising from North Korea could drive South Korea closer to the US and Japan and strengthen regional anti-China alliances. China’s influence and ability to constrain North Korea hence remains an important card it can play to retain South Korea in its orbit. South Korea recognition of its need to reduce its reliance on China and diversify its trading partners are also noteworthy risks for China. This is because of the significance of Korean investment in China, technological influence, and potential to contribute to further isolation of China in the future. China and Indonesia China and Indonesia have a steady relationship based upon strong trade and the significant Chinese investment in Indonesia including the Belt and Road Initiative (BRI). The key challenge with the relationship between China and Indonesia is around maritime disputes and China's territorial claims in the South China Sea. This relates particularly to the resource-rich Natuna Islands, which are within Indonesia's Exclusive Economic Zone. Indonesia has taken steps to rapidly militarize the islands over the last ten years in an effort to deter further Chinese activities. There is risk that the deterioration in US and regional relations with China could negatively impact sentiment towards China and its investment activity in Indonesia. Other issues such as the Chinese treatment of the Muslim minority Uighurs could also attract wider condemnation and a deterioration in the Indonesian view of China. China and Germany As with the EU more generally, trade between China and Germany has experienced substantial growth over recent decades. China become Germany's largest trading partner outside the EU with exports of US$113.38 Billion during 2022. Germany is China's most important trading partner within the EU and currently has a trade deficit of $US 84.3 billion euros. Chinese exports include electronics, machinery, and textiles to Germany, and automobiles, machinery, chemical products, and electrical equipment goes the other way. While the economic ties between China and Germany have been mutually beneficial there has been concern on the German side around fair market access. This primarily relates to intellectual property rights, restrictions on German investment in China, and forced technology transfer. The relationship between Germany and China is nested within the wider EU relationship and the war in Ukraine has accelerated receptiveness for a more assertive Germany on the global stage. In 2022, German Chancellor Olaf Scholz declared that Germany would need to undertake a ‘Zeitenwende’ or turning point in its role [in the world]. In 2023, Germany announced the provision of US $3 billion to Ukraine including tanks, anti-aircraft systems and ammunition. The question remains the extent to which Germany takes up this more prominent leadership and ‘stabilizing’ global role and with it a shift away from primarily a trade led approach. This could mean a Germany that is less ‘neutral’ with China and adds further weight to a Western perspective. China and Australia While Australia is not one of China’s immediate neighbours and is one of China’s smaller trading partners – the relationship is in some ways a useful 'case study' for China. Australia is China's fifth biggest source of imports and 10th largest export market. Key Australian exports to China include iron ore, coal, liquefied natural gas (LNG), and agricultural commodities. There is no doubt that Chinese and Australian relations have become increasingly challenging over the last twenty years. Australia's long standing alliances with the US, Japan and other South East Asian countries has long put it in the cross hairs of Chinese foreign policy objectives. Australia was one of the first countries to question China’s COVID response and Australia has raised human rights issues in China for a number of years. Other issues have included cybersecurity, the South China seas and freedom of navigation, and allegations of Chinese foreign interference. The China - Australia relationship provides an indication of the Chinese view of the region and the extent it does and does not separate its economic and political objectives. Systemic risks within China ‘Systemic risks’ are those factors, conditions, or emerging challenges that may or may not be a distinct risk in and of themselves, but can initiate, contribute, or compound other risks. Many of these risks already exist and in some cases appear to be managed. Others could emerge rapidly and potentially cause a cascade of systemic risk and possibly a failure. The systemic risks discussed can be broadly broken down into the categories of: economic, social (sociological), political (government), environmental, and technological. Many of these risks are not unique to China but may have distinct characteristics within the Chinese context and evolve differently depending upon how they are managed. The Chinese political system is a key determinant in the management of each risk and has advantages and disadvantages. It is noted that each systemic risk is highly complicated and warrants its own deeper focused research. This article is intended as an introduction to those systemic risks that may be worth tracking as part of a wider effort to understand China’s overall risk profile. Systemic Systemic economic risks The rapid development of the Chinese economy has led to elements of imbalance that may create systemic risks. Contributing factors can be summarised as high indebtedness, overcapacity, oversupply, and dependence upon new investment to drive growth. The government has implemented measures to address these risks including regulation, structural reform, and deleveraging the economy. The Chinese financial sector has been a persistent area of weakness. Despite government efforts to enhance the resilience of the sector, China has had faced persistent challenges related to shadow banking, non-performing loans, and over inflated assets. The government has consequently strengthened financial regulation and supervision and established the Financial Stability and Development Committee. While efforts to reduce the vulnerability of the major Chinese banks has made progress, the risks within the wider banking system remains. Concentrated exposure to the same asset types and high levels of institutional interconnectivity has pushed up the risks. The implication is that even indirect losses from a smaller financial institution could create contagion in the wider system from common exposure (such as to the mortgage market). So while the stability of the major Chinese banks receives media attention the viability of the smaller Chinese banks should also be noted. The viability of the financial institutions has been wrought by the ‘easy credit’ they have provided over recent decades to enable Chinas rapid economic growth. While this has been essential for business expansion it has also created concerning debt levels, credit dependency, and financial instability. In response, the Chinese government has tightened credit conditions and measures to control excessive borrowing. These interventions however remain challenging to balance with the flexible needs of small and medium-sized enterprises without jeopardising their viability. The cascade effects of this easy credit can be seen within the debt sitting within government, private sector, and households. Real estate and infrastructure over development by local and regional government has emerged due to central government policy targets, easy credit, and the increased demand for real estate from internal migration. Land sales and development have resulted in some local and regional adminstrations becoming debt laden and reliant upon an unsustainable growth model. Household debt levels have also risen rapidly as a consequence of this permissive environment. This included the accessibility of credit, the attractiveness of real estate as an asset, rising consumption levels, and general confidence in the Chinese economy. This new level of household spending propelled millions of Chinese into a growing middle class that brought with it rising confidence and expectations. The recently reduced spending power of this section of Chinese society and their pessimism about the economy will inevitably have a dampening impact. Capital flight from China has been an issue that Beijing has been concerned with for a number of decades. It is estimated $3.8 trillion capital left China over the mid 1990’s. In response China has introduced strict oversight and capital controls to limit the outflow of funds, currency conversions, overseas investments, and foreign exchange transactions. China has also imposed stringent regulations on foreign exchange transactions to restrict the conversion of the Chinese yuan into foreign currencies. Despite these measures, there is a risk that that further contraction of the Chinese economy motivates individuals and businesses to move capital outside China. Since the Russian invasion of Ukraine in 2022, China has been experiencing significant levels of capital flight. The recent moves by Beijing to rein in some of the mega companies (such as Alibaba and Tencent) are also thought to be pushing some Chinese companies to consider shifting operations outside China to avoid these controls and operate in more liberal markets. Inadequately developed taxation system. China has ongoing structural challenges with its taxation system including a comparatively low tax base, inefficiencies, issues between with the central/regional/local taxation levels, and high levels of tax evasion. Ironically the inefficiency of the tax system has in many instances supported the rapid growth of businesses and a more effective system could also have a dampening effect. The availability of low cost labour has undoubtedly been a core driver behind China’s rapid growth to become the ‘worlds factory’. China’s position as the most populated country was frequently cited as its key underlying resource. Access to this low cost work force was supported by waves of migration from rural China to its cities. However, as the country has developed its average wage also rose leading to a decrease in the availability of cheap labour. Arguably, other international locations offering the same or cheaper labour has also led to the loss of manufacturing competitiveness and the Chinese reliance on the lowest price strategy (note the social implications of the shift away from low cost labour are discussed elsewhere). As noted, the systemic economic risks China faces have unique characteristics due to the CCP apparatus. This is particularly evident in the relationship between national security and the economy . Over the last decade the Chinese government has introduced a number of measures purported to be for national security reasons that may have a detrimental impact upon the Chinese economy. These include the 2023 anti-espionage law that has caused alarm with the international business community. These laws appear to deem routine business activity of international persons or organisations as potentially ‘espionage’ and requires foreign companies to provide full access to its communications to the Chinese government. Many international companies now perceive China as an unsafe operating environment for its staff and business activities requiring elements of confidentiality. Systemic social risks China has a number of systemic social risks that need managing. Many of these risks are not unique to China however the Chinese government response has created different outcome pathways. China’s aging population is decreasing the available workforce and simultaneously the levels of dependency. By 2029, China will begin a period of ‘negative population growth’ and by 2065 the population will return to the levels of the mid-1990s. This demographic shift poses challenges for sustaining economic growth and puts pressure on healthcare, pensions, and formal and informal social systems. It can also lead a reduced consumer base and flow on effects upon other demographic groups in society. Social inequality and urban-rural divide continues to challenge China with significant income disparities between urban and rural areas and wealth inequality. An estimated 13% of the Chinese population still live close to the poverty line. There is little doubt this has been a focus for government with policies aimed at poverty alleviation and rural development. While poverty rates have been reduced it remains a challenge. This may become more acute with rising employment rates and the loss of opportunity amongst those who moved from rural to urban areas. Youth unemployment in China has steadily risen over the last decade to reach over 20% in 2023. This will be further exacerbated by an estimated 11.6 million college students set to graduate in 2023 and bring with them expectations of a career and prospects. The significant risks facing the Chinese property sector (which is already covered in another article – see China risk # 1 ) are increasingly burdening the Chinese population. The high concentration of the populations wealth within a sector that is dangerously over leveraged has creates a systemic social risks that could rapidly unravel. There is clearly growing concern within the Chinese population around the stability of the property and this has led to protests includes the 2020 movement to stop paying mortgage payments to banks and development companies. A possible outcome of the many social risks are increasing levels of unrest within China. This could include labor disputes and strikes, particularly in the manufacturing and industrial sectors where workers may be seeking working conditions and higher wages. As China’s economy contracts and manufacturing leaves China for alternative international locations, there may be increased tension between labour costs and the expectations of Chinese workers. A failure to find the right balance could lead to increasing levels of labour unrest and disruption. Systemic political risks There are longstanding questions around the Chinese one-party system and the extent it creates systemic political risks for China. Much has been written about the downsides of such a centrally controlled system and specifically the Chinese Communist Party (CCP). Despite this the CCP has defied the critics and its longevity has provided stability to China for decades. The authoritarian nature of the CCP and the apparatus required to maintain it however does create underlying risk . The rigidity of planned economies can reduce adaptability to changing circumstances with concentration of power in a leader and/or a small group of leaders. This can lead to decision-making that is less responsive and adaptable to evolving circumstances. Rapid changes in the domestic or international landscape require flexibility and agility in decision-making, including the ability to respond to unforeseen events. A highly centralized decision-making structure may hinder the ability to promptly adjust strategies and policies. Elements of the risks within the CCP have been addressed in different ways, such as Deng Xiaoping’s introductions of limits to presidential terms within the Chinese constitution. This was an attempt to rebalance the supremacy of the party following the Mao years and the ‘cult of personality’ that had developed. This was also seen as a means to mitigate leadership excesses that could give rise to coups by orchestrating the peaceful transfer of power from one leader to the next. The CCP is also been highly aware of the dangers of corruption , the abuse of power, and limited political accountability. Continual efforts to address these challenges have been made through anti-corruption campaigns and by promoting rigorous intra-party supervision mechanisms. While on some level these measures may have reduced risk, they have arguably created different issues and the need for a ‘deep state’. The Chinese government has introduced stronger ‘anti-espionage’ state security laws and increased the visibility of the CCP throughout country. The effectiveness of these efforts to foster good governance and mitigate the limitations of one-party rule is cause for ongoing concern. In 2018, a significant constitutional amendment was enacted to remove the 10-year limit on Presidential terms . This change allowed President Xi Jinping to hold the preeminent leadership position indefinitely. While the CCP apparatus may have adopted this change based upon their confidence in Xi and the perceived necessity for political stability – it does heighten particular risks. The concentration of power within a ‘great leader’ inevitably brings with it the strengths and weaknesses of the said leader. Decision-making processes can become heavily dependent on the leader's judgments and preferences. This can lead to a lack of institutional checks and balances, reduce the diversity of perspectives and potentially stifle alternative voices even if they are objectively better. Officials providing advice can become less ‘free and frank’ and instead provide upwards reporting that conforms to the views of the leader rather than reality. This can lend itself to uninformed decision-making and an unrealistic expectations of the leader to make sound choices. The great leader model can also limit international bi-lateral relationships with its greater emphasis on the leaders personality and reflecting the leaders preferences and comfort levels. Whereas transitory national leaders can provide an opportunity for a re-set of international relationships, an enduring leader may fixate on the same view and inhibit the opportunities for dynamic policy shifts. Some may argue that continuity of leadership provides stability and the ability to pursue long term objectives better, however, this may ignore the rapidly changing complexity and possibility that a different strategy may be required. Over reliance upon a single leader also creates longer term challenges in terms of succession planning and institutional continuity. If the leader's authority is not effectively transferred or if succession processes are not well-established, it can lead to instability and power struggles. This could rapidly lead to wider instability and a loss of confidence in the government more generally. Systemic environmental challenges With rapid industrialisation, China has suffered from significant environmental degradation. This includes air and water pollution, deforestation, and soil degradation. The government has acknowledged these challenges and launched a number of initiatives to address them. Progress has been made but more efforts are needed to tackle long-term environmental sustainability. While environmental challenges have long term impacts they can also create short to medium term risks that can exacerbate other systemic risks. These can be seen with many of the areas of environmental risk. Air and water pollution: A number of Chinese cities have severe air pollution particularly where coal is used for energy and emissions from vehicles, construction, and industry. China's water resources have suffered from pollution caused by industrial waste, agricultural runoff, and inadequate wastewater treatment. This pollution affects both surface water and groundwater and may lead to water quantity and quality issues. Beyond the environmental cost, this pollution can directly impact economic conditions (i.e. some reports estimating around 19,000 deaths in Beijing alone and costing US $9 Billion in 2023). These impacts and the reputational damage incurred by the CCP for failing to manage these issues in turn create political risks. Land and soil Degradation. The pollution and degradation of soil are major concerns due to industrial activities, excessive fertilizer use, improper waste disposal, and contaminated irrigation systems. Erosion, desertification, and loss of arable land are growing problems and have links to the economic use of the land and population health. The annual costs to rehabilitate degraded land is estimated to be in the tens of $US Billions a year. Waste Management. With its significant population and manufacturing base, China generates vast amounts of waste. Improper waste management, recycling, and disposal may create environmental and health risks. Climate Change. Compounding all of the environmental challenges, climate change will increase the frequency and intensity of extreme weather events and natural disasters. Some estimates suggest the impact of climate change upon China could be in the order of nearly 4% of GDP by 2050. Systemic technological challenges China has been historically very reliant upon foreign technology and has consequently made considerable effort to reduce this technological dependence. Despite this, China's economy still relies heavily on foreign research and technology and remains vulnerable to changes in the policies of international competitors. The US-China trade war which began in 2019, led to the US restricting the export of key strategic technologies such as semi-conductors. This had an immediate impact upon Chinese technology companies supply chains, their ability to meet market demands, and consequently their appeal to international technology manufacturers. The policies of the US and others also however accelerated efforts to develop Chinese versions of key technology and develop a higher level of self reliance. On one hand this move away from international supply chains could support local businesses, produce innovation, and strengthen national resilience. On the other hand, however, there is the risk that China loses its connectivity with international research, develops technology that is not aligned with international standards, is inferior, and is simply not attractive to the international market. This could have a profound impact on the value of Chinese exports and undermine its efforts to move up the manufacturing value chain. Recent efforts by Beijing to rein in its technological firms including the likes of Alibaba, Tencent, and other significant companies are also notable from a technological risk perspective. Beijing has apparently assessed that some of these companies were becoming ‘too big’, overleveraged, and possibly, too powerful within China. The Chinese government efforts to rein these companies in may however have gone too far. By reducing the level of support for international Chinese tech companies, China may be inhibiting its ability to keep abreast with its technological competitors and shape international standards and markets. What to watch in 2023 The risks highlighted in this report are all dynamic and interconnected and present significant challenges to the Chinese economy. This makes it important to watch how they evolve through 2023 and beyond and how the Chinese government seeks to manage them. While it is impossible to predict how each risk will manifest there are indicators that interested parties could watch for in the coming years. While quantifying these risks is extremely challenging these indicators could be rated for likelihood against a range with pre-determined ‘high risk’ zones (Appendix 1). What to watch for in the Chinese real estate market: How companies such as China Evergrande Group, Country Garden Holdings, and Sunac China Holdings manage their debt and if they default; News of underlying quality and safety issues with property developments from marginally viable developers who have taken short cuts. This may highlight: (a) unsafe and poor quality construction (b) overleveraged and highly risky developments (c) corruption at various levels of government. Social unrest occurring in China specifically relating to real estate issues. This could include from Chinese citizens who either cannot afford housing and/or have incurred significant losses from real estate investment, revelations about corruption, and quality and safety issues. The Chinese government’s response at the city, State, and central government levels. The extent of this intervention and the unintended consequences that emerge; The impact of a significant downturn of the domestic Chinese real estate market on Chinese investment holdings internationally and whether this generates capital flight inwards or outwards. What to watch for in the relationship between China and the United States: Overall, whether the US government perceives strategic advantage or necessity in the pursuit of economic penalties and constraint of China for a range of reasons. The US pushing China increasingly publicly around trade imbalances and unfair trade practices by China. Related to this are the availability of options to defuse and concessions from both sides to enable meaningful progress. Technology competition becoming more evident. Growing distrust in the US and among like-minded countries (following US lead) around Chinese technology companies. This distrust may become increasingly connected to national security, supply chain risks, but also protectionist policies around strategic industries. This may include areas such as such as artificial intelligence, semi-conductors, 5G networks, and big data capabilities. The impact of trade disputes and strategic competition on Chinese technology companies, their development programmes, increasing tension and balkanisation of international standard development, and challenges and decline in the international market for Chinese technology Rapidly changing sentiment towards China within the US business community. US businesses perception and confidence in China may deteriorate for a number of reasons including: This could be on the back of concerns around the reliability of supply chains, Chinese government market interventions, the US/China trade dispute, and access to an affordable workforce. Specific issues such as the Chinese Cyber security and Data protection laws may also create concern for US business. Tensions over Taiwan and the South China Seas. A miscalculation by either side during an air or sea patrol cause rapidly escalating into limited conflict. It is understood that the development of protocols to de-escalate such incidents is a high priority for US Secretary of State Blinken. National security incidents continuing to feature. The Chinese spy balloon incident of early 2023 was an example of heightened sensitivity around such issues and could cause distractions to the resolution of other bi-lateral issues. Cyber security issues. Ongoing exploitation of US networks by Chinese cyber actors that causes significant loss of US confidential information and/or access to this information or system. Publicity and unintended consequences from this activity provides further cause for a US response. Regional tension and flare ups. The underlying tension generated between the US and China acting in each others geographic spheres will continue to grate both sides. Specific incidents could cause tension too such as North Korean miscalculation, suppression of public sentiment in Hong Kong, location of Chinese military/spy base near US territory, or development of new Chinese bases in Asia-Pacific. The US to continue highlighting human rights within China. This is likely to focus on treatment of ethnic minorities such as the Uighur's and could lead to leading to tension and an inability to resolve wider bi-lateral issues. Sentiment towards China in the US deteriorates. Any one of the issues noted could generate a negative perception of China and providing impetus to US political leaders to respond. Regional bi-lateral relationships to watch: Escalation of tensions in the Taiwan Straits . The increased volume of Chinese air and maritime forces in the Taiwan Straits raises the probability of a miscalculation and/or incident involving the military forces of Taiwan, the US or another ally. A serious incident would require rapid de-escalation and even if conflict was avoided it would provide grounds for new measures against China. Signs of increased US political support for Taiwan through elected representatives or government officials. This could include informal/formal visits to Taiwan and military support and exercises. The nature of these visits could be indicative of how the US views Chinese strength and believes there is a window to press an advantage and build longer term stability in the Taiwan Straits. The Ukraine war has provided a clear illustration to China of the political and military risks with an attack upon Taiwan and this will hearten the US and its allies. Escalation of the territorial disputes with India . Another serious incident along the Line of Actual Control (LAC) would significantly harden Indian resolve and bring with it the possibility of: military conflict, India moving away from non-alignment to ‘take sides’, and a detrimental impact upon Chinese business interests in India. An escalation in any one of a number of existing territorial disputes in the South China or East China seas could lead to increased tensions and conflict. This could involve the Philippines, Vietnam, Indonesia, Taiwan, Japan and their respective allies. While Chinese military superiority is assumed over its neighbours, the impact if such a conflict could be significant on the Chinese reputation and interests. Ongoing tension between the US and China corresponding to increased tension within China’s other key bi-lateral relationships and/or in the region. China could suffer a loss of stature towards regional leadership. Non-aligned and predominantly ‘trade’ based bi-lateral relationships could also become increasingly vocal regarding other socio-political issues as public sentiment shifts against China. The rapid build up of the military capabilities of China’s neighbours in response to China’s territorial claims and military activities. These capabilities will increase the likelihood of a more assertive response by these nations to China. Increasing levels of economic competition between China and its neighbours as they perceive opportunity to attract foreign manufacturing and investment away from China. Specific industries and regions in China could be particularly impacted as industry shifts away to new regional locations. Cyber intrusion activity undertaken by Chinese based actors causes significant impact in the target industry and/or country. The extent of the activity could cause hardened policy settings against China and Chinese interests. More countries to restrict market access to Chinese technology companies to their telecommunications, 5G, and other advanced technology projects based upon security risks. Strategic concerns about Chinese developed technology and its connection with the Chinese government limits the international demand for collaborative projects, standards development, and market access. This could impede Chinese research and development and reduce the international demand for Chinese goods and services. Reputational damage to China if further incidents should occur in the disputes in the South China Seas. Falling sentiment towards China across the region could lead to public support for measures to counter China through trade and other means. Further outbreaks of COVID or any other similar health emergency is attributed to China and causes ongoing political, economic and social disruption. As well as the direct impact upon supply chains, bi-lateral and regional trading partners may accelerate the exit from Chinese suppliers. More international companies to shift operations out of China and to the likes of India and Vietnam and other regional locations as a direct result of the US-China trade issues, rising costs, Chinese government policies and concern with supply chain security. Systemic risks to watch through 2023 and beyond: Ongoing weakness in the Chinese financial sector related to shadow banking, non-performing loans, and over inflated assets. The failure of large and/or key institutions could create wider contagion and systemic failure. Government interventions within the financial sector could transfer considerable risk to government institutions and jeopordise the utility of the tools available. The vulnerability of big and small Chinese banks because of their high levels of institutional interconnectivity and concentrated exposure to highly vulnerable Chinese real estate The impact from the loss of ‘easy credit’ within China upon small, medium sized enterprise upon their viability and ability to scale and compete internationally The unsustainable use of land sales and real estate development by many local and regional adminstrations to generate revenue resulting in levels of debt that result in the loss of services. More information emerging around the levels of household debt levels becoming an increasingly political issue as Chinese citizens blame government policies for the failure of the economy at the macro and micro levels. Portions of the Chinese population may begin so question whether the CCP and political system has the capability to adequately manage China’s future development. Capital flight from China re-emerging as an issue that undermines the Chinese economy. Beijing may again seek to strengthen its oversight and capital controls. Very large Chinese companies increasingly look for ways to shift operations outside China to avoid Beijings increasing interventions. Ongoing challenges with the efficacy of taxation system with its low tax base and inefficiencies not supporting Beijing to make the policy decisions it may need to. As the economy contracts, the tax base will also shrink. The unavailability of low cost labour in China providing opportunities to other emerging low cost labour countries to absorb China’s work loads. There may be increasing numbers of manufacturers seeking to shift all or part their factories offshore. Related to rising labour costs in China are the unmet expectation of the growing Chinese middle class who have experienced a long period of sustained economic growth – and now find it harder to find a well paying job. As well as the obvious risk of social tension, this will impact Chinese consumer confidence and consumption. This can be observed with spending on luxury goods and services and discretionary purchases. The underling authoritarian characteristics of CCP apparatus becoming more evident in the nexus between national security and the economy with Beijing making decisions impacting the economy for declared national security reasons. Some decisions will risk significantly undermining Chinese competitiveness and attractiveness to investors. Incidents arising from the implementation of the 2023 anti-espionage law involving foreign nationals will heighten concerns amongst international businesses and investors around the risks of doing business within China. International companies operating in China will need to be cautious if/when national security incidents in the likes of the US become publicly known and Beijing looks for reciprocal responses. China’s aging population and ‘negative population growth’ will put increasing long term pressure on healthcare, pensions, and formal and informal social systems. The result may manifest in a number of different ways and particularly upon Chinese youth who may become increasingly unsatisfied with their prospects. Rising social inequality and an urban-rural divide may become more evident. Many Chinese workers who have been laid off in the cities may return to their home towns. This may cause more general discontent with the economy and the Chinese government itself to spread further across the country. Youth unemployment continuing to rise as the Chinese economy stagnates and finds a new equilibrium that may not provide the same employment and lifestyle expectations for young Chinese. Loss of individual or family wealth through a collapse of the Chinese property market is likely to cause pockets of social unrest. This will be particularly acute where the levels of excess, corruption, and general recklessness become publicly known. Beijing may feel the necessity to impose harsh penalties upon the perpetrators to make an example. Increasing levels of unrest within China including labour disputes and strikes, particularly in the manufacturing and industrial sectors where workers may be seeking working conditions and higher wages. Public exposé of significant cases of corruption , the abuse of power, and questionable political accountability will continue to test the stability of the Chinese political system at multiple levels. The removal of limits on Presidential terms and resulting concentration of power within a ‘great leader’ will be shown to have inevitable challenges. Decision-making processes can become heavily dependent on the leader's preferences, will cause a reduction in the diversity of perspectives that may be objectively better. The rejection of official advice and ‘free and frank’ policy processes will be evident with the dismissal of the visible heads of Chinese government departments and spokespersons. The limitations of the great leader model with regard to international bi-lateral relationships with its emphasis on the leaders personality and preferences will be highlighted with China’s inability to make progress on a number of bi-lateral challenges and becoming increasing globally isolated. Longer term challenges such as (leader) succession planning may not be of immediate concern, however, the lack of clear pathways of institutional continuity will increasingly undermine confidence in China (at home and internationally). The unsustainable expectations around the success of the leader, the inevitable failures, and removal of timeframes for a leadership refresh may lead to a sense of resignation and low optimism or ambition for change. Air and water pollution becoming more of public issue within China and of increasing concern to (1) Chinese citizens suffering detrimental health and safety impacts (2) the health system and its ability to manage the impact of this upon the Chinese population (i.e. such as the significant increase in respiratory illnesses) (3) business and industry in China impacted due to the draconian measures required to manage the levels of pollution and (4) the reputational damage to the Chinese government from the perceived failure of its management of the issue by the domestic population and international stakeholders. Severe cases of land and soil degradation becoming an issue if the extent and impact of cases becomes publicly known. Cases impacting international supply chains will damage China’s reputation as a safe and reliable food producer both within China and internationally. Extreme cases where people, particularly children, die as a result of ineptitude, corruption, or recklessness could cause local and or national outrage in China and lead to severe penalties to the perpetrators. While inadequate waste management is some parts of China may be inadequate it is not likely to create wider risk in and of itself. However, cases of large scale pollution from waste that impacts the health and business interests of a significant group in the population could create anger against government officials. The significant environmental risks relating to the impact of climate change becoming a more prominent and domestic political risk. As with other vulnerable parts of the world, large parts of China will see an increase the frequency and intensity of extreme weather events and natural disasters. While the Chinese government may seek to manage the narrative around climate change, its impact and growing awareness of the issue, particularly amongst younger Chinese will create dissention towards the Chinese government. China’s technological dependence on foreign research and technology leaving China vulnerable to changes in the policies of international competitors. Further escalation of the US/China trade disputes and wider international restrictions around the export of technology to China will continue to have significant impact upon Chinese technology companies supply chains, their ability to meet market demands, and consequently their appeal to international technology manufacturers. Chinese efforts to develop a higher level of technological self reliance leading to a loss of connectivity to international research and standards. This could lead to the development of parallel Chinese technology that may be increasingly incompatible with competitors and have less appeal in international markets. Efforts by Beijing to rein in major technological firms such as Alibaba, Tencent, and other significant companies become more common. While the Chinese leadership rationale for this may be for sound from an internal political perspective, the level of intervention with Chinese ‘champions’ may go too far and undermined Chinas ability to contest technologically within international markets. Some Chinese technology companies will risk being viewed as unreliable partners who have not kept up with technological developments. It may consequently take some years for some Chinese firms to return to their previous scale and influence internationally. Summary China has a number of challenging risks to manage through 2023 and the immediate years. Key emergent risks include a significant downturn in the Chinese real estate market , ongoing tension and strategic rivalry with the United States , and tension within regional bi-lateral relationships . The question remains how these emergent risks will trigger and exacerbate underlying systemic risks within China . These include systemic economic , social, environmental and technological risks. Interested parties would be prudent to closely monitor these emergent risks to determine if they are significant enough to cause broader failures within China. Arguably, however the primary systemic risk remains ‘political’ with the possible impact of emergent and systemic risks creating an untenable scenario for the Chinese Communist Party and the apparatus established to maintain its political supremacy. While the strengthens of the political system are frequently heralded in China’s rapid development, its converse weakness may become increasingly evident. This could rapidly reduce the social licence the CCP has with the Chinese population as the economic growth ‘opium of the masses’ no longer provides the same offer and the population questions other dimensions of societal value. China’s challenges will be significant through 2023 and beyond. 2023 Summary

Most nations are developing or iterating a national Artificial Intelligence (AI) strategy. Nations see the potential to accelerate positive outcomes for their citizens. A national AI strategy needs a vision, objectives, priorities, and focus on emerging opportunities and risks. Developing a national AI strategy Comparative national approaches ai contents Contents Introduction WEF AI framework OECD AI European Union (EU) AI strategy United Kingdom AI strategy United States – AI strategies China AI strategy Other national AI strategies Summary of themes from national AI strategies AI risk areas identified by nations Steps to develop a national AI strategy Summary References intro Introduction The application of Artificial Intelligence (AI) is now a high priority for governments – both developed and developing. It is well recognised that AI has the potential to support government objectives in all domains and improve the lives of citizens. From larger economies such as the US and China who seek to focus on the full gambit of AI applications, to developing countries who may be more interested in specific areas. All need a clear strategy to assist them pursue their AI aspirations. Nations are also backing up the rhetoric around AI with significant investment and this needs to be carefully guided to deliver value. As with other emergent technology, investment can not be based upon hype and needs realistic priority setting. The following report is an analysis of different approaches to support the development of national level AI strategies . It includes a review of resources developed by the World Economic Forum (WEF), the OECD, and the European Union (EU). The report then highlights the national AI strategies of the UK, US, and China before providing a high-level view of the themes from the AI strategies of a number of countries including: France, the Netherlands, Germany, Sweden, Denmark, Singapore, Australia, Spain, Canada, Italy, and Norway. Particular (but not exhaustive) examples of AI research and application by each nation are also noted. It is stressed that AI is an inherently dynamic field and new strategies, initiatives and the individuals and entities involved with them change rapidly. This report is a summary at a point in time and may not cover new developments within different national and international contexts. WEF Up The World Economic Forum (WEF) AI framework The WEF have been undertaking extensive research and collaboration with international stakeholders for a number of years around emergent technological trends including AI. This has included the production of whitepapers and sponsoring research and other activities. In 2019, and in response to the growing focus on AI, the WEF published ‘A Framework for Developing a National Artificial Intelligence Strategy’. The WEF suggest that: ‘The (AI) framework will help teams responsible for developing the national strategy to ask the right questions, follow the best practices, identify and involve the right stakeholders in the process and create the right set of outcome indicators. Essentially, the framework provides a way to create a “minimum viable” AI strategy for a nati on’. WEF notes the rapidly changing nature of the fourth industrial revolution requires governments to take a proactive approach to technological change. The pervasive nature of AI requires a sound multi-stakeholder approach to manage preventable harms, have technologically informed policies, alleviate public and ethical concerns and ensure the best outcomes. It is noted that a country’s AI strategy needs to reflect its real world strengths and weaknesses. A developed country may seek to increase the automation of health care in reflection of its demographics, whereas a developing country may want to highlight STEM and growing the knowledge economy. Designing the AI strategy WEF suggest starting with a basic Strengthens, Weaknesses, Opportunities, Threats (SWOT) analysis. This will allow the identification of priority focus areas for the AI strategy and where investment may be required and the supporting human resources, processes, and technology. Each of the items within each domain (Strengths, Weaknesses, Opportunities, Threats) can then be ranked for prioritisation. An overall list of possible actions can be pulled together with the overlay of whether they are short, medium, or long term and any dependencies. Establish objectives for the AI strategy WEF note that a national AI strategy should be designed to serve a set of clearly defined objectives. In line with the SWOT analysis, the objectives of the national AI strategy should focus on specific targets in the following areas: Capacity – human resources and digital infrastructure Investments – research and development, grants Adoption – socioeconomic sectors, industrial sector Regulation – enabling regulation such as privacy and ethical standards for data use. Key dimensions of a national AI strategy The WEF suggest that while each country will have its own national policy priorities within its AI strategy, certain elements should be in a “minimum viable” strategy. These include: Dimension 1: Standardized data-protection laws and ethics The criticality of good data for AI requires a robust regulatory environment that embeds trust between data subjects and the organizations using this data. This regulation needs to govern how data is collected, stored, processed, and shared and requires attention to ethical issues. Dimension 2: Establishing research environment and integration Access to open data between the research, academic and business communities is crucial as is the creation of a research environment for industry-academia collaboration. AI talent development is a national issue that needs cross-sectoral integration and good governance. Dimension 3: Preparing the workforce for the AI economy The impact of AI upon the workforce needs to be actively anticipated and consequently requires planning for the skills required in the future workforce. WEF notes the need to build the capacity and underlying infrastructure for this shift such as upskilling and re-skilling. Dimension 4: Investing primarily in strategic sectors The WEF emphasise the need for nations to primarily focus on their respective comparative advantage and design their AI ecosystems accordingly. Most nations have finite resource and investment to allocate to the AI strategy and it should seek to address national challenges. Dimension 5: Engaging in international collaborati on The rapid pace of AI evolution makes it a field nations need to develop in conjunction with others and in alignment to international initiatives. This is because AI knowledge is globally distributed and no one nation is likely to have all the required expertise and capabilities required. WEF asserts that it is crucial that nations actively seek international collaboration and contribute to international regulation and governance. Create an implementation plan National strategies need an implementation plan that allocates responsibilities across the stakeholders involved. The broad impact of AI means that this needs to be across government, legislature, businesses, academia and other societal players. The WEF suggest nations develop a responsibility matrix for stakeholders and includes the following: Phases, milestone; and timelines; Role of all stakeholders (government agencies, legislature, industry, standard-setting, private-sector, academia, research institutions, civil society); Budget/investment allocation – both by public and private sector; and Administrative structures for oversight of the strategy. OECD AI strategy development guidance The OECD is well established in its focus on AI and research on strategy and policy matters. The OECD ‘Going Digital Toolkit’, which was published in 2021, provides an overview of national AI strategies and policies. The Toolkit is noted as seeking to provide policy makers with the guidance they need in a 'digital and data-driven world'. The OECD report stresses that AI advances require policy makers to shift from ‘principles to practice’ to achieve the benefits and mitigate the risks. The Toolkit also provides an overview of various AI policy initiatives underway by governments with a focus upon (1) policy design (2) policy implementation (3) policy intelligence and (4) international and multi-stakeholder policy co-operation. According to the OECD, key priorities governments in the formulation of national AI strategies and polices are the promotion of trustworthy AI systems, investment in responsible AI research and development and digital environment enabling access to data, alongside privacy protection. The rapid development of AI policy has led the OECD to create the OECD AI Policy Observatory (OECD.AI) which includes more than 600 national AI policies from 60 countries. This resource is designed to assist countries’ compare AI policy initiatives according to the recommended OECD AI Principles (see Figure 1.0). Figure 1.0 – OECD principles and recommendations for AI The OECD five principles for stewardship of AI: AI should benefit people, planet and drive inclusive growth, development and well- being. AI systems should respect the rule of law, human rights, democratic values, diversity, and include appropriate safeguards; There should be transparency and responsible disclosure to ensure understanding of AI-based outcomes and the ability to challenge them; AI systems must function in a robust, secure, and safe way throughout their life cycles and potential risks should be continually assessed and managed; Organisations and individuals developing, deploying or operating AI systems should be held accountable for their functioning in line with the above principles The OECD also recommends that governments: Facilitate public and private investment in R & D innovation focused on trustworthy AI; Foster accessible AI ecosystems with digital infrastructure, technologies and mechanisms to share data and knowledge; Ensure a policy environment that supports deployment of trustworthy AI systems. OECD Up European Union Up UK European Union (EU) AI strategy The primary entities responsible for developing the European Union (EU) AI strategy are the European Commission (policies and regulations at the EU level); European AI Alliance (engaging stakeholders around strategy); and the European Parliament (legislates policies and regulations). Other EU entities and stakeholders are also involved. There are multiple EU AI strategies and plans published by the European Commission noting the intention to make the EU a ‘global hub for AI’. They reiterate the need for the underlying rules being applied reinforce European values and support AI develop in a trustworthy and safe way that respects fundamental rights while still promoting innovation. The AI Act provides a legal framework that will help regulate specific uses of AI and should to be considered with the accompanying ‘Coordinated Plan on AI’. In April 2021, the Commission presented its AI package that highlighted the need for a common EU approach. This work is being implemented through a shared Strategic Action Plan for AI (SAPAI) together with newly applied regulation and impact assessments. The European approach to building trust in AI The EU Commission emphasize the need to develop trustworthy AI. This effort is supported by various tools including: The European legal framework for AI to address fundamental rights and safety risks; A civil liability framework - adapting liability rules to the digital age and AI; The revision of sectoral safety legislation (e.g. Machinery Regulation, General Product Safety Directive). The 2021 plan is also designed to support the uptake of AI in the EU so that research can be commercialised and build strategic leadership in high-impact sectors. The 2021 Coordinated Plan on Artificial Intelligence aims to increase collaboration between the Commission and Member States by: (1) accelerating investments in AI technologies to drive resilient economic and social recovery aided by the uptake of new digital solutions (2) acting on AI strategies and programmes by fully and timely implementing them to ensure that the EU benefits from first-mover advantages; and (3) aligning AI policy to remove fragmentation and address global challenges. Overall, a key priority for the EU relates to AI governance and regulations . The focus being the establishment of regulatory frameworks and guidelines for ethical and responsible AI deployment within the EU. Research includes investigating the legal, ethical, and socio- economic implications of AI technologies across various sectors. Countries developing an AI strategy may find EU work relating to governance and regulation provides a good base to build their own approach from. The United Kingdom – AI strategy The key UK entities involved in setting the national AI strategy include the Office for AI, within the Department for Science, Innovation and Technology (responsible for coordinating AI strategy and policy across government); The Department for Digital, Culture, Media and Sport (DCMS); the Alan Turing Institute (the national institute for data science and AI research); and the Government Digital Service (GDS). In 2018, the UK government signalled around £1 Billion would be invested in the UK AI ecosystem. This investment was directed to enable a ‘step-change’ regarding AI in the UK and build the resilience, innovation, and productivity of the public and private sectors. The UK strategy has a ten-year vision to make the UK: “the best place to live and work with AI, with clear rules, applied ethical principles, and a pro-innovation regulatory environment...” The strategy identifies the core elements for successful AI as essentially: people, data, digital infrastructure (‘compute’) and finance. The pervasiveness of AI’s impact upon mainstream society is noted as requiring agile governance and regulatory regimes that uphold the safety, security and rights of citizens. With this context the UK’s National AI Strategy focuses on: Investing in the long-term needs of the AI ecosystem . Investment and planning for the long-term needs of the AI ecosystem to continue leadership as a science and AI superpower; Ensuring AI benefits all sectors and regions . Supporting the transition of the UK to an AI-enabled economy, ensuring the benefits of innovation are evenly distributed across the UK; Governing AI effectively . Ensuring the UK is positioned at the national and international level to foster innovation, investment, and the protection of fundamental values. The strategy then uses these three areas of ‘pillars’ to break down the short (next 3 months), medium (next 6-12 months), and long term (next 12 months and beyond) actions that the UK will be undertaking (see figure 2.0 below) The UK National AI Strategy has an accompanying implementation plan that will support delivery of the strategy as well monitoring and assessing its overall progress. Up Figure 2.0 – Summary of detailed actions under the UK AI strategy (for example of actions) United States Up The United States - AI strategies The primary United States government entities involved in national strategy setting include the White House Office of Science and Technology Policy (OSTP) – coordinating policy and strategy at federal level; the National Institute of Standards and Technology (NIST) – standards and guidelines; the Department of Defense (DoD); and the National Science Foundation (NSF). It is important to note the wide breadth of other federal, state, private sector, not for profit, and other organisations that also contribute to the US AI strategy in different capacities. The Executive Order 13859 ‘Maintaining American leadership in AI’ highlights the breadth of U.S. government intent to sustain an advantageous scientific, technological, and economic position of the US through a co-ordinated Federal government strategy via the American AI Initiative. The National Artificial Intelligence Initiative (NAII) was consequently established by the National Artificial Intelligence Initiative Act of 2020 (NAIIA) in 2021. The main purpose of the initiative is to coordinate efforts across the US ecosystem. Areas for focus across the Federal agencies include: AI innovation - Leadership in AI Research and development. There is a specific Research and Development strategic plan; Advancing trustworthy AI –The development and use of trustworthy AI systems in public and private sectors. This included the use of metrics, assessment tools and standards; AI education and training – The efforts preparing the current and future US workforce for the integration of AI systems across all sectors; AI infrastructure – This includes the availability of quality data, models, and computational infrastructure; AI applications – Across a wide range of sectors including agriculture, financial Services, healthcare and social services, pandemic response, national security and defense, science and technology, justice, transportation, weather forecasting and education; International cooperation around AI – Diplomatic and aid related. An area of ongoing focus in the US is ‘AI ethics and responsible AI ’. This work involves the development of ethical guidelines and frameworks for AI development and deployment. This is seen as crucial with research and the ethical implications of AI technologies, including challenges such as bias and algorithmic fairness. Given the size of the US government and the wide variety of applications, there are a large number of sectoral and/or institutional level AI strategy documents. Each have their own purpose, priorities, opportunities and risks (see references for links). Considering US government AI strategies can be overwhelming due to the complexity of the US federal system. What may be helpful for other countries are the thematic priorities developed by the US and sector specific strategies. This may assist a country in determining its own priorities as well as identify possible opportunities for collaboration with the US. United States – key AI institutions within US Universities (not exhaustive list) The National Science Foundation (NSF) AI Institute for Artificial Intelligence and Fundamental Interactions (IAIFI) is a collaboration of both physics and AI researchers at MIT, Harvard, Northeastern, and Tufts. A core focus is the use of innovative methods to improve theory calculations, experiments, and to advance the field of AI. The Ohio University based AI Institute for Future Edge Networks and Distributed Intelligence (AI-EDGE) . Research includes the synergies between networking and AI to design the next generation of edge networks (6G and beyond). The Institute will develop the key underlying technologies for distributed and networked intelligence to enable a host of future transformative applications such as intelligent transportation, remote healthcare, distributed robotics, and smart aerospace. The AI Institute for Collaborative Assistance and Responsive Interaction for Networked Groups (AI-CARING) . This is collaboration between Georgia Tech, Carnegie Mellon University, Oregon State University, the University of Massachusetts Lowell, and Oregon Health & Science University. The AI-CARING mission is to develop the next generation of personalized collaborative AI systems that improve the quality of life and independence of aging adults living at home. The National Science Foundation AI Institute for Student-AI Teaming (iSAT) at Colorado University . This is an interdisciplinary research community dedicated to transforming classrooms into more effective, engaging and equitable learning environments. MIT Computer Science and Artificial Intelligence Laboratory (CSAIL) – Research is wide ranging and includes AI and Machine Learning, Algorithms, computational biology, computer architecture, graphics and vision, Human-computer interaction, robotics, and others with a focus on how they impact the likes of big data, cyber security, energy, education, Internet of Things (IoT), wireless, transport, healthcare, and manufacturing. China Up Other national AI strategies China AI Strategy The primary Chinese entities involved in the national AI strategy include the State Council of the People's Republic of China (strategy and policy); Ministry of Industry and Information Technology (MIIT) (regulation); the Ministry of Science and Technology (MOST); and the National Development and Reform Commission (NDRC). It is noted that a number of other State, military, private sector and research organisations not identified here are also involved in the Chinese AI strategy. In 2017, China unveiled its overarching national AI strategy entitled ‘A New Generation Artificial Intelligence Development Plan ’. The plan has four basic principles: Technology-led . Taking a long-term support, China will strive to lead transformational and disruptive breakthroughs in methods, tools, and systems for AI; System approach . Systematic development of strategy to take advantage of the [socialist] system to concentrate resources required major AI projects; Market-dominant . Accelerate the commercialization of Chinese AI technologies. Utilizing government support for planning, policy, security, market, ethical regulation; Open-Source . Promotion of open-source sharing between industry and academia and as well as military and civilian entities to achieve technological innovation. Key milestones for the Chinese AI strategy The plan notes that China should have made significant progress in advancing AI models and methods by 2020. It also stresses China should be competitive at the global level and be heavily involved in establishing AI ethical norms, policies, and regulations. By 2025, the Plan sets the expectation that China should have made major ‘theoretical and technological’ breakthroughs in AI to support it becoming a world leader in AI. China should also have laws, regulations, ethical norms, and methodologies to undertake AI security assessments. The Plan projects that by 2030, China should emerge as the ‘world leader in AI ’ with AI technology innovations and centres that support personnel training. To support China’s strategy, the Chinese AI Open Source Software Development League has also put out a strategy. This has three parts including the (1) adoption and participation in AI open source (2) leading on AI open source development including natural language processing and (3) leading the trend towards AI open source and emphasizing systems to evaluate AI open source. One specific area of interest to the Chinese government has been the use of AI-powered surveillance and facial recognition technology . This has included the extensive development and deployment of advanced surveillance systems using AI and facial recognition technologies. Research is ongoing using facial recognition algorithms, biometric data analysis, and AI-enabled surveillance technologies. Themes from other national AI strategies France The main French entities involved in setting the national AI strategy include the French Ministry of Economy, Finance, and Recovery (strategy and policy); the French Ministry of Higher Education; and the French National AI Strategy Committee (NSAI). There are other organisations involved in the development of the French AI strategy not noted here. The French National Strategy for AI (SNIA) was allocated a budget of €1.5 billion for five years (2018-2022) and includes the following three themes: AI research and development : Developing the highest scientific levels of AI by training and attracting the best global talent in the field. Promoting AI research and development to enhance innovation and economic competitiveness; Data-driven economy : Encourage the widespread adoption of AI in the economy and society, particularly through startups, public private partnerships and data sharing; Ethical AI : Ensuring an ethical framework that supports responsible use of AI technologies and appropriate transparency and fairness. The French government have also emphasised the need for AI in public services to improve efficiency, citizen-oriented services, and the importance of active international collaboration. This includes strong ties with EU partners such as the German Research Center for Artificial Intelligence (DFKI) and with Japan. France – National priority for AI strategy – building the supporting infrastructure. The Jean Zay supercomputer that provides high performance computing for AI applications. Jean Zay has a computing power of more than 36,85 petaflops per second and has supported key projects such as BLOOM, the largest multilingual "open science" model, with over 46 languages including 20 African languages and 176 billion parameters. Jean Zay is also leading development of energy efficiency with its water-cooling technology. The application of AI in France is also present within the arts and culture secto r. Research has included investigating the use of AI algorithms for artistic creation, music composition, and digitization of cultural heritage. A specific example is the French based "AIVA: Artificial Intelligence Virtual Artist" which is an AI-based virtual artist capable of composing original music. Up Netherlands Key entities involved in the national AI strategy include the Dutch Ministry of Economic Affairs and Climate Policy (policy and innovation); Dutch Ministry of Education, Culture, and Science; the Dutch AI Coalition (Public-private partnership driving AI strategy and collaboration), and the Parliamentary Standing Committee on Digital Affairs. It is noted that are other organisations involved in the development of the Dutch AI strategy not noted here. The Dutch Digitalisation Strategy 2021 has a significant focus on AI and is based on the EU Strategic Action Plan for AI (SAPAI). The Dutch strategy includes the following themes: Public-private partnerships : Encouraging collaboration between the government, industry, and academia to promote AI research and innovation. This has included the work of the Dutch AI Coalition (NLAIC); Responsible AI : Emphasizing the development and deployment of AI technologies that safeguards public values and human rights – so AI use is ethical, transparent, and fair. Recent focus has been around the legal aspects of decision-making algorithms, the unforeseen effects of self-learning algorithms, and modernisation of Dutch law to consider big data; International engagement : The Dutch Government is active within EU bodies, international entities such as the Global Partnership on Artificial Intelligence (GPAI), and through a number of bi-lateral agreements. The Dutch strategy also emphasises the importance of AI skills and education to build a skilled AI workforce, the use of data , digital inclusion, connectivity, and the application of AI in key sectors such as healthcare, government, agriculture, energy, and mobility. Netherlands – AI application to address national priority – Water management One area that the Netherlands has taken a specific interest in is how AI can assist with water management. The focus has been on flood prediction, and climate adaption and resilience. Research has included studying the use of AI for real-time monitoring, modeling, and decision support in water management . A specific example of this work has been underway at the Deltares research institute in the Netherlands since 2015. Deltares specializes in water and subsurface issues and have been collaborating with the Dutch government on the development of models integrating data from various sources using AI techniques to develop real-time flood forecasting and other water management models. Germany Key entities involved in the national AI strategy include the Germany Federal Ministry for Economic Affairs and Energy – AI strategy; Federal Ministry of Education and Research (BMBF) - research and development; and the German Research Center for Artificial Intelligence (DFKI): research and technology transfer. Not all German organisations involved in the development of the AI strategy are noted here. The AI Strategy of the German Federal Government includes the following themes: ‘Minds’ : training, attracting and retaining more AI specialists in Germany. This includes initiatives such as the German Academic Exchange Service (DAAD); Research – establishing leading and internationally recognised research structures with a focus on the provision of cutting-edge AI and computing infrastructure; Transfer and application – establishing AI ecosystems of international standing that are based on excellent research and with effective transfer structures to support the application of AI to business purposes. This includes support for start ups and SME’s. Regulatory framework – Fostering the conditions for innovation whilst also ensuring human-centric AI applications and infrastructure that is regulated to be safe, secure and trustworthy; Society – supporting civil society in its engagement in the development and application of AI so that it serves the common good. The German government and research institutions have also been active in International cooperation arrangements. This has included collaborating with EU, US, Japan and other international partners to exchange knowledge and promote AI advancements. Germany – AI application to address a national priority – manufacturing Germany has taken a particular interest in AI in manufacturing and industry 4.0. This is not surprising given Germanys significant industrial base with the focus upon utilizing AI to drive innovation and efficiency in manufacturing processes and industrial automation. Particular research is exploring the application of AI in predictive maintenance, supply chain optimization, and human-robot collaboration. An example of how AI can assist with ‘predictive maintenance’ is underway at the Fraunhofer Institute for Manufacturing Engineering and Automation (IPA) Researchers have developed AI-based predictive maintenance solutions that use machine learning algorithms and data analytics to predict possible equipment failures, likely downtime, and optimized maintenance schedules. Sweden The key entities involved in setting the national strategy include the Swedish Innovation Agency (Vinnova) - research, development, and innovation; Ministry of Enterprise and Innovation - strategy and policy; Swedish Research Council (VR) - funds research and academic projects. It is noted that are other organisations involved in the development of the AI strategy not highlighted here. The Swedish national AI strategy includes the following themes: Education and training – Efforts to increase the level of AI talent in Sweden, encourage skills development both through formal education and training as well as ‘lifelong learning’. This also includes the introduction of AI components in non- technical and professional development programmes; Research (lab to market) – A focus upon basic and applied research environment in AI, strong connections with leading international AI research, use of pilot projects and ‘safe’ environments, along with efforts to adequately manage AI risks; Innovation and use – Building from the underlying research base, this includes the provision of support for projects and startups for economic and societal benefit; Framework and infrastructure – The use of data and digital infrastructure to support AI projects within a framework of enabling legislation, rules, standards, norms and ethical principles. Sweden has also sought to be an active participant in the development of EU and international standards and regulations that promote the ethical use of AI. This has also accelerated the establishment of governance mechanisms such as the Swedish government Committee for Technological Innovation and Ethics (KOMET). Sweden - AI application to address a national priority – green technology A particular area of interest within AI for the Swedish government has been with AI in sustainability and green technologies . Here the focus has been upon the application of AI to address sustainability challenges and accelerate the development of green technologies. Research has been primarily around the use of AI in renewable energy optimization, smart grids, and environmental monitoring. Some of this research has been undertaken in collaborative efforts between the Swedish Energy Agency and Swedish academia. Researchers have conducted research on AI- based optimization of renewable energy systems with a focus on AI algorithms and models that improve the efficiency, reliability, and integration of renewable energy sources into the power grid. Denmark The primary agencies involved in setting the national AI strategy include the Danish Agency for Digitalisation – responsible for government digital transformation; the Danish Ministry of Higher Education and Science – research and education; and the Danish Board of Technology (engaging with stakeholders on policy). It is noted that there are other Danish organisations involved in the development of the AI strategy not noted here. The National Strategy for AI outlines the vision for Denmark is to be a ‘front-runner in responsible development and use of artificial intelligence’. It also notes the following themes: A responsible foundation for AI – this includes the use of principles for responsible development and use of AI that will be supplemented by efforts to: strengthen cyber security and legislation and ensure responsible and transparent use of AI. Governance mechanisms will also be strengthened through the Data Ethics Council. Access to more and better data – More public-sector data being made available for AI in collaboration with businesses and research communities. This will initially focus on environmental and climate data from the transportation sector. There will also be a specific focus on the Danish language and accompanying resources to accelerate Danish language-technology solutions to benefit citizens, authorities and businesses; Strong competences and new knowledge – To build the level of skills and experience of AI in in the public sectors a number of projects that will be undertaken within health, social sector and employment areas; Increased investments – New sources of investment in AI will be developed including the Danish Growth Fund and by attracting new international investment. . Denmark – AI application to address a national priority – citizen engagement A specific area the Danish government has been exploring is where the AI could augment public services and citizen engagement . The focus of this work has been around utilizing AI technologies to improve public service delivery and citizen participation with research investigating AI for personalized public services, chatbots, and data-driven policymaking. An example is research underway at the Denmark based Alexandra Institute, Aarhus University, and Danish Agency for Digitisation around how AI can personalise public service delivery . Researchers have been developing AI algorithms and systems designed to tailor public services to individual citizens' needs, preferences, and circumstances. The research has centred around data analysis, machine learning, and user-centric design approaches to enhance the user experience and effectiveness of public services. Singapore The primary entities involved in the Singaporean national AI strategy include the Info- communications Media Development Authority (IMDA); the Smart Nation and Digital Government Office (SNDGO); and National Research Foundation (NRF). It is noted that are other organisations involved in the Singapore AI strategy not highlighted here. Key themes from the Singapore National Artificial Intelligence Strategy include: Emphasise deployment – Work across public, private and research institutions to enable AI solutions. Includes R&D, regulatory, and capability development; F ocus on key sectors –AI deployment in key sectors with high social or economic value that builds on existing strengths such as transport and logistics, manufacturing, finance, safety, security, cybersecurity, smart cities, healthcare, education and government services; Strengthen the AI Deployment Loop – Within the “AI deployment loop” identify and initiate collaborative AI projects (“National AI Projects”). Utilise these projects to learn lessons; Adopt a human-centric approach - Focus on benefits to citizens and businesses in alignment with the Smart Nation approach. This means focusing on deployment in high value sectors of and addressing the risks and governance issues. Singapore – AI national priority – developing the Singapore AI ecosystem The strategy also identifies unique Singaporean ‘ecosystem enablers ’ that include: (1) The Triple Helix Partnership between the research community, industry and government enabling the commercialisation and deployment of AI solutions (2) AI talent and education – efforts to the shortfall of AI talent across the ecosystem through training and the attraction of top-tier global talent; (3) Data architecture – initiatives to increase the rapid and secure access to high-quality cross-sectoral datasets. This work will focus on the use of frameworks for public-private data collaboration, trusted data intermediaries for data exchange; (4) Progressive and trusted environment – strengthen citizens trust in the development and deployment of AI solutions; (5) International collaboration – ongoing work with international partners to collaborate and guide international AI discourse and develop global standards, policies and guidelines. The Strategy also notes the ongoing focus on high impact AI Projects within wide range of sectors including: Intelligent freight planning; municipal services; medical – including chronic disease prediction and management; education – including personalised education through adaptive learning and assessment; and border clearance operations. Australia Key organisations involved in the Australian national AI strategy include the Department of Industry, Science, Energy, and Resources – policies and innovation; the Australian Centre for Artificial Intelligence and Digital Ethics (CAIDE): ethics and policy guidance; the Commonwealth Scientific and Industrial Research Organisation (CSIRO) - research and industry collaboration. It is noted that are other organisations involved in the development of the Australian AI strategy not highlighted here. Themes from the Australia’s Artificial Intelligence Action Plan include: Focus one: Developing and adopting AI to transform Australian businesses – support to help Australian businesses develop and adopt AI technologies to create jobs and increase their productivity and competitiveness; Focus two: Creating an environment to grow and attract the world’s best AI talent – support to ensure Australian businesses have access to world-class talent and expertise; Focus three: Using cutting edge AI technologies to solve Australia’s national challenges – support to harness Australia’s world-leading AI research capabilities to solve national challenges, and ensure all Australians benefit from AI; Focus four: Making Australia a global leader in responsible and inclusive AI – support to ensure AI is inclusive and technologies are built to reflect Australian values. Australia’s focus on the ethical and responsible use of A I is guided by the Australia’s Artificial Intelligence Ethics Framework that focuses on human, societal and environmental wellbeing and promotes respect for human rights, diversity, and the autonomy of individuals. It also seeks to promote fairness, privacy, security, safety, underpinned by transparency, contestability, and accountability. Australia - AI application to address a national priority – agriculture One specific area of interest within Australia has been the use of AI in agriculture and rural innovation . This work is focused on understanding how Australia can leverage AI technologies to optimize agricultural practices to improve productivity and support sustainable rural development. This includes livestock management, precision agriculture, and crop yield prediction. Research into the use of AI for livestock management is being sponsored by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and other institutions. Of note has been the use of AI algorithms, machine vision, and other sensor technologies to monitor animal behaviour and health. This work has led to the development of AI-powered systems for early disease detection, automated feeding systems, and animal behaviour analysis. Spain Organisations involved in the Spanish national AI strategy include the Secretary of State for Digitalis ation and Artificial Intelligence (strategy and policies); National Institute of Cybersecurity (INCIBE); and the Ministry of Science and Innovation - research and development initiatives. It is noted that are other organisations involved in the development of the AI strategy not noted here. Key themes for the Spanish National Artificial Intelligence Strategy include: Axis 1 – Promote scientific research, technological development and innovation in AI. This includes the Spanish Network of Excellence in AI, academic research, national centers for multidisciplinary research and funding for the private sector; Axis 2 – Promote the development of digital capabilities, national talent, and the attraction of global talent in AI . This includes the National Digital Skills Plan, vocational training, university education, and the "SpAIn Talent Hub" program, including a focus on female talent; Axis 3 – Develop data platforms and technological infrastructures to support AI. The establishment of a Chief Data Officer, industrial data spaces with accessible repositories and the strategic supercomputing capabilities (cloud, edge, quantum); Axis 4 – Integrating AI into value chains to transform the economic fabric . This includes programs supporting companies incorporate AI through Digital Innovation Centers, public-private venture capital fund, and national green algorithms program; Axis 5 – Enhance the use of AI in public administration and in strategic national priorities . This includes establishing the innovation laboratory (GobTechLab), promoting skills and "AI for data-driven public sector" program with a focus on health, justice, employment. Axis 6 – Establish an ethical and regulatory framework that reinforces the protection of rights . Establish observatories to evaluate the impact of algorithms, the Charter of Digital Rights, and an AI Advisory Council. Spain - AI application to address a national priority – Tourism An area of specific interest in the application of AI for Spain has been tourism and hospitality . The focus has been upon using AI technologies to enhance personalized experiences and destination management. Research has been underway between academia in Spain and the tourist industry. Researchers have used AI algorithms and machine learning techniques to analyze large quantities of tourism data, including social media data, booking data, and other tourist behaviour. The research is designed to gain insights, trends, and patterns to support decision-making in destination management, marketing strategies, and subsequent resource allocation. Canada Key entities involved in the national AI strategy for Canada include the Canadian Institute for Advanced Research (CIFAR) - research and initiatives; Innovation, Science, and Economic Development Canada (ISED) policies and innovation; and the Canadian Digital Service (CDS): digital transformation across public services. It is noted that are other Canadian organisations involved in the development of the AI strategy not noted here. The Pan-Canadian Artificial Intelligence Strategy notes the vision of the Government of Canada to have ‘one of the most robust national AI ecosystems in the world, founded upon scientific excellence, high-quality training and deep talent pools, public-private collaboration and our strong values of advancing AI technologies to bring positive social, economic and environmental benefits for people and the planet’. Key themes include: Pillar one: commercialization . This is focused on the use of National Artificial Intelligence Institutes (Amii, Mila and Vector Institute) to translate research in artificial intelligence and commercial applications and support for business to adopt these; Pillar two: standards . Support the Standards Council of Canada and the Canadian Government more generally its efforts to advance the development and use of standards and ethics related to AI; Pillar three: talent and research : Utilise the CIFAR programs to attract, retain and develop academic research talent, as well as maintaining centres of research, and academic training at Amii, Mila, and the Vector Institute. Another priority focus is Canadian compute capacity for AI researchers to support the objectives of the strategy. The Canadian government has considerable focus on the responsible use of AI and have developed directives, guidelines, tools (such as the Algorithmic Impact Assessment) and other support. Canada - AI application to address a national priority – Healthcare An area of particular interest to the Canadian government has been the use of AI in healthcare and medical research . The specific focus has been around how AI could transform healthcare delivery, improve diagnostics, and accelerate medical research. An example of ongoing research into AI assisted disease diagnostics is underway at the Vector Institute for Artificial Intelligence and University Health Network (UHN) in Canada. Researchers at the Vector Institute and UHN have researched AI-powered disease diagnosis using AI algorithms, machine learning, and deep learning techniques to improve the accuracy of disease diagnosis. This research has targeted the diagnosis of cancer, cardiovascular diseases, as well as neurological disorders. Italy Key entities involved in the national AI strategy include the Ministry of Economic Development – strategy and policies; the Ministry of Education, University and Research – research and education; and the Agency for Digital Italy (AGID): Coordinates digital transformation. It is noted that are other organisations involved in the development of the Italian AI strategy not noted here. Key themes from the Italian national Strategic Plan for AI 2022-2024 include: Strengthening frontier research in AI; Reducing the fragmentation of AI research; Developing and adopting human-centric and trustworthy AI; Increasing AI-based innovation and AI technology development; Developing AI-based policies and services in the public sector; and Creating, retaining and attracting AI researchers in Italy. Areas of focus by the Italian government include the provision of AI competences at all education levels, professional development, upskilling and reskilling training programs in AI for the workforce. This will be complemented by building the Italian AI research ecosystem with national centres of excellence (such as the AI and Intelligent Systems Laboratory (AIIS) to increase the competiveness of the AI industry ability to attract international talent and investment. These efforts will be underpinned by the establishment of a regulatory and ethical framework for AI and the provision of digital and telecommunications infrastructure. Italy – AI application to address a national priority – cultural heritage preservation One area of focus for AI use by the Italian government has been cultural heritage preservation. This work has been exploring the application of AI technologies to preserve and restore cultural heritage artifacts and sites. Research has highlighted the use of AI for digital restoration, object recognition, and 3D modeling. Examples of AI assisted heritage preservation in Italy include the use of AI-based digital restoration of artworks and cultural artifacts using AI algorithms, computer vision, and image processing techniques to restore and enhance deteriorated or damaged artworks. Norway Entities involved in the Norwegian national AI strategy include the Norwegian Ministry of Local Government and Modernisation: responsible for digitalization; the Norwegian Ministry of Trade, Industry, and Fisheries - innovation and industry development; and the Research Council of Norway – funding research and supports academic initiatives. Key themes from the Norwegian National Strategy for Artificial Intelligence include: A good basis for AI – The Government of Norway will build world-class AI infrastructure in Norway through digitalisation-friendly regulations, good language resources, fast and robust communication networks, computing power, and data sharing across industries and sectors; Data and data management – Building significant datasets from many different sources with machine learning used to provide insights. The government will encourage access and the active sharing of data from the public sector so that business and industry, academia and civil society can use data in new ways; Language data and language resources – development of technology that exploits Natural language processing (NLP) for virtual assistants and the analysis of unstructured data; Regulations – Modernising the legal and regulatory framework to make it technology-neutral so it keeps up with rapidly changes technology and its application; Infrastructure: networks and computing power and deployment of the electronic communication networks – Ensuring the mobile communication networks in particular are the backbone of the digital transformation of society. This includes fourth-generation (4G) mobile network and the deployment of nationwide 5G network for the application of technology such as for the Internet of Things (IoT). Norway – AI application to address a national priority – smart energy use An area of particular focus for Norway has been around AI in energy and sustainable development. How can AI technologies be used to optimize energy systems, support renewable energy integration, and promote sustainability? Norway has ongoing research underway around the use of AI for energy forecasting, demand response, grid management. A specific application of this work has been energy forecasting research at the SINTEF (Foundation for Industrial and Technical Research), and Norwegian University of Science and Technology (NTNU). Researchers have utilised AI algorithms and machine learning to predict energy demand and production to enable better decision-making in energy planning and optimization. Summary of themes Up Summary of themes from national AI strategies The primary themes within the national AI strategies of the countries reviewed can be distilled down to the following (see Figure 3.0): Research and development : All countries prioritize investing in R & D to foster AI innovation. Talent development : Most strategies highlight the importance of nurturing AI talent through STEM education, training programs and reskilling to address the shortage of AI professionals. Ethical and responsible AI : Many countries emphasize the need for ethical and responsible AI development through guidelines, frameworks, and regulatory measures. Economic growth and competitiveness : All nations note the economic potential of AI to drive growth, enhance productivity, and foster innovation across industries. Societal impact and Public Services : There is a consistent emphasis on the use of AI to address societal challenges and improve public services in a wide range of areas. Industry collaboration : Collaboration between public sector, industry, academia, and research institutions is seen as essential to accelerate AI development, commercialization, and adoption. International cooperation : A number of strategies highlight the importance of international collaboration for research, development, and governance issues. Figure 3.0 - Summary of themes from national AI strat egies AI risk areas Up AI risk areas identified by nations New technology and the associated strategies utilized introduce risk that needs to be managed. All the countries reviewed as part of this report have identified a wide range of risks associated with AI. The level and nature of the risks identified are highly variable depending upon the national context, the specific application of the AI in question, and how mature the national level AI governance and risk management mechanisms are. The most common risks identified with AI at the national level include: Ethical concerns : Many nations have highlighted ethical considerations as a key risk in AI development. This includes issues such as bias and fairness, privacy and data protection, transparency and general (public) understanding of AI systems, and the potential for AI to be used for malicious purposes. Economic disruption and job displacement : The potential for AI and automation to disrupt labour markets and lead to job displacement is a concern for many nations. Strategies often focus on ensuring a smooth transition for affected workers, upskilling and reskilling programs, and creating new job opportunities in AI-related industries. National security and cybersecurity : Many nations recognize that AI technologies can have implications for national security. Concerns include the potential for AI to be used in cyber attacks, the development of autonomous weapons systems, and the protection of critical infrastructure from AI-related threats. Human control and accountability : Maintaining human control over AI systems and ensuring accountability for their actions is a recurring risk. This involves addressing issues of responsibility when AI systems make autonomous decisions and defining legal and regulatory frameworks to govern their use. International competition and strategic advantage : A number of countries are concerned with maintaining a competitive edge in AI development and deployment. Strategies often aim to promote research and development, foster innovation, attract AI talent, and establish international collaborations to stay at the forefront of AI advancements. Besides the application of (universal) human rights, each nations priorities will drive where the focus for AI risk management is. Areas where there is potentially significant impact upon safety, privacy, and wellbeing (such as AI healthcare) will require deeper attention. There are enormous opportunities for nations to learn from each other. Steps to develop a national AI strategy Up Steps to develop a national AI strategy The approaches outlined in this report provide a good base from which a (new) national AI strategy could be developed. While each country will need to tailor its strategy to its own priorities and resources, key steps could be summarised as: Assess the current landscape : Evaluate the country's current capabilities, strengths, and weaknesses in AI research, talent pool, infrastructure, and industry adoption. Identify sectors with potential AI applications and assess the ethical, legal, and social implications. Define the vision and objectives : Establish a clear vision and strategic objectives for national AI development in alignment with the country's broader economic, societal, and innovation goals. Define the intended outcomes and impact of the AI strategy. Undertake stakeholder engagemen t: Engage stakeholders from government, academia, industry, civil society, and the general public to gather diverse perspectives, insights, and expertise. Foster collaboration to ensure collective ownership and support. Develop policy and regulatory framework : Develop policies and regulations that facilitate responsible AI innovation, security and privacy protection, data governance, and ethical considerations. Address challenges related to fairness, transparency and security. Review research and innovation ecosystem : AI innovation requires an ecosystem that supports AI research and development. Invest in research institutions, centres of excellence, and collaborations between academia and industry. Promote knowledge exchange, open data, and access to computational resources. Prioritise talent development : Focus on the development of a skilled AI workforce through education, training, and upskilling programs. Foster partnerships between academia and industry to bridge the skill gap and attract and retain AI talent. Build infrastructure and data resources : Invest in robust and scalable digital infrastructure to support AI development and deployment. Foster data sharing frameworks, data accessibility, and interoperability while ensuring privacy, security, and protection of personal data. Support industry adoption and competitiveness : Encourage AI adoption across industries through incentives, funding and support. Foster public-private collaborations to drive AI innovation, commercialization, and competitiveness. Support AI startups and scale-ups Embed ethical and responsible AI : Establish ethical guidelines, standards, and frameworks for the development, deployment, and use of AI technologies. Promote transparency, fairness, and accountability. Address bias and other ethical concerns. Collaborate internationally : Engage in international cooperation and collaboration to exchange knowledge, best practices, and lessons learned. Participate in global initiatives to shape AI governance, standards, and norms. Monitor and evaluate : Implement mechanisms to monitor and evaluate the progress and impact of the AI strategy. Regularly assess the effectiveness of policies, initiatives, and investments. Iterate strategy based on feedback and changing technology landscapes. Summary The opportunities with Artificial Intelligence (AI) are incredibly wide and deep and offer nations the chance to accelerate initiatives to benefit their economies and societies. There are inherent risks too and sound governance and regulation based upon human rights and ethics will be required. The development of a national strategy for AI is essential for nations seeking to make use of this rapidly evolving technology and its multitude of applications. This strategy work should be used to guide nations in the efficient and effective use of their resources and investment in AI in accordance with their national priorities. Guidance material developed by the World Economic Forum (WEF), the OECD, and European Union (EU), provide nations with a good base to develop their own strategies. The AI strategies of a range of countries noted in this report also provide a reference point for information, comparison, and for examples of the specific application of AI. Further, more specific research is encouraged. The need for international collaboration and cooperation across all aspects of AI development is critical for all nations. It is hoped this report will support build awareness of the value of ongoing comparative analysis and lead to new joint international projects. Summary Up References References AI Institute for Collaborative Assistance and Responsive Interaction for Networked Groups (AI-CARING). https://www.ai-caring.org/ Australian AI action plan (20 21) - https://wp.oecd.ai/app/uploads/2021/12/Australia_AI_Action_Plan_2021.pdf China AI strategy https://datagovhub.elliott.gwu.edu/china-ai-strategy/ CSAIL at MIT - https://www.csail.mit.edu/ France AI strategy - https://ai-watch.ec.europa.eu/countries/france/france-ai-strategy-report_en European Union AI https://digital-strategy.ec.europa.eu/en/policies/european-approach-artificial-intelligence Galindo, L., K. Perset and F. Sheeka (2021), "An overview of national AI strategies and policies", OECD Going Digital Toolkit Notes, No. 14, OECD Publishing, Paris, https://doi.org/10.1787/c05140d9-en The German Federal Government AI strategy - https://www.ki-strategie-deutschland.de/files/downloads/Fortschreibung_KI-Strategie_engl.pdf and www.ki-strategie-deutschland.de Italy AI strategy - https://oecd.ai/en/dashboards/policy-initiatives/http:%2F%2Faipo.oecd.org%2F2021-data-policyInitiatives-27222 The NSF AI Institute for Artificial Intelligence and Fundamental Interactions (IAIFI) https://iaifi.org/ OECD AI https://oecd.ai/en/dashboards/overview OECD overview of AI strategies https://www.oecd.org/science/an-overview-of-national-ai-strategies-and-policies-c05140d9-en.htm OECD going digital toolkit www.oecd.org/going-digital The Netherlands Digitalisation Strategy 2021 - file:///C:/Users/P%20W/Downloads/210621-min-ezk-digitaliseringstrategie-en-v03.pdf The Norwegian National AI strategy - https://www.regjeringen.no/en/dokumenter/nasjonal-strategi-for-kunstig-intelligens/id2685594/?q=AI&ch=4#id0026 The NIST AI risk management framework - https://www.nist.gov/itl/ai-risk-management-framework Ohio State University - AIEdge - https://aiedge.osu.edu/ Rwanda https://www.nepad.org/news/artificial-intelligence-core-of-discussions-rwanda-au-high-level-panel-emerging The Spanish national AI strategy - https://espanadigital.gob.es/sites/agendadigital/files/2022-06/E09M41_National_Artificial_Intelligence_Strategy.pdf Swedish Government review of AI potential https://www.vinnova.se/contentassets/29cd313d690e4be3a8d861ad05a4ee48/vr_18_09.pdf The Government of Singapore – National AI strategy. https://www.smartnation.gov.sg/files/publications/national-ai-strategy.pdf UK Government AI - https://www.insideprivacy.com/artificial-intelligence/the-uk-government-publishes-its-ai-strategy/ UK Government AI - https://www.gov.uk/government/publications/national-ai-strategy/national-ai-strategy-html-version#executive-summary UK Government AI strategy https://www.gov.uk/government/publications/national-ai-strategy/national-ai-strategy-html-version University of Colorado Boulder - https://www.colorado.edu/research/ai-institute/ US government AI strategy https://www.ai.gov/strategy-documents/ US DoD - U.S. DEPARTMENT OF DEFENSE RESPONSIBLE ARTIFICIAL INTELLIGENCE STRATEGY AND IMPLEMENTATION PATHWAY , June 22, 2022 United States - ARTIFICIAL INTELLIGENCE ACTION PLAN , May 7, 2022 US State Department - ENTERPRISE DATA STRATEGY: EMPOWERING DATA INFORMED DIPLOMACY , September 27, 2021 US Department of Homeland Security - S&T ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING STRATEGIC PLAN , August 1, 2021 United States, Department of Health and Human Services - U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES: ARTIFICIAL INTELLIGENCE (AI) STRATEGY , January 14, 2021 United States, Federal Drug Administration - ARTIFICIAL INTELLIGENCE/MACHINE LEARNING-BASED SOFTWARE AS A MEDICAL DEVICE ACTION PLAN , January 2021 United States, Department of Homeland Security - U.S. DEPARTMENT OF HOMELAND SECURITY ARTIFICIAL INTELLIGENCE STRATEGY , December 3, 2020 (United States, Department of Transport - ENSURING AMERICAN LEADERSHIP IN AUTOMATED VEHICLE TECHNOLOGIES 4.0 , January 2020 United States, Department of Justice - DATA STRATEGY FOR THE U.S. DEPARTMENT OF JUSTICE , February 26, 2019 United States - Department of Defense - DEPARTMENT OF DEFENSE ARTIFICIAL INTELLIGENCE STRATEGY , February 2019 United States, Office of Director of National Intelligence) THE AIM INITIATIVE: A STRATEGY FOR AUGMENTING INTELLIGENCE USING MACHINES , January 2019 US Department of Transport - PREPARING FOR THE FUTURE OF TRANSPORTATION: AUTOMATED VEHICLES 3.0 , October 2018 US Department of Transport – Automated driving systems 2.0: A VISION FOR SAFETY , August 12, 2017 Up Download report HOME

Auckland railway land could be re-used in innovative ways to provide space for new residential, commercial, mixed-use, or greenspaces. This is not a new concept and there are numerous international examples where this has been done successfully. The case for innovative use of railway land in the Auckland CBD Auckland is New Zealand’s largest city with an estimated population of 1,673,000 in 2023. According to Statistics NZ, the city is projected to reach two million residents by the early 2030s if not sooner. Within the city, the Central Business District (CBD) is growing at around 1.7% and currently provides around 110,000 jobs for nearly 20% of Auckland’s working population. The city centre has a growing residential population of over 40,000 people with another around 7000 housing units planned. Land in Auckland’s Central Business District (CBD) is amongst the most expensive in New Zealand. The Real Estate Institute of New Zealand (REINZ) reported that Auckland prices increased by 350% from 1999 to 2019. This is simply the economics of urban intensification and is consistent with the experience of cities around the world. As with many international cities, this ongoing growth has led to the exhaustion of land available for development in the CBD. There may be new opportunities, however, to unlock value from some Auckland CBD land and the wider Auckland metro area for clever multi-purpose use. Specifically, there is a case to consider innovative ways to use the land above, below and adjacent to the Auckland railway network. The Auckland Central Rail Link (CRL) is notably already on course to bring significant economic development to the sites adjacent to the newly built railway stations. Britomart station, Newmarket Station, Waitematā Station and others have shown what this kind of multi-purpose use could look like and the transformation it has initiated in the surrounding areas. Interest in developing railway land is increasing internationally The development of railway associated land is not a new idea and many high-density international cities have undertaken extensive investment in such land. This includes a number of European cities with old metro networks through to rapidly developing metropolitan areas in North America and the Asia-Pacific. While some have the historic advantage of underground networks developed over hundreds of years, many do not. Planning frequently begins from core transport hubs and ripples outward. Railway stations and railway lines are by necessity close to the built environment. Key nodes within the network are the source of intense urban planning and considerable investment. Reusser et al (2008) highlights how railway stations in Europe are becoming a destination in their own right and are consequently attracting investment. The necessity to connect the space adjacent to transit areas (including railway stations and lines) is essential to urban revitalisation. Zacharias et al (2011) notes the trend in Japan ‘to combine commerce, leisure, media, fashion, information’ to make railway stations and the area around them spaces for ‘creation and innovation’. Railways and the use of railway land have a significant impact upon the urban environment and in many cases its linearity can divide urban centres. Revisiting common assumptions and challenging the downsides of rigid railway infrastructure needs to be encouraged to facilitate better movement within cities and prevent unwanted urban ‘dead zones’. There is no doubt that the railway network in Auckland city has had a significant impact on the evolution of the city, its liveability, and the people who live in it. The question is whether the innovative use of Auckland’s rail associated land could provide a solution to a number of the challenges the city faces and a means for the step change the city deserves. Feasibility of developing Auckland railway land The merits of using railway land optimally seems self-evident, particularly in dense urban environments such as Auckland. The question is whether the value of developing these critical nodes and associated railway land for multi-use would provide a Return on Investment (ROI) for the Auckland CBD and wider metro areas. At a basic level, the analysis for the ROI for the development of railway land in the Auckland CBD would need to consider: (a) the cost of the railway land (b) the cost and complexity to develop the land (c) the cost and impact upon adjacent associated infrastructure (d) the potential ROI from development itself and (e) the social, Iwi, environmental considerations and possible cost/benefits from such projects. Covered railway corridor – Paris metro. Engineering company WSP have undertaken analysis of the feasibility of using the space above railway land within the London metropolitan area to build residential housing. By their calculations there could be around 280,000 new London houses constructed above railway land. This estimation was based upon an assumption that the buildings above the railway would be 12 storeys high and upon ‘viable land’ of at least 100 metres long. Key constraints were assessed to be decking costs (span width, foundations, etc), rail restrictions and risk, and delays associated with approvals. The opportunity to develop Auckland’s railway land also needs to consider the wider, longer-term benefits of such development to the urban environment. How could it support Auckland become a more liveable city? Could it help manage sustainable intensification? Could it revitalise and re-connect the city? Could new sustainable green space be developed? What other opportunities could emerge from this? Development use cases for Auckland railway associated land The opportunities are endless but development options with railway associated land could include: Residential housing development The housing crisis due to inadequate supply for the growing population is a challenge Auckland and a number of international cities continue to grapple with. Medium to high rise residential developments above railway land could allow the provision of housing in the Auckland CBD and wider metro area. This could support the policy objective of continuing intensification within urban centres and the associated use of public transport to reduce environmental impact and increase efficiency. WSP estimate that Australian cities Melbourne and Sydney could create an extra 77,400 and 29,160 homes respectively by building over railway associated land. There are numerous other international examples including Manchester (UK) Victoria station and The Royal Mint Gardens development above Fenchurch Street Station. Within Auckland, the Newmarket railway station is an example at a smaller scale. Enhanced pedestrian access Connecting the city and allowing more seamless pedestrian movement between its key attractions has been an ongoing focus for Auckland. This effort could be accentuated further by reimagining disused railway land and/or building over the land in the city and reducing the barriers it creates. This kind of project could become an iconic feature of the city and significantly enhance its liveability. Examples of this include the ‘Goods Line’ in Sydney where a disused rail line has been converted into greenspace for pedestrians and cyclists from railway Square to Darling Harbour. The High line in New York city is another example of a pedestrian walkway that utilises 2.33 km of disused elevated freight railroad. Urban living and green space The creation of new urban living areas including ‘green space’ within the city is an exciting prospect. This could range from parks, gardens, forested areas, connected walkways, public squares, covered civic facilities and everything in between. This could provide an opportunity to radically transform the aesthetic look and feel of parts of Auckland city and enable rejuvenation. Examples include Federation square in central Melbourne that sits on a 38,000m2 solid deck over the Jolimont Railway Yards. Atlanta city is considering a project ‘Buckhead Park Over GA400’ which will be 731 metres of greenspace over a railway line and highway Called Buckhead Park Over GA400. Singapore is also undertaking work to revitalize a former 24-kilometre-long disused railway into a public park and Boston, US is considering options to re-use spaces beneath its elevated roadways. Mixed use development Mixed use developments could include shopping centres, hotels, residential and other commercial use. While mixed use development in many international cities is frequently centred around high volume rail transport hubs, other rationale (such as proximity to the foreshore and key other attractions) may be equally important factors in Auckland. Examples include the ‘Shard’ in London, which is built partially above the London Bridge Station, the Grand Arche complex above the Paris metro system, Wien Mitte ‘The Mall’ at Wien Mitte train station (Vienna), Euston Station in London, and Stratford station in the UK. Cycle paths Dedicated cycleways are already a feature of the Auckland CBD and metro areas and this could be further developed and connected to new walkways and greenspaces. An example is the Berlin Radbahn project that aims to create nine kilometres of covered bikeways beneath Berlin’s U1 railway. Sporting/recreational facilities New sporting and recreational facilities could be created above railway land in Auckland. This could range from facilities used for sports such as basketball, netball, tennis, football, badminton, squash, golf driving ranges, to aquatic complexes. At the larger end of the spectrum are stadiums capable of holding large events and thousands of spectators. International examples include the Brentford Football club in the UK that is above the Great Western Main line and the proposed new Chelsea Football Club stadium in London. The Chelsea project will use decking to cover the West London railway Line and the District Line on the London underground. Schools and educational facilities Land suitable for building new school facilities and/or extending existing ones is challenging to find in the Auckland CBD and wider metro areas. This may become particularly acute in the Auckland CBD with rapidly increasing levels of residential housing. Schools and tertiary educational facilities could be built over railway land close to the CBD to alleviate the pressure on out of zone schools and reduce commuting time for families. Examples include the London based Ark Soane Academy that will have a capacity for 1,200 students being built above Ealing Broadway Station. In Tokyo, the Tokyo Metropolitan Kokusai High School was built above the Shinjuku Station and has seven-stories and can accommodate around 1,000 students. Possible locations for viable Auckland railway land Auckland has kilometres of railway land located within the CBD and the wider metro area that could be exploited for future development. While the viability of this land for future development is unknown, detailed analysis of each option could be warranted. The prospective land could include the following locations: The railway land between Mechanics Bay and Tamaki Drive; The railway land between Quay St, Ngaoho Place, and Te Taou Crescent; The railway land corridor from the Grafton Station to Eden Station and further West; The railway corridor from Parnell Rise encompassing the Parnell and Newmarket Stations; The railway corridor between Great South Road and State Highway 1 – from Remuera Road encompassing the Remuera, Greenlane, and Ellerslie Stations; The railway corridor from Penrose Station encompassing Te Papa and Onehunga Stations; The railway land in Penrose from Nielson Street South through to Otahuhu Station and adjacent to Manukau Harbour; The railway corridor from Otahuhu Station South through Middlemore, Papatoetoe, Puhinui Stations. The railway land between Titi Street and Otahuhu train Station; The railway corridor between Waipuna Road and Sylvia Park and South to the Southern Eastern Highway; Other examples that may also exist in the wider Auckland metropolitan area. Conclusion The price of land in the Auckland CBD could j ustify development of land above, below and adjacent to the Auckland railway. This could unlock space for residential, commercial, and a wide range of other use cases. The broader opportunity, however, for Auckland could be in the development of new space that connects the city and makes it more liveable. It is recommended that further analysis is undertaken around the feasibility of such projects. References Arcadis. Development of Melbourne’s Federation Square. https://www.arcadis.com/en-au/projects/australia/federation-square Buckhead community improvement district. https://www.buckheadcid.com/buckhead-community-improvement-district-secures-750000-hub404/ City Rail Link (2023). Website. https://www.cityraillink.co.nz/crls-benefits#benefits_urban_renewal Construction news (2019). Brentford FC’s stadium build keeps within the (railway) lines. https://www.constructionnews.co.uk/buildings/project-reports/brentford-fcs-stadium-build-keeps-within-railway-lines-05-06-2019/ Euston Estate Limited Partnership. Super Stations Lessons for Euston station – how mixed-use developments can transform a community http://sydneyandlondon.com/wp-content/uploads/2014/02/Super_Stations1.pdf Farrat Engineers (2001). Why people are building above railway stations. https://farrat.com/news/why-people-are-building-above-railway-stationswhy-people-are-building-above-railway-stations/ Funding and Financing Public Transport Infrastructure, Steer Davies Gleave and Campaign for Be tter Transport, April 2016. www.cbtthoughtleadership.org.uk/SDGFundingAndFinancingReport.pdf Jiyoon S (2013) The economic impact of the preservation and adaptive reuse of rail tracks, the high line in New York City: regional impact analysis and property value change analysis. Doctoral dissertation, Cornell University Mott McDonald. The challenges of over station projects. https://www.mottmac.com/views/the-challenges-of-developing-over-station-projects Real Estate Institute of New Zealand (REINZ). Megatrends report New Zealand property market 2022. https://static1.squarespace.com/static/5ce1fd700bf20400017d3a30/ t/62870764dbe 861605892a31c/1653016425667/MegatrendsReport_FINAL.pdf Reusser, D., Loukopoulos, P., Stauffacher, M. and Scholz, R. (2008) Classifying railway stations for sustainable transitions – Balancing node and place functions. Journal of Transport Geography 16 (3): 191–202 Staudacher, C. (2001) Bahnhof und Stadt–Bahnhofsviertel als Standort- und Lebensgemeinschaft. Wirtschaftsgeografische Studien 12 (27–28): 17–36 Syms P (2000) Urban regeneration: a handbook. Reg Stud 34:896–897 UK Government. www.gov.uk/government/news/regeneration-of-stations-set-to-deliver-thousands-of-new-properties-and-jobs www.cbtthoughtleadership.org.uk . Development around stations - Exploring international experience and lessons for the UKhttps://bettertransport.org.uk/wp-content/uploads/legacy-files/pdfs/Tracks-Development-Around-Stations.pdf Wang J, Xiang Y, Luo Y (2010) Urban abandoned railway planning strategy based on the concept of green corridor. Northern Horticult 5:129–132 Wise D (1985) Urban regeneration. Construction 52:48–52 WSP. Network – a technical journal by WSP. Rail Overbuild: Current and Future Activity in London http://network.wsp-pb.com/article/rail-overbuild-current-and-future-activity-in-london Zacharias, J., Zhang, T. & Nakajima, N. Tokyo Station City: The railway station as urban place. Urban Des Int 16, 242–251 (2011). https://doi.org/10.1057/udi.2011.15 Zhang, C., Dai, S. & Xia, H. Reuse of Abandoned Railways Leads to Urban Regeneration: A Tale from a Rust Track to a Green Corridor in Zhangjiakou. Urban Rail Transit 6, 104–115 (2020). https://doi.org/10.1007/s40864-020-00127-2 Zhang F, Yang W (2017) Selection of utilization modes of urban waste railways based on value engineering. J Heilongjiang Inst Eng 31(4):12–18 Zuo Z, Li C (2017) Study on the construction and planning of high-density urban ecological pattern based on the reuse of abandoned urban railways. Urban Archit 21:37–40 HOME MORE REPORTS

The basic steps to starting a government AI program Improving Government efficiency What steps can Governments take to increase their efficiency? Governments worldwide seek to improve efficiency in public service delivery, balancing cost-effectiveness with high-quality outcomes. Achieving this balance requires a series of strategic choices, from adopting new technologies and innovative practices to reshaping organisational structures. In this article, we discuss essential strategies for fostering efficiency, including overcoming common barriers. Promoting innovation and adaptability Innovation is central to enhancing efficiency in government. By embracing new practices and digital solutions, governments can streamline workflows, reduce reliance on manual processes, and improve overall service delivery. For instance, automating data processing or integrating digital platforms can significantly reduce operational costs, making services more accessible and efficient. Encouraging a culture of adaptability and ongoing improvement helps departments remain responsive to changing needs and develop solutions that better serve the public. Artificial Intelligence (AI) offers numerous innovative opportunities for efficiencies (see AI productivity ). Building scale with proven methods Once effective practices are identified, scaling them across agencies is vital to maximise efficiency. However, scaling requires cohesive management and structured governance (see Digital era governance ), as fragmentation can hinder consistency. Using sunset clauses to periodically review and assess programmes allows governments to retain only those services that demonstrate clear value, reducing regulatory burdens and focusing on high-impact areas. Scaling also involves phasing out ineffective services, redirecting resources to more successful initiatives. Shared services and centralisation Government support services, including finance, HR, and IT, often operate in separate silos across departments, leading to duplicated efforts and inconsistencies. By consolidating these functions into a shared services model (see Shared services ), governments can eliminate redundancies, standardise processes, and lower costs. For example, shared IT services can provide a unified platform for departments, simplifying access to essential tools like email, intranet, and data storage while reducing individual agency expenses. In addition to cost savings, shared services enhance reliability and improve service quality, as centralised teams (see Digital Government Units ) can more effectively address technical issues and support user needs. Consolidated procurement practices Procurement is a substantial area of government spending, accounting for a significant portion of public sector budgets. Consolidating procurement across departments (see Reducing digital expenditure ) enables governments to leverage their purchasing power to negotiate better prices, streamline purchasing, and ensure consistent quality. By centralising these processes, governments can reduce administrative burdens, strengthen supplier relationships, and derive greater value from public spending. Incentives to drive efficiency gains Incentivising departments to adopt efficient practices can be a powerful motivator in achieving government-wide efficiency (Breaking silos across Government ). Best practices include performance-related pay and recognition programmes that reward individuals and departments for implementing cost-saving measures or innovative approaches. Performance-related incentives, such as linking a portion of pay to meeting efficiency targets, encourage staff to take ownership of efficiency goals. Additionally, fostering a culture of accountability and transparency around these targets can motivate teams to actively pursue and sustain improvements. Measurement and analysis for informed decision-making To manage public resources effectively, governments require a comprehensive approach to measurement and analysis. This allows for data-driven decision-making (see Data sharing across Government ), ensuring that resources are allocated to the most effective programmes. Accurate measurement capabilities can identify areas of waste, benchmark department performance, and highlight successful strategies for replication. For instance, monitoring processing times or citizen satisfaction with services can reveal where efficiencies can be gained, enabling government leaders (See Digital leadership ) to make informed decisions on programme adjustments and resource allocation. Human capital development The public sector workforce is one of the largest expenses for governments, making effective human capital management critical. Investing in training, professional development, and workforce planning ensures that staff have the skills (see AI skills ) needed to manage new technologies and meet modern demands. An effective human capital strategy involves not only attracting talent but also retaining and developing it, enhancing the overall productivity and adaptability of the workforce. Lean continuous improvement Lean methodologies (see Lean Government ) focus on continuously improving processes by eliminating inefficiencies that do not add value from the citizen’s perspective. This approach is widely applied in areas like healthcare, where it can reduce wait times and improve service quality by streamlining workflows. Lean practices help ensure that public resources are used effectively, delivering the highest possible value to citizens. Barriers to efficiency Government efficiency efforts often face obstacles, including political dynamics, limited resources, and organisational resistance. Addressing these challenges requires a proactive and adaptable approach, ensuring reforms are supported by a clear commitment to efficiency. Political obstacles: Political considerations can slow down efficiency initiatives, with competing agendas creating potential roadblocks. A practical, cross-departmental approach can help mitigate this, focusing on outcomes and creating alliances across political lines to achieve shared goals. Capacity limitations: Many government agencies operate under tight resource constraints or lack the expertise necessary to drive substantial reform. Investing in training, technology, and skilled staff is essential to build a foundation for sustainable and effective change. Shifting priorities: Changes in administration often lead to shifts in priorities, disrupting ongoing efficiency initiatives. Establishing leaders or teams dedicated to long-term efficiency goals can ensure continuity, even as political agendas evolve. Cultural resistance: Resistance to change is common in established government organisations. To overcome this, leaders must foster a culture of accountability, adaptability, and openness to new ideas, helping teams embrace the idea that efficiency reforms, though challenging, benefit all stakeholders. Conclusion Improving government efficiency requires a combination of innovation, strategic scaling, strong incentives, and data-driven decision-making. Governments can achieve significant efficiencies by adopting shared services, consolidating procurement, and fostering a culture of accountability and continuous improvement. By addressing common barriers and establishing clear, measurable goals, governments can enhance the quality of public services while responsibly managing resources.

The 9 step policy development process for Government agencies Nine step policy development process. Developing good policy is a complex and multifaceted process that demands careful consideration, collaboration, and substantial time and effort. It is an indispensable aspect of governance, whether in the public sector, private organizations, or even within communities. There are many compelling reasons why investing the time and effort into crafting effective policies is essential. Well-crafted policies provide a structured framework for decision-making . They outline clear objectives, define roles and responsibilities, and establish guidelines for actions. This clarity helps organizations and governments navigate various situations with consistency and fairness, reducing the risk of arbitrary or biased decision-making. In turn, this fosters trust among stakeholders, whether they are citizens, employees, or investors, as they can rely on a transparent and accountable system. Good policy development involves extensive research, data analysis, and consultation with experts and affected parties. This process ensures that policies are grounded in evidence and are informed by diverse perspectives. By integrating a wide range of inputs, policies become more robust, adaptable, and capable of addressing the complexities of real-world challenges. In essence, policy development serves as a mechanism for harnessing collective wisdom and knowledge, leading to more informed and effective solutions. Investing in the development of good policies contributes to long-term stability and sustainability. Policies help mitigate risks, anticipate future issues, and promote strategic planning . By considering the potential consequences of various courses of action, organizations and governments can avoid costly mistakes and crises. This proactive approach not only safeguards the interests of stakeholders but also saves resources that might otherwise be wasted on reactive measures. Developing good policy is hence a process that is worth the time and effort because it provides a foundation for fair and consistent decision-making, harnesses collective knowledge and expertise, and contributes to long-term stability and sustainability. Whether in the public or private sector, investing in policy development is an essential element of effective governance and responsible leadership, ultimately leading to better outcomes. While every organisation, government, or institution is likely to develop policy differently – there are some basic steps that should be included as part of the development process . Following these steps will increase the likelihood of high quality policy advice. The extent to which each stage is followed will depend on a range of conditions such as the project’s size, the resources available, the timeframes, and the risks associated with the project. Contents Step 1. Define the Problem Step 2. Identify Objectives Step 3. Develop Options Step 4. Determine Criteria Step 5. Access Options Step 6. Formulate Reccommendations. Step 7. Implement Step 8. Monitor Step 9. Evaluate Step 1. Define the Problem The aim of the first stage of the policy development process is to clearly define the problem you want to address. This guidance covers the following topics: Why defining the proble m is important Key tasks when defining the problem Things to avoid when defining the problem Key deliverables and achievements Quality standards 1. Why defining the problem is important During this stage in the policy development process you need to develop an: in-depth understanding of the problem’s underlying causes awareness of the competing values, ideologies and beliefs surrounding the problem. By identifying and clearly stating the real underlying problem (as opposed to a perception of the problem), your policy response is more likely to address the problem adequately. If you define the problem incorrectly, your subsequent analysis is likely to be of limited value. Revisit your problem definition as you gain additional information and carry out analysis throughout the policy development process. With each iteration of the definition you can be more confident you are focusing on the right problem. Note : It is important to make the time to understand and define the problem clearly, even if you have only a short timeframe to develop a policy response. 2. Key tasks when defining the problem Define the problem after gathering and analysing the information most relevant to the problem. You will use the information you gather during this stage throughout the policy development process, as it frames and generates the subsequent stages in the process. Key steps when defining the problem Follow these steps to define the problem. 1. Plan what information to gather and how Good quality policy making depends on high quality information derived from a variety of sources. This information includes: expert knowledge and opinion domestic and international research statistics and empirical data stakeholder consultation information evaluations of previous policies and interventions new research secondary information, including open source information from the internet. Each policy project requires different amounts and types of information depending on its size and nature. Your policy must be informed by the available information. If minimal or no published information is available, acknowledge this limitation explicitly. 2. Analyse the information 3. Draft the problem definition 4. Consult on the problem definition Revisit the problem definition and revise it as needed. 5. Identify the level of approval Identify the level of approval required for the project to proceed beyond this stage (e.g. approval from a policy manager, senior manager, Chief Executive, or a Minister(s). Key questions when defining the problem It is helpful to ask the following key questions when defining the problem. What is the perceived problem? What assumptions underlie the problem? It is your role to identify, make explicit and explain the different assumptions and values behind the problem. The idea that there is a problem that needs to be resolved exists usually arises when someone thinks something is not working as well as it could (or at all) or has an idea about an improvement. Stakeholders have differing values and will not always agree what the problem is or even if there is a problem. People usually define a ‘problem’ as something that is ‘wrong’ or ‘undesirable’. However, different people define these terms differently, depending on their evaluative framework. You need to be aware that not everyone will think the facts you (or others) have defined as a problem are necessarily even a problem. Consider whether a stakeholder is presenting you with a solution rather than a problem. Do any theoretical frameworks and values underlie the problem? Different theoretical frameworks: define policy problems differently emphasise different outcomes suggest different criteria for assessing options lead to different options for addressing the problem. Understand the key theoretical frameworks within which policy is developed, so you can work within the relevant framework and understand the language used by, and debate issues with, analysts using other frameworks. Analysts working within different frameworks may take different approaches to the same stage of the policy cycle. This is particularly relevant when developing policy in a cross-agency/organisational context. Understand the influence of common belief systems is important, so you can: understand the assumptions behind policy proposals use the intellectual frameworks associated with belief systems as starting points for analysing the causes of, and solutions to, a problem identify their frames of reference and make allowances for these when considering policy matters. What is the Government’s underlying framework? Governments and organisations with different political and ideological beliefs have different views and make different assumptions about the Government’s role and the nature of people in society. For example, governments may have different views about equality: Some may believe that equality is not possible, but governments should look after less fortunate people Some may think that Governments should ensure equality of opportunity, then leave the responsibility to utilise the opportunity to the individual Others may believe Governments should strive for equality of outcome. Because of these different assumptions, different policies would be developed to provide for the same situation. Recognise and challenge these assumptions in your initial analysis of whether a problem needs more attention. What are the problem’s perceived symptoms? What is the context in which this problem has emerged? What conditions or events lie behind this problem? Describe (rather than assess) the political, cultural and socio-economic aspects of the context surrounding the problem. Understanding the context is critical for policy design. Determine how these and other factors (such as institutional capacity, the history of resource use and the policy, economic conditions (local, national or international), and pressure from society) might affect the problem. What natural and built environmental conditions surround the problem? Who is affected by the problem and how? What are the characteristics of the population that is or will be affected by the problem? How does the population vary by age, gender, ethnicity, employment status or locality ? Understand the needs and characteristics of the population affected by the issue, so you know what behavioural aspects to consider. Think carefully about what is most likely to influence the group to respond positively to a policy intervention. How is the effect of the problem distributed across different groups and regions? How does the problem affect specific geographic, age, socio-economic and cultural groups? What are the problem’s effects in terms of magnitude, duration and frequency, regional limits, reversibility, cumulative impact, local sensitivity and probability? Multiple groups may be affected by the problem, so multiple views will be represented in the problem definition. A problem for one group may represent a benefit for another, or a range of problems might exist, but only for a certain group. Consider also problems that may emerge in the future linked to symptoms or context factors present today. Can the problem be quantified ? What is the problem’s trend ? Is the trend increasing or decreasing? Is the nature of the problem changing, if not increasing in occurrence ? Is the problem linear, discontinuous or cyclical? Think in terms of deficit and excess. Indicate the problem’s size. If something is developing ‘too slowly’, is ‘too big’ is or ‘too small’, define ‘too slow’, ‘too big’ or ‘too small’. Gather information to help you estimate the relevant magnitudes of the problem. Consider identifying a range of estimates as well as a point estimate. Is this problem similar to or different from other problems? What were the solutions to those problems? What are the interdependencies between these issues and other issues? Is there a larger problem of which this problem is only a part? Are there smaller problems into which this problem can be divided? Does this problem exist in other countries ? If so, how is it defined and handled there? How has this problem been defined and handled in the past? Is this a universal problem for any society or is it peculiar to a society with a particular institutional or political structure? Research and appreciate the history behind the problem (such as previous policy responses). Many situations requiring a policy response are not new. Government agencies frequently have considerable experience and institutional knowledge in dealing with a wide range of situations. Draw on this experience to learn lessons and avoid repeating an aspect of a policy that has not worked well before. What are the wider community’s views about this problem? Understand the interests and expectations of the people who will, or may be affected by, or have an interest in, the problem. Not everyone will think the facts you (or others) have defined as a ‘problem‘ really are a problem, as each person may apply a different evaluative framework to the same facts. Are people avoiding sensitive issues? If so, how are you managing this? What other agencies are involved? What non-governmental agencies are involved with or affected by this problem? What agencies are working in the community or with the people affected by this problem? Are you distinguishing between causes and symptoms? Symptoms are often how problems present. Distinguish causes from symptoms by asking, ‘If the problem, as identified, was addressed would it be resolved?’ If your answer is ‘no’ you are probably identifying symptoms rather than causes. Ask of each possible cause, ‘If this is the true cause of the problem , how does it explain each symptom?’ Different groups and interests will make different assumptions about the underlying causes. If there is no agreement on the cause, it may be difficult to formulate agreed policies. You can summarise your causal analysis using a tool called a 'problem tree’. This is a practical way to represent the different problems and show how they relate to each other. Are there competing hypotheses about this problem's underlying causes? What are the underlying assumptions of each hypothesis? What theoretical frameworks underpin each hypothesis? What evidence supports a causal link? How does the problem affect your Government? Consider the following. What are the micro- and macro-economic effects of the problem? How does this problem affect the Government’s objectives? What are current Ministers and government administrations declared interests and preferences? Can the Government influence the causes or symptoms? What are your agency’s role and mandate with regard to the problem? Consult at both interdepartmental and public and stakeholder levels. What are other departments’ perspectives? Engage with other government agencies to clarify the policy problem and related issues across government. These discussions can highlight information, issues and potential problem areas, draw attention to important relationships that you will need to manage throughout the process, and highlight cross-government outcome considerations. Other agencies may know nothing about the particular situation, but they may be able to share their experiences from dealing with similar problems and situations. 3. Things to avoid when defining the pro blem When defining the problem, avoid the following pitfalls that can decrease your definition’s usefulness. Defining the solution to the problem . Do not construct the definition of the problem being considered so that it includes an implicit solution. The definition must be open to a range of possible solutions. For example, saying ‘Too little housing exists for homeless people’ implies the solution is ‘more shelter’. This will inhibit you from thinking about ways to prevent people from ‘becoming homeless’. Start with ‘There are too many homeless people’. Forgetting to question apparent causal chains . Verify that the alleged causes of a problem are real; not assumed. Ask, ‘Do the problems you have identified lead to the outcomes? If so, to what degree do they lead to the outcomes?’ Cause and effect needs : a high degree of association between the causal factor and the effect; a logical time sequence where the programme precedes the effect; to eliminate other possible causes; an association that remains consistent when studied in different groups and at different times; agreement with known facts or theory; to show that with greater exposure there is a greater effect. Most single studies cannot show cause and effect on their own. By demonstrating the same results by researchers over several studies, you can feel more confident in the findings. Not recognising the philosophical grounds or frameworks . The raw material for your initial problem definition may come from your Minister or other stakeholders. It may be narrowly confined to a technical problem or broadly located in a controversy of wide social interest. It may point to a condition people do not like or consider ‘bad’, like school children use of social media, media violence or global warming. Explore the philosophical grounds and frameworks in which you, your client or your eventual audience should or should not consider the alleged condition ‘bad’. Attributing greater representativeness to the information that is valid. You are unlikely to be able to apply the results of a small-scale study to a wider group or geographic area. Your problem definition should reflect only the data you analysed. Take into account the credibility and validity of the information you have interpreted. Every policy process has limitations. Acknowledging these limitations only strengthens the policy’s credibility and likelihood of success. 4. Key deliverables and achievements Your key deliverable at the end of this stage is a clear, concise, accurate and agreed problem definition. You will also have achieved the following: An understanding of the significance of the problem being considered. You will have produced, and got agreement on, a succinct summary of the problem (preferably quantitatively described). For example, your problem definition could state, ‘Groups x and y are suffering from the adverse outcomes a and b as a result of factors p, q and r’. This provides a clear reference point for later stages of policy development. Clarity about whether your agency needs to pursue the problem. You will be able to explain: why the Government should be involved in addressing the problem who else needs to be involved in developing a solution (e.g. other departments). Authorisation for further policy development. Without authorisation and support from senior levels the policy development process will not be workable and the resulting policy will not be viewed as official. However, not every policy issue needs ministerial approval. At the outset of this stage you will have identified with your manager the level of approval required for the project to proceed beyond this problem definition stage. If approval includes applying project management methodology, scope the policy development and draft a project plan. 5. Quality standar ds Your problem definition must meet the following standards and identify the context and parties, including: an analysis of the current situation current Government involvement (e.g. legislation) the decision-making context stakeholder assumptions sector concerns, assumptions and underlying values legal considerations (e.g. fit with law) ethical considerations risks of current situation impact on outcomes. The problem definition identifies: the problem’s variables, symptoms and root cause other factors occurring within and around the problem the risks of change or no change the benefits of change or no change. A logical explanation exists for why your agency is advising on the problem. The problem definition exploits your agency’s collective institutional knowledge and experience beyond the agency. Project management requirements for scoping and project planning have been met, if appropriate. step 1 step 2 identify objectives Step 2. Identify Objectives The aim of the second stage of the policy development process is to identify what the policy needs to achieve (i.e. its objectives).This guide covers the following topics: Why identifying objectives is important Key tasks when identifying objectives Things to avoid when identifying objectives Key deliverables and achievements Quality standards 1. Why identifying objectives is important Objectives describe what the situation would look like after the problem was resolved. They focus on what has to be achieved, not how it is to be achieved. Well-founded, clear objectives: show you understand what the policy needs to achieve show you understand what the situation will look like once a policy has been decided and actions taken identify what the Government wants to achieve through action or involvement with the problem provide a sound basis for you to design and select options provide a benchmark against which to evaluate achievements. 2. Key tasks when identifying objectives This subsection covers the following topics. Content of objectives Steps when identifying objectives Content of objectives Identify what you hope to achieve through any action or intervention (i.e. the objectives). Objectives must contain the: specific results being sought contribution the results will make towards government or departmental outcomes or other objectives measures or standards to be used to assess whether the expected results have been achieved timeframe within which the objectives are to be accomplished. Steps when identifying objectives Follow these steps to clarify your objectives. 1. Determine what has to change to resolve the problem Using your problem definition to determine exactly what it is that has to be corrected, maintained, improved or created to resolve the problem. Initially, it may be appropriate for you to focus on needs that are amenable to change or are the most prevalent, serious or pressing. 2. Determine the policy’s intended outcome Establish the outcomes the objective is intended to achieve or contribute to. Determine the policy’s intended outcome after referring to: goals the Government has specified for the government sector generally or your agency in particular intermediate outcomes specified in your agency’s statement of intent (if your agency has one) outcomes specified in relevant legislation specific Government or ministerial directives relating to the particular policy area in which you are working. 3. Draft your objectives It is important to make your objectives SMART: Specific Measurable (quantifiable) Achievable (feasible, realistic) Results focused (explicit) Achievable within a realistic timeframe. Specify the objectives broadly enough so all alternative solutions can be considered, but not so broadly the range of alternatives becomes too large to assess, or the extent to which the objectives have been met becomes too hard to establish. 4. Review your objectives Are your objectives specific about what has to be achieved and internally consistent? If not, adjust them accordingly. 5. Identify indicators of success Each objective needs clearly defined indicators. When measured, the indicators will tell you whether the policy’s objective has been achieved (i.e. whether the policy has been successful). An indicator must: be a logical link between the available evidence (what is measurable) and the objective (what is to be achieved) be sensitive enough to measure changes within an initiative's timeframe be affordable (i.e. in terms of ‘return for effort’ and the balance of costs and benefits) be stated clearly and concisely make sense to stakeholders. 6. Seek managerial approval for your objectives Arrange for the manager who will ultimately approve the new policy to review and agree on your objectives. This review is critical for avoiding misunderstandings about scope, timing, responsibilities and ownership. 3. Things to avoid when identifying objectives When identifying the objectives, avoid the following pitfalls that can decrease their usefulness. Identifying policy decisions in the objectives. Your objectives must not contain decisions about how something will be achieved; only what will be achieved. For example, the objective would not be ‘to provide literacy programmes to adults’ but ‘to increase adult literacy’. Writing vague or over-optimistic objectives. Vague or over-optimistic objectives limit your ability to assess the options. Without clear objectives your policy lacks focus and a basis on which you can decide about options and implementation. Be realistic. Vision statements are an inspiring picture of the future, but objectives should reflect realistic priorities. If you have arbitrarily selected objectives you may address needs that do not exist, do not fit with the Government’s goals, or are unimportant. 4. Key deliverables and achievements At the end of this stage you will have: identified clear and concise objectives that are consistent with the Government’s goals authorisation and support for continuing the policy development process. 5. Quality standards Your objectives must meet the following quality standards. The objectives are outcomes or changes of state. The objectives are SMART. The objectives relate to the problem and the outcomes sought (not processes). The objectives are consistent with existing policies, strategic statements and statutory constraints. The objectives' relationship to your agency’s mission, priorities and role is clear. The objectives’ relationship to the Government’s goals is clear. step 3 develop options Step 3. Develop Options The aim of the third stage of the policy development process is to develop options that are likely to resolve the problem. This guide covers the following topics: Why developing options is important Key tasks when developing options Things to avoid when developing options Key deliverables and achievements Quality standards 1. Why developing options is important More than one way to achieve a policy objective will exist. If you identify and explore all the different options, you can advise decision-makers of the merits and disadvantages of each. 2. Key tasks when developing options This section covers the following topics: Types of policy instrument Steps for developing options Types of policy instrument Policy instruments are the means by which a policy is implemented. Your options will include one or more policy instruments, for example: legislative instruments (e.g. new or amended Acts or regulations) programmes and services administered through public or other agencies informative materials (e.g. brochures) infrastructure (e.g. hospitals, schools, roads, dams or buildings) education (e.g. a public education campaign) funding (e.g. using government spending and taxing powers (such as taxes, concessions, grants, contracts, loans, vouchers or transfer payments) to shape activity beyond government control). Considering a range of policy instruments is important, because the Government will want to use the most appropriate tool to do its job. The policy instrument you choose can have a major impact on a policy proposal’s cost, timing and acceptability, so choose carefully. Policies are often implemented using a combination of policy instruments (e.g. an amendment to an Act, a public education programme and an allocation of new resources). Steps to develop your options 1. Develop a comprehensive list of alternative options List all the alternative options that might contribute to achieving the policy’s objectives, for example: amending legislation providing services providing incentives entering into agreements purchasing land building capacity in the community doing nothing (i.e. taking no further action). Include the ‘do nothing’ option because it may be the best option. It may be unnecessary for the Government to address the problem now or naturally occurring change might mitigate or resolve the problem. In the last stages of your analysis, you will want to be assessing no more than three or four options. In the beginning, err on the side of comprehensiveness, but when assessing the options discard obvious losers, combine others, or reorganise others into a single ‘basic’ alternative with one or more subsidiary ‘variants’. 2. Simplify the list of options Simplify your list of options by considering the practicality, necessity and feasibility of each. This will make sure time and effort are not wasted further evaluating the benefits and cost of ineffective options. Reject options that have little or no positive effect. Reject options that fail to meet the minimum objectives. Reject options that are impracticable. Retain only those options that are realistic, feasible and practicable, will meet the objectives and are aligned with Government policy. The key to simplifying your options is to distinguish between a ‘basic’ option and its variants. The ‘basic’ option is a specific course of action; ‘variants’ describe different methods of implementation, collaboration and partnerships, and financing. At the fifth stage of the policy development process you will assess the remaining options’ effectiveness, efficiency and comparative worth. 3. Explain how each option will contribute to the obje ctives Identify the ‘chain of events’ linking inputs to results (i.e. what are the processes, techniques, tools, events, technology and actions that are involved in the option?). Identify the relationships between the inputs, planned activities, and intended outcomes or results. Determine the implementation timeframe. Identify what and how many resources each option will use and where they will come from. Resources include: fiscal resources (e.g. appropriated funds, special grants, donations and user fees) facilities and equipment the knowledge and skill bases required to implement the option. important partners or collaborators (e.g. local and national organisations involved in planning, delivery or evaluation). Explore the legal, administrative and compliance implications and costs. 3. Things to avoid when developing options When developing the options, avoid the following pitfalls that can decrease the options’ usefulness: Including variations on a single option. Even if you feel one option is a front-runner, keep an open mind about the other options; otherwise you are likely to develop only options that are variations of your favoured option. Alternative options are not just different ways of carrying out the same thing. Assuming alternative options are mutually exclusive. That options are ‘alternatives’ does not mean they are necessarily mutually exclusive. Analysts may use the term ‘alternative’ to mean that choosing one option implies foregoing another or they may use it to mean that each option is just another action that might resolve the problem, perhaps in conjunction with other options (i.e. ‘alternatives’). Avoid this ambiguity in your list of options and be aware of it in others’ lists of options. 4. Key deliverables and achievements At the end of this stage you will have: a comprehensive list of all the options to resolve the problem being considered a smaller list of practicable options to resolve the problem and achieve objectives agreement from the appropriate level of management or Ministers about the range of options to be assessed. 5. Quality standards Your options must meet the following quality standards: A clear relationship exists between the options, problem definition and objectives. Each option’s effect has been identified clearly, described on a basis of best evidence and justified. Step 4. Determine Criteria The aim of the fourth stage of the policy development process is to identify an appropriate range of criteria to help you (and others) to make the necessary policy decisions. This guide covers the following topics: Why determining criteria is important Key tasks when determining criteria Things to avoid when determining criteria Key deliverables and achievements Quality standards step 4 determine criteria 1. Why determining criteria is important Criteria are the mechanisms that enable you to assess the different facets of options and their projected outcomes objectively and, ultimately, to recommend a preferred course of action. Criteria allow different values to be brought into the policy process, because they are evaluative standards for judging the ‘appropriateness’ of each outcome’s projected outcomes. Key tasks when determining criteria Link your criteria to the identified problem and objectives. The most important criterion is that the option resolves the policy problem to an acceptable degree. However, you need to identify other criteria so you can highlight how options differ from each other. This section covers the following topics. Key questions when developing criteria Common criteria Key steps when developing criteria Key questions when developing criteria Answer the following questions when developing your criteria: What agency policy frameworks are relevant to the problem being considered? What policy frameworks will other government agencies use when considering this problem? How can other government agencies' underlying values be reflected in the criteria? What international implications need to be reflected in the criteria? What ethnic and gender perspectives and human rights and privacy issues should be reflected in the criteria? Do the options give rise to social, economic, environmental or cultural considerations that should be reflected in the criteria? What goals or objectives of the Government should be reflected in the criteria? Are there potentially competing Government goals or objectives that should be reflected in the criteria? Common criteria The most common criteria used in policy analysis are as follows: Effectiveness: the extent to which the option's outcomes address the problem or enhance the achievement of the objectives. Efficiency: the extent to which the results will be achieved for the lowest possible costs in terms of financial and other resources. Cost: the expenses the option will incur, including who will pay for them and the extent to which the government will pay for them. Administrative efficacy: the extent to which the option is administratively simple, efficient and effective. Complexity: the extent to which clients and administrative and enforcement officers will understand the option. Practicality: the extent to which the option can be practically implemented. Distribution of benefits: the extent to which a net benefit (economic, social or legal) exists and who receives it. Fairness: the extent to which differences exist between client groups, including whether target groups are properly addressed and whether the option distributes benefits or burdens differently among groups. Policy consistency: the extent to which the option is consistent with other policies and meets legislative and the Government’s commitments. Legality: the extent to which the option can be implemented under existing law or requires legislative amendment. Community acceptability: the extent to which the option is acceptable to the communities affected (particularly the stakeholders identified in its development), whether client needs will be met, and whether other stakeholders will be satisfied. Government policy and outcomes: the extent to which the option is consistent with Government policy and outcomes. Political acceptability: the extent to which the option is acceptable to the Government (i.e. Ministers) Gender implications: the extent to which and how the option’s outcomes affect the different genders. Implications for other ethnic groups: the extent to which and how the option’s outcomes affect ethnic communities, having regard to the growing and diverse ethnic communities. Human rights implications: the extent to which and how the option’s outcomes affect individual human rights. Privacy implications: the extent to which and how the option’s outcomes affect privacy. International compatibility: the extent to which other jurisdictions have followed the same approach or whether our different approaches are compatible. Level of Government intervention: the level of government intervention each option requires (e.g. creating a new law is a high level of intervention, while introducing a new programme that provides incentives represents a lower level of intervention). Options that achieve the objectives with the lowest level of government intervention are often favoured. Key steps when developing criteria The key steps when developing your criteria are as follows: 1. Develop a comprehensive list of possible criteria List all the possible criteria that may be useful in assessing the options’ projected outcomes. In formulating the criteria, consider the range of perspectives and values to be taken into account. Think about what each group of stakeholders considers to be important. Consider the policy frameworks within which the stakeholders operate, their underlying values, and the criteria that reflect those values. Consider the criteria from the point of view of different disciplines (e.g. legal, economic, social, environmental and constitutional): A legal perspective may raise questions about the extent to which an option affects constitutional arrangements or what processes might be appropriate when changes are proposed to our constitutional arrangements. An economic perspective may raise issues about the type of good that is to be provided (i.e. a public or private good) and the most efficient means of providing that good, whether Government intervention to control or regulate the supply of the good is warranted, and, if it is, the lowest level of intervention that would achieve the objective. 2. Use ‘ends’ rather than ‘means’ as criteria When developing criteria focus on ends rather than means. For example, if you are looking to improve people’s health, do not assume increasing access to doctors (means) is the only or most effective way to improve health (end). 3. Facilitate trade-offs Criteria that are expressed in simple either/or terms can be used to oppose or support any particular proposal. Such criteria discourage debate about the extent of advantages or disadvantages. 4. Develop clear and appropriate measures for criteria When establishing the criteria, move from more general descriptors (such as ‘community wellbeing’) to particular, specifiable measures of such concepts. These specifiable measures will enable you to make and support your policy analysis and preferred options. Measures can include the following: Specific measurable criteria: the individual criteria that enable an option’s projected outcome to be assessed (e.g. the fiscal cost to the government or a reduction in the number of problem gamblers). Experts’ judgments: informed people or official bodies’ judgements about the expected results. Multiple measures: if each measure is partial or imperfect, multiple measures supplement each other so an outcome can be assessed. Subjective feelings: when human perception is involved, objective conditions may not correspond with affected parties’ subjective valuations (e.g. physiological health measures may not reflect people’s subjective health experiences). 5. Reduce and simplify the list of criteria Consider the broad list of criteria you have developed. It is likely some will appear more, and some less, useful. You might be able to eliminate some criteria as being less significant or combine two criteria. Avoid selecting criteria that might bias the later states of the assessment. Finish with no more than four or five criteria. Larger numbers of criteria are likely to make the job of resolving conflicts between criteria increasingly complex, so the determination of the preferred option becomes more difficult. 6. Things to avoid when determining criteria When determining the criteria, avoid the following pitfalls that can decrease the criteria’s usefulness. Overlapping criteria. Ensure your set of criteria does not conceal duplication, with the same concept expressed within different criteria. Overlapping criteria increase the risk that decision makers will be misled about the merits or otherwise of an option. Identifying solutions rather than criteria. 7. Key deliverables and achievements At the end of this stage you will have: generated a comprehensive list of criteria that can be applied to each option’s projected outcomes obtained agreement from Ministers, government agencies, your manager or stakeholders to the refined set of criteria you will apply when assessing your options in the next stage. 8. Quality standards Your assessment criteria must enable measurement of all the policy objectives’ important dimensions. Step 5. Assess Options The aim of the fifth stage of the policy development process is to assess the options objectively to determine the preferred option. This guide covers the following topics: Why assessing options is important Key tasks when assessing options Things to avoid when assessing options Key deliverables and achievements Quality standards 1. Why assessing options is important Assess the options using the criteria to determine which will best resolve the problem being considered. Your objective assessment about each option will include: how each option will be implemented the relative merits of each option in terms of benefits, implementation costs and efficacy. Assess each option against your criteria. 2. Key tasks when assessing options The key tasks when assessing the options are as follows: Assess how options are likely to work in practice to: identify practical constraints to be overcome if the options are to be successful develop more accurate estimates of the likely cost and impacts of options determine whether options need to be modified, so any population group that is intended to benefit as part of the outcome, does so determine whether options are likely to represent value for money determine whether options' benefits are likely to be sustainable in the longer term. Apply the criteria to the projected outcomes for each option. Apply criteria to each option’s projected outcomes so you can assess each option objectively; but not judge each option. This enables you to determine: ‘Option X is expected to deliver outcome Y, which is the best of the possible outcomes’. Identify the risks associated with accuracy of projected outcomes. You will probably need to reach agreement with officials from other departments (who may have a different perspective on what criteria are most important or what the projected outcomes will be). If you are not certain about your projections, qualify any statement you make about their accuracy. Develop an outcomes matrix for all the options. An outcomes matrix: brings together your analysis of the criteria and projected outcomes enables you to form an overall view of the preferred option helps you to identify and resolve conflicts among options. Make the trade-offs between each option’s outcomes. The most common trade-off is between costs and the provision of a service (e.g. extending pool hours from 6 pm to 10 pm against an annual cost of $1M). Another common trade-off, especially in regulatory policies, is between privately borne costs (e.g. the cost to a company of installing pollution removal equipment) and social benefits (e.g. the improved health of the communities surrounding the company and better protected forests).Trade-offs occur at the margin, ‘If we spend an extra X dollars for an additional unit of service Y, we can get an extra Z unit of good outcome’. By considering trade-offs Ministers answer the question, ‘Does society value Z more than X? If the answer is ‘yes’, Ministers will purchase another Y; if the answer is ‘no’, they will not. Consider a cost-benefit analysis. A cost-benefit analysis seeks to identify and measure the implications (including externalities) associated with each option, so you can assess objectively the option with the greatest level of net benefit to society. A formal cost-benefit analysis requires robust data and input from a range of people with specialist skills, so use it to resolve only the most significant of policy issues. It is not always appropriate or necessary to undertake a cost-benefit analysis. Consider other analyses. The nature of your analysis depends on the matter you are considering and the practices of the discipline within which you are working. Consider using any of the following eight analytical tools, as appropriate. Models predict likely outcomes in different circumstances. Organisational maps show diagrammatically the formal and informal relationships between and within agencies. They are particularly important when establishing responsibilities in options involving several agencies. Logic models map out the various interventions and their interrelationships to deliver a policy option. Cost-effectiveness analyses estimate the costs (direct and indirect) from options, so you can determine whether the option is likely to deliver value for money. Cost-utility analyses compare different programmes by using a common outcome measure so each programme has a cost per outcome measure. This enables you to determine which competing uses of resources gives the best value. Comparative analyses draw on experience and good practice in other countries tackling similar policy issues. 3. Things to avoid when assessing options When assessing the options, avoid the following downsides that can decrease the assessment’s usefulness. Being too optimistic or pessimistic about an option’s outcomes. Assessing options on an advantage/disadvantage basis. If you assess the options solely on an advantage/disadvantage basis you risk introducing analyst bias into your assessment. The two major problems with this are: your definitions (or values) of what is an advantage (‘good’) and disadvantage (‘bad’) are not explicit, so you tend to describe options as opposites of each other (i.e. if something is an advantage of one option you then describe it as a disadvantage of another option) you will tend to apply different considerations to each option, so providing an incomplete picture of the options. Taking additional factors into account when deciding the preferred option. If you take factors other than the criteria already agreed into account when you are deciding the preferred option, you tend to apply different considerations to each option. This provides an incomplete picture of the options and leaves the analysis open to analyst bias. Thinking of trade-offs as being between options rather than projected outcomes. You cannot assess the options if you think the trade-offs are between alternative options rather than projected outcomes. Convert the alternative options into outcomes, so the potential trade-off is clear. 4. Key deliverables and achievements At the end of this stage you will have: assessed each practicable option on the basis of agreed criteria assessed each option’s implications for the Government and your agency authorisation for further policy development. 5. Quality standards Your assessment of the options must meet the following quality standards, where appropriate. Each option’s: effect in resolving the issues has been clearly identified, described on a basis of real evidence and justified economic, social, legal and political effects have been identified and described clearly resource costs, savings and associated trade-offs have been identified clearly, justified and described impact on your agencies business operations costs has been assessed thoroughly legal and legislative implications and costs have been identified clearly, justified and described administrative and compliance implications and costs have been clearly identified, justified and described implications for ethnic groups have been clearly identified, justified and described implications by gender have been clearly identified, justified and described International obligations have been taken into account. If risks are associated with the favoured option, check: all pertinent issues related to the risk are identified issues and discussion are supported by research or statistical information stakeholders have been canvassed for their views on the issues, and these have been recorded. step 5 access options step 6 formulate recommendations Step 6. For mulate Recommendations The aim of the sixth stage of the policy development process is to formulate your recommendation of the preferred option for resolving the problem and present your recommendation as a briefing paper to senior officials or Ministers. This guide covers the following topics: Why recommendations are important Key tasks when formulating recommendations Things to avoid when formulating recommendations Key deliverables and achievements Quality standards 1. Why recommendations are important Formulate clear recommendations, so the problem being considered can be resolved. Recommend a course of action (i.e. your preferred option) after assessing the options. Prepare that recommendation on the basis of the evidence and your analysis from previous stages. If you do not have enough information to make a recommendation, repeat previous stages until you do. 2. Key tasks when formulating recommendations To formulate your recommendations undertake the following tasks: Identify your preferred option. Describe precisely the decisions decision makers need to take. The option of a single activity is unlikely to address all aspects of a problem, so consider a mix of activities. Generate justifiable recommendations. Your recommendations must reflect the evidence, so do not make claims the evidence does not support. Link your recommendations to the evidence to strengthen the proposal’s credibility and the likelihood it will be accepted. Acknowledge policy’s limitations. Take into account the credibility and validity of the information you are interpreting (including who has and has not been consulted and the pros and cons of the research strategy you chose), so you can acknowledge your policy’s limitations. Acknowledging the limitations, strengthens the conclusions you have reached and the likelihood your recommendations will be implemented. State assumptions explicitly. State the assumptions you have made explicitly so they can be tested. For example, if you have made an assumption about a stakeholder's position, state that assumptions early so the stakeholder can confirm or correct it. Identify links to the Government’s objectives. Link your recommendations to the Government's stated objectives. Read about the Government’s policy frameworks in its statements of general policy, party political documents, Acts of general and particular application, and Cabinet decisions. These documents may not always give you clear guidance about a particular policy issue, but they will give the Government’s strategic direction, so you can assess its political expectations. Identify how outcomes will be measured. Include in your recommendations observable indicators that when measured will show when the policy has had an effect. This enables the policy to be monitored for effectiveness and efficiency, and adjusted in the light of experience. Identify financial implications. If your recommendations have financial (fiscal) implications include information about: costs (e.g. operating and capital costs, transitional and ongoing costs, administration costs and programme-related costs) existing funding (or expenditure) whether the expenditure can be absorbed and whether this is reasonable savings potential funding sources or new funding the appropriation being sought consultation with the Chief Financial Officer Achieve agreement within and between government agencies. Where other agencies have a vested interest in the policy, the consultation process that must occur as part of development of the policy needs to result in agreement among the agencies about the recommended policy solution. Therefore, any disagreements need to be managed carefully. Communicate your recommendations effectively. Your recommendations must stand alone, so their meaning is clear to a reader who has not read the whole paper. Ask, ‘Do the recommendations make sense to someone who knows nothing about the paper and its content?’ 3. Things to avoid when formulating recommendations When formulating recommendations and writing the paper, avoid the following pitfalls that can decrease the papers’ usefulness. Failing to acknowledge limitations. If you do not acknowledge your information’s and processes’ limitations, your conclusions will be weakened and have less likelihood of being accepted. Making recommendations that are not justified in the paper. Each recommendation must be supported by one or more statements in the paper. Do not introduce new material into the recommendations as this causes confusion and undermines the high-quality policy development process you followed in stages 1 to 6. Writing unclear recommendations. If your recommendations do not stand alone (i.e. are not clear to a reader who has not read the whole paper) they are less likely to be approved. 4. Key deliverables and achievements At the end of this stage you will have prepared a briefing or ministerial paper recommending a preferred option. Usually, a senior official will also give an oral briefing to the Minister. 5. Quality standards Your recommendations must meet the following quality standards. If risks are associated with the favoured option, check: all pertinent issues related to the risk are identified issues and discussion are supported by research or statistical information stakeholders have been canvassed for their views on the issues, and these views have been recorded. The recommendations stand alone (i.e. their meaning is clear to a reader who has not read the whole paper). Appropriate links are made to other policies, the Government’s goals or agency outcomes. Step 7. Implement The aim of the seventh stage of the policy development process is to develop a planned approach to implementation, so your policy can be implemented successfully. This guide covers the following topics: Why planning implementation is important Key implementation tasks Things to avoid Key deliverables and achievements Quality standards 1. Why planning implementation is important How and who implements the policy requires as much critical attention as you gave the policy’s development, because: strategic choices in implementation affect the policy’s success and the use of resources implementation is complex and may also involve other government departments policy analysis and development is intricately related to implementation. Throughout the policy development process ensure the policy will be implemented effectively by consulting regularly and keeping the operational unit that will manage the implementation well informed. 2. Key implementation tasks This section covers the following topics: Implementing a policy successfully Content of implementation plan Implementing a policy successfully To implement a policy successfully: assess the implementation’s critical path to identify the key stages, so you can organise them efficiently, and identify and take corrective action to address potential problems promptly develop an implementation plan identify and manage risks use reliable project management tools develop a clear communications strategy. Content of implementation plan Include in your implementation plan: a timetable for delivering the policy, including key deliverables, targets and milestones the roles and responsibilities of the people and organisations involved in the policy’s delivery and maintenance, including the lead agency and governance structures the resources allocated to implementation (e.g. money, skills and infrastructure) how potential barriers and constraints (e.g. the capability of information technology systems and staff) will be managed, so resources can be allocated appropriately contingency plans to ensure the policy will continue even when the unexpected happens how performance is to be reported and monitored to ensure appropriate accountability the risks and how they are to be managed how project management tools are to be applied to the implementation how the policy is to be communicated reporting arrangements, including: how regularly reports will be prepared (e.g. weekly, monthly or annually) the level at which reporting will be directed (e.g. to the appropriate Minister) the form reports will take (including progress against the milestones or targets and the success criteria). 3. Things to avoid To implement your policy successfully avoid the following pitfall that can decrease the policy’s success. Thinking implementation is solely an administrative task by assuming: decisions will automatically translate into action. the policies before implementation were right, so they will not need to be modified for implementation. the controversies and choices in the policy’s development will disappear when the policy is implemented. Other departments or agencies can and will implement policies they have not been involved in developing. 4. Key deliverables and achievements At the end of this stage you will have an implementation plan that can be approved by senior management. If another department or agency will implement the policy, senior managers from both organisations must agree the plan. 5. Quality standards To be a high quality impl ementation plan, your plan must include: a timetable key deliverables milestones the roles and responsibilities of those involved in the policy's delivery and maintenance the resources allocated to implementation potential barriers and constraints and how they are to be managed risks and how they are to be managed contingency plans how performance is to be reported and monitored how project management approaches are to be applied to the implementation a communications plan reporting arrangements. step 7 implement Step 8. Monitor The aim of the eighth stage of the policy development process is to develop a monitoring programme that will gather information about a policy’s activities and results. This guide covers the following topics: Why monitoring is important Key tasks when designing a monitoring programme Key deliverables and achievements Quality standards 1. Why monitoring is important Monitoring provides a record of activities and results. It may signal problems that need to be remedied as a policy is implemented. Information generated through monitoring also informs policy evaluations. 2. Key tasks when designing a monitoring programme Follow these key steps when considering a monitoring programme: 1. Determine whether the policy initiative needs a monitoring programme: The Government does not have the resources to monitor its policies. Therefore, it is important to prioritise policies for monitoring. Consider the following eight practical and political considerations when prioritising. Costs: more expensive policies usually justify monitoring programmes. Risks: policies that have greater risks usually justify monitoring programmes. Dispute: policies may be controversial or new, so generate strong interest and receive media and public attention. They may receive bad publicity, be impacted by political activities, be sensationalised or be open to public scrutiny. Therefore, a monitoring programme may be justified to gain reliable information about the policy’s implementation and impact. Impact or performance: policies with substantial opportunity for improvements to their impact or performance usually justify monitoring programmes. Data availability: having insufficient data to undertake an analysis or having insufficient time to gather the data usually means a monitoring programme is unlikely to be effective, so is not justified. Applicability: if policies can be measured or the effectiveness of current operations or future alternatives can be reasonably estimated, monitoring programmes may be justified. Length of operation or time-span: monitoring takes time and the impact of some activities takes time to be felt, so if you expect an initiative to operate for more than a year or two it is worth considering a monitoring programme. Expansion: if plans exist to expand the policy initiative (e.g. it is a pilot) a monitoring programme is usually justified. 2. Determine the monitoring programme’s scope and scale The more focused you are about what you want to examine through monitoring, the more efficient you can be, the less time monitoring may take, and the less the monitoring will cost. The monitoring programme’s scale and scope depend on the sort of information needed to make major decisions and whether you are planning to evaluate the policy. 3. Collect baseline information Before the policy is implemented document the characteristics of the people, conditions or events surrounding the policy initiative. This provides data that can be compared with the monitoring data collected during or at the end of a project to gauge its outcomes and effects. 4. Identify outcome indicators Outcome indicators measure the outcomes you are trying to achieve with your policy, usually across social, economic, environmental and cultural dimensions. They are primarily descriptive and often used to assess the ‘big picture’ (i.e. the situation at a societal level). Because outcome indicators are based at the societal level, they are unlikely to be within any one organisation’s ability to control, so cooperation and partnerships are required. An outcome indicator: forms a logical link between the available evidence (what is measurable) and the initiative’s outcomes (what you want to achieve) is sufficiently sensitive to be able to measure changes within the initiative’s timeframe is affordable, in terms of ‘return for effort’ and cost–benefit needs to be stated clearly and concisely needs to make sense to stakeholders. 5. Identify performance indicators Performance (or output) indicators indicate organisational effectiveness, reflecting the achievement of agencies and specific programmes or initiatives. They are prescriptive, providing a way to evaluate actions. Performance indicators play an important role in how services are delivered and improved. Develop performance indicators in the context of planned goals and objectives. Performance indicators gauge progress toward the intended outcome of specific actions at an organisational, rather than a societal, level. Performance indicators are closely related to an organisation’s mission and purpose, so are usually within its ability to control. Examples of performance indicators are the proportion of customers satisfied with council libraries and the number of water conservation brochures distributed to households. A performance indicator: forms a link between the available evidence (what is measurable) and the initiative’s outcomes (what we want to achieve) is sufficiently sensitive to be able to measure changes within the initiative’s timeframe is affordable, in terms of ‘return for effort’ and cost–benefit needs to be stated clearly and concisely needs to make sense to stakeholders. 6. Decide the data needed for each indicator For each indicator, identify the data you need collected. Decide how the required data can be gathered efficiently and realistically. Answer the following questions. Is it practical to collect that data? What will it cost to collect that data? Who will collect that data? When will that data be collected? How you go about collecting the data depends on your selected indicators. However, irrespective of the method you use, develop a standardised recording form (such as that shown in Table 1) and a standardised procedure for collecting the data. Table 1: Indicator collection guide step 8 monitor Indicator Source of data (records, clients, etc) Method (questionnaires, interviews etc) Indicator Source of data (records, clients, etc) 7. Determine the data collection method Decide how the data will be collected by asking the following questions: What data is to be collected? Who will collect the data? How will the data be collected? When will the data be collected? What will happen to collected data? Pre-test your data collection methods (e.g. if you are using a questionnaire have a few staff answer the questionnaire to check whether the questions are understandable and unambiguous). Use a standardised recording form (such as that shown in Table 2) when collecting the data. Table 2 – Data collection guide Title Indicator Source of data (records, clients, etc) Methods (questionnaire, interviews etc) Who collects data When to collect data Priority three Significant digital investments Priority three investments are significant and complex digital investments but are likely focused on only one or a few agencies and hence may not have the same level of cross-government impact. Priority one Flagship All-of-Government government digital investments Priority one investments are the governments most strategic, significant, and complex digital investments and contribute substantially to the governments digital strategy and cross-government efficiency and effectiveness. Priority two Strategically significant digital investments Priority two investments are strategic, significant, and complex digital investments but may not have the same level of cross-government impact as priority one investments. 3. Key deliverables and achievements At the end of this stage you will have a monitoring plan that your manager or others can consider adopting. 4. Quality standards Your monitoring plan must meet the agency quality standard. Step 9. Evaluate The aim of the ninth stage of the policy development process is to evaluate your policy to establish whether it is appropriate, effective, efficient and economical. This guide covers the following topics: Why evaluation is important Key tasks when designing an evaluation Things to avoid Key deliverables and achievements Quality standards 1. Why evaluation is important Evaluating a policy helps you to determine whether: the policy is producing the desired effects causal links exist between the policy and what is happening in the policy area the policy instruments and settings are wrong or ineffective changing circumstances are affecting the policy objectives or outcomes changes in the policy environment (e.g. emerging research, changing economic circumstances or crises) are marginalising previously important policy assumptions resources are being allocated effectively policies are meeting current the Government’s priorities resources from one policy initiative can be released (through cuts or the policy’s termination) to meet new policy demands. When resources are finite, a decision to implement one initiative means fewer resources are available for another initiative. Therefore, it is unethical not to evaluate an initiative’s benefits and costs. 2. Key tasks when designing an evaluation All evaluations involve costs. Even the simplest evaluation takes time away from other activities, so think carefully when designing an evaluation. Create a work plan for conducting the evaluation by following these steps. 1. Assess what is being evaluated The Government does not have the resources to evaluate all its policies to the same extent. Therefore, it is important to prioritise policies for evaluation. The practical and political considerations in selecting policies for evaluation are similar to those used for monitoring. 2. Assess the scale of the evaluation Limited resources mean you must prioritise what you want to evaluate; you may not be able to evaluate every aspect of a policy. Decide whether the evaluation will be self-contained or integrated with other activities. The more focused you are about what you want to evaluate: the more efficient the evaluation will be the less time the evaluation will take the less the evaluation will cost for your staff or a consultant’s time. Consider the trade-off between the breadth and depth of information the evaluation could gather. For example, if you evaluate a wide range of a policy’s elements (breadth), you are unlikely to be able to investigate any element in great detail (depth) unless you have significant resources. On the other hand, if you examine an element in great detail (depth), you are unlikely to have enough resources to evaluate other aspects of the policy (breadth). 3. Decide the type of evaluation Evaluations can be informal and tied to routine service or project operations. These evaluations are adequate for ongoing assessments to guide small changes in a policy’s activities, functions and objectives. They promote continual development by providing you with feedback about progress, encouraging you to reflect on outcomes, and providing a basis for you to consider future action strategies. Explicit, formal evaluations are important when the policy’s significance is great. The three types of formal evaluation (formative, process and outcome) are all part of the ongoing evaluation process. Formative evaluations collect, assess and feed back information relevant to planning and operations to inform the policy’s design and implementation. They are used in a policy’s planning stages to ensure it is based on needs and its procedures, methods and materials are effective. Process evaluations assess what a policy initiative consisted of in practice (e.g. what happened, why, where, when, with whom, in what context, at what cost, and how did it produced the results it did). This information aids a policy’s development or extension and ensures accountability for the resources it uses. Outcome evaluations assess whether a policy has met its objectives. They identify the policy’s intended and unintended outcomes. 4. Decide who will conduct the evaluation Evaluators can be internal staff or external(s). The advantages of using an internal evaluator are that he or she is likely to have: good access to the policy being evaluated. a good understanding of the policy's background, context and initiatives. The advantages of using an external evaluator are that he or she may: be more objective than an internal evaluator. remain focused on the evaluation for as long as he or she is on contract. 5. Decide when the evaluation will be reported on Consider the likely requirement for regular in-house and ministerial briefing papers reporting on the evaluation. Things to avoid when designing an evaluation. When designing or undertaking an evaluation, avoid the following pitfalls that can decrease the evaluation’s usefulness. Imposing unnecessary cost burdens in terms of time and financial resources. Evaluations should not be so complex they detract from service delivery or are difficult to complete successfully. Evaluations should complement management processes by gathering the necessary information for improving and accounting for effectiveness. When possible, evaluation activities should draw on established management activities. Assuming a causal pathway. Most evaluations show only relationships, not cause and effect. To show cause and effect you need: a high degree of association between the causal factor and the effect a logical time sequence where the programme precedes the effect to eliminate other possible causes an association that remains consistent when studied in different groups and at different times agreement with known facts or theory • In some cases, a dose–response relationship (i.e. the more exposure (dose), the greater the effect (response). Most single studies alone do not show cause and effect beyond a doubt. By demonstrating the same results by different researchers over several studies, you can feel more confident in the findings. Using individual cases as indicators of success. Accounts of individual performance are valuable in illuminating aspects of a policy success and can provide rich information for understanding how a programme operates. However, a policy’s success cannot be based on individual case studies. An evaluation at a service or project level needs to compare statistical and qualitative indicators. The overall assessment is usually expressed in terms of rates, percentages, correlations or other statistics. Ignoring unanticipated outcomes. Be alert to unexpected outcomes and address these in the evaluation report as appropriate. Adapting policy or implementation plan to fit evaluation design. Narrowing a project to fit the evaluation design, especially if the policy being evaluated takes a broad, multi-pronged approach, can lead to: an evaluation showing the initiative has had limited effect (because the effects in the complex initiatives occur over a much longer period) promising initiatives being undervalued or at risk of being terminated (because the critical interim outcomes, which are difficult to quantify, are overlooked) Failing to collect base-line data. Document the characteristics of the people, conditions or events surrounding the policy before it is implemented, so you have data for comparison with the evaluation data. Key deliverables and achievements At the end of this stage you will have an evaluation plan that: outlines what will be evaluated outlines the data that will be collected in the evaluation outlines how the information gathered in the evaluation will relate to each aspect of the evaluation questions has been endorsed by the appropriate manager your manager or others can consider adopting. 5. Quality standards Your evaluation plan must meet the following quality standards. • The evaluation plan outlines: what will be evaluated what data will be collected how the information gathered will relate to the evaluation questions. step 9 evaluate