Problem Gambling Foundation loses govt funding - service provision vs service advocacy

Dr Eric Crampton

New Zealand has a generalised problem where service providers spend a lot of time on policy advocacy. Service providers are not supposed to engage in lobbying on the public dime. David Farrar summarised the state of play a couple of years ago:

This [taxpayer-funded lobbying] is an issue that should be investigated by the Government or the Auditor-General. Yet again we have evidence of taxpayer-funded groups using their funding to lobby the Government for specific law and policy changes.

This is an extremely bad thing. The Government should not be effectively paying people to lobby Parliament and the Government a specific way. Just as Ministries are forbidden to lobby, it is equally wrong for them to contract other groups to lobby.

This was first exposed in 2003. Then ACT MP Rodney Hide revealed that Action on Smoking and Health (ASH) and five other NGOs were receiving taxpayer money from the Ministry of Health to help lobby MPs on the Smoke-free Environments Amendment Bill (the one that banned smoking in bars and cafes). 

The Director-General of Health then ordered a State Services Commission investigation into the matter (the Hunn/Brazier inquiry). Hunn and Brazier considered that the advocacy and lobbying clauses in six contracts were unacceptable under public service standards and in their view could compromise the political neutrality of the Ministry of Health. They recommended that future agreements with NGOs explicitly exclude lobbying activities. 

The Treasury’s most recent guidelines (2009) for contracts with non-governmental organisations also make it clear: “Government agencies should also be careful to ensure that contracts do not breach public service standards of political neutrality”. 

However, the Health Ministry is still funding the “advocacy” and “awareness raising” that these organisations engage in. The Ministry still funds ASH and other organisations like the Public Health Association – it is just more careful about what it puts in the contracts.

It's hard to avoid that service providers in this area engage in some lobbying. The people who care most about helping those who are negatively affected by some issue are the ones who are both most likely to get involved in helping and who are most likely to want to spend a lot of time pushing for policies reducing those harms.

Suppose that you're the Minister. You want to contract with providers of social services to help people: drug addicts, alcoholics, problem gamblers, people who want to quit smoking, compulsive eaters - there's a wide range. And you know that a lot of these services are best outsourced to groups who are really passionate about helping others.

At the same time, these groups will often be more than a bit one-eyed about it: they'll see the problem they're helping to address as being far worse than it might be on a broader view, and they might also forget that they're only seeing the worst cases - there might well be plenty of folks out there who engage in these activities recreationally and without substantial harm to themselves or others. So these groups will be convinced that the best thing for everybody would be just to abolish whatever substance or activity they think is responsible for the problems experienced by the people they're helping. And so they'll want to advocate for policies substantially restricting things.

Anything you do, as Minister, short of complete bans, will never ever be enough for them. Any policy you undertake will be criticised as either not going far enough (with allegations that it's because you're beholden to industry) or as being a step backwards (with even stronger allegations that it's because you're beholden to industry). Even if it's the case that you've been entirely working in the public interest, weighing up the effects of any policy both on the problem cases who experience harms and on other consumers, nothing will ever be enough for them.

Suppose further that it's effectively impossible to sort out how much of any contract you provide is used for service provision and how much is used for lobbying. Suppose you pay some organisation a million dollars to provide services for individuals in some area. They also collect $20,000 in private donations. They say that all of their lobbying activities come out of the $20,000. But it's done on computers you funded, in office space you paid for, and with staff you've largely paid for too. Maybe it's true (and maybe it isn't) that the marginal cost of the lobbying, given the fixed costs you've covered for them already, is only $20,000. It would also be true that they're leveraging substantially on the fixed costs you've fronted.

The government today cut funding for the Problem Gambling Foundation. They did a lot of good work in helping problem gamblers. Their most recent available annual report, 2010's, had $4.6 million in government grants and contracts, $3,143 in private donations and koha, and $405,044 in "all other income", sources unspecified but likely to include fees for their various conventions and seminars. Their 2010 report celebrated Gamblefree Day, a highlight of which, in their view, was a

"stunt carried out by a group of students from AUT who dumped $5 million of fake money under the Sky Tower to demonstrate how much money is lost every day through gambling. There was extensive media coverage including an article in the NZ Herald."

They also included, as part of "supporting communities", their work in encouraging people to "make submissions to their local councils advocating for maintaining or introducing a sinking lid policy." They this month tweeted that allowing a supermarket to sell lotto tickets at the checkout rather than via a separate queue constituted having "lotteries products rammed down our throat."

In my view, it is entirely reasonable for groups like the Problem Gambling Foundation to make submissions to Councils or to Government outlining, based on their particular expertise, what problems might arise due to proposed policies. Councils and governments then weigh these considerations against the effects of regulations on non-problem users and come to a decision. Encouraging and facilitating other submissions, though, seems a lot more like astroturfing.

You fund a group to help problem gamblers, and you get both help for problem gamblers and facilitation of this kind of thing. 

I know absolutely nothing about the decision to de-fund the Problem Gambling Foundation and whether it was due to their lobbying activity or for other reasons. I also know nothing about the relative proportion of time PGF spent on public advocacy stunts like the above relative to their work with problem gamblers; I expect that the latter dominated the former by a substantial margin. I also would have had a string of other groups well ahead of PGF in the queue for de-funding if we're going to start de-funding health lobby groups. PGF at least provided a really valuable service along with its other activities. Others don't.

It would be useful were the Government to establish a clear set of guidelines and to require their enforcement throughout their service contracting. Organisations providing contracted social services should feel very comfortable in providing expert advice to government through the submissions process. But they should also be barred from astroturfing or other public advocacy stunts as condition of receiving funding.

Alternatively, I strongly recommend that National establish a set of contracted NGOs to provide issue advocacy on the right. They could provide some nominal services, but they'd really exist to lobby government for reduced regulatory burdens, reduced tax burdens, free trade, and consumer sovereignty. Perhaps it could be part of a package proposal for cross-party support: politically neutral service providers, or else neutrality ensured by establishing a bunch on the other side. I strongly prefer the former.

Update: David Farrar tweets that PGF's advocacy work had nothing to do with it.

So the PGF lost out on a contestable contract to Salvation Army. The Sallies also advocated against Sky City deal -

— David Farrar (@dpfdpf) March 20, 2014

Can see lots of reasons to prefer either PGF or Salvation Army getting this contract; can't see why, given the contract's awarding to another pretty vocal anti-gambling group, folks reckoned it to be punishment for anti-gambling advocacy.

Dr Eric Crampton is a senior lecturer in economics at the University of Canterbury. He blogs at Offsetting Behaviour.

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