Guest blog by Amrita Deonarine, IPP 2021
I came across this methodology of Problem-driven Iterative Adaptation (PDIA) in 2020 at the onset of the Covid-19 pandemic when global energy prices plummeted, triggering supply shocks, demand shocks, and a health crisis all at the same time. The consequences of this triple whammy almost severed the revenue base of a highly reliant energy-based economy with a poorly diversified non-energy sector. This triggered the worse recession since the 1980s in Trinidad and Tobago. As a result, diversification away from the energy sector became the topic of discussion once more for policymakers in the country. Being in a position to have influence over policy decisions, my mission was to find a process that the country can model to achieve non-energy diversification. That’s when I came across the practice of PDIA by the Building State Capability program at the Harvard Kennedy School and decided to enroll a year later. My main expectation was to learn about a process to come up with policy solutions that were designed on the basis of understanding elements of the underlying problems/challenges hindering the effective implementation of policy around non-energy export diversification in Trinidad and Tobago.
Borrowing the idea of the PDIA process, it became clear that there is no one size fits all solution to your country’s problems. Just because one country has managed to diversify its export base successfully, doesn’t mean that you can uproot that model and apply it to your own country and it will work. Without an in-depth root cause problem analysis of the policy challenge in your country context – an analysis that goes beyond the vertical logic framework and project management principles that we are well accustomed to – achieving your goal becomes a far-fetched moving target.
The widely practiced plan-and-control approach to policy implementation is not always effective for complex policy challenges because many times level of uncertainty or unknowns. When dealing with complex policy challenges, many times, the unknowns are unknown and we are quick to resort to thinking that the challenge is a lack of capability without knowing or understanding why capability is lacking or what we need to do to build that capability.
PDIA work is plenty and hard work that cannot be done alone. Teamwork becomes critical especially when you have to deconstruct the problem. Creating diverse teams that draw expertise from different levels of your and affected organizations is critical as it allows for different strands of thinking from multiple perspectives to come together to better understand the problem, causes, and sub-causes. This allows for a better understanding of the different areas the policy must address especially during iterations when you have to adopt spurts of taking action, stopping, learning, adapting, and then taking another step.
Leadership skills are critical in navigating the PDIA process, especially when establishing the convening and connecting roles. As snowflake relationships get built, maintaining strong leadership as a convenor is essential.
I was working on the complex policy challenge of protracted delay in non-energy diversification in Trinidad and Tobago. Understanding the limitation of my role, I redefined my policy challenge to ineffective addressing of tax evasion, tax compliance, and corrupt taxation practices in the current tax administration system (lead by the Inland Revenue and Customs & Excise Divisions) causing inequities in tax system.
Initially, when I started investigating the policy challenges of tax evasion/leakages in tax administration in Trinidad and Tobago, I was almost entirely convinced that once internal processes, systems, and procedures were addressed, a large chunk of the tax leakage from tax administration deficiencies would be rectified and there was no need to go as far as establish a semi-autonomous revenue authority to solve these problems – the policy solution proposed by the government. However, through problem deconstruction and conducting several iterations which allowed me to determine several unknowns from multiple stakeholders within the tax administration institutions, and also former authorizers it was discovered that there is a severe challenge with human resource management, discipline, corruption, and management of people who man these institutions.
The problem festered for decades because the people who handle these institutions are subjected to the regulations of the dysfunctional public service commission/civil service, especially when it comes to these aspects:
1. Hiring suitably qualified persons in the field of tax administration
2. Identifying and dealing with suspected wrongdoing e.g. suspected cases of corruption
3. Accountability
4. Disciplining workers
5. Accurately documenting performance i.e. performance appraisals
6. Developing proper work ethic – code of ethics policies
7. Firing workers
8. Being 40% understaffed etc.
This is something difficult for any government change as they are enshrined in the constitution. Any reform or action to be taken on the operations of the public service commission requires a constitutional majority in the parliament, something that successive governments have never been able to get any support on. Furthermore, without that independence in dealing with human resources compromised both institutions ability to independently establish and control a proper functioning operational framework governed by the relevant policies. As such, the government since 2002 has begun its investigation into the feasibility of establishing a semi-autonomous revenue authority which they have tried to establish for the past 11 years but has been unsuccessful due to resistance to the move to eliminate the public service from the revenue collection function.
After examination of other countries’ experiences in establishing a revenue authority, I was able to come up with 9 critical design features that are necessary when designing a semi-autonomous revenue authority to ensure that the new tax administration function is sufficiently independent, while at the same time allowing for oversight and supervision from the executive. It was against these design features I was able to benchmark the government policy proposal to deal with tax leakages/tax evasion via institutional reform in the form of a revenue authority for Trinidad and Tobago.
Through iterations and adopting the IPP framework I was able to build my knowledge/learning on revenue authorities around the world and was able to benchmark the government proposal against successful cases i.e. based on the 9 critical design features of a revenue authority. Through this exercise, I proposed several amendments to improve the legislation according to these design features. Several of these were accepted examples with respect to the establishment of the board, their functions in relation to the management of the institution, and the establishment of the post of director general and his function in tax administration. I was also able to tighten the legislation in the way it adopted accountability mechanisms e.g. internal audit function, and external audit function. A big win I was able to accomplish was with respect to the accountability to parliament every 5 years on the performance of revenue authority under the existing law which was passed. This is in addition to having the MOF provide the parliament with an operating plan and strategic plan on an annual basis. However, a big shortfall in the policy reform proposed was the adoption of a hybrid revenue authority model, one in which the enforcement functions of tax administration remain with the public service commission. I was unable to make amends in this regard as this would have meant that the bill would have had to revert to special majority legislation which the opposition had made clear that they would not be supporting. At that point, my objective was to improve the governance framework proposed by the government via the bill based on research and stakeholder consultations, and support some change being made.
The PDIA process is difficult and at times frustrating when your change space is limited and you need to redefine methods and creative ways to create space for change. In my case, because of my unique background and not having access to the tax administration officials directly, I had to come up with alternative solutions to get to the root cause of the problems being experienced by the tax administration. I ended up getting to the right persons by continuously convening and connecting with multiple stakeholders. The IPP Harvard team, Daniel, Salimah, and Matt were especially supportive and instilled confidence to persevere despite the challenges.
Finding the solution to a complex policy challenge should not be the ultimate aim in the first attempt. Innovative and creative ideas come out of continuous trial and error through iterative adaptation. Therefore, going forward, every bill that comes my way as a legislator in Trinidad and Tobago will be scrutinized to the best of my ability and time using the PDIA process.
This is a blog series written by the alumni of the Implementing Public Policy Executive Education Program at the Harvard Kennedy School. Participants successfully completed this 6-month online learning course in 2021. These are their learning journey stories.