I’ve got a little timer because we’ve got a very strict timeline and one of the things Greg was asking me was do you think you can stick within your 15 minutes? So I thought I’d better bring this so that I make sure I do. He’s had very many long conversations with me so he knows how long I can talk for.
I’d like to start by acknowledging the Ngunawal people and their ancestors on whose country we come together today. I’d also like to acknowledge the traditional owners, the Warlpiri People and, in particular, Robert Robertson and Lillian Long without whom I wouldn’t be here today talking about this. And it’s their kindness and generosity, when I was in Willowra and Yuendumu, that helped me get here today, so…
Tony’s told you a bit about who I am. The main thing I want to tell you, about being a mediator for the last 25 years, has been mediation is about putting people in control of their disputes. Every single community has conflict. When I first started I used to get introduced as the youth meditation worker from the conflict revolution service, which I loved. I loved working for a conflict revolution service. My then boss was always called the medication coordinator from the conflict revolution services. So between it we had medication and meditation and mediation. But mediation’s come a long way but, interestingly enough, the critical thing for indigenous communities, like every other community who experiences conflict, what makes the difference is the ability to deal with that conflict quickly and effectively. If you have to wait your conflict will fester and it will escalate. If you have to wait your conflict will get harder and harder to deal with.
So what I want to tell you about is why this particular process was so important because it was local people building a local dispute resolution process in one of the most fraught community conflicts that was being experienced at the time and they turned it around. And what had happened was that in 2014, so last year, I heard about a project in the Warlpiri community called Willowra, which is 4½ hours north west of Alice Springs. What I was told was that the Willowra mob wanted to set up a mediation service modelled on the community mediation service that had been set up in Yuendumu. And the reason why they wanted to do that is that they’d had a lot of trouble in Willowra and they wanted to set up this service in Willowra using local people to resolve the problems they were having in Willowra and Ti Tree and surrounding communities. They were really inspired by what had happened in Yuendumu and they thought that the Yuendumu example was something that, as Warlpiri people, they could follow and achieve the same thing in their community that had been achieved in Yuendumu.
So I was really clear when I was going up there that I was going up not as a mediator, I was going up to support a group of people who were, themselves, going to be the mediators - and that was quite a critical difference. I was really clear that a fly in-fly out 12 week mediator was next to useless – that I would’ve been worse than a Band-Aid. I wouldn’t have provided any emotional comfort which is what I think Band-Aids do. I wouldn’t have been of any use because I had no connection and no language and no understanding of the conflict and in a conflict in Willowra that dates back to, many say the Coniston massacre, you cannot fix that conflict in weeks. There is an arrogance inherent in that that is unforgiveable and I was really clear I wasn’t going as a mediator. I was really clear as I understood it that there were a group of local people who wanted me to support them as they set up their own service where they would be the mediators.
Like most things in the Territory, when you get there you discover that it’s kind of different to the story you were told when you’re not there and so the local people were very clear on the fact that they didn’t want me as a mediator, which was great, because I didn’t want them to want me as a mediator, and we were on the same page. But the agencies who’d funded us and the agency I was working for thought that no, no, no, we’ve heard great things about you, we’ve heard you’re a mediator extraordinaire, surely you can do it in 12 weeks, in fact, you could probably do it in eight and leave us 4 weeks for funding for something else. So the critical thing was actually not talking to the community but actually getting those funding the service to understand no – the community does not want a fly in-fly out mediator. What they want is actually someone who can support them in their own capacity to resolve the conflict.
So the first point of negotiation was supporting Willowra people to say no to the idea of this mediator being imposed on them and they were very happy with that because what that meant could be communicated they wanted to set up a service like Yuendumu. And I know I’m talking to you a bit about Willowra but it’s really crucial to understanding why this cost benefit analysis came about because, through the conversation with the Willowra Neutral Group and the Yuendumu mediators, what became apparent in June of last year, was that the Yuendumu Mediation and Justice Committee only had funding til the end of last year.
Now many of you would be aware of Yuendumu. The Australian, the ABC reported in 2010 that there had been a tremendous conflict in Yuendumu. 300 people, some reports say, had been bussed from Yuendumu to Adelaide and dumped in a park in Adelaide with no support. It had all been sparked by a killing in a town camp in Alice Springs and that had then spiralled into a whole lot of conflict in the community in Yuendumu. It was incredibly fraught. Services could not be delivered. The only person I heard, whilst I was in the Northern Territory talking about the service that was able to ongoing in terms of non-indigenous service provides, was the local vet who was going in and desexing dogs and worming and providing health checks for the animals. That was the only service. Everything else couldn’t operate. The critical thing that happened was people would that the fuse box on people’s houses would be destroyed. That meant the house was unliveable. People would then move out and then the house would be trashed in their absence.
The clinic in Yuendumu was on one side of the community. People who lived on the other side of the community were too terrified to go to the clinic and there are reports of people who died because they couldn’t access the health services. This conflict in Yuendumu had everybody – non-indigenous persons in Yuendumu and every non-indigenous service provide outsider of Yuendumu, and many of the indigenous organisations supporting Yuendumu, absolutely unclear, uncertain about everything except one thing which was that nobody believed that the conflict could be resolved.
Yuendumu had had a program of mediation since 2006. There had been two mediation officers who’d worked with the community but in 2012 something different happened. A man by the name of Mardu Panty [6:42], who came from Nepal, came to work in Yuendumu. He was employed as a mediation officer. By this stage the conflict had been ongoing for a long time, since that incident in 2010. Mardu realised that he could not do this himself. He had an interesting history. He’d worked as a peace keeper between the Maoists and the rebels in Nepal and he knew that building peace depends on the more people you have standing alongside you who can facilitate the peacemaking, the less people there are to fight. So he decided there’s no point in having one mediation officer employed and he put out a note and asked who would like to come and be a mediator and the first person who turned up was Robert Robertson. Robert Robertson’s a Warlpiri man and Robert was one of the fundamental people who got the local people involved in providing mediation in Yuendumu. And in August 2013 they celebrated 365 days of peace - that community that everybody outside of that community, and many within the community, believed was a basket case – needed to be closed down, needed to be written off. That community had been turned around by the people who owned that community, who belonged to that community, who were for that community. Those people had mediated their own conflict and had built their own peace.
And one of the most amazing things for people was that, in fact, when you think about a community that’s been destabilised by conflict, it’s an ecosystem that needs to return. And one of the fundamental health indicators for an ecosystem, if we look around in Australia, is not a platypus apparently, because platypuses live both inside and outside the water. So they’re not a very good indicator of river health. The thing that’s a really good indicator of river health is something that lives only in the river. And so one of the things that only lived in Yuendumu that people loved that got taken away during the conflict was football. And one of the best signs that the ecosystem was returning to health for people was that the football was returning and, in fact, in 2013 they held, after I think it was 6 years, their first football carnival. And in fact when I went to Willowra and worked with the people in Willowra, one of the things that they said was they wanted football to come back and it was really held up as a sign of this will be a sign that our ecosystem has been rebuilt after the conflict. And what I was really struck by was the fact that we don’t need Band-Aids in terms of dealing with conflict. Fly in-fly out mediators who fix the conflict are a Band-Aid. We need hospitals. If we want to have health our health depends on somewhere that can provide long term ongoing support. A Band-Aid doesn’t do that. A mediation service is not a Band-Aid. A mediation service is the equivalent of a hospital because conflict will always arise. That conflict in Yuendumu, that everyone knew about in 2010 that has been resolved, does not mean that Yuendumu has remained without conflict. Yuendumu, like every community, continues to have conflict. It does not escalate however. It does not get out of hand because the moment the local people hear about something they will talk to a mediator or the mediator will hear about it and bring together people in a mediation process. So conflict is dealt with really quickly before it can escalate.
So when I went to Willowra what became really apparent was the fact that the Yuendumu Mediation and Justice Committee was about to lose its funding at the end of the year and that the Willowra people themselves wanted a mediation service that they saw needed to draw on the capacity of the Yuendumu Mediation and Justice Committee. One of the fundamental things was we needed to know the value of the Yuendumu Mediation and Justice Committee. As Tony had said I’d spent a lot of my life throwing myself in the middle of people in conflict. I spent 5 years of my life working with IATSIS in the Federal Court desperately writing papers, hoping somebody somewhere would pick up on one of the things that we said, which was the key recommendation - if we want to support communities to be effective, and this is true whether they’re indigenous or non-indigenous, we need to support those communities to deliver dispute resolution within those communities in a timely manner.
I saw what was happening in Yuendumu was the lived proof that what we’d said in research worked. What we knew worked people were doing and what I also knew is that when you look at a community in peace there’s not a problem. So when you’re a funder or when you’re a service provider you don’t think there’s anything you need to do but, in fact, if you want to maintain peace you need to maintain the funding for a mediation service because, in fact, maintaining peace requires the things that maintain that peace and in this case, in Yuendumu, the peace was rebuilt by the mediators from that community. If they were taken away the peace would last but the next conflict would begin the process of undoing the peace because the people did not have the support to continue the peacemaking.
It’s like most things in life – it’s a process. It’s not we get peace, that’s it, it’s all good, we all go home, it’s that we need to keep, it’s like exercise, you know, it’s not like I exercised yesterday, it’ll last me for the rest of my life. We have to do it every day and it’s the same with peacemaking. So the critical thing then was actually talking to the people in Willowra, the mediators in Yuendumu and the neutrals in Willowra and saying I’m here for 12 weeks.
The focus of this is actually getting a panel of mediators together. But when I finish and I’ve gone away and there’s no money for this project to continue and Yuendumu has no money to continue, where will that leave you? So we talked about well what can we do about that? And one of the things that I said was I’d been involved in a project in Victoria where in fact they’d done a cost benefit analysis. That cost benefit analysis had found for every dollar that was spent a significant proportion of benefit more than the dollar that was spent was returned to government. And I knew that what was happening in Yuendumu was delivering more than it was costing government and so I asked the people in Willowra and Yuendumu do you think it would be useful to try and identify the economic benefits of the work that you’re doing. Twofold reason behind that – one, it will help to get ongoing funding for Yuendumu; and secondly, it will actually put the case to the funding body that it’s ridiculous to fund a 12 week project for a mediator when you actually need to build peace forever. And the people in Willowra said yeah, that makes sense, and they were very happy for me to spend – I worked with them, we did set up the panel, we had community meetings, but they also gave me permission to do everything I could to lobby to get funding for the cost benefit analysis. And at quarter to 5:00 on the last day that I was working in Alice Springs the Northern Territory Government said yeah, we’re happy to give you the money. And then the people I was working for said well we’ll give you four more weeks to spend that time scoping out and making sure that everybody who’s going to talk to the economists who are doing this are happy to talk to them. So I did 4 weeks’ worth of explaining what a cost benefit analysis was, getting people’s consent to participate and then we actually had the cost benefit analysis process begin and I’ll now hand over to Ann and Greg who’ll tell you what we learnt. Thank you.
Well I’m actually the techie guy. You know, I’m the guy who did the kind of crunching the numbers and stuff like that so, and I did the overheads as well, that’s why I’m here. So I just want to say a little bit about what the process was of the cost benefit so you’ve got an understanding of what we actually did and Anne will talk about the results, what the outcome was.
So basically cost benefit’s very simple. We just add up all the costs, add up all the benefits, look at the difference between the two and say whether it’s good or bad. One of the difficult parts is not actually the mathematics, that’s relatively straight forward, the difficult part is actually working out what are those costs and benefits – actually identifying what the project’s about. And so that identification process, part of that’s looking at the literature, what’s been written about similar kinds of projects before. So there wasn’t a lot written about mediation in terms of cost benefit, but there’d been a lot written about conflict. So if you look at the literature you can often find what other people have said should be part of that process.
And part of identifying what the project is is actually knowing what the question you’re asking is as well. So a lot of confusion comes with cost benefit is because people think they are doing a financial analysis. Financial analysis asks a very different question to economic cost benefit analysis. Financial analysis is this good for this person’s budget or this company’s budget or this government department’s budget? Economic cost benefit analysis asks is this good for society? Is this good for Australia? So it looks much more widely at costs and benefits than you would if you just looked at a financial analysis. So that identification part’s important.
Literature – I did quite a bit of reading. We read quite a lot and tried to find what are the types of impacts that mediation or peace-building projects have had. Talking to the stakeholders is really important and Rhian was very helpful in that she rang lots of people, organised lots of people for us to talk to and then I rang them up and I could say Rhian’s spoken to you, you know, you’ve agreed. She got the police and the courts and the prison people – it was excellent, got a lot of really good information from those people about how this project had had impacts way outside the community in which it was actually done and they were the impacts that we needed to value in order to work out whether it was a good project.
So talking to stakeholders there’s a technique called log frame which you could talk about for ages. A lot of people hate it but I find it quite a useful technique for actually understanding the logic of the project – what causes what? So you can actually work out is this a cost to my project or is it actually somebody else’s project, it’s not actually a cost of mine even though it’s involved in my project it’s actually doing something else. So the logic of the project. Understanding that is really important.
So this sort of diagram which may look kind of complicated, but it’s a way of simplifying the project. So we had sort of activities over here if there was some mediation that was happening or prison visits. There are labour and materials that were used up in that process and what we needed to do then was value those. Well most of those were purchased in a marketplace, which is a good measure of their value, you could measure them. The output was peace. Hard to put a dollar figure on peace, you know. I’m sure you could work out a market somewhere or something. Economists can invent one if they want and set up artificial market. But what we looked at was what impact did peace have? What impact did our project have? So it had an impact on freeing up resources that would’ve been used to try and control that community if there wasn’t peace. So the prisons, the courts, health care – you know, because people were getting hurt, being damaged; the Northern Territory Mediation Service was using a whole lot of resources when that community was in conflict; housing was being destroyed, so that all stopped. Those resources, those people could work somewhere else, they could do something else and we could measure that in terms of what price you paid for their time and their materials.
The resources within the community were better used now. As Rhian said there was a whole lot of resources there – community stores, community groups, childcare, aged care, within that community that wasn’t being done. Those resources they were sitting there being unused, sometimes being damaged, so we got much more productivity out of our resources in that community. Again, they were worth something in the marketplace, what we paid for those services and so we could value those.
There was also a big improvement in the longer run in terms of the health of the community, the education of the children particularly, and we could look at, okay what did that do? That improved health, improved education and improved their lifetime’s productivity. They could work better, they could work smarter, they could produce more output because they had better health, better education because the community was now at peace and we could value that in terms of what increase in wages they would’ve got from that increased education or that increased health.
So it wasn’t too complicated once you sat down and worked out the logic of the project. So we used that kind of analysis to do that. They’re the kind of people that we spoke to the different participants, some of whom might not have directly seen themselves as a participant in that project but they were because they were getting some benefit or carrying some cost from that. We identified what those costs and benefits were and we could work out, you know, who was winning, who was losing. You can use that in terms of an incidence table to work out what’s the impact on distribution? Who are the winners and losers? Because often that’s just as important as whether it’s a good project or a bad project. A good project can fail because distribution’s poor. The people you rely on are not getting a benefit.
Valuation – that’s something that economics or cost benefit analysis often gets more in trouble about. There’s all sorts of funny things that we do as economists to value things, like value a person’s life. I can tell you how much you’re worth. Yeah, you’re worth, you know a million dollars or a hundred thousand dollars, depending on how much life you’ve got left, what kind of job you’ve got and so on. It’s a bit macabre really but you have to recognise that we’re only actually valuing you on a limited ethical basis. We’re only looking at your economic value – not your value as a whole human being. So economics just looks at one part of total value.
So if you recognise that, that economics is only telling you one part of the story of your community, it makes the whole cost benefit analysis a lot less scary, you know. I can do you a cost benefit that says this is a wonderful project, we should go ahead and do it. Like the people up in Manus for example. You know, the cost benefit might say it’s a good thing. I doubt it very much but that doesn’t mean it’s the right project for Australia to do. There are other ethical issues apart from whether it’s a utilitarian benefit to society. There’s also about whether that’s the right thing. Do you want to live in a society that locks up women and children because they’re running away from oppression? That’s a different ethical question economics doesn’t tell you about, so you just need to recognise that. So we use valuation in terms of market prices and wages but we’re also looking at a 10 year time frame for this project. We just picked that because we figured that was a reasonable time frame to get the longer term impacts.
Most people are impatient. They prefer to have a benefit today than having it in 10 years’ time. To address that we actually reduced the value of the costs and benefits in the future compared to having them in the present. That’s called discounting. It’s not very complicated but again some people get a bit upset, particularly environmentalists, because they’re benefits are often 100 years in the future and even a 2% discount rate can mess that up, but it didn’t have a big impact in terms of this project.
We then look at those, we repair them, which one’s going to be bigger than the other costs or benefits and we use net present value benefit cost ratios, internal rates of return, just as measures of that comparison and Anne’s going to talk about how big they were but this is a visual example. We’ve got our benefits here, it’s in the millions of dollars here and costs, you can see clearly that the benefits are much bigger. And the different kinds of impacts as well. There are actually some handouts up here that have that graphic in them, so happy to have a look at that.
The other two things that I did in the analysis which weren’t directly part of cost benefit but I think really should be, and helps with the kind of story that, you know, funders and other people outside you want to look at, is addressing the issue that these numbers that I could put in here they’re not certain. They were my best estimates based on the literature based on what people were telling me, the stakeholders, the best information I got – none of that is perfect, it could go wrong, you know, and therefore you need to actually do what’s called a sensitivity analysis to say what if my estimate was mot right? And for this one I just halved the benefits. That’s a pretty substantial mistake, yeah. Even if I had over-estimated the benefits by 100% would it still be a good project? The answer was yes, it’s still a very good project. So my conclusion then, our conclusion then is that it’s very robust. You can put a lot of value on that so you can deal with those kind of uncertainty issues by doing a sensitivity analysis, and we did that.
The other thing you need to do is look at who wins and who loses distribution. The main loser in this case was the community members who were giving their time up for free. They were getting a benefit of living in a more peaceful society, more peaceful community which is pretty important to them, but if you want them to continue to be part of that process you need to think about should their time be valued at zero and not getting, well I valued it, I put a value on it for the cost benefit, but they were getting no direct return – they were getting an indirect return. So in some cases that might be that the project doesn’t go ahead, particularly if they aren’t able to get those more general benefits. I didn’t think in this case it was a major problem for the project.
So that’s basically how we put the numbers together to come up with the results which Anne is going to talk about. Thank you.
Thank you and I’d like to acknowledge the traditional owners and custodians as well here. I’m going to start with these summary figures and then go back and look at the graph that Greg had up before. So one of the things about cost benefit analysis is that quite often all the costs are up front. So if you think of a process like this you’ve got to set up the mediation committee. You’ve got to establish the peace park etcetera. A lot of those costs come right at the beginning and the benefits come in smaller amounts distributed over time and we’ve just made the assumption that it’ll be over 10 years.
So when we look here at the total cost, the present value and the total benefits’ present value, it’s about bringing those benefits from the future, discounting them back to current prices. So a dollar saved in 2020 is not worth a dollar now, it’s something less because of the issues of uncertainty, inflation, all the rest of it.
So basically what the results are showing here, and these, as Greg has said, you have to make some fairly heroic assumptions in doing these sort of calculations, and we’re focusing very much on economic costs and benefits. We’ve tried to put some other things into the story as well but they’re not so easy to measure. How do you put a dollar value on peace in the community? Well, as Greg said, we’ve got these other indicators but we don’t get the whole story. So what these calculations show is that basically there’s a benefit cost ratio of 4.3, which means that for every one dollar spent there’s a return to the community of 4.3 dollars. So this is a really a worthwhile investment. Greg’s the CBA expert but we looked at comparators. What was an example of a comparator? I can’t remember.
I just said it was probably the overall fuel [28:58] change and what’s that, three? Is it around three, yeah? And then that itself is very high, so anything, you know, 1.1 would be quite good. You know, the World Bank when it does its kind of analysis, in this sense, it would expect something that was 1.1, 1.2, so 4.3 is enormous – it’s a very, very high rate of return.
Can I just ask what was the…[29:29]?
It was quite high, around three I think.
I was going to say it was about three, yeah. So these projects have very good returns is a bottom line story from all these calculations. And the thing about putting numbers on things like this is finance departments and treasuries love stuff like this, that they can look at a spreadsheet and look at numbers. You’re talking the talk that they understand and in the days that we live in that’s quite an important selling point.
So I’d like to just go back to this because this visual… there’s a big table you can look at if you want to look at things in more detail, but this visual shows you where some of the big savings were. So in this left column we have the costs. So basically the resources and the members’ time. So even though the members weren’t paid for their work there’s still a cost - there’s an opportunity cost of their time. There are other things that they could be doing so we’ve put a value on that. And then the establishment of the peace park is just a relatively small amount of money.
The benefits, each of these different coloured rectangles shows the benefits that we’ve estimated will arise from continuing the project on until 2020. So the green ones, community productivity, is looking at the ability of the community to have more people in employment, more things going on. All of that is important for, well contributes to the community’s economy which, in turn, makes further resources available in the community.
The next two green ones here are about healthier children and healthier adults. The little one here’s healthier adults. This one here’s healthier children. The fact that children were not able to go across town to the clinic is obviously a huge cost on the kids and the kids’ health. If they’re getting proper health care and if health care is, professionals are not diverted to fixing up problems after there’ve been fights, they can address other issues. This is a health service, also costs of running the health service.
This one here, the children’s education, a lot of the children had stopped going to school because it just wasn’t safe to go to school, so that if we made a very simple assumption that if one extra kid stayed on and finished Year 12 and after finishing Year 12 was paid the average wage of an indigenous worker in Yuendumu, how would that boost the income of the community? And you know, it’s a big number because a whole lifetime of work generates a large amount of income.
The prisons and policing here is the big part of the story and one of the issues I think in funding this program is that a lot of the savings were made by the Northern Territory Government and the funding was coming from the Commonwealth and so health, education, policing are all responsibility of the Northern Territory Government but the money to actually fund the mediation was coming from the Commonwealth. So when Rhian asked us to do this the Commonwealth was thinking of cutting off the funding for this project and as I understand they’ve now got some more funding and I guess we hope that we’ve contributed in some way to producing that funding.
So you can see that the benefits of undertaking this sort of work are substantial and what we’ve been able to do with a cost benefit analysis is put some numbers on it and put it in a framework which is easily recognised by people in finance and Prime Minister and Cabinet and Treasury, as a form in which governments often work. So I think that CBA is a very useful tool for assessing the worth of some of these projects.
Really we want to have time for questions and comments so I’m going to just finish off now. If you want to see the full report it’s available here on the Central Desert site so please look at it and we’d be now keen to have some questions. Thank you.