Subsidy Reforms APEC Koh Samui March 18 2013 Paul Mitchell Communication Integral to Reform Fuel Subsidy Reform will not succeed without communication that is integral to the process from the beginning or even before and continues throughout the process and possibly for a perio ID: 550037
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Communication and Fossil FuelSubsidy Reforms
APEC
Koh
Samui
March 18 2013
Paul MitchellSlide2
Communication Integral to ReformFuel Subsidy Reform will not succeed without communication that is integral to the process from the beginning (or even before!) and continues throughout the process and possibly for a period of time after the reforms have been implemented.
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Political Unrest3Slide4
Political Unrest “An oil price hike by Bangladesh has sparked a call from opposition parties for a nationwide strike. Bangladesh’s main opposition parties have backed several violent strikes and blockades in recent month.” Reuters Jan 4 2013
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“India has announced a sharp increase in fuel prices in a long awaited but politically risky move. The increase risks triggering an intense political backlash.”
Financial Times India Sept 13 2012.
“The demonstrations that have mobbed the streets of Amman for two weeks are demanding the overthrow of King Abdullah – a criminal offense in Jordan. This was spurred by a basic issue; the rising price of gas after the government withdrew subsidies.
Time magazine November 28 2012.
Thousands of people in Nigeria fought deadly street battles with police after the government cut its fuel price subsidies in 2012.
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Politics and Subsidy ReformGovernments fear instability one way to reduce dangers is to provide visible services at low cost. Once this process has begun it is difficult to stop particularly in oil rich states where the subsidy is a readily available means of supplying visible goods and service to unrest prone populations.
“The fuel price subsidy saga has not benefited any political party.” ADB, Asia Pathways, Oct. 30, 2012.
“Subsidies even in countries lacking energy resources contribute to political and economic stability.”
Yale Global online Will Hickey June 7 2012.
“Governments give subsidies as part of a political bargain as a visible way of delivering benefits”.
Global Subsidy Initiatives August 2012
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Technical or Political Issue?Removal of fuel subsidies is a POLITICAL issue based on policy and technical work
Need to take a political economy approach
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Why communication ? “Public information campaigns can mobilise
political support for reforms and help overcome vested interests. The public should be informed about the drawbacks of existing subsides and the benefits of reform.” IMF Fuel and Food Price Subsidies: Issues and Reform Options, Sept 8, 2008.
“
Many development failures― particularly those involving economic reform, utility reform and large infrastructure projects― have resulted from ignoring the political, social and cultural context within which the development intervention takes place, and not from a failure to propose the right technical solution
.”
The Impact of Communication on Development, World Bank 2006.
“ Clear communication with stakeholders and the public appears to be a key element of an effective reform strategy.”
International Institute for Sustainable Development, Global Subsides Initiative, Untold Billions
.
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Strategic Communication
Strategic Communication isthe
development
of
programs
designed
to
influence
the
voluntary behavior
of
target
audiences
to
achieve
management objectives
. Slide9
Communications Darwinism
Define
Be Defined
Copyright © 2003 Chlopak, Leonard, Schechter & AssociatesSlide10
Communication: Two-way approach
Government
Society
Stakeholders
Information
Comm.
Office
Social programs, laws,
Projects
MediaSlide11
Types of CommunicationSlide12
Communication Strategy Framework
Strategic Context
Management Objective:
Communication Objective:
Strategic Elements
Work
Plan Elements
Evaluation
Key Risks
Audience
Current and desired behavior
Messages
Channels/
Activity
Timing
Responsibility
Resources
Expected
OutcomesSlide13
Perception of Consumers
One Initiative - Two Perceptions
INSECURITY
REMOVING FUEL SUBSIDIES
Entitled to low fuel costs
Reduced Income
Higher costs for food fuel and transport
Government corrupt no transparency
No salary increase
Lower lifestyle
Who benefits where will savings go
Anxiety
& mental
problems
Less $ for school
fees
Might have to move for job
Feeling Trapped
GREATER BUDGET SECURITY
REMOVING FUEL SUBSIDIES
Reduce corruption
Better macro economic situation
More for education and health
Better governance
More money in budget
Improved economy
Satisfy donors and markets
Leaner government
Better living standards
Better Life
Better
environment
Perception of GovernmentSlide14
Defining Political Risk“…effective political risk analysis is not just a question of evaluating a country risk. Instead, risk assessment must identify the implications of social, political and economic conditions
of each particular development intervention.
The key to analyzing the political risks facing a project is to identify the winners and losers and assess their relative ability to help or hinder a project, whether directly or by influencing others.”Slide15
Political Risk is Highly ContextualIssue Internal Politics
Time
Place
Who is involved
History
External environment
Social and cultural environmentSlide16
Dimensions of Political RiskSlide17
Risk Differences: Fuel subsidy removal
Political Risk:
Likelihood of political and social unrest; protests. No way to “win” on issue but must pursue for budget purposes. Issue could fail government could be punished in elections.
Social Risk:
People believe that they are entitled to the benefits of oil and gas industry or that the government owes them subsidized fuel as their right.
Cultural Risks:
Driving a car seen as important for status even for short distances. Using other means of transit seen as “poor peoples’” transportation.Slide18
Communication Based Assessment
A process which obtains information from the stakeholders allows us to recognize the environment in which the development initiative will be implemented; use the findings to shape the project before it is implemented; bring certain stakeholders into the process; and identify the information and communication gaps, and bridge them, in order to achieve the desired impact.
Through systematic analysis of external actors, regime leaders, and the economic, social, and political sectors, pressure and interest groups, and culture, captures the relationships among key internal and external actors and between those groups and government authorities. Public opinion polling, as part of the CBA captures empirical information related to the social, political, cultural, communicational and institutional situation (including civil society participation) of a development intervention.Slide19
Why use Survey Research ?Survey research objectively and independently uncovers opportunities and identifies red flags, obstacles and risks.
Survey research can assess risk among a range of stakeholders from opinion leaders to the general population.
Survey research allows you to track attitudes in order to ‘have a finger on the pulse’ of movement of risk Slide20
Which Research Methodology?Should be chosen on a case by case basis that reflects the challenge your project/program faces. Also based on information gaps from other assessments.
The general population's
views may be best gathered through a combination of qualitative and quantitative research.
Topics are probably sensitive when there is political risk to consider. Hence, use independent firms to measure attitudes. Do not use firms that are aligned with a political party.
Choose a firm that has expertise in the area of policy and is issue oriented. Exploration will require a nuanced approach.Slide21
Reform Issues21
PrepareSlide22
Reform IssuesWhat was the political logic behind the establishment of the subsidies? Often a mix of interest based politics and some legitimate policy issues.
On average the richest 20% now receive over six times more in subsidy benefits than the poorest 20%. World Bank, Chief Economist for Africa, April 2012.
“Yes we feel entitled to it and if government raises LPG prices next week, as it inevitably will we’ll scream bloody murder.”
Firstport
Jakarta May 24 2012 murder.”
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Reform issuesThe subsidies are the only tangible benefit the poor can get in normal economies especially in resource rich developing countries. Yale University, Global online, June 7, 2012.
Assuring the public that savings will be used well is critical especially since many governments are viewed as corrupt and will not use savings for people’s benefit.Embedding the reform within a broader reform package.
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3 E’s24Emotions
ExpectationsEntitlementSlide25
Reform Issues25
Focus on Outcomes Not Process!!!Slide26
What is consultation?Public consultation, or simply
consultation, is a regulatory process by which the public's input on matters affecting them is sought. Its main goals are in improving the efficiency, transparency and public involvement in large-scale projects or laws and policies. It usually involves notification
(to
publicise
the matter to be consulted on),
consultation
(a two-way flow of information and opinion exchange) as well as
participation
(involving interest groups in the drafting of policy or legislation)*
*Wikipedia 2012
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Language used by Government“Essential step to revive the economy and build investor confidence.”
“A first step to fiscal consolidation.”“Urgency to curb budget deficit to stave off a threatened downgrade by credit rating agencies.”
“Necessary to bring order to public finances”
“It is a credible step towards fiscal consolidation that the government has taken something for which the market has been waiting a long time.”
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Language Used by Opponents“Black subsides” “Climate Spring”
“Financial terror” “Ending subsides only adds to the ranks of the poor and threatens global security.”“A very cruel blow “
“Those who want to raise prices want to see this country burn.”
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TimingTendency to undertake reforms too late often after a series of other budget saving measures; in isolation; in a poor economy; when fuel prices are high; people are already fed up.
Whether to go with “big bang” or slowly introduce reforms is highly contextual:
Is ultimately a political calculation partially based on budget needs.
Depends on the ultimate goal for reform.
Is a function of the political risk involved.
Depends on the amount of pain a government is willing to undertake and when it wants to take it.
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TransparencyAn effective political strategy benefits from transparency in the cost and purpose of the subsidy. Many subsidies survive because the parties that carry the burden are unaware of the costs they are paying.
Need to have an informed debate over legitimate purposes of the subsidy.Public information allows for an independent assessment of a subsidy policy.
Disclose information about how prices are formed (e.g. Ghana provides information on taxes, distribution costs and refining margins).
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Communication that Works31Ghana 2005
Outsourced research to independent institute – credibilityHighlighted positive results of subsidy reform and costs of inaction.
President involved high level commitment – also high credibility in government. Finance Minister led campaign
Subsidy savings devoted to social priorities. Made transparent and
monitorable
– included elimination of school fees and improved public transport
Comparison to other countries showed low cost of fuel in Ghana
Multi media campaign – radio broadcasts, advertising, interviews
Trade Unions still opposed but public acceptance no large demonstrations.Slide32
Communication that Works32Indonesia 2005
2003 attempt failed widespread distrust of government.
Led large multi media communication campaign newspapers, village notice boards, televisions shows, FAQs
Government greater popularity.
Tied to cash compensation scheme widely publicized.
Carried communication program throughout reform. responded quickly to problems.Slide33
Fill Your Reform with Communication33