importance of policy coherence

Policy coherence

How can policies complement each other to support development?

We had a very stimulating discussion, facilitated by well-known journalist Vincent Browne, on policy coherence, both from a global perspective and an Irish perspective, hosted by the Kemmy Business School at University of Limerick. We had the pleasure of hosting Paul Hoebink of the Netherlands as well as Mark Montgomery of Irish Aid, Sheila Killian of University of Limerick and our own Sorley McCaughey of Christian Aid Ireland.

Policy coherence can seem like a very intangible and theoretical idea and trying to unpack it in both conceptual and practical terms can be more overwhelming than it needs to be. Thanks to our speakers they were able to illustrate the discussion through concrete examples and experiences, enabling the panel and audience to come to a few recommendations for future consideration and action. Unfortunately, the Department of Finance and the Department of Communications, Climate Action and Energy, who are responsible for coordinating the government’s response to the Sustainable Development Goals (SDGs), were unable to attend. Their absence didn’t prevent the discussion from being informative, but their participation could have added authority and ownership to the recommendations.

Improving policy coherence is not easy. It requires strong leadership and oversight as well as coordination and trade-offs within foreign policy (security, human rights, trade), within policies of a single government (industrial, agricultural, fisheries), between countries or members of a regional bloc, and between private, civil and state actors, just as is needed to achieve the SDGs.

Although efforts to ensure policy coherence have always played a role in development, it is a relatively new concept in politics and political science. The Maastricht Treaty was the first to embody this concept and later the OECD’s Development Assistance Committee (OECD-DAC) gave a big impetus by producing documents and reports on issues and instruments and taking it up in their Peer Reviews of OECD donor countries. 

In some ways, it is easier to describe policy incoherence as opposed to policy coherence and how then to think about it in relation to development. When policies are coherent, the objectives and results of a government’s development policies are not undermined by other policies, which impact on developing countries, and these other policies support development objectives where feasible. However, policy incoherence is not always intended (with strong representation of interest groups) and can also be caused by unintended consequences (lack of knowledge of effects, weak representation from developing countries). The proliferation of private aid also has an impact on coherence and is reflective of the wider conversation about the complexity of the task.

There is a need also to remain ‘realistic’ when it comes to the challenge of policy coherence, especially considering the number of objectives of a government at any given time and also within the international domain given the broad set of stakeholders involved.

Key lessons learned to foster better coherence include:

  • Research on effects of policies to detect (unknown) results specifically on developing countries
  • Establish focal point/coherence unit (which prepares meetings, commissions studies/research)
  • Political will and commitment from politicians and ministers
  • Regular consultations with and pressure from like-minded countries
  • Regular reporting/integration into developing country strategies
  • Produce publications or research or how policies have become more coherent

In Ireland, policy coherence is a key priority for the government and key for achieving the SDGs. There have been a number of forums in the past that have brought stakeholders together, which worked very well, and there are a number of them currently operating. These include the Senior Officials Group across departments, SDGs working group, SDG forum.

However, there are huge challenges especially when it comes to gaps in policy development and policy implementation. And it takes technocratic and political leadership to ensure it happens. However, Irish Aid is very conscious of the need to prioritise policy coherence in at least a number of key areas and have received a number of recommendations during the consultations on the Irish Aid White Paper to this effect. One area that needs particular attention is the tax policy and Irish Aid spoke about the initiatives to try and mitigate some of the challenges raised by Christian Aid, Oxfam and others on the impact on development. Ireland signed the Addis Tax Initiative which supports the increase of resources towards domestic tax initiatives, as well as bilateral support to OECD and the African Union on tax. The Irish government is also working with the Revenue Authorities to scale up their outreach to support tax administrations in developing countries.

The Irish Tax policy came as a response to Irish poverty and to stimulate economic growth, and it has been positive in some fronts. However, it is important to examine the effects it has on development policy and recognise and eliminate the loopholes that exist for private actors operating in developing countries where infrastructure and regulation are not strong. These loopholes are not always designed. For example, a South African company was sourcing sugar from a plantation in Zambia and was obligated to pay tax to the Zambian government. The South African company escaped this obligation by rooting its profits through Dublin and back to South Africa, paying a greatly reduced tax bill. This is a loophole that does not benefit Ireland but is at the same time quite disadvantageous to Zambia. This shows up a contradiction also with Ireland’s development assistance to Zambia which is about 16 million while the Zambian government could have collected 8 million in tax from the transactions on sugar. 

There are other loopholes that exist owing to intentional omission that can support Ireland and undermine developing countries. For example, the tax treaty negotiated recently between Ireland and Ghana does not incorporate OECD Base erosion and profit shifting (BEPS) guidance which tries to minimise tax avoidance strategies that exploit gaps in tax rules to shift profits to low or no-tax countries. Ireland is Ghana’s biggest foreign investor and such lack of provisions for tax avoidance puts Ghana in an utterly compromised position.

Ireland is expanding its tax treaties in another 8 countries, 5 of which are developing, and it needs to ensure that they do not follow in the same vein as the Ghana treaty but upholds the spirit of the OECD BEPS.  

There was a suggestion from some attending that the possibility of oversight mechanisms could be examined with realistic and workable targets that can ensure policies are examined and assessed for gaps (intentional or unintentional), especially in relation to the obligations under the SDGs.

Christian Aid also discussed the possibility of a structure being put in place to input into upcoming tax treaties to ensure they encapsulate the guidance from the OECD BEPS on tax avoidance and abuse.

Some of the key recommendations that emerged from the seminar that will support Ireland to improve on its policy coherence for development, which includes coherence between tax and development, are:

  • Ensure strong leadership that defines Ireland’s key values. This will help to generate a shared sense of vision for Ireland and the developing world among all departments. The Department of Foreign Affairs (DFA) and Irish Aid have a key role in ensuring their vision becomes front and centre for Ireland as a country given its underpinnings in human rights, democracy and poverty reduction.
  • Be coherent enough. Irish Aid should prioritise the key areas for coherence in relation to development.
  • Establish focal points inside the DFA and Irish Aid dedicated to policy coherence.
  • Ensure that CSOs and academics and the private sector participate in existing structures for policy coherence (e.g. SDG Stakeholder Group).

There was a commitment to continue discussions and ensure that the dialogue on policy coherence is one borne of constructive engagement and evidence-based analysis.