Nudge, nudge, how Baird government will get us to pay our bills on time

If 80 per cent of your neighbours paid a bill on time, would you do the same? The Baird government reckons you will, and is banking on our apparent herd mentality to ensure an extra $10 million in fines are paid by the due date each year.

Treasurer Andrew Constance is expected to announce on Monday that bills and penalty notices will be overhauled to clarify what action is required, and let people know that late payment of land tax is not normal.

The strategy is based on "nudge theory", which uses behavioural economics to encourage citizens to act differently - in this case, the way the government would like them to. It follows a NSW trial that found changes to the layout and language of bills and penalty notices could lead to a 4.8 percentage point increase in fines being paid on time, and a 12 percentage point rise in those paying outstanding land tax by the due date.

Mr Constance said such interventions, known in bureaucratese as "behavioural insights", could change citizens' payment habits without the need to regulate, legislate, tax or impose more penalties.

"People who refuse to pay their fines or bills, or pay them late, unfairly increase the burden on the majority of people who do the right thing," he said. "These changes mean we'll spend less taxpayer money chasing bad debts and instead focus on delivering better services."

The government estimates people will avoid about $4 million in late fees each year. Penalty notices for offences such as speeding will now be delivered in "plain English" to make the consequences of non-payment clear. Unpaid fines, for example, will be topped with the words: "pay your fine now, or lose your licence, possessions, or money from your bank account".

Those with overdue land tax bills will be told "more than eight out of 10 people pay their land tax on time, making you one of a small minority who has required us to take further action". The government is also researching how to apply the theory to encourage the use of private health insurance or return to work after injury.

It was advised by a global "nudge unit" known as the Behavioural Insights Team, which was set up by the British government. The international director of the team, Rory Gallagher, said humans were ''social beings and we are heavily influenced by what others do''.

NSW Council of Social Services chief executive Alison Peters said many people could not afford to pay fines on time and that nudge tactics would make them "feel more anxious".

The story Nudge, nudge, how Baird government will get us to pay our bills on time first appeared on The Sydney Morning Herald.

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