Repainting is cheaper than buying a new car

Social Investment needs just a few tweaks

Kieran Madden

Auckland, November 8, 2017

National’s Social Investment Approach must stay, but not as we know it.

Imagine, for a moment, that policies are cars. Deep in the Beehive Legislative Garage, the Labour-led Government has discovered its inherited a blue Social Investment car that goes well; it is even got some potential to be tuned up to go even better. But rather than sending it to the scrap heap for merely being the wrong colour, the Government needs to paint it red and make it their own.

Smart Johnny

Thanks to Judith Collins, National has been known to (literally) crush a car or three. But as New Zealand Initiative’s Eric Crampton recently pointed out, a new lick of paint is also straight out of National’s playbook.

Under John Key, National inherited Working for Families and barely changed it over the course of three consecutive governments, while at the same time taking credit for the programme’s sharing of the spoils of economic growth and reduction of income inequality.

Jacinda Ardern should do the same with Social Investment, but it cannot be left as is. Simon Chapple, Director of IGPS reckons that Social Investment boils down to the following three ideas: the first “a belief that people on welfare suffer long-term social and economic costs,” the second “that these costs are best mitigated by making long-term investments in those people,” and the third “that the best way to assess the government’s performance in reducing these costs is by the savings made in long-term benefit payments, which can be calculated by actuaries.”

Perverse Outcomes

The third, Chapple argues, causes “unintended and perverse outcomes.” Measuring success through actuarial models can divert the focus from the real business of improving people’s social and economic outcomes to bolstering the Crown’s balance sheet. Victoria University Professor Jonathan Boston has also argued a modified version of the policy should be kept. Even Former Labour Finance Minister Michael Cullen acknowledged that it had already started to break down some of the old-school siloed government departments. A more people-focused approach that gets rid of the actuarial targets is the way to go.

Early intervention

Early signs suggest that Ardern agrees too. Rather than announcing social investment is going straight to the crusher like foreign property sales, three strikes and charter schools, she supports “early intervention” but wants to find out “if that is truly what the investment approach was doing.” Early intervention might just be the red paint.

This fits with Labour’s philosophy, invest early and widely, and lines up with their strong focus on early childhood education and the Best Start package that helps all families with costs of having a new baby.

This universal approach, however, is at odds with National’s hyper-targeted approach. Both aim to intervene early, but National’s approach seeks to identify and support those who really need it. It’s important that this focus stays.

Social investment shows a great deal of promise.

Let us hope this Government will kick the tyres, take it for a spin and keep it on the road. There’s serious mileage to be gained for our most vulnerable.

Kieran Madden is a Researcher at Maxim Institute based in Auckland.


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