State of the state

Kasulikku

The State of the State
New Zealand 2016

Social investment for our future

We believe New Zealand is a great place to live, work and play.  And research shows government’s finances are in relatively good shape – at least for now. But we face significant economic and social challenges that need urgent attention.   A combination of the ageing population, low productivity and revenue growth, and the need to reduce government debt will impose huge fiscal pressures in coming decades. More importantly, we know that too many people in our society are experiencing poor life outcomes and too many of their children are at risk of following them.  

These factors have driven us to focus on broadening the use of social investment to support New Zealand’s most vulnerable people. Wider use of this approach in our social sector is likely to prove valuable in managing our future fiscal challenges and supporting better outcomes for Kiwis.

Overview

The State of the State is a review of the government’s financial position, and the implications for public policy in New Zealand. In 2016, the focus is on social investment – the new approach to improving the quality of life outcomes for those most in need.

 

Infographic: State of the State

Executive summary

New Zealand is amongst a group of advanced nations that have seen poor, and sometimes negative, results from increased social sector spending in recent decades. Despite our efforts, government data shows groups in our society who have persisting poor life outcomes. If left unchecked, the cycle of intergenerational disadvantage will continue in these groups, and future generations of New Zealanders will be left with both higher costs and a less fair society to live in. More >

Crown finances

Most governments in the developed world would welcome a set of accounts like those of New Zealand. Despite imposing austerity measures, many other OECD governments are burdened with significant debt, yet are nowhere near returning to a scenario where their revenue exceeds their expenses. As a consequence, many government balance sheets are loaded with rising debt and high debt servicing costs.

In contrast, the New Zealand government’s books are in good shape for now. The post-global financial crisis (GFC) target of returning to operating surplus was achieved in June 2015, the first surplus in seven years. More >

What is social investment?

In a New Zealand context, social investment can be defined as government activity undertaken on the basis of a return on investment justification. Data is used to quantify a social problem, including the long-term costs to individuals and government. Agencies seek funding for interventions on the basis of the likelihood and extent to which future costs to government are reduced by improving social outcomes. Finally, measurement and reporting is undertaken to ascertain how successful programmes are in achieving both the cost reduction and improved life outcomes. Measurement also provides a better understanding of what works which influences future investment decisions.

Social investment contrasts with traditional approaches to funding government activity, which focus more heavily on what was delivered and ensuring good value for money in the delivery of those services, rather than on the value of outcomes achieved. More >

Why does an investment approach matter?

Current social services do not always address the needs of New Zealanders with poor life outcomes. This can lead to long term negative impacts.

With low cost education, affordable healthcare, and a temperate climate, New Zealand should be the perfect place to live.

However, while most people in New Zealand are flourishing, some children, young people and adults experience alarmingly poor outcomes. Further, we don’t always know how effective taxpayers’ money is in improving their circumstances. More >

Challenges to adopting social investment

The investment approach has been taking shape over several years. It has been incrementally rolled out in various ways, including through reforms to the welfare system and Better Public Services (BPS) results – to help people move away from being ‘at risk’ to leading happy, productive and fulfilling lives.

As alluring as it sounds, achieving such an ideal is not that simple. In addition to our own research, we spoke to more than 20 leaders in politics, the public service, social service delivery, academia and business to get a sense of their thoughts, concerns and ideas on social investment. Through these conversations we identified a number of challenges to the widespread uptake of social investment. More >

Social investment: people

The premise of social investment – investing in vulnerable citizens today to realise social and financial benefits in the future – fundamentally involves the Millennial generation in two ways: as the beneficiaries of its success, and as the generation that will be largely responsible for its implementation. More >

Social investment: place

Making good policy choices requires the best available data. New Zealand’s social data is collected by a number of independent administrative agencies, each of which divides the country into different regional territories. Each data set captures a different population, which makes comparisons across the social policy domains difficult and creates challenges for the
social investment approach. More >

A model for social investment

We propose a package of reforms the government should work towards to realise the aspiration for social investment in New Zealand. Our proposed package of reforms represents a clear departure from today’s operating environment for the social sector. We suggest a structural reconfiguration some may find challenging, while acknowledging that we don’t yet have all the answers.

We have cast out five years ahead, in part, because there is so much current activity in relation to social investment, and in part, because there are multiple pathways to realise our end point. More >

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