Building on the success of others

Dr Eric Crampton
The National Business Review
27 October, 2017

National’s supporters on the right could have been forgiven for expecting a lot after the 2008 election. After three terms of Helen Clark’s Labour government, and National’s opposition to Labour’s policies, they had a right to.

But John Key built three successive majority coalitions by disappointing his supporters on the right. Rather than abolish Working for Families, National made only small tweaks to the programme it had derided in opposition as welfare for the wealthy. And when Working for Families was a part of the story behind the broadly shared benefits of economic growth over the past decade and the flat trends in income inequality, National was happy to take credit.

Labour has the chance to do the same by building on Bill English’s Investment Approach.

Over the past few years, the Wellington bureaucracy has been slowly reorienting itself towards measuring the effectiveness of what it does. Under the Investment Approach, the government uses back-end administrative data held in Statistics New Zealand’s Integrated Data Infrastructure to figure out which policy interventions wind up reducing the government’s long term fiscal burden.

It has been long and hard work for National. The ship of state is far more like a Panamax cargo vessel than a jetboat, and getting that course change has not been easy.

The Social Investment Agency is now running. Multi-category appropriations for social interventions now cut across departmental silos, enabling projects that span many ministries’ traditional functions. And we have the start of a process letting non-governmental organisations work with government to use that data to figure out whether their programmes do as much good as they hope.

But haste in getting progress made sometimes for tone-deaf communications, and for ham-fisted implementation.

National focused on how the Investment Approach could reduce the government’s long-term fiscal burden. Bill English rightly understood, and often pointed out, that the reason people wind up costing the state a lot in benefits is because they are living miserable lives.

If targeted effective interventions can improve people’s lives so they need not rely on state support, then the fiscal savings are just a proxy measure for what is really being targeted: the improvements in quality of life among the most vulnerable.

But where the focus is on the savings rather than the saved, the message is lost. And too much of the discussion was framed around minimising future costs.

It is too easy to imagine evil ways of minimising future fiscal liabilities – and doubly so for those who were not inclined to give National the benefit of the doubt.

Normal politics would rule out evil ways of reducing the government’s long term fiscal burden. But relying on politics can be risky, and it is unnecessary. Instead, we can use better metrics. Measuring a programme’s likely effects on the long-term fiscal burden is important, but so too is broader monitoring to make sure that programmes are not doing harm along the way.

That provides Labour with an opportunity to put its own stamp onto the Investment Approach. Continuing to measure the long-term fiscal burden facing government, and the contribution of new programmes to reducing that burden, is important. But so too is adding the right additional measures for any programme to check and to demonstrate that the programmes really do good.

At the same time, some non-governmental agencies critically important in delivering social services have been wary of the shift to measuring outcomes. Data-sharing provisions in social service contracting have been blunt, and the government had to walk back from requiring NGOs helping victims of sexual violence from providing data to the notoriously leaky Ministry of Social Development.

But the solution is ready. The Social Investment Agency, working with Statistics New Zealand, has demonstrated that it can work with NGOs toward data-sharing arrangements that protect clients while helping everyone figure out whether interventions work.

In an address to the RNZAF Command and Staff College in 2000, Labour’s Minister of Social Services and Employment Steve Maharey expressed a vision of a government that enables the community and voluntary sectors to provide effective programmes meeting real needs, cutting across departmental silos and designing services to meet communities’ needs as they see them.

Helen Clark’s government began work towards that goal. Bill English spent three terms of government building the institutions that would let that vision come to fruition. And now Labour can see it through to completion – and both they and the country can reap the rewards of having done so.

In opposition, the parties now in the incoming government sometimes damned the shifts in social services. They criticised the focus on reducing fiscal burdens, and worried about whether any social service delivery should rely heavily on ‘Big Brother’ data approaches.

But the Investment Approach has already started attracting international attention as the world’s most promising way of making sure every dollar of government spending does the most possible good in improving lives. It has the best chance of achieving Steve Maharey’s vision, and the coalition’s objectives.

In government, we hope Labour’s coalition can take a page from John Key’s book by making the Investment Approach its own.

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