Taking an investment approach to social policy implementation

OPINION: One of the features of the Government’s proposed approach to social policy implementation is the adoption of what they are calling an investment approach.

Now there is nothing new about this approach in its itself and in a way, you would expect nothing else from a Prime Minister with a Treasury background.  And there is nothing new about applying this in the social area.  Economists have long argued that social benefits are benefits with an economic value much like any other economic good – it is just that benefits of this type are difficult and complex to calculate.  The interesting aspect, in this case, is that the Government is putting so much emphasis on this approach and effectively investing a lot of its own political goodwill in a positive outcome.

So, what are the pros and cons of taking such an approach?

One comment that can be made immediately is that investment up front is really another way of calling for early intervention –  ie picking up and correcting social problems before they even become a problem.   You can’t argue with the good sense of doing this and this is backed up by the extraordinary success of the Otago experiment which has following the progress of a single cohort of children for something over 30 years now.

 But there are some major pitfalls:

• There has to be a really good understanding of the context, ie what is causing the problems how different causes are inter-related, to be reasonably sure (you can never be absolutely sure) that investment is occurring in the right way.  I think there is a reasonable measure of doubt about whether that understanding really exists or whether any commitment to finding out will be made.
• Social investment, in particular, is a long-term business and there will be ups and downs and successes and failures. Does the Government have the fortitude – and can it pass that fortitude to future governments – to stick with the programme?
• Investment analysis is typically but not solely about numbers. It will be very difficult to develop meaningful numbers in the social area, particularly in the short term.  But the lack of numbers should not be used to assume failure which is often the temptation.
• The social area is complex with many complicated interrelationships – I suspect it is a case of making progress in addressing problems on multiple fronts rather than tackling one major problem at a time. Will the investment approach withstand the pressures that will bring?

There is also a nagging concern about the ability of the staff on the ground to make it work.  Unfortunately, some clever restructuring and the introduction of a name change is rather superficial and does not mean too much, particularly if the staff are the same.  An unanswered question is whether the new approach will be embodied in the approach taken by staff and whether a suitable upfront investment will be made in training and systems to make it work.

The real test will come in realistically adopting the special characteristics of the social area to the template of an investment approach.  In a sense, the down to earth approach and experience of a Paula Bennett is going to be the essential foil to the numbers and economic analysis approach of Bill English and the Treasury.  The way this pans out will have a large influence on the success or failure of the investment approach.

By Bas Walker

This is another of Bas Walker’s posts on GrownUps.  Please look out for his articles, containing his Beachside Ponderings.