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PoliticsJanuary 12, 2017

Social investment: the two uninspiring words upon which the entire election could hang

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If the National Party gets its policy of “social investment” right it could stay in power for another generation. So what will Labour and the Greens do about it? Here’s part four of Simon Wilson’s analysis of Labour in 2017.

At the National Party’s Northern Regional Conference in May last year, Bill English started his speech with a joke. “I’ve just spent the last few weeks testing my popularity in world capitals,” he told the delegates. “And I couldn’t find anyone who’d heard of me.”

The self-deprecation of a confident man. It was, he added reflexively, John Key they all knew about. Now that English is the Number 1 his jokes will have to evolve, but his sense of humour is firmly in place. And so is his purpose.

He was on stage to explain that purpose. It’s called “social investment”.

For several years now English has been driving a profound reform programme in the delivery of social services. It’s far from finished; in fact, even some of the ministers involved seem barely to understand it. But welfare reform is happening. And at its heart is a thoroughly 21st century idea: we’ve got the data, now to tell us where to spend the money.

Conservative governments worldwide are watching, fascinated, not least because social investment inverts the usual conservative approach to welfare. Which is to sit back, moan about bludgers and pick up the pieces when they have to. Social investment, as English told the conference, means “spending money now to save money later”. In National terms, it’s practically a revolution.

Prime Minister Bill English applauds deputy Paula Bennett during his swearing-in ceremony on December 12. (Photo by Hagen Hopkins/Getty Images)
Prime Minister Bill English applauds deputy Paula Bennett during his swearing-in ceremony on December 12. (Photo by Hagen Hopkins/Getty Images)

It works like this. Thanks to the Dunedin longitudinal study and other research, it’s now possible to say which kids are most likely to become criminals, which are most likely to be diabetic by the time they reach adulthood and which are most likely to produce another generation afflicted by the same poor prospects.

To put that in the language of social investment, we now know how much of a burden a child is likely to be on the taxpayer over the whole of their life. We also know, from a wealth of evidence-based research, which programmes are likely to help most in reducing that burden.

Already, English says, the results are striking. Eight years ago “the total long-term cost of all benefits was $78 billion. Now it’s $68 billion.”

It’s not exact, of course: this is statistical probability not individual destiny. It’s important to remember that.

But it does put the focus on targeted assistance, starting young. The Dunedin study suggests that by age three a child’s “brain health” is already a strong indicator of how they will get on in later life. That’s not really news: it’s widely known that what happens to the very young is profoundly important and what happens throughout childhood forms the adult.

What’s important now, though, is that the study names four factors instrumental to poor brain health. They are socio-economic deprivation, exposure to maltreatment, low IQ and poor self-control.

Other information comes from the government’s own integrated database (IDI), collected from the ministries of Work and Income, Education, Health, Housing, Justice and Children, Young Persons and their Families (CYF).

The IDI also identifies four factors: a CYF finding of abuse or neglect, being supported mostly by benefits since birth, having a mother with no formal qualifications and having parent with a prison or community sentence.

The lists are not the same. Some on the left have argued that undermines their credibility. But while it’s obvious more analysis is needed, the lists are clearly not contradictory. Together, they provide a very strong basis for effective targeted action.

Read more in Simon Wilson’s series on the NZ Labour Party in election year 2017, including a 3-step plan to making Andrew Little an electable PM, here

Social investment presents a serious challenge to the centre-left – to the Greens as well as Labour. This is the National-led government doing nothing less than redefining the paradigm of the welfare state, not by undermining it but by making it more fit for purpose. That’s the left’s job, or it used to be. It used to be a central purpose of the left in government.

And yet it’s the right that now offers a systematic, determined and evidence-based effort to break inter-generational cycles of poverty, crime and ill-health. Welfare that is both more effective and more affordable. Who would be opposed to that?

And mark what it means: welfare is here to stay. Its purpose, now, is to produce citizens who will stay in work, out of jail, out of hospital and away from the need for expensive long-term care. Yes, the irony is staggering – the National government is engaged in a level of “social engineering” unprecedented in history. But forget about that. The goals are excellent.

English explains social investment differently from the way someone on the centre-left would. “Smaller government is better government,” he said at the conference. “We’ll have smaller government when government does its job properly.”

Does its job properly? He means spend money wisely, look after the vulnerable, ensure our future… there are very big ideas underpinning this reform.

And note the link to tax cuts, which derive from smaller government: one of the reasons they’re always on the agenda is that they are now part of the promise of modern welfare policy.

Another sign of English’s serious intent: he’s taken his deputy, Paula Bennett, away from a leadership role with social investment. Her obvious disdain for beneficiaries makes her a terrible fit. The minister in charge is now the high-flying and much less abrasive Amy Adams.

Social investment marks the end of universal care, that foundation stone of the social-democratic state. But don’t be fooled by the tax-cuts language. It also marks an absolute rejection of the libertarian jungle.

Social investment has the potential to be so constructively powerful that if National gets it right, it could stay in government for another generation.

But National is not getting it right. Despite the promise, despite the deep data analysis and the policies built on it, and despite English’s own determination, the government has done absurdly little to achieve its social-investment goals.

Many National MPs still indulge in victim blaming and beneficiary bullying. And what about all those stories of cruel indifference and bureaucratic blockheadedness in government agencies, uncovered last year by journalists like John Campbell at RNZ, Kirsty Johnston at the Herald and Mike Wesley-Smith at Newshub?

In a buoyant economy, why are working families living in cars and why aren’t all homes warm and dry? Why do illnesses like rheumatic fever persist? When will children no longer be such easy prey to the temptations of sugary fatty foods and why do we still have epidemic levels of domestic violence? Where is the utter blitz of support for low-decile schools and their communities? Why are our incarceration rates still among the highest in the developed world?

The list goes on and on, and the answer to every question on it is that National (and Act) are the wrong people to reform the welfare state. No matter how sincere Bill English may be, he and his colleagues are compromised by the deeper interests of their supporters, confused by what they are doing anyway and unwilling and/or unable to shake their old prejudices.

Health debates are skewed by the demands of expensive top-end medicine and an absurd focus on managerialism. Education debates are subverted by the concerns of middle-class parents who don’t trust their perfectly good local schools. Justice debates are sabotaged by a red-mist desire to punish. The fast-food industry has been protected when it should be demonised; the construction industry is free to keep building costs ridiculously high.

All Black captain Richie McCaw and Prime Minister John Key in the dressing shed following a Tri Nations series Bledisloe Cup match, September 2009. (Photo by Ross Land/Getty Images)
All Black captain Richie McCaw and Prime Minister John Key in the dressing shed following a Tri Nations series Bledisloe Cup match, September 2009. (Photo by Ross Land/Getty Images)

As for crime, the jails are bursting but the government has done almost nothing to join the dots between the values of thuggish masculinity, the underachievement of boys in school and the sorry record of male-perpetrated violence at home and on the streets.

If John Key had done just one thing, if he cared about anything except being liked, it could have been this: he could have used his mana with the All Blacks to turn them into leading agents in a major, culture-changing campaign against domestic violence. Pushed them to become genuinely positive models of what it is to be a man.

It’d mean a deep culture shift throughout the rugby nation, and don’t we need that? And Richie McCaw would have said yes, wouldn’t he?

As a symbol of why National should not be trusted with reforming the welfare state, look no further than the clumsily named Ministry for Vulnerable Children. That name declares the mechanism of targeted assistance, as social investment prescribes. But it also smacks of Victorian condescension: it’s a modern equivalent of “the poorhouse”. National wants to help the most at-risk children, which is great, but is baffled by the idea that they, like everyone else, deserve their dignity.

So what are Labour and the Greens to do? Stand on the sidelines and sneer at social investment and all who practise it? That’s easy but profoundly unproductive. Instead, why not take it over and make it work?

National has stolen the high ground on welfare reform, and now Labour and the Greens should steal it back. If they take ownership of social investment they will have the chance to transform it into a real, genuinely effective and deeply thought-through approach to policy. They could start, very easily, with better-funded early-childhood education. They could put far more resources into the Southern Initiative, a network of programmes focused on South Auckland. There are individual social-investment projects in communities all over the country just begging to be scaled up and rolled out to other communities.

There are many on the centre-left who say it can’t be done. Social investment is another neoliberal plot, all that tired old hogwash. If they’re right, we need to hear an alternative and more compelling narrative for welfare.

But are they right? Social investment, to repeat, is the means by which many more of our most-marginalised citizens will be able to hold down jobs, stay out of jail and out of hospital and away from the need for expensive long-term care. It offers a systematic, determined and evidence-based effort to break intergenerational cycles of poverty, crime and ill-health. A welfare state that is fit for purpose in the 21st century: both more effective than the 20th-century version and more affordable.

Its champion, when it works, will truly earn the right to be the natural party of government. Do either or both of Labour and the Greens want that role?


This is the fourth in a series on election year and the Labour Party. Coming up: the lessons from Trump (they’re not what you think), and National’s Index of Shame.

Keep going!