It may have looked like an ordinary Budget announcement this week when Nicola Willis allocated $190 million for a new fund to address social problems, but what sits behind it is the start of a radical shift within the public service.
Andy Coster, the former Police Commissioner, who is in the thick of this radical change as head of the Social Investment Agency (SIA), calls the change “disruptive”.
It is a change that will increase the influence the SIA has over billions in social spending on such areas as addressing youth offending, unemployment, housing need and addictions.
And it is a change that could ultimately lead to contracting decisions on providers being made by community-based commissioning groups.
Coster said the current system of social service delivery worked well for about 80% of services that were relatively simple.
“If I need a knee operation, efficiency says I don’t get to choose who does it. I don’t get to choose when and where it happens. I’ll get told to turn up; I’ll turn up. I’ll get roughly the same thing as the last person got and that is the most efficient way to deliver that service. That is good value for taxpayer money.
“But if I have got a drug addiction, no home and I’m unemployed, there’s no way in the world I can navigate all these different agencies to pull myself up by my bootstraps.
“If we want to shift the dial for these more complex problems, we need a different model. It is in that respect a reasonably significant public management reform,” said Coster.
Willis, the Finance Minister and Minister for Social Investment, is starting to put muscle on the bones of the social investment approach that began with Sir Bill English, in which targeted help, assisted by data and evidence, is given to families with highly complex and often multiple needs.
Coster was with Willis in Auckland this week when she announced the social investment fund across four years with the crucial emphasis on the fact that social service providers will be measured by outcomes.
It is an approach that will focus more on long-term outcomes and will allow a more holistic approach to social challenges, in the way that Whānau Ora does.
From his policing experience, Coster said families with family violence would often have children not attending school, children who did not get jobs after leaving school, who became victims or offenders of family violence and were headed for prison.
“Those are the families that we should be concerned with and the system at the moment – it is not that it doesn’t care, it’s just lined up in a way where the incentives drive it towards what’s happening now and no one agency is there for those families.”
There were organisations in the community to help for those families, but they were not enabled to make a difference in the way they could. Often, a social service provider had multiple contracts with multiple Government agencies.
The Government already spends about $7 billion each year contracting social services from non-government organisations in a bid to help people’s lives.
The $190m, over four years, is a tiny fraction of that. Willis announced three providers that have already won contracts. Within the next year, the plan is that the fund should contract with about 20 providers.
But the plan is also to expand the scope of the fund. From July, Coster’s SIA and Treasury will begin a rolling review of Government agencies to identify which block of current contracting funding sitting within, say, Oranga Tamariki, or the Ministry of Social Development, might be appropriate to transfer to the social investment fund.
It will also encourage providers who have many contracts with different agencies to discuss the possibility of streamlining them into a simpler contract with the fund.
“We want to create the opportunities for these organisations with very fragmented arrangements... to have a conversation with the fund about moving their funding and arrangements into the fund, which could then take them towards a more outcomes-focused contract rather than reporting to 10 different agencies. They can have a very simplified reporting arrangement.
“It has got potential to scale in a way that Whānau Ora so far hasn’t,” said Coster.
“We will be measuring the outcomes from the contracts. There will be much less concern with outputs or activity, which is how we monitor most social commissioning at the moment.
“We’re much more interested in ‘can we see changes in life course trajectory for the people who have been supported?’”
The fund will sit within the SIA for only a year. Willis’ aim is to get it established and then to allow it to function independently, probably with a board.
Coster’s SIA will then continue to provide the team of social investment ministers advice on outcomes, what has worked, and what new outcomes they might set.
“It is not appropriate to sit with us long term because we have a central agency role that needs to shape the practice across the whole social sector.”
He said the commissioning side of the fund could be devolved – “the idea that the fund could work through a community-based commissioner and non-government entity that, understanding the need of the community, understanding the outcomes that ministers had set, could then commission services in that community”.
“That, of course, has the benefit a much greater local knowledge as to who is working well with the communities of interest, other opportunities within that community, so this can start to build connections into local government and into other local investment.”
The SIA has been given the higher status of a central agency – along with the Public Service Commission, Treasury, the Department of Prime Minister and Cabinet and the Ministry for Regulation.
That means they have a larger responsibility across parts of the public service for setting standards and influencing others.
“We would not be able to undertake this kind of disruptive thing that we’re doing without sitting in that space, and in particular if we weren’t working to a very senior minister like the Minister of Finance,” Coster said.
“The Social Investment Agency has got particular strengths in data and evidence and economics, understanding the value of outcomes.
“Where we’re moving to is being able to influence decision-making about the allocation of funding across the social sector and to this question of where is the best place for funding to be spent to get the outcomes we want.
“In that respect, I think of our role as most closely aligned to that of Treasury because Treasury is thinking about the allocative efficiency of Government funding. “
The SIA had particular strength in doing that in social outcomes because it had a good population-level lens in the (anonymised) Integrated Data Infrastructure run by Stats NZ.
“What Treasury is able to do with economic data, we are able to do with population data,” he said.
“So we need to be working closely together, and I think there is a very strong case for the SIA always being aligned to the Minister of Finance.”
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