Finance Minister Grant Robertson says National's idea to have NGOs deliver social services with wealthy New Zealanders donating to a social investment fund amounts to "privatisation" of the welfare system.
National's finance spokeswoman Nicola Willis today unveiled the party's policy to "bring social investment to life" if elected next year through setting up the fund that would invest in programmes to help the most "disadvantaged citizens".
Social investment originated under National's former finance minister Sir Bill English as a targeted approach to welfare, drawing on government data to assist those most in need and at risk of needing long-term state support as early as possible.
Willis said the fund would start with government money but she hoped its success would see wealthy New Zealanders choose to invest in it.
"If private capital can be better deployed to help change the lives of more New Zealanders, then I will not be afraid to use it."
Finance Minister Grant Robertson said he did not think the "privatisation of important social services is the right way to go".
"If we want to engage with community groups, which I do think we should do when we're delivering public services, we're better off doing that directly than trying to create some kind of privatised model."
He said having wealthy people and charities donate to it was a "very strange way of going about what are often called public services".
He said private prisons had not worked, for example.
"The profit motive doesn't always work when you want to deliver good-quality social services."
Robertson said he agreed with the social investment model in using good-quality data and early intervention policies.
"But then extrapolating that out, to say to provide better services is to effectively privatise and go for profit is something I don't accept."
National leader Christopher Luxon said their policy was about getting good outcomes from spending.
He referred to the Government spending $1 million a day on emergency housing, with 4000 children in motels.
"So the Government keeps funding failure and not getting improved outcomes for people.
"The Social Investment Fund is just the vehicle by which we can actually get money to community organisations to actually be able to buy ourselves some improved and better outcomes.
"There's a lot of philanthropy around a lot of charitable trusts and foundations that actually want to invest in those causes as well. And that's a good way to be able to do it.
"There's a lot of good people with lots of money around wanting to make improvements in their private capacity. And this is another way for them to support passions and things that they want to see improve in this country as well."
Luxon said it was not privatisation.
"You are just directing government money into the Social Investment Fund, to actually partner with community organisations to deliver improved outcomes. So it's not a radical concept."
Act Party leader David Seymour said government and tax were not the "only way" to help people.
"We shouldn't see it as a negative, that people want to voluntarily help each other.
"That in itself shouldn't be maligned as a negative development.
"I think more generally, social investment under Bill English was the best policy that never happened.
"It's just, 'use good data to target interventions to the right people at the right time'.
"Every government believes that, don't they?"
Green Party co-leader James Shaw meanwhile said the idea of wealthy people paying to help other people sounded like the tax system.
"Literally, the idea that wealthier people should pay their fair share towards supporting other people is the tax system.
"So congratulations to Nicola Willis for a striking, original idea.
"If Nicola and the National Party, have finally come around to the idea that wealthier people should contribute more to support the worst off in our society, we've got a few ideas about how to do that.
"You could just manage that with an actual tax on the income earners."
The fund proposed by National would be administered by a new Social Investment Agency, which would replace the Social Wellbeing Agency, and have a yearly work programme to evaluate the social impact of government programmes.