A major shift to more voucher-type funding of social services, including health and education, is proposed in a new official report.
The Productivity Commission report on "more effective social services" says the Government should "empower clients" by handing over budgets for people to spend on choosing their own education, healthcare and social services.
It also recommends much more decentralised services, including possible competing insurance-based systems such as ACC.
But decentralisation would be matched by more data-sharing between agencies to track how individuals are doing, and extending the "investment approach" from its current use in welfare spending to guide up-front spending across other areas such as education and healthcare to reduce future costs to the health, welfare and justice systems.
The report proposes a new centralised Office for Social Services to coordinate data-sharing and extending the investment approach.
Commission chairman Murray Sherwin, a former Reserve Bank deputy governor and later head of the Ministry of Agriculture and Forestry, said the commission saw Australia's market for employment services as a model for decentralising services. Providers are paid at fixed rates and compete for clients with public "star ratings" based on their success in finding jobs for unemployed clients.
"There are already a lot of trials of different things in NZ," Mr Sherwin said. "There are opportunities to take that further into a more devolved arrangement and also to more of an outcomes-based focus."
Many NZ disabled people already have individualised funding packages which they can use to choose between competing service providers. The report suggests there is scope for more such "voucher"-type packages in other disability support services, home-based care for older people, respite services, drug and alcohol services and in family services such as budgeting and counselling.
It says government and non-government agencies should share data on individuals across the health, education and social services sectors. It recommends this should generally happen only with the individuals' consent, but says consent would not be appropriate in areas such as child protection, policing and Corrections.
"Social service agencies will need to develop agreed protocols to govern the sharing of such data," it says.
It recommends "a comprehensive, wide-access, client-centred data infrastructure". Clients would have access to their own data.
Mr Sherwin said extending the "investment approach" across government was about "trying to identify early where the at-risk people are and channel resources and effort towards dealing with them".
The report suggests that "moving to an investment approach would improve schools' incentives to raise the achievement of the full spectrum of students", rather than focusing only on those who can pass NCEA exams with a bit of help.
It says the Ministry of Social Development is investigating the feasibility of applying the investment approach to social housing, and an expert panel reviewing Child, Youth and Family has been asked to consider an investment approach to child protection.
The report also notes previous attempts in the 1990s to develop competing insurance-based healthcare systems and acknowledges that they were abandoned in the face of practical difficulties.
Nevertheless, it says a competing social insurance system "has good opportunities and incentives for innovation and may out-perform models with a single government insurer". It recommends that the proposed Office for Social Services should keep insurance systems as an option in developing new arrangements.
The report is a first draft and is open to public input until June 24.