Social investment set to save $12bn and help at-risk NZers better

Social investment set to save $12bn

KPMG say the government's social investment approach is not only set to save the country $12 billion but is putting building blocks in place that will see "vulnerable" New Zealanders protected long-term by targeted expenditure.


Finance Minister Bill English has been updating interest groups recently on the social investment approach - using data and investment techniques to understand what makes the most difference to the lives of those on benefits and other forms of social support, so financial help can be targeted to specific needs rather than just blindly making payments.

Financial constraints from the global downturn and Christchurch earthquakes had forced the government to address the drivers of social dysfunction "rather than simply servicing misery, which is very expensive," English said in a recent speech. "Instead of mindlessly paying a sickness benefit for 40 years, we're taking steps to intervene now to help vulnerable New Zealanders lead a better life and save the Government money in the long run."

Souella Cumming, the KPMG partner who leads their New Zealand government sector practice, says it is still early days, even after four years as it takes time to see the results of real social impact. However, the emphasis on data and information-sharing is showing signs of real inroads into understanding our own social structures.

"What's happening is not just a question of saving money," she says, "it's about using joined-up data from across all government services to build a whole new way of looking at people who need help and deciding on the best way of doing that - because you have the best possible information at your fingertips."

An example is a person on a benefit; there is already some evidence that person will also have had a "high draw" on the health system, the education system, the justice system and social support services. But there are little or no information services from those areas that can "join the dots" to help present an accurate picture of that person's needs - nor to profile how a similar person in the future can have the best possible opportunities before costing the taxpayer more money than is necessary.

A new social investment analysis of all children aged up to 14 has identified factors that make a young person more at risk of experiencing hardship later in life. They include:

  • A Child, Youth and Family finding of abuse or neglect
  • Being supported by benefits for most of their lifetime
  • A parent who has received a corrective sentence
  • A mother with no formal qualifications

Those factors can be used to spur up-front intervention to stop patterns from repeating, says Cumming: "Imagine that being applied across the whole spectrum of government agencies and public service so people in need can be supported more effectively and have those needs assessed rather than just turning up at a benefit window or being consigned to a pattern of behaviour that often does not end well."

English has claimed some victories already, saying the welfare system's future lifetime cost has reduced by $12 billion over the last four years as a result of government actions - equating to 60,000 people each spending 15 years less on a benefit.

Latest updates on targets to reduce the likes of welfare dependency and recidivism and to lift educational achievement showed that since 2012:

  • Immunisation of 8-month-olds has increased from 84 per cent to 93 per cent
  • 18-year-olds who achieve NCEA Level 2 have increased from 74 per cent to 81 per cent 
  • crime has dropped by almost 20 per cent and 
  • re-offending has dropped by almost 10 per cent

Other areas where the "investment" approach is reaping dividends include Justice where $1 million is being spent on a system that predictively indicates what could happen to criminals later in life, depending on the severity of their punishment. For example, data shows those sentenced to community work are more likely to re-offend and rely on the dole, in certain cases, than those fined.

"The insurance industry has been doing this kind of thing since the Year Dot," says Cumming. "They have used their actuarial abilities to assess risk profiles through data on their customers - and decide what premiums to charge as well as making other decisions.

"The public service sector hasn't had that ability and, while some may think they are risk-averse, our work in the public sector has shown us public servants are beginning to embrace this new approach as they see data driving up effectiveness of social programmes."

Cumming also thinks the investment approach will survive party political boundaries: "The fundamental idea of using quality data and analysis to inform spending decisions, and intervening early in a life rather than being the ambulance at the bottom of the cliff, is difficult to disagree with.

"These are trends we are seeing across the world as technology opens up the potential of big data and we would expect an investment approach to remain in the public sector.

A new government might decide to package the initiative differently but I think this is one of those projects where the philosophy and execution could transcend politics." 

orgianally published in the NZ Herald

© 2023 KPMG, a New Zealand Partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

Connect with us