Is social investment the new panacea?

There are individuals born in NZ who will, over their lifetimes, cost the taxpayer hundreds of thousands of dollars in welfare, child protection, justice, corrections and mental health services. They will physically and emotionally hurt others, possibly take a life or lives, and in that respect inflict even greater indirect costs on society. 

Social investment suggests allocating some of that down-the-line cost to up-front intervention and prevention. By necessity it would have to focus on the child, the beginning. Later is often too late.

There have been past tentative efforts in this direction. For instance the predictive risk modelling work done at Auckland University. This identified the common circumstances around the birth of a child who'd go on to be the subject of abuse. For example:

“Of all children having a finding of maltreatment by age 5, 83% are seen on a benefit before age 2, translating into a very high “capture” rate.”

Early reliance on welfare was significant. But there was a host of other predictive indicators, for example having a parent who had served a custodial sentence, or a parent undergoing addictive substance treatment. 

Ultimately, though, then Minister for Children Anne Tolley rejected application of the model. The professor behind the work is now assisting north American states in child protection practice.

But the exploratory work proved that it isn't difficult to identify where the future trouble begins.

The absence of data and knowledge isn't a barrier to informed intervention.

The problem lies with issues of privacy (or avoidance of stigmatisation), and race. 

The last National government introduced a law to enable a baby to be uplifted from a mother whose earlier children had been removed due to substantiated abuse. That didn't play out well when Maori advocates actively blocked the process.

Similarly with Section 7AA, whereby cultural considerations must be paramount when placing a child into care, some Maori will attempt to thwart non-Maori intervention.

While he was Police Commissioner, Andrew Coster oversaw a regime of Treaty training and courses aimed at unlearning unconscious bias. His woke credentials were earned. Next year he will take charge of the new Social Investment Agency where the budget provided for practical intervention will be available to iwi providers. It will be no surprise if he is highly sympathetic to the 'by Maori, for Maori' sloganeering. (We could all be confidently sympathetic if violence against children was diminishing but it is not.)

So where will that leave the current tension between the Minister for Children and Oranga Tamariki bureaucrats? Might we see a Minister for child protection and CEO for social investment with competing philosophies? As if there isn't already enough conflict between the public service and coalition politicians.

But there is another aspect of social investment which suggests to me the government still isn't taking the concept seriously.

Literally billions are spent on incentivising the type of lifestyles that create future criminals. A third of Maori babies are dependent on a welfare benefit by the end of their birth year. They don't grow up in working households. Sole parents are now expected to spend a future 17 years on welfare; if they enter the system as a teenage parent, 24 years. Too often their own parents were subjected to woeful upbringings devoid of examples of how to raise a child well. This malaise isn't just a Maori problem, but a child in need of intervention is more likely to be Maori.

Those billions make a mockery of 'social investment' at $12 million annually.

We seem to be simultaneously stoking a massive fire while standing by with a watering can.

Wellington takes a hammering (though it's not evident from MSD's calculations)

My blog posts often result from a question popping into my head.

In this case, given all the gloom and doom around public servant lay-offs in the capital, I wondered, "How big is the growth in Jobseeker benefit receipt in the Wellington region and how does it compare to other regions?"

To answer this I accessed the latest Jobseeker Support data at MSD. Their chart calculates the percentage of the working-age population (aged 18-64) receiving Jobseeker Support in each region and compares Sept 1,2023 to Aug 30, 2024:

 

(Left click on image to enlarge)

That's interesting, I thought. The year-on-year growth (final column) is highest in Auckland, Central and Waikato. Comparatively, Wellington isn't faring that badly.

But hang on. To get a reliable percentage, a reliable fraction is required. The denominator (middle  column) is the 'Estimated 18-64 resident NZ population'.

Note that the chart purportedly uses June 2023 for both calculations - 'Reported week' and 'Same week last year.'

Yet Wellington and Central have changed population numbers - Wellington's increased while Central's decreased. So the column headings are at least partially incorrect.

The official published numbers are totally unreliable.

To answer my question, I can however set up my own graph showing absolute numbers on Jobseeker Support by region, and the percentage change from base, year-on-year. At 27 percent annual growth, much higher than any other region, Wellington does not look pretty. But neither does Auckland, in terms of absolute growth:

Still, we have been in much tougher times. In June 1993 for instance, 200,000 people were reliant on the equivalent benefit but in a population around 2 million lighter.

That isn’t much consolation to those losing their jobs today but let’s hope that the unavoidable correction to Labour’s six years of over-cooking the economy with borrowed money doesn’t come with too much more pain.

The child poverty conundrum

 The Child Poverty Report 2024 has just been published. It's an overview and selected findings, as opposed to a full report which is due in 2025.

Poverty can be measured in various ways.

Material hardship is measured by asking survey questions about deprivation. Has a child gone without fresh fruit and veges, been subject to postponed doctor visits, experienced a cold and damp house, etc. The DEP-17 scale has 17 items and experience of 6+ is considered material hardship; 9 or more, severe hardship.

The following graph shows that children in beneficiary households experience material hardship at rates that are consistently, "four to five times the rates for children in working households":

(Left click on image to enlarge.)

While the fall in the hardship rate is good news, the percentage of all children living in beneficiary families increased from 15 to 19 percent  between 2017 and 2024 (see Table 6).

So the rate of hardship has fallen but there are more children subject to it.

In my opinion, the growth in benefit-dependent children is primarily the result of increasing benefit payments and incentivising more families to opt for welfare and stay on it for longer.

The following further graph from the report illustrates the steep rise in beneficiary incomes over recent years (but does not include Best Start, Winter Energy Payment or Accommodation Supplement.) A sole parent with two children receives just under $700 weekly. Adding in the exclusions however, pushes that figure up to $1,057 weekly (April 2023). See Page 6,  https://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/research/benefit-system/total-incomes-annual-report-2023.pdf

In respect of children in workless households, in 2022 (latest data) New Zealand was second only to Romania when compared to 26 European countries.

By family type the highest material hardship rate occurs in sole parent families at 32 percent (compared to 12 percent overall.)

The report notes, "New Zealand also has a relatively high proportion of sole parent households compared with European countries."

Most children on benefits are in sole parent households (70%).

In conclusion, the report shows that in general child well-being has improved and poverty has fallen.

However, the part of the equation that relates to those children living on benefits is not sustainable policy.

The numbers cannot  be encouraged to keep growing. That will only ramp-up inter-generational dependency and further deplete potential productivity.

The feasible approach is that which Clark and Cullen adopted during the 2000s (but Ardern and Robertson shunned more latterly). 

That was, work is the best way out of poverty. Always has been and always will be.

Simply shoveling ever more money into perpetually unemployed households is just another moribund idea from the Ardern era.