6 Things Governments Could Invest in that Actually Work (or how to stop throwing money down the loo)

Jess Berentson-ShawTax and Welfare

No single group operating in the policy space (or politics) owns fiscal responsibility as an idea. Rather fiscal responsibility is something all Governments are concerned about (in fact legally they have to be as we have an act that covers it). As a concept and practice though what does it mean? One critical aspect of fiscal responsibility is prioritising the spending of public money to where actually works to best improve outcomes for individuals, while ultimately reducing costs (in the big scheme of things) to society.

Last week it was revealed that in ground breaking research, the warm-up New Zealand scheme (where houses are insulated for low or no cost under a government funded scheme) was shown by Researchers at Motu Economics to be highly cost effective. For every $1 invested there was a $6 saving to government by way of reduced health costs.

Awesome, here is exactly what the prime minster has asked for – evidence of a policy that works for people and saves the country money. And as professor Philippa Howden-Chapman said due to New Zealand’s “excellent health administrative data” the cost-effectiveness of the programmes could be zeroed in on. Good news for good data – this will also make the Prime Minster happy, as he is a big fan of good data.

In fact Bill English gave a speech last year talking very specifically about the benefits that good data can bring to Government investment “It’s always tempting for any government to throw more money into a system that isn’t working…. So today is about taking the next step on the path to improved sharing and use of data.”

And later in the same speech “We’ll do what works…. And we welcome the public’s rising expectation that we will use their money effectively….Data sharing is an essential part of this.”

Problem is the Government is not doing what works (this is a depressingly common theme in Governments). While the proven cost-effective warm-up New Zealand scheme is not going to continue to be funded, there is also serious money going into any number of things that have no evidence of effect. Many policies (policies that cost money to implement) appear to be driven simply by erroneous beliefs and ideology.

Everyone loves a list so we thought perhaps a list might help this (and future) Government go some way to helping achieve fiscally responsible governance. On this list are things we can have confidence will work, because research like that done on the warm-up New Zealand scheme, tells us they will. If you have doubts about the veracity of such research findings, it pays to remember that there are many things Governments spend money on that are based simply on a belief they should work – I call these interventions the homeopathic treatments of the policy world. A good example of this is sanctions based welfare. It works to tip people off the benefit and cut welfare costs, but does nothing to improve long-term outcomes for individuals or long term costs to society.

The policies, interventions, and programmes we list here are all things that we found high quality evidence for in our research for our new project Pennies from heaven.

Six Costs Effective Policies to Improve Outcomes for Individuals and Reduce Costs to Society


1. Home Insulation Scheme for Low-Income families

This is a scheme that significantly reduces costly and traumatic preventable illnesses in children and older people as we discussed above

2. Public provision of affordable and warm housing without a profit incentive

In the UK this system reduces adult sick days, keeps children in the same house and hence at the same school for their childhood, and improves achievement. As an added bonus the Government could stop throwing money away ($2billion a year) on accommodation supplements and emergency housing payments – money that doesn’t ensure positive outcomes for families anyway.

3. Unconditional cash payments for parents of young children

A large body of high quality research shows this policy improves multiple outcomes for children across their lifetime, reducing significantly the costs associated with child poverty. It could halve the gap in outcomes between children who are raised in low-income families and other children. We calculated a net return of at least $1.9billion a year. This is just an added bonus however to living in a country populated with children and families who are flourishing

4. Reward don’t punish parents in receipt of welfare payments when they do paid work

Under the current system of providing social welfare for parents the stick is brandished with alarming frequency. Under the mistaken belief that work is the solution for low income families with children, those in receipt of welfare payments must actively engage in seeking work when their youngest child is three or in some cases one year old (if this child is born while they are in receipt of a benefit). If they fail to do so, a sanction is applied (i.e. the money coming into the family to support the children is cut). When these parents do find work (mostly of a low income and precarious nature) then welfare payments cut out quite quickly, leaving families not much better off and sometime worse off due to the costs of working.

This exact (punishing) approach was researched in the US and compared to a more carrot-like approach. In a rewards based approach sole woman parents were supported to attend work programmes (but were not mandated to do so). These women could continue to keep their welfare payments while they worked (up to a level that improved their overall economic circumstances and while that work was establishing). The stick approach (like we use in New Zealand) did not improve the economic wellbeing of the families or children’s outcomes at all, while the carrot approach achieved improvements in both. Good for families, good for the economy.

As well as improved outcomes, if we took this supportive approach the Government could also stop wasting at least some of the $280 million a year they spend on reviewing entitlements to welfare when people miss a WINZ meeting, or work 10 hours that instead of 9 that week.

5. Home visiting programmes to reduce child injuries in the home

A “childhood injury” sounds such a bland event. But consider a screaming toddler who has had boiling water tipped over her face, a 5 year old killed in a driveway, your own child screaming in fear and pain after slipping on the deck and snapping their wrist. After cancer and abnormalities, childhood injuries are the biggest killer of children in New Zealand. Programmes in New Zealand and in Canada have shown that professionals visiting the home and doing work to make it safer for children significantly reduce childhood deaths and injuries. Investing in such programmes would save significant ACC and hospital costs

6. One to keep an eye on: Community Coalitions

A new and interesting area of research for reducing health disparities is the community coalition, which involves the formation of a group that includes representatives from a minority or at-risk community. These coalitions work to create a community and environment that encourage healthy choices and improve quality 
of life for the people they represent. As an example, a coalition may work on the development of green spaces, seek to adjust healthcare workers’ behaviour towards at-risk individuals, or create healthcare outreach groups for particular health issues. The point is that the coalitions themselves will identify the areas of need. A systematic review of these approaches indicates that they show promise, but need more rigorous evaluation. Community coalitions are particularly interesting in the context of the Crown’s relationship with Maori Under the Treaty of Waitangi. Programmes in which Maori decide what wellbeing looks like to them, and how that are best achieved need a lot more focus, investment, and commitment

So that is a starter for 6, there are any number of excellent minds working in this space of what works who have more to offer to Government.

Politics is always about the art of the possible. So the question for the public and politicians is do we want to make a fairer, more inclusive New Zealand possible even if it means doing something that we are not sure we believe in? Are we prepared to look past our own assumptions and beliefs to the science and the research to achieve the goal?

6 Things Governments Could Invest in that Actually Work (or how to stop throwing money down the loo) was last modified: March 13th, 2017 by Jess Berentson-Shaw
About the Author

Jess Berentson-Shaw

Dr Jess Berentson-Shaw is a science researcher working for the Morgan Foundation. Jess holds a PhD in Health Psychology from Victoria University. Jess has over 10 years’ experience working on applying science and evidence to public policy. She worked on improving the use of science in public health practice in NZ, before working as a Research Fellow at University College in London, where she researched how doctors and clinicians translate scientific evidence into their clinical practice. While in the UK she also developed a national data collection system, which was used to determine what factors contribute to poor outcomes for women and babies during pregnancy and birth. On her return to New Zealand she directed a research group that specialised in the independent evaluation and application of research and science to health policy and practice. Jess loves science and what it can do to make the world a fairer place.