More effective social services

Key Results

Chapter 2 – Social services in New Zealand
Findings

F2.1 Government expenditure on social services as a percentage of GDP is currently higher in New Zealand than the OECD average. Expenditure is also higher than common comparator countries such as Australia and Canada, but lower than the United Kingdom.
F2.2 From a client’s perspective, government processes for delivering social services can seem confusing, fragmented, overly directive and unhelpful.
F2.3 Clients differ according to the complexity of their needs and their capacity to access the services they require from the social services system. The Commission has found it useful to notionally place clients into four groups:

• People with relatively straightforward needs who require assistance to access services (quadrant A).
• People with relatively straightforward needs who have the capacity to access services for themselves (quadrant B).
• People with complex needs who have the capacity to access services for themselves (quadrant C).
• People with complex needs who require assistance to access services (quadrant D).

F2.4 The social services system struggles to effectively deal with multiple and inter-dependent problems encountered by the most disadvantaged New Zealanders (quadrant D). Improving services for this group offers the biggest opportunity for gains.
F2.5 The social services system often fails to create and share information about which services and interventions work well and those that do not. Overcoming this deficiency in the system is important for achieving better social outcomes from expenditure on social services.
F2.6 Better alignment and coordination of services would improve client outcomes.
F2.7 Opportunities exist to reduce the transaction costs of contracting out social services. From a provider’s perspective, onerous government processes are wasteful in that they draw resources away from providing services.
F2.8 Opportunities exist to improve outcomes for individuals and achieve a higher impact from government expenditure through early intervention

F2.9 Ministers and officials tend to focus on the flow of new social services initiatives, giving relatively little attention to management of the large stock of programmes that account for the majority of expenditure. There are likely to be significant gains from more active management of the stock of social services programmes.
F2.10 Over the past 20 years, numerous reports into the social services system have highlighted a consistent set of problems and proposed a set of similar solutions. Many of these reports have focused on symptoms of system weaknesses rather than the underlying cause of the weaknesses. Lasting improvement can only come from identifying and tackling these causes.

Chapter 3 – New ideas in New Zealand and elsewhere
Findings
F3.1 Social services programmes that give clients an entitlement to a level of support and choice over how that entitlement is spent promote innovation and responsiveness in provision. Yet such programmes can create pressures to expand entitlements, increasing programme costs. Programme design needs mechanisms for keeping costs within budget.
F3.2 Successful implementation of substantial new social services schemes is assisted by a clear vision of the destination, careful staging and trials of new approaches, continuing community consultation and independent evaluation to guide design and build support.
F3.3 Philanthropic organisations like to take a lead in demonstrating the success of innovative approaches to the design and delivery of social services. They look to the Government to pick up and fund those approaches that prove successful.

Chapter 4 – An assessment of the social services system
Findings
F4.1 Traditional delivery of public services takes place in vertical departmental silos. Particularly for clients with multiple and complex needs (quadrants C and D) that span the responsibilities of several agencies and ministers, this causes frustration, wasteful duplication, and fragmented diagnosis and support.
F4.2 Accountability and delivery structures within government agencies place a high emphasis on managing political risks and keeping expenditure within budget. Accordingly, officials use prescriptive contracts to manage costs and risks to their specific agency.
F4.3 Tightly prescribed government contracts reduce the flexibility of providers to tailor services to meet the needs of clients. This is problematic in cases where the tailoring of services would improve client outcomes.

F4.4 The lack of agreed measures of value has led to too little measurement and reporting of the outcomes achieved from social service programmes. Aversion to political risk has compounded this. The combined effect has often been performance reporting that, while costly, provides few insights into the impact and worth of programmes.
F4.5 Government agencies often do not subject their social service programmes to rigorous and transparent evaluation. They frequently fail to learn from previous experience.
F4.6 There is useful information at all “levels” of the social services system, but decision makers frequently lack important information required to make good decisions.
F4.7 Government agencies have overlooked their potential to shape and manage the market for social services contracts. Consequently, the provider side of the market is distorted and underdeveloped in some areas.
F4.8 Contracting models that give a service provider a geographic monopoly for the duration of a contract deny clients a choice of services and providers, and can weaken incentives for providers to deliver good services to clients.
F4.9 Problems with contracting out are often symptoms of deeper issues such as the desire to exert top-down control to limit political risk. Letting go of central control will require shared measures of the value created by social services, and a willingness to explore different institutional designs and approaches to commissioning.
F4.10 Previous attempts to reform social services have often struggled because of competing “worldviews” that inhibit agreement on problem definitions and the underlying causes of problems.
F4.11 The organisational cultures of providers and government agencies tend to be resistant to change. These cultures can also be paternalistic towards clients.

Chapter 5 – System architecture
Findings
F5.1 Top-down control emphasises standardisation and risk management, but has significant limitations. Using more devolved approaches may achieve substantial improvements in the performance of social services.
F5.2 The case for large-scale devolution of responsibilities for social services to local government does not appear strong in New Zealand. Devolving responsibilities to local government would not resolve some significant problems of the current social services system.
F5.3 Devolution of responsibility for social services to semi-autonomous government entities can lead to better outcomes than direct ministerial control. Such entities typically have better information and incentives to make and implement decisions that maximise social returns.

F5.4 Multi-category appropriations and other mechanisms added in 2013 to the Public Finance Act 1989 are useful additions to the budget appropriation system. Yet these mechanisms are not sufficient to provide flexibility at the interface between providers and clients. Such flexibility is required to tailor services for clients with multiple, complex
problems.
F5.5 System architecture and the enabling environment require active management for social services to be effective. This active management should be the responsibility of a system steward. The current arrangements fall short of what is required for good system stewardship.