Good afternoon and thank you for the invitation to speak at the Analytics Forum today.
Traditionally, a data forum may not be the natural environment for social sector policy makers.
But I’m pleased to say that this is changing, with the ever increasing use of data and analytics in public policy.
This is largely due to the driving force of the Government’s Social Investment approach.
What is the social investment approach and why is it important?
Each year we spend around $61 billion on social services so New Zealanders have the best chances to be healthy, educated and safe.
There are parts of it that we can't tell you whether it is effective - especially some of the work for people with complex needs. We need to do better.
And despite this significant investment, we are not seeing the outcomes we want for all New Zealanders.
This is especially true for people with highly-complex problems that do not fit neatly within traditional government structures and approaches.
Social investment is a new approach that will help New Zealanders achieve better longer-term outcomes.
In short: it’s about changing lives.
We want our policies to deliver for all New Zealanders – including those at the very hard edge whose lives are entangled in complex, difficult issues.
These are the New Zealanders who are spending their entire lives on welfare, the families trapped in a life of crime, the ones dropping out of school without being able to read, or caught in the inter-generational cycle of family violence.
We want to do more for these New Zealanders because we want more for them.
We want them to live independent lives where they can reach their full potential – rather than simply surviving.
We want to give them hope and allow them the opportunities we all enjoy, so they can make the most of the talents they have and contribute to society.
But doing so means we have to do things differently. And it’s not a matter of throwing good money after bad.
Our view is that we have to shift the whole system and start investing more upfront in a highly-targeted way that directs much-needed support to those in need.
But to make smarter investment decisions we have to have better information.
And to do that, we need to harness the power of data.
We have to be able to understand and analyse people’s need for, and experience of, social services. This means being customer-centric, and putting people at the heart of Government – rather than expecting our customers to navigate the labyrinth of the public service.
We have to know what works, for whom, and at what cost. This means frank assessments of how well we deliver services, and making changes to do better.
And we have to have information that reflects the complexities of real life – where we intuitively know that impacts in one sector have implications in other areas of people’s lives, and that interventions like education do not have immediate payoffs but are still worthwhile.
All of these rely on the use of data and analytics at a scale and level of sophistication that is unprecedented in public policy, particularly in the social sector.
But I’m excited by the challenge and delighted that New Zealand is a world leader in this task.
The United Kingdom, France, Australia and others all see the value in the Social Investment approach but are limited in implementing it because they are having to focus their efforts on consolidating their data and information before they can go any further.
New Zealand’s social investment journey already has a head start from the work underway in gathering and processing the data on the millions of individuals captured in the Integrated Data Infrastructure, as well as the on-going national conversation about the use of New Zealanders’ data, facilitated by the Data Futures Partnership.
But we’re not taking a breather. We’re pressing on.
The long-term game – How data and analytics can transform the public sector
I want to make this transformation permanent, so data-driven decision-making is the expectation in public policy, not the exception.
To help the public sector to meet these demands, the new Social Investment Agency will open its doors on Monday (3 July). This isn’t another layer of bureaucracy, but a lean, nimble and highly-skilled agency who will help social sector agencies better understand and meet the needs of our most at-risk New Zealanders.
But embedding data-driven decision-making requires a long-term work plan.
Despite recent developments, there is still a long way to go to embed the social investment approach. After all, social investment requires a new mind-set and new capabilities in the social sector. That kind of transformation cannot happen overnight.
So, what is our plan for making that transformation happen?
I have four priority areas to embed a data-driven approach to decision-making that will ultimately change lives for the better.
Applying Social Investment across Government
First, we need to get all agencies to apply social investment across their everyday work.
Some agencies have that work underway already.
The earliest approach was the welfare liability model. This used person-centred variables to estimate the predicted lifetime cost to government of welfare expenditure.
The cumulative impact over five years from changing the way we work with people is a reduction of around $13.7 billion in the welfare system’s future lifetime cost.
This means less money on benefits and more money for schools, hospitals and roads.
To put these savings into context, its equivalent to the entire budget the 20 District Health Boards will spend across the country this year.
Agencies have built on the liability approach to use increasingly sophisticated methods for understanding the demand for social investments.
The investment approaches in justice, welfare and social housing have evolved to focus not only the current need for services, but identify future housing or welfare support, or even offending.
For instance, we know a nine-year old boy known to the care and protection system and in a benefit-dependant family is expected to commit three offences in the next 15 years. We also know that this boy would offend three fewer times if his parents took part in parenting courses.
With targeted interventions, we can reduce crime, prevent victims going through trauma, and keep potential offenders out of jail – all of which has flow-on benefits to government.
There is also more work to be done by agencies to understand the impacts of one intervention’s impact in another sector. For example, we know that 70% of the children known to the care and protection system will be on a benefit by age 21 and this cohort is nine times more likely than others to go to prison in their lifetime.
Knowing the opportunities to intervene not only means smarter investments, but can deliver meaningful change for New Zealanders.
Creating the right infrastructure
The second priority area is developing the infrastructure for agencies and others to apply social investment.
The new Social Investment Agency is tasked with developing the tools and architecture.
Investing in building robust and reusable infrastructure from the start enables the rest of the sector to apply social investment consistently—avoiding the unnecessary costs of repeating the time and effort of developing bespoke tools.
For example, the Social Investment Analytical Layer (or SIAL) makes it faster and easier for users of the Integrated Data Infrastructure to prise insights from this dataset. The cleaned and quality-assured data layer maps around 66 per cent of the IDI data back to anonymised individuals.
Since its launch in March, the SIAL has already saved around $1 million. These savings will only increase as more agencies use the IDI and benefit from the initial work. The SIAL will also be updated to improve measures over time.
These kinds of benefits can only be realised if we embrace new, more open and transparent ways of working.
The Social Investment Agency will set a new standard for sharing progress and insights early and often. Reusable code will be made public so users can take advantage of the progress made and recommend improvements.
Information sharing is also vital to spreading social investment beyond Wellington. Government does not need to hold, collect or store all data but it should ensure decision-makers have timely and trusted access to the information required.
We are building the Data Exchange to transform how New Zealand’s social sector data is shared. The Data Exchange is a secure, private, and controlled cloud-based exchange that enables government agencies and non-government organisations to share data.
The first live transfer of anonymised data was successfully completed in December last year.
With the value and amount of data being shared, this raises questions about what kinds of data are legitimately required to support different social investment questions.
As you’ll know, data provides different levels of information. Aggregated data like the Census provides us with averages and counts while the data available in the Integrated Data Infrastructure is more detailed but has any individual, uniquely identifying information removed.
There is currently no guidance on what level of data is appropriate for very different social investment questions.
For instance, de-identified data might be fit for the purposes of understanding populations and measuring effectiveness, but improving service delivery on the frontline may require more detailed information.
Without a principled approach, there is a risk that the use of data does not match the intended analytical purpose. This in turn risks losing New Zealanders’ trust and confidence in the government’s use of their data.
We are taking a proactive step to provide guidance on this issue.
The Social Investment Agency will lead a Working Group with Statistics New Zealand and NGOs to inform, clarify and guide the use of data for social service delivery. This will agree on an approach to collecting data, as well as determining when it is appropriate to use different types of data and the purposes for which certain data can be used.
Getting whole of system advice to decision makers
The third priority area is about getting whole-of-system advice to decision makers.
We need to recognise that people’s lives and problems are not structured around government agencies – a fact that is revolutionary in Wellington. Families facing challenges have a whole range of complex needs and to look at them through a single lens, rather than as a whole, is a lost opportunity.
Yet government agencies don’t think that way, aren’t funded that way, and don’t hold themselves accountable that way.
It’s been near impossible to get advice that spans social sector portfolios. This has made it difficult for Ministers and decision-makers to recognise the real trade-offs between different investments over time and between sectors.
Now, the Social Investment Agency will be responsible for developing ‘whole of system’ advice – providing guidance on opportunities and target populations. Decision-makers will be able to decide what, when and how to invest to maximise long-term impact.
The new Social Investment Board, consisting of Chief Executives from Ministries of Health, Education, Social Development and Justice, will advise Cabinet’s Social Policy Committee on the strategic direction, priorities and joint results for collective action by agencies.
This will be particularly valuable in New Zealand’s most pervasive issues—family violence, mental health, and alcohol and drug addictions —where traditional agency boundaries hinder progress.
This is one of the newest areas for social investment. Providing the kind of information to support this level of decision-making requires new analytical frameworks and approaches that bring previously siloed data together to make coherent decisions.
But we can already see the benefits of this approach from initial attempts – such as the Social Investment Unit’s social housing test case.
This case which I’m releasing today shows that it’s possible to understand the broader fiscal impacts of a single service, like social housing, on agencies, such as health and education.
We compared data between those who were allocated a social house and those who weren’t. It found that those living in a social house:People are in jail for less time – that’s a 25% reduction Children are in school for longer – up 6% Families access better support – a 4% increase in welfare spend.
We can use the insights from this test case to calculate the fiscal return on investment for social housing and prove with hard data what we already intuitively know – that providing social housing helps New Zealanders to lead better lives.
Being bold and brave, and taking risks to fail
The fourth priority area pushes for innovation—trying new approaches to achieving outcomes—and rapid learning and feedback loops.
The social sector works well for many New Zealanders but not for groups with complex needs. We want to try new approaches where they are needed to provide the right support for all New Zealanders.
Slowly, but surely we are changing the culture of the public sector to one of taking risks, tolerating innovation, and being bolder and braver about solutions to some of the trickier issues we’re facing.
It was Albert Einstein who said the definition of madness is doing the same thing over and over again and expecting different results. But that’s exactly how the public sector has been trained to think.
I want agencies to be focused on solutions, not outputs.
We want them to break the mould, to test, trial and build on the lessons we have learned, so better ways of improving outcomes are identified and implemented.
And the new Social Investment Agency will help the public service do that.
In Budget 2017, Health Minister Jonathan Coleman and I announced $100 million for a new cross-government social investment fund that will target innovative new proposals to tackle mental health issues.
Mental health is a social investment priority for this Government.
It’s one of our most complex social issues, and it is having big impacts across the employment, housing, health and justice sectors.
This new fund is an opportunity to encourage new ideas, and robustly measure the success of new approaches.
It’s important to come up with innovative solutions which keep up with the evolving needs of New Zealanders.
In conclusion, we have an ambitious programme to bed social investment in across the social sector.
These ideas and approaches will grow and become business as usual over time, ultimately providing better returns to New Zealanders.
In the meantime, we’re getting better at using data.
We’re narrowing in on the families who need intensive help.
We’re understanding better how our policies can help and at what point in someone’s lives they are most effective. And we’re investing more in what works.
It's not just how much money we spend, but what gets the best results.
We’re a Government that wants fewer customers. Because the less people rely on Government, the more independent they are.
We’ll do this, not through cutting public services, but by improving lives so people don’t need those services.
This means fewer people on benefits, fewer people in prison, fewer people needing mental health or addiction support.
We’ll save money in the long run, but more importantly we’ll change lives.
We are on the precipice of the most remarkable transformative changes in how we deal with our social services in New Zealand.
In our hands, we now have the ability to do the one thing that New Zealand has not nailed yet which is to address the lives of a small number of particularly vulnerable New Zealanders, who we’re not prepared to write off.
We want more for them.
If we can do this, there is nothing stopping New Zealand being the best country in the world.