Social Budget

Social Budget

Budget 2015 is a step further down the social investment path for this National-led Government, both in scale and ambition.

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Budget 2015 is a step further down the social investment path for this National-led Government, both in scale and ambition. The Government is attempting to present a compelling logic for its social investment approach; a logic it hopes will continue to inform New Zealand’s direction past the tenures of both the Prime Minister and Minister of Finance. This Budget is not exclusively about which agency Government channels taxpayer money through. Rather it is about how focusing on and addressing key social issues can improve the situation of targeted individuals while delivering a financial improvement to New Zealand as a whole.

This Budget’s key social features include a package designed to ease child hardship; additional government spending to support vulnerable children; further development of its flagship Social Housing Reform Programme; and further investment in health, education and trades training. Beneficiary parents of the children targeted in this Budget will, however, face increased requirements to return to work, increase part time work and/or have their eligibility re-tested every year.

Despite delivering a social budget, this Government is acutely focused on moving towards a surplus. To that end, the Minister of Finance has described social investment as "targeted, evidence-based investment to secure better long term results for the most vulnerable New Zealanders". The Government is willing to pay more up front on the assumption that sustainable change for the most vulnerable New Zealanders will equate to financial gains for the Crown. That is, although this is a "social" approach, the key aim remains an improved fiscal track for the Government.

Hon Paula Bennett will have a key role to play in achieving the aims of this Budget, alongside Hon Bill English, Minister of Finance. Minister Bennett's portfolio has been designed to give her the visibility and change levers needed to progress the social investment agenda beyond the realm of her previous portfolio, Social Development. Minister Bennett’s new mix of portfolios and past experience make her a key player supporting the social element of the Minister of Finance’s broader economic strategy, and signals the increasing part she is expected to play both in delivering this Budget and in achieving the Government’s aims more generally.

To embed the investment approach, and ensure the aims of that investment are being met, we can expect to see an even greater focus on the following in 2015/16:

  • Information sharing between public sector agencies
  • Systemic measurement
  • Evaluation of interventions
  • More effective contracting, increasingly focused on integrated service delivery
  • Existing providers, especially government agencies, facing increasing levels of contestability.

All of these signal a new way of working between government and private/not for profit social sector providers. It is less about how Government is organised or officials' desire to shy away from "risky" innovation, and more towards making a difference to people in need, as long as the fiscal return is identifiable.

However, there are several barriers that need to be overcome in order for the Government and the public sector to achieve the desired results. These include the variable quality of information available to inform targeting investment; as well as culture and practices across public sector agencies that hinder collaborative initiatives and the ability of NGOs to respond to rapid changes in the way their services are commissioned. The impacts of these barriers should be closely monitored, and steps put in place to overcome them in the future.

© 2017 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

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