New Zealand: We can do better - the Productivity Commission on social services

Brief Counsel
Last Updated: 4 October 2015
Article by Matthew Yarnell

At the heart of the Productivity Commission's final report on More effective social services are the most neglected, most vulnerable people in our society.

The Commission's 61 recommendations advocate a fundamentally different approach to the way the system works for our most in need citizens, people whose lives are complicated and who face multiple challenges.

It's a sobering read but also an optimistic one which challenges our public service to collaborate, innovate and be more responsive to their clients.

The Government is clearly receptive to this message. It resonates with recent public sector reforms, emerging trends in technology and the explosion in the availability of data.

An important report

Finance Minister Bill English has publicly commended the quality of the Commission's analysis, describing it as sharp and thorough, so it is probably safe to assume that the government will adopt much of the Commission's advice. This would mean moving to a more integrated and responsive regime that better marshals resources to achieve more effective outcomes for those who are most vulnerable.

The principal area of agreement between English and the Commission is on the importance of focussing on the people with the deepest needs and the least capacity to access the services that are intended to be there for them.

The costs in social waste and desperation are obvious, and there is also the fiscal cost. The 10,000 highest cost "clients" are each expected to generate lifetime budgetary costs of $500,000 or more, amounting collectively to $6.5 billion.

As English observed in his contribution to Treasury's guest lecture series on social investment:

"The way we have designed our social service system is preventing us from making a meaningful difference in the lives of people with multiple, interdependent problems. This isn't because people are slack or lazy – it is just that these families have really different and complex lives, and so need a different and bespoke approach."

For a long-time there has been a level of tacit acceptance that some people's lives are simply too difficult to improve. But, with increasingly sophisticated tools available, the Commission – and the Government – are saying to our public service that we can and must do better. There is a tendency to focus on the Government's fiscal motives (and, no doubt, they are real) but there is also a real determination to mitigate the misery faced by a significant minority of New Zealanders.

Some tools

Data access

The era of "big data" and analytics has created new possibilities to better inform decisions and to make that information available to decision-makers at all points in the chain. This will require protocols and governance arrangements which secure confidence and trust in data sharing and making trade-offs with some of our (now entrenched) notions around privacy. At the core of this is the idea that promoting better feedback loops between the providers and consumers of social services will encourage the public service to make better decisions about where resources are prioritised, how resources can be better co-ordinated and how we evaluate the success – or failure - of social service provision.

The Government is in the process of setting up the Data Futures Partnership – an independent cross-sector group to drive this work.

More flexible public sector management options

Amendments in 2013 to the Public Finance Act (PFA) and the State Sector Act (SSA) have also set the stage for greater collaboration across departments and for a more results-focussed funding model.

The PFA, for example, now requires departments to report on what is intended to be achieved from the appropriation and on what is achieved. And the SSA enables the responsibilities of public service CEOs to extend beyond their agency's boundaries – leading to the creation of cross-agency boards, such as the recently established Social Sector Board, comprising the CEOs of the Ministry of Social Development, Health, Education, Justice, Police, Corrections, MBIE, Te Puni Kokiri, Pacific Island Affairs and Statistics.

A bespoke approach also means that agencies need to consider delegating more authority to those best-placed to respond to the needs of the client – whether employees of that agency, employees of other agencies or even non-governmental service providers. The 2013 reforms allow much greater flexibility in departmental delegations, a fundamental shift from a model that has traditionally demanded the concentration of authority at the top of the public service.

Social bonds

Social bonds (also referred to as social impact bonds) are a newly developing form of results-based contracting between the government, private social service providers and investors – which may be financial institutions, charities or individuals.

They are in use in the UK, the US and New South Wales. In New Zealand, pilot work in this area is underway led by the Ministry of Health with the government considering bonds focusing on employment for those with mental health issues, lowering recidivism rates and helping people manage long-term health problems.

The Commission considers that the social bond approach can stimulate innovation by sharing risk and linking payment to performance while leaving the providers (as opposed to the government) free to determine how to achieve the agreed outcomes. Accordingly, it sees a role for them in encouraging experimentation and testing the effectiveness of new approaches. But it says "they may not be suitable for wide application across social services".

The Investment Approach

This has been used by the Ministry of Social Development (MSD) for active labour market programmes. The idea is modelled on the system used by ACC and came out of the Paula Rebstock-led Welfare Working Group. It uses an actuarial model to evaluate Future Welfare Liability (albeit an imperfect proxy for evaluating the net social benefits of intervention) as a guide to where the Government should put its investment in welfare-to-work services.

The expectation was that it would shift the caseload focus from clients who are easy to move off benefit to the more intractable cases. It has produced promising results from a fiscal perspective but the Commission observes that "slavish application of an investment approach based purely on costs and benefits to government might lead to perverse outcomes". For example, a health service which sought only to reduce future costs would have no incentive to discourage obesity, given that obese people have a lower life expectancy.

The Commission recommends an extension of the programme but with more devolved decision-making, explicit criteria to ensure that all clients get access to at least a minimum level of service and independent actuarial and economic scrutiny to build public confidence.

From silos to integration

The Commission portrays the current system as one where well-intentioned people with fragmented budgets and decision rights are attempting to solve complex problems in a vacuum of information about what works, why it works, how well it works, who it works for and how much it costs.

It recommends an integrated approach for the most disadvantaged, at the hub of which would sit a skilled, client-centred "navigator" who is close enough culturally and geographically to the client to understand the client's circumstances and to build a relationship of trust. (This navigation concept has also underpinned the delivery of many Whanau Ora related services.)

The navigator would have a clear responsibility to achieve outcomes that are agreed by both the client and the commissioner/funder and a "realistic" allocation of funds. He or she would be supported by:

  • information systems and an allocation framework that funnels money to where it has the most effect, and
  • devolved decision-making that gives the navigator the freedom to provide or purchase services that will best meet the client's needs.

The Commission recommends the establishment of a "Better Lives" agency which would have dedicated funding and a mission to provide integrated services to the most disadvantaged New Zealanders. One comparison the Commission uses is with ACC which, once a claim has been accepted, accepts long-term responsibility for the claimant, including rehabilitation. Rather than provide the services directly, the agency would be responsible for the stewardship roles of high level design, goal setting, standard setting, data gathering, monitoring and investigation. It would contract with commissioning agencies that were close to the clients, with each enrolled person or family the responsibility of a single agency. Other clients would remain the responsibility of the mainstream social service agencies.

As an alternative, it suggests that the District Health Boards could have their role widened to include social services, but it is difficult to imagine either the DHBs or the Government being attracted by this proposal.

First steps

The Commission has outlined an action plan for the first two years, the next two years and the longer-term, with an immediate focus on getting the broad infrastructure into place. Key recommendations for years One and Two include:

  • assigning Ministerial responsibility for system reform
  • establishing a Transition Office to steer the reform and to report every six months on progress
  • initiating work on selecting a delivery model
  • improving commissioning, contracting and procurement processes
  • establishing governance arrangements for sharing data across agencies and providers
  • actively promoting innovation
  • investigating services where client direction could be expanded, and
  • enhancing evaluation.

The 400+ page report is available here.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions