Jan Logie

MSD and their investment approach

The Government talks about investment but there is no investment. It is not investment if it isn’t over the whole of life and if there is no new money  — Shamubeel Eaqub


Investment sounds like adequate resourcing but this is cost cutting — Prue Kapua, President of Maori Women’s Welfare League

The MSD Investment approach is being used to target services to a very small group that the Government has decided are the most vulnerable and/or will be a long term cost. This approach increasingly drives funding decisions for community organisations, the structure of income support services, and the decision to restrict new Ministry Oranga Tamariki to ‘vulnerable children’. Many organisations will no longer get government funding or they will only get funding for services that fit this very targeted model.

The Government has set up actuarial modelling to make these decisions, using insurance company data analysis techniques to try to assess who will be at risk of negative outcomes. They define negative outcomes as:

  • involvement with youth justice
  • being on a benefit for 5 years between the ages of 25 and 34
  • getting a conviction
  • not getting a school qualification.

The Government have decided that the risk factors are

  • a substantiated CYF notification
  • a parent on a benefit for the majority of their life
  • having a parent with a conviction
  • limited formal education.

Why the actuarial model is problematic

1. Stigma

The first problem is that tightly targeting around risk and negative outcomes individualises problems and creates stigma. 150 years of public health knowledge and decades now of youth development have told us that risk-based targeting entrenches and exacerbates problems. The investment leaves the conditions that cause the problems unaddressed and people start to see themselves more as a problem rather than whole people with the ability to be resilient or change.

2. Assumes causation

The second major issue is this approach, against the evidence, assumes causation. Treasury itself has said they “expect a third of children at higher risk to not have any of the five poor outcomes later in life and for every negative outcome there are more children with only one or no risk factors.” Tightly targeting services will stigmatise people who were not at risk, and will mean people who need help are no longer able to get it.

Treasury has further criticised the MSD approach noting “although these four indicators are associated with poor future outcomes, they may not cause poor outcomes directly. Instead, they may be linked to other things that lead to poor outcomes.” Further “many children can overcome disadvantaged backgrounds, and others have poor outcomes despite their relative advantage. Measuring risk is inexact and services will always need to be flexible enough to provide support based on that individual need.”

3. Focus on fiscal cost to government

Thirdly, the focus for MSD is reducing long-term fiscal liability. This looks only at the costs to the government and at nothing else. It doesn’t consider the economic or social benefits of caring for children, having better jobs, or better training. Further, it doesn’t consider economic or social costs such as greater poverty/inequality.

This National Government has been cost cutting across MSD for the last few years despite there being a greater social need in our families and communities. It talks about investment but we have only seen new money for the data crunchers and new bureaucracies. Due to cost pressures, CYF has lost 121 social workers in a time of deep concern about their ability to deliver for our children.

Ignoring reality

Take one example, the flagship vulnerable children’s teams have been funded by removing money from an existing programme called Strengthening Families. And yet, the work with families is still being done by community-based organisations without specific funding. These are organisations that, despite increasing need, haven’t had a funding increase in 8 years. When it comes to welfare, the Government proudly talks about how many people have come off benefit as proof of their success – yet research suggests as many as half of these people haven’t gone into work. This is all cost saving to the Government and increased costs to families and our communities.

What the National Government is ignoring in all of this is the growing number of people seeking food parcels, the growing number of people on the streets, the growing number of homeless, and the growing distress amongst our community social workers – whose situation was likened to being medics in a war zone without medical equipment.