Profit making companies could be contracted to deliver social services: Anne Tolley

Social Development Minister Anne Tolley told TV One’s Q+A programme that in future profit making companies could be contracted to deliver social services.

"If they can deliver good results for people, why not?" Ms Tolley said.

"I mean, I’m very involved in the development of the Wiri contract [held by private prison operator Serco]. That’s a service-based contract. It’s not just running a facility; that’s delivering 10% better than the public service in rehabilitation. That’s going to make an enormous difference to the families of those prisoners. So if private enterprise can deliver those sorts of results, I wouldn’t hesitate to use them."

Ms Tolley told Corin Dann that the government is revolutionising the way social services for vulnerable families and children are delivered.

"I think it is, and I think it’s not just government driving this; actually, the agencies themselves are driving this. So yes, it is a completely different way of looking at it," she said.

Anne Tolley says one of the main problems is that "we don’t know what works – we haven't got good evidence, we haven't got good data’. There's $330 million of that that comes through the community investment strategy. That has just built up over the years."

Asked if the government is just throwing that $300 million at community investment, "and you've got no idea if it's working?", Ms Tolley replied: "That's right. Essentially, that's right. Now, some of it we have some data on and we know that it works, and there's very little, quite surprisingly very little of it."                                                                                                                                                                  

The Minister wants to see better public service targets.

"I liken it to national standards," she said. "So we're setting a goal here - we want to reduce the number of assaults on children. So we want to be working with those organisations. Some of that's very long-term work, and they'll have to show progress through the time of their contract. And others, they might have to show there might be much more short-term results."

RAW DATA: Q+A transcript: Corin Dann interviews Social Development Minister Anne Tolley

Watch the interview here

ANNE One of the main difficulties we have is we don't know what works — we haven't got good evidence, we haven't got good data. And when you look at MSD's spend, which is about $600m a year into supporting those vulnerable children and vulnerable families, there's $330m of that that comes through the community investment strategy. That has just built up over the years.

CORIN And that's, what, NGOs, private, Barnardos?

ANNE Yep, all of that. Much of that has just been added to. New programmes come out, and it's just grown a bit like topsy.

CORIN So you're just throwing that $300m at them, and you've got no idea if it's working?

ANNE That's right. Essentially, that's right. Now, some of it we have some data on and we know that it works, and there's very little, quite surprisingly very little of it.

CORIN Some people might be wondering why on earth you're hadn't changed that approach six years ago if you've got no idea if the money's working.

ANNE Yeah. So, MSD's started, and the reforms that my colleague, Paula Bennett, started in Work and Income, in particular - so of that $600m, they broke off the work and income part of it. It's about $280m. So for

the last few years now, that has been invested under similar auspices. So measured, evaluated, trialled, changed, and that's working well.

CORIN So you're going to put measurements and a results-based focus on all these services?

ANNE Yep.

CORIN Can you give us some examples of how that might work?

ANNE So, currently, when we contract for work with many of these organisations - about 2000 of them.

CORIN So parenting skills, budgeting services?

ANNE Yep, all of those. All of those. It's a numbers base, so we contract people to deal with maybe 2000, 3000 clients. What we're going to be saying to them instead is... Cos what this is all about is changing people's lives. So we're using taxpayers' money to make a difference in people's lives.

CORIN Sure.

ANNE So that's what we're going to focus on, so what difference does that expenditure make in changing people's lives? So what difference does it make? If you look at the BPS targets, for instance, how is the work that you're doing-?

CORIN Just explain - better public service targets.

ANNE Better Public Service targets, and of those is reducing assaults on children. So if you look at vulnerable children, there's a whole number of groups out there that we contract to provide services for that are focused on those vulnerable children. What difference is that making?

CORIN So you're saying right now they don't have a target that says, 'You must reduce the number of assaults'?

ANNE No. No.

CORIN Whereas in future they'll have a concrete target that says, ‘You must have reduced the number of assaults on children by said amount'?

ANNE Yep. Yeah. So at the moment, we'll contract them to work with so many children to give them support and to provide a number of programmes. So it's all focused on programmes and numbers of input.

CORIN Is it possible to get those sorts of results?

ANNE Yes, of course it is, and I liken it to national standards. So we're setting a goal here - we want to reduce the number of assaults on children. So we want to be working with those organisations. Some of that's very long-term work, and they'll have to show progress through the time of their contract. And others, they might have to show there might be much more short-term results. Classic example of where we've trialled this and it's working well is our social sector trials, where between - and remember, this is not just necessarily MSD - so health, education and MSD's said to some small communities, 'Take these resources - these are results we want you to get.' So fewer young people appearing in court, more young people staying in school, less young people involved with drugs and alcohol. Quite clear results, and the social sector trials had the resources to move around and shape.

CORIN How long did they take? Because some of the sectors say, you know, you're only going to get proper results on changing a child's life - it might take five to 10 years. How is an organisation, though, that has to meet a performance target, going to give that result to get their money?

ANNE As I say, some will be short term - keeping a child at school can be quite a short-term result. So that child getting through to something like NCEA level two.

CORIN So if it's truancy, the programme gets the tick for keeping the kid at school, but what guarantee is it the kid’s actually learning or getting any value?

ANNE Well, that’s what I say – some of the goals will be short-term, but I can tell you just being at school makes an enormous difference to a child’s life. Judge Becroft often says a child in school isn’t in court – that’s absolutely right. So yes, then the schools have to make sure that they do something with them, and Minister Parata and even my minister of education with trades academies, the youth guarantee. So there’s a whole lot of work being done around that. And that’s what I say – this isn’t just about MSD. This is all of those social sector agencies working together.

CORIN Okay. On that point, I think some figures suggest 40,000 children are admitted to hospital every year because of poverty related illnesses. Can you give some sort of assurance that you can cut that number?

ANNE Well, it has to be part of the results we’re looking for. That’s what people pay their taxes to us. That’s what we should be spending that $331 million that MSD pays out every year. So I was in Tauranga and Hamilton last week. Into Tauranga, we put $33 million in support to agencies every year. And in Hamilton, we put $45 million.

CORIN So that money’s going into those support agencies and those NGOs that are working in that sector, but someone would argue with that recent case, for example, with Emma-Lita Bourne, who died in a state house, damp house, why not just give those families more money to pay their power bill, rather than give the organisations money to come in and work and all the rest of it?

ANNE And when you look at something like Whanau Ora, they are doing some of that. See, what we’ve got with a focus on individual programmes and agencies working in silos – families don’t work like that. They’re very complex issues, so I don’t know the details of that particular family, but some of the families that I have seen the details of will have all sorts. They’ll have mental health issues with members of the family, there’ll be drug and alcohol problems, there’ll be financial and budgeting issues – you know, there’s a whole range of issues that they’ll be dealing with. There’ll be violence in the home, there might be gang membership, so just coming in with one solution to one part of that is not necessarily going to change it.

CORIN But won’t that one solution, though, at least mean the child, if there are children in that family, they get a guarantee of a warm house?

ANNE Well, not necessarily. Not necessarily. And you can have a warm house that’s completely enclosed that’s high moisture content, and you can have related illnesses to that as well. So what I’m saying is, one part of that – you can solve one part of that – but actually, all the other problems are going to continue. And what we’re trying to do is get a much more joined up work from the state agencies, but our focus on actually changing the outcomes for those families.

CORIN So, just finally on this point, $300million or so being spent in this area – will that increase as part of this investment strategy or decrease?

ANNE No, it will stay the same. And when I talk to mayors up and down the country, and we met with local government New Zealand representatives last week-

CORIN This is not about cost cutting?

ANNE No, it’s not. They say, ‘Look, there’s plenty of money coming into our town; we just need it spent effectively.’ And that’s the key to us rolling out this investment, is making sure that it’s driven locally. We can’t decide here in Wellington what’s working in all those different communities.

CORIN So will some of those communities see, for example, a number of their services cut, because some of them are not working well, there’s duplication? Can you guarantee that none of them will be cut?

ANNE Well, no, of course I can’t. If there’s duplication, why on earth would we be paying for that? Why should we pay for the delivery of programmes that are not having an effect?

CORIN So some of the existing services will go?

ANNE Some of them will stop, and others might get more.

CORIN Does that create an enormous amount of uncertainty and potentially nervousness for that sector?

ANNE Yes, it does, and the sector is aware that there will be changes, but the sector itself wants to know that first of all, we’re assessing well the demand in the right places, and then that we’re rewarding those organisations that are making changes in people's lives. They want it as much as the government wants it.

CORIN What about MSD itself? You’re demanding, you know, more accountability and, you know, better performance from these NGOs. Labour is arguing that, you know, MSD’s got 53 staff on over $200,000. I mean, is that a good look for MSD to be a big, sort of, behemoth in Wellington?

ANNE That’s what I say – this programme has to be driven locally.

CORIN Do you have any concerns about that sort of number of people being paid that amount when you’re dealing with an agency that’s looking after vulnerable people, social workers on, you know, low incomes?

ANNE Well, I’m very focussed on the fact that we put $331 million out into communities. And we really don’t know whether we’re meeting the needs of that particular community and whether we’re making a difference to the lives of the people that we’re supposed to be changing.

CORIN So not concerned about those salaries?

ANNE Well, I think $331 million is a lot of taxpayers’ money.

CORIN In other words, you’re saying you need that level of expertise?

ANNE At times we do, we need good expertise at head office. How much or how little of that is really just for the chief executive, I can’t reach down into that. That’s not my responsibility.

CORIN The other element that some of the sector was worried about is that this is a stalking horse for privatisation. Is it possible that in future private providers that are looking to make money, essentially, but using that profit incentive, similar to social bonds, that incentive of profit, could be involved in more social services? We’ve got private prisons, we’ve got charter schools – could we see the likes of a company that runs a private prison, Serco, which in the UK is looking at child services, involved in an area like that?

ANNE If they can deliver good results for people, why not? I mean, I’m very involved in the development of the Wiri contract. That’s a service-based contract. It’s not just running a facility; that’s delivering 10% better than the public service in rehabilitation. That’s going to make an enormous difference to the families of those prisoners. So if private enterprise can deliver those sorts of results, I wouldn’t hesitate to use them. But there will still be in communities the desire and the people who want to be involved at the NGO level, many in the volunteer sector, because we’re good people, and they want to contribute.

CORIN That would be quite a significant move, though, wouldn’t it, if you still have your NGOs, but if you also allowed private operators to come in with the aim of being able to make money on what they do to provide those core social services – that would be quite a significant shift, wouldn’t it?

ANNE No. Well, it depends on what you’re talking about, making a profit, because those NGOs are paying people to do work, and they are organisations, and some of them own property. And then you have the philanthropy, so you have private enterprise involved in it from the philanthropic point of view anyway. What I’m focussed on and I think what I want to see from the contracts is that it’s focussed on, what is the difference that that investment into that community is having on the lives of those vulnerable people. Cos I think, in the end, that’s what New Zealanders pay their taxes for.

CORIN So if a company like Serco, which in the UK wants to provide child services, asked, said they could do it in New Zealand and it could do it better than the current services being offered, you’d be open to that?

ANNE it would need to be better. You know, like Wiri, they would need to be offering something that was better than the current services. But yes, I would be open to that. And we’d want to trial it and make sure that it worked and that it was delivering, and they would have to have the same, maybe tighter controls, but yes, I think I would be open to it.

CORIN Just finally, is this a revolution in the way we do social services?

ANNE I think it is. I think it is, and I think it’s not just government driving this; actually, the agencies themselves are driving this. So yes, it is a completely different way of looking at it.

CORIN And what do hope success will look like?

ANNE Oh, success, for me, will be that we know that we are reducing the number of vulnerable children and families in New Zealand because of the investment that we are putting into our communities.

CORIN Anne Tolley, thank you very much for your time.