Getting entrepreneurial about social policy

It sounds an anomaly in terms, like a herd of cats. But Steve Maharey is undeterred: he is backing a conference of social entrepreneurs.

What will they do, tomorrow and Friday in Wellington, these free spirits? Not earnestly pass resolutions to save souls. Entrepreneurs — business, cultural, environmental or social — are risk-takers for an idea that works, not conformists to majority votes.

There are two dimensions to one-time shoe-shop manager Maharey’s flirtation with entrepreneurs.

One is to save, in some new form, social democracy. The one-size-fits-all, top-down factory state that worked a treat 50 years ago doesn’t work any more because the world outside has changed and people here are far less regimentable.

The new idea Maharey is pursuing — coined in Britain — is for governments to hook into and help local initiatives. For that, you need to find and encourage entrepreneurial sorts who dream up those initiatives. Jim Anderton will partly be tapping into the same idea in hosting a regional development conference next week.

The second dimension is pragmatic acceptance that central government can’t fix localities that have gone bad. Maharey chairs the cabinet committee on Northland which ordered extensive doorstep fact-finding by state and regional agencies and concluded that “the only solution is a community able to run itself”.

That requires local self-starters, he says, a “neighbourhood leadership model” in which “they tell us what to do. We do not tell them what to do.”

Fine-sounding sentiments. And a private social venture capital fund being got up by Auckland business entrepreneurs should help. But can ministers who learnt their politics at social democracy’s high point 30 years ago really let go of the reins enough?

There is another catch-22 at the heart of Labour’s conundrum as it seeks an ethos relevant in the 2000s: middle-class capture of much of the welfare state. With tax rates capped by international pressures, that leaves less for those most in need.

Who is getting the bulk of the $420 million to ameliorate student loans? Middle-class kids. They are far more likely to go to university and polytechnic than those of low-income families.

Social democrats could justify this when there were steeply graduated income taxes. Helen Clark once explained to me in the 1980s that the welfare state’s payouts and services needed to be universal so the middle class felt it was worth its while paying its disproportionately high share of the cost. Thus was the nation bound together in common cause.

And in the 1950s, when average families paid little or no tax, unemployment was microscopic and there were no DPBs, it worked. But now the income tax rates on the middle class are flatter and lower, demand is higher and average families pay a lot of tax, the Clark rationale is under great strain.

And the middle class is good at organising to hang on to their goodies. A couple of hours at the education and health debates at Labour’s annual conference next week would make that clear to you.

This paradox at the heart of latter-day social democracy is well argued in James Cox’s book, Middle Class Welfare.

The left will reject Cox because the Business Roundtable commissioned him. But to save social democracy the left might usefully pose itself the equity — fairness — questions Cox raises and go after some entrepreneurial answers.

Bill English is no fan of Roger Kerr, either. English is far too centrist. But conservatism, too, needs modernising and that requires the same nagging paradox to be addressed. How can you tell the middle class, he asked last week commenting on Cox’s book, that “they are going to have to pay for something they now get free? Why would people agree to that?”

English’s answer is an “integrated argument”, covering tax, the quantity and quality of services to be provided and the values by which the system is to be run.

Don’t ask for details. There aren’t any yet. But, what with Maharey’s entrepreneurs and English’s musings, maybe change is in the air.