An opening for a legacy initiative

Forget asset sales. Forget fiscal consolidation. Forget cows and oil. When the Key government is assessed at its end, its importation into some social policy of an actuarial/investment technique might well be judged its most important policy initiative.

This month Social Development Minister Paula Bennett will issue a white paper on a topic to which that technique is particularly appropriate: “vulnerable children”, whose rescue is becoming a major public management and long-term economic issue.

Bennett narrowed this wide category to “the most vulnerable” in her preface to the green paper on which the white paper is based and which attracted nearly 10,000 submissions, a fifth of them from children and young people up to age 24.

Bennett’s “most vulnerable” focus suggests her target is children who get badly maltreated or, worse, damaged or killed. But hard cases make bad law. There is a much wider basis for monitoring and bothering about children.

The Dunedin longitudinal study has demonstrated strong links between very early childhood experiences and later performance in education, youth, work and adult life. A bad or poor start, which may be from causes other than maltreatment, stunts a child for life.

There are strong equity and social cohesion reasons for trying to save children from such bad starts. There are also strong economic reasons: children either grow up to be productive members of the workforce, taxpayers and positive guardians of the next generation or they fail at school and then at work, get physically and mentally ill, go off the rails and, too many, into prison. Prisons, Bill English has declared, are a moral as well as a fiscal failure.

The economic — future workforce — dimension is what got Business New Zealand’s Phil O’Reilly into the Every Child Counts coalition and on to the Children’s Commissioner’s “expert advisory group” on child poverty, which reported in August that too much of a childhood spent in poverty is a big contributor to a poor start.

The Dunedin study’s evidence — and associated research in the likes of health, nutrition and education — is that very early intervention is far more successful than trying to fix people later.

To be effective, most submissions on the green paper argued, the needs of children should trump those of parents and caregivers and intervention should be “as early as possible”, guided by active monitoring. It also suggests a wider definition of targeted children to something along the lines of “vulnerable to a substandard or damaging home life”.

Enter the actuarial/investment process. The long-term cost of a poor start (in lost work and tax contributions and in health, courts, prisons and collateral damage to others) can be actuarially calculated and from that the return on an investment which steers a child on to a positive path.

Infometrics, not a leftwing economic consultancy, calculated in 2011 that poor outcomes for children cost the New Zealand economy $6 billion a year.

Prime Minister John Key labelled that “rubbish”. But he has also backed both the actuarial/investment approach and Bennett’s white paper. The latter chimes with his wish for his prime ministerial legacy to be what he has done for disadvantaged children.

He will get that opportunity if the White Paper reflects the thrust of most green paper submissions. But that poses him a big management challenge.

Note, for example, that, for innovation, only in August — three years on from appointing a chief science adviser — did he get to the point where in the fine print of a report could be found an aim to work “towards” government spending slightly more than the OECD average, “as fiscal conditions allow”.

Will the same “towards” and “as fiscal conditions allow” qualifiers apply to “vulnerable children” and thus to our future workforce? Or will he transubstantiate from fiscal scrooge and one-time currency trader to long-term investor?

That is a legacy question.