The dynamics and drivers of persistent disadvantage
Approximately 697,000 New Zealanders experienced persistent disadvantage in one or more domains in both 2013 and 2018. A total of 172,000 people experienced complex and multiple forms of persistent disadvantage in two or three domains in both 2013 and 2018. Māori, people with disabilities, Pacific peoples, and sole parents experienced higher rates of persistent disadvantage compared with rest of the peak working age households in Aotearoa New Zealand.
The drivers of disadvantage are systemic. Broader societal barriers are reflected in the public management system. Power imbalances, discrimination, and the ongoing impacts of colonisation form part of the economic and social context for both advantage and disadvantage in Aotearoa New Zealand. In addition, siloed and fragmented government and short-termism reflect well-known challenges that the public management system has been grappling with for decades.
Our vision – a fair chance for all
The high-level elements of a wellbeing policy approach include:
• setting long-term goals and measuring what matters for improving the lives of citizens;
• evidence-based decision making;
• embedding new approaches across institutions (such as the use of wellbeing frameworks, prioritising prevention and early intervention, and taking an integrating or collaborative approach); and
• building accountability for progress.
Combining the approaches of the current and previous Governments would be a promising way forward to improve our wellbeing approach. Drawing on both detailed distributional evidence and a broad spectrum of indicators, this approach would:
• carefully consider both material and non-material impacts of policy choices;
• emphasise both life course and intergenerational patterns of advantage and disadvantage;
• take a comprehensive approach to data analysis; and
• encourage robust analysis of strategic priorities and assessment of initiatives.
Our work for this inquiry has highlighted the following principles for the public management system as critical to achieving wellbeing for all in Aotearoa New Zealand.
• Strengthen the influence of te Tiriti throughout the system.
• Provide long-term, strategic direction to address persistent disadvantage.
• Prioritise the wellbeing of all with an explicit focus on equity of outcomes and distributional fairness.
• Broaden the values of the system.
• Integrate learning and innovation.
• Prioritise and empower the voices of people experiencing disadvantage.
Re-think the macro settings and assumptions of the public management system
Similar to all “human systems”, Aotearoa New Zealand’s public management system is shaped by underlying ideas and assumptions. Assumptions in a human system are never neutral; they reflect the dominant values, mindsets and worldviews held by people in that system. These assumptions flow into and underpin the system settings and policy approaches that filter, drive and direct public policy decisions and investment.
Assumptions may be explicit or implicit. Although they are not necessarily held by everyone, they are nonetheless embedded in ways of working that can enable or constrain progress. The tendency for policy agencies to consider disadvantage within individual policy or public service domains is an example.
He Ara Waiora recognises collective values, and the latest version of the Living Standards Framework introduced the concept of collective wellbeing. Giving such frameworks, including the Pacific Wellbeing Outcomes Framework, greater centrality and weight would help in broadening the values, both in policymaking and in the expectations placed on how public servants should uphold the “spirit of service”.
Wellbeing approaches will not achieve their full potential to address persistent disadvantage until there is direction and prioritisation within the public management system. This direction and prioritisation require long-term objectives that better drive purpose and explore co-benefits and complementarities across the public management system.
Short-termism within the public management system limits the ability to address long-term challenges and take decisions with multi-generation timeframes. This is compounded by the absence of forums, instruments or institutions protecting the interests of future generations, and by the lack of future-facing accountability mechanisms.
Give effect to te Tiriti o Waitangi
The Government should give better effect to te Tiriti o Waitangi, by embedding tikanga frameworks such as He Ara Waiora into the public management system, so that holistic, intergenerational values guide wellbeing policy and investment, and ongoing public sector reform.
Clarify the role of the public service in improving wellbeing
The Government should amend the Public Service Act 2020 to clarify the role of the public service in improving the wellbeing of all New Zealanders, and to clarify how the values set out in He Ara Waiora and other indigenous frameworks could guide how public servants work.
Pursue cross-party agreement on generational strategic objectives
The Government should pursue cross-party agreement to develop and implement generational (20- to 30-year) strategic objectives for the nation to help support long-term policy pathways to address intergenerational issues, such as persistent disadvantage.
Embed and action wellbeing objectives in the public management system
The Treasury (in collaboration with the Social Wellbeing Agency, population agencies and others) should advise on changes to the Public Finance Act 1989 and other required legislation for the following purposes.
• Set long-term wellbeing objectives and all of-government priorities consistent with improving the wellbeing of current and future generations.
• Set out an explicit interpretation or principles of wellbeing in Part 2 of the Public Finance Act 1989 to guide policymaking and funding decisions, in the same way that section 26G already sets out principles for fiscal responsibility.
• Ensure that the definition of fiscal responsibility is consistent with the broader principles of wellbeing (as reflected in, for example, He Ara Waiora).
• Strengthen the link between the wellbeing objectives and long-term policymaking by adding a requirement that the Government of the day sets out a statement of long-term priorities, which should include explicit details of long-term wellbeing goals and how they will be achieved.
• Require the Government to report progress annually towards wellbeing objectives and priorities, and to address issues identified in the Wellbeing Reports required by the Act.
• Track expenditure related to reducing persistent disadvantage and/or enhancing wellbeing in all agencies (consistent with the suggestion for environmental spending by the Parliamentary Commissioner for the Environment) and require an all-of-government report on agencies’ contributions to addressing persistent disadvantage against agreed outcome targets as part of annual reporting.
• Develop and implement a spending review function, informed by OECD good practice, which has the objective of assisting agencies and groups of agencies to better understand their effectiveness in reducing persistent disadvantage and improving the wellbeing of current and future generations.
Align wellbeing roles and responsibilities of local and central government
The Government should consider how to align the respective roles and responsibilities of local and central government in planning and delivering wellbeing outcomes, taking into account the final recommendations from the Review into the Future for Local Government and our recommendations on supporting more locally led, whānau-centred and centrally enabled initiatives.
Develop and resource a Wellbeing Policy Implementation Plan
Central agencies should develop and resource a Wellbeing Policy Implementation Plan, aimed at implementing the system changes recommended by this inquiry and clarifying agency roles and responsibilities.
Introduce a Wellbeing of Future Generations Act and establish a Commissioner for Future Generations
The Government should introduce a Wellbeing of Future Generations Act to establish a Parliamentary Commissioner for Future Generations, whose statutory role is to represent the interests of future generations. The Future Generations Commissioner may have the following functions.
• Facilitate a national conversation to develop a shared understanding of wellbeing for future generations, with a specific focus on inequality and distributive fairness.
• Review and advise on a range of a methodologies such as foresight and scenario modelling to develop an anticipatory governance model for the public management system, informed by He Ara Waiora and other tikanga frameworks.
• Review and advise on the capability needed across the public service for integrating long-term thinking into policy development, learning and evaluation, and producing informative and illuminating Long-term Insights Briefings.
• Provide independent analyses of the Government’s long-term wellbeing objectives and the Government’s response to Wellbeing Reports.
• Advise on the appropriateness and consistent application of Aotearoa New Zealand’s discount rate policy, which determines how much weight is placed on future outcomes relative to present-day outcomes when analysing social policy investments.
• Advise on the impact of the Budget on future generations.
Establish and maintain measures describing a social floor
The Treasury – in consultation with Tiriti partners, other government agencies, representatives of people experiencing persistent disadvantage, and the public – should develop and maintain measures describing levels of both material and non-material wellbeing necessary for social inclusion as defined in this report.
As a first step this should begin with quantifying and maintaining the level of incomes required for a range of families and whānau to meet the material requirements for social inclusion, noting that these are not the only requirements for social inclusion.
The levels should be designed to achieve social inclusion for individuals, their families, whānau and communities, recognising the interconnection between the needs of people and the context in which they live.
The levels should be based on criteria including the factors required for social inclusion described in the reports of this inquiry, the standard of living needed for social inclusion, and Aotearoa New Zealand’s human rights statutes and international commitments.
These outcomes and measures should be incorporated in the Living Standards Framework and He Ara Waiora, alongside other measures required for a sustainable and equitable environment, society and economy.
The Social Inclusion Act (see Recommendation 13) should require that the extent to which this baseline social floor is achieved be monitored and reported on.
Expedite work related to protective factors
Progress, expedite and resource existing work programmes that protect against persistent disadvantage.
Re-focus public accountability settings to activate a wellbeing approach
Given the extent to which disadvantage persists in Aotearoa New Zealand, a step-change in public accountability settings is required, rather than incremental improvements. To effectively tackle complex, long-term issues like persistent disadvantage and promote wellbeing for all in Aotearoa New Zealand, now and in the future, there are three critical gaps in the accountability system that must be addressed:
• weak direct accountabilities for ministers and the public service in addressing persistent disadvantage and the needs of future generations;
• the neglect of te Tiriti o Waitangi as a foundational constitutional document; and
• settings that constrain ongoing learning and more innovative and effective ways of addressing persistent disadvantage, including relational, collective and trust-based approaches.
The gaps in the accountability system contribute to the short supply of the types of approaches that evidence shows can provide more effective joined-up assistance to people experiencing persistent disadvantage. These centrally enabled, locally led, whānau-centred approaches are under-resourced. Those that exist often struggle to meet the level of need and aspirations within communities.
The gaps in the accountability system arise from the interplay of features that strongly incentivise certain ways of working. These features include:
• siloed decision making and vertical accountability limiting collective action on complex issues;
• narrow, transactional contracting approaches, curtailing responsiveness to needs and the ability to adapt to changing contexts;
• entrenched risk aversion working against innovation and learning; and
• a lack of investment in the necessary infrastructure constraining collaboration.
Commission a first-principles review of public accountability
The Government, with Tiriti partners, should commission an independent, first-principles review of public accountability settings. This review should consider the nature of the relationship between the public, Parliament, and central and local government, and the principles and settings that would best support those relationships, underpin long-term wellbeing, and ensure effective shared accountability.
The objective of the review should be to develop a more responsive, relevant, and accessible public accountability system that builds trust and empowers people – particularly those experiencing persistent disadvantage, who are not well served by current accountability settings. It should clarify who is accountable to whom, what they are accountable for and why, what information is needed, the mechanisms for providing information, and appropriate remedies if accountability is not upheld.
Progress more immediate public accountability policy work
The Government should progress more immediate public accountability policy work by commissioning Treasury, along with Tiriti and local partners, to lead a cross-agency policy work programme on public accountability. This programme would also include drawing up the terms of reference for the independent review outlined in Recommendation 10.
The scope for this work programme could include:
• incorporating more diverse and collective views of accountability into our policy settings, building on He Ara Waiora and the advice provided by Haemata Limited (2022b) to the Office of the Auditor-General on Māori perspectives on accountability;
• strengthening the role that Independent Crown Agencies and Officers of Parliament (such as the Human Rights Commission, the Office of the Auditor-General, and the Productivity Commission) have as part of the public accountability ecosystem to better align with the Public Finance Act 1989 and the Public Services Act 2020;
• increasing resourcing for parliamentary select committees as a key forum for public accountability;
• evaluating the degree to which the collective accountability arrangements for Interdepartmental Executive Boards are working as intended, and recommending change as needed.
Instruct the Productivity Commission to undertake a follow-up review
The Government should instruct and resource the Productivity Commission to undertake a follow-up review of progress on the recommendations of this inquiry within three years, to determine whether Aotearoa New Zealand is making progress towards reducing persistent disadvantage, or if more radical change is needed.
Introduce a Social Inclusion Act
The Government should introduce a Social Inclusion Act alongside, and complementary to, the Child Poverty Reduction Act 2018. The primary purpose of the Social Inclusion Act would be to require the Government of the day to state its short- and long-term objectives towards reducing persistent disadvantage in measurable terms, and to explain how it proposes to meet those objectives (see also Recommendation 8).
Commission a programme to support locally led, whānau-centred and centrally enabled initiatives
The Government should commission a programme of policy work – led by the Social Wellbeing Agency and Te Puni Kōkiri on behalf of the Social Wellbeing Board – aimed at enabling and sustaining more locally led, whānau-centred initiatives that directly support people’s autonomy to make changes in their lives. This work, which should be in collaboration with community partners, will require resourcing for both agencies and community partners and should develop proposals which include:
• mandating a central steward to oversee and guide the national ecosystem of locally led, whānau-centred initiatives, and to support two-way accountability between communities and the central government;
• appointing a lead agency responsible for convening central government agencies and working with key stakeholders across the motu to drive a whole-of-government approach to policy work on locally led, whānau-centred and centrally enabled approaches to improving wellbeing and breaking the cycle of persistent disadvantage;
• developing and resourcing effective “backbone” support so that core project management, data collection and reporting capabilities are available to each initiative, and they are able to embed ongoing learning (see Chapter 6);
• developing monitoring, evaluation and learning approaches that are proportionate to the quantum of funding and risk involved and connected into a wider learning system;
• introducing eligibility and accountability settings and clarifying decision rights to ensure public funds are used appropriately, but do not excessively constrain the cross-cutting nature of locally led, whānau-centred approaches. Such eligibility criteria would include appropriate endorsement that eligible organisations authentically engage with and are accountable to their respective communities and, in particular, those people in their communities experiencing persistent disadvantage;
• committing to long-term funding, provided ongoing effectiveness and/or improvement can be demonstrated; and
• dovetailing with other system transformation efforts such as Social Sector Commissioning to provide opportunities for testing and learning what works.
Strengthen social sector commissioning
The Government should strengthen the mandate, or establish a functional leadership role, for social sector commissioning across government under the provisions of the Public Service Act 2020. We endorse the Social Sector Commissioning Action Plan to address the centralised power imbalances in the public management system by making the commissioning of services and flow of resources into communities more collaborative between funders and providers.
Enable a public management system that learns and empowers community voice
Learning in the public management system tends to be ad hoc and concentrated within central government agencies. The system does not collect the performance information it needs, due to a lack of demand for monitoring, evaluation, research and learning, as well as a lack of capability.
When learning does take place, it often occurs at the agency level, far from the people doing the work, and long after an actual intervention. This means the people doing the work do not have timely access to the information they need to learn and improve.
The learning system needs to be locally led, whānau-centred and centrally enabled, like the most effective approaches to providing assistance to people in persistent disadvantage. To do this, it must:
• invest in learning by doing and understand the lived realities of individuals, families, whānau, and communities experiencing persistent disadvantage and what matters to them;
• support the system to undertake collective sense-making to learn, decide and act together at different levels; and
• include a strong leadership and stewardship function that creates a mandate for the learning system shifts required, and to support central government to enable more of what works.
An overly narrow emphasis on what the system has delivered to individuals, families, whānau, and communities (such as services) – especially when determined by proxy measures in administrative and survey data – is simplistic and can lead to stigmatising views of people and their experiences.
To support the learning system to work on the ground, the public management system needs to:
• recognise that individuals, families, whānau, and communities know what matters for them;
• invest in learning how to strengthen the system at all levels;
• actively involve individuals, families, whānau and communities in the innovation and learning process; and
• measure the wellbeing impacts that matter for individuals, families, whānau, and communities.
To support a shift to two-way learning and accountability between communities and central government, the system needs to:
• develop collective learning mechanisms for communities and central government to make sense of what is learned;
• create the right governance that includes national-level and community-level representatives; and
• build stronger connections with communities to underpin both of the above.
An effective learning system needs six key components: knowledge generation; knowledge use; leadership; accountability, capability and capacity. Some of these components are missing, and others need strengthening. A leadership function is needed to ensure all six key components are present, at all levels of the public management system, and are supporting a system that is locally led, whānau-centred and centrally enabled.
Key elements for government-wide policy that would build learning capability and capacity in learning across the public management system are:
• clear requirements and standards for how the learning system should operate;
• a review function to monitor whether central government is enabling learning and improvements are occurring; and
• a separate centre of excellence to support the public management system to share expertise, knowledge, and facilitate learning across all levels of government and with communities.
Aotearoa New Zealand needs to expand the measures used to understand the patterns and nature of persistent disadvantage by developing a broader range of “being left out” measures (in particular, social connection, discrimination, sense of identity and belonging, and community participation) and longitudinal information to understand persistent disadvantage across the life course and between generations.
In particular, the learning system needs to be able to support the public management system to anticipate the future needs of individuals, families, whānau, and communities.
Improving existing data and evidence will be needed to support the implementation of a number of the recommendations made by this inquiry. These include supporting the setting out of wellbeing objectives; measuring levels of material and non-material wellbeing as part of establishing a social floor; and measuring changes in persistent disadvantage, which is part of the Social Inclusion Act.
Resource better community engagement
The Government should resource the Social Wellbeing Board to ensure Tiriti partners and community stakeholders can be active partners in development, decision making, implementation and learning, in relation to policies and programmes to reduce persistent disadvantage.
Create a leadership and stewardship function for learning and improvement
The Government should create a leadership and stewardship function to set requirements for learning and improvement in the public management system and mandate an appropriate agency. The requirements of this function should include:
• ensuring the voices of individuals, families, whānau, and communities experiencing disadvantage are used to inform what support and help is needed and how it should be provided;
• supporting the public management system to innovate, test and adapt to find out what works to break the cycle of persistent disadvantage;
• tracking the adoption of new systems settings, behaviours and practices that prioritise equity and support the changes needed on the ground in whānau and communities;
• ensuring the public management system acts in a timely manner on what is being learned – for example, by adapting services, sharing learning where relevant, removing any obstacles, or creating new services to meet unmet demand; and
• supporting the public management system to anticipate needs across the life course and between generations so that government can do more to prevent persistent disadvantage from occurring, instead of just addressing it when it does happen.
Establish a government-wide learning policy
To strengthen the learning system the leadership and stewardship function should:
• establish a government-wide learning policy;
• specify requirements and standards (or alternatively, guidance) for how the learning system should operate and to guide good practice for agencies;
• establish a review function to monitor whether the public management system is enabling learning; and
• create a centre of excellence to provide expertise, share knowledge, and facilitate learning across all levels of government and with communities.
Invest in the capability and capacity of the learning system
The Government should invest in the capability and capacity of the learning system, including:
• the development of practice-led learning to support new ways of working;
• the learning system workforce, including learning partners; and
• the structures and support needed to help the system check whether its programmes remain meaningful.
Invest in data collection
The Government and government agencies should invest in data collection for measuring wellbeing and disadvantage over the life course, between generations, and within communities, including taking the following actions.
• Commit to long-term investment in the Living in Aotearoa survey (or equivalent surveys) and the Integrated Data Infrastructure, to expand its measures (for example, a broader range of “being left out” measures – particularly about social connection, discrimination, sense of identity and belonging, and community participation) and set up longer-term panels to allow wellbeing and disadvantage to be measured over the life course and between generations.
• Resource Statistics New Zealand, in collaboration with others, to prioritise work programmes that capture community-level data. This could include improving existing surveys and using existing government administration data to provide more detailed information about persistent disadvantage among specific communities (for example, by ethnicity, location and/or age), or by working with communities to help them collect their own data and information.