Rethinking Social Investment

The Federal Government is to be commended for its early steps to redress disadvantage, such as the creation of a Social Inclusion Unit, its commitment to reduce homelessness, and its overall policy theme of investment in people as the key to a successful future for the nation. But it is vital that this policy thrust includes a strong focus on investment in all disadvantaged Australians. Moreover, the chances of such investment occurring shouldn't depend upon the inclination of one particular government.

Rather, there is a need for initiatives that build evidence for such an approach and thus gain support for it among the general public, across the political spectrum, and at all levels of government. A ‘social investment institute' focussing on investment in the disadvantaged is one such initiative. A ‘social investment institute' would ideally be an independent governmental authority (more independent than the new Social Inclusion Unit), and it could have a broad watching brief over policies affecting the most disadvantaged - however defined. Its overall goal would be to assess the costs and benefits of existing and alternative policies relating to the disadvantaged - that is, costs and benefits for both the disadvantaged themselves and the broader society. This brief could cover all levels of government - if governments at these levels could be persuaded to agree, and with coast to coast governments of the same hue now is a better time than most - as well as covering government instrumentalities and NGOs funded by government.

The social investment institute would initiate policy evaluation and research that could either be done in-house or contracted out to universities or specialist bodies like the Institute for Family Studies or the Australian Institute of Criminology. It would also collect existing research from Australia and abroad. There are many precedents for this sort of body: statutory organisations having advisory, review or research functions - such as the two just mentioned. It would, however, have a different brief to bodies such as these, with its focus on all disadvantaged Australians and a specific focus on social investment yielding broader social benefits.

If it couldn't be set up as a government agency, a second option would be to set it up as an independent body - like a think tank. Questions of unstable funding and access to government departments render this option less desirable. Furthermore, there would be no imperative for the government to ‘own' the body's recommendations.

Image: Powerhouse Museum.

Having a social investment institute producing independent, well-researched and publicly accessible data and policy recommendations would have the following advantages:

Of course an obvious question here is: What would motivate governments or parties to support the creation of such a body? Wouldn't they be making a rod for their own backs? I don't believe so. Most politicians on the left, and a fair proportion in the centre and on the right, have gone into politics because they see government action as potentially beneficial in whatever spheres of life concern them. The same could be said about many middle-level to senior public servants. Once in their positions, however, politicians and officials become very aware of the competing demands for the public dollar, and of the political costs (real or perceived) of increasing the size of the pie through increased taxation or borrowing, which lead them to focus on what can be cut or stopped from growing as much as on what can be introduced or expanded.

If there were some authoritative body that legitimised both the sort of spending they believed in and ways of raising the necessary funds, they may welcome it. It would be both generating greater policy certainty and reducing the political costs of implementing that policy. In this regard, it's interesting to reflect on Ross Garnaut's reports on climate change. These have substantially shifted the centre of gravity of acceptable climate change solutions in a radical direction, thus reducing the political cost of advocating radical solutions. Labor's proposed target of a 60% cut in carbon emissions by 2050 seemed quite forward looking in comparison to the Coalition's policy, but tame when compared to Garnaut's proposed 70-90% cut, and yet the media have been broadly positive about Garnaut's recommendations. A social investment institute could produce a similar shift in its policy area.

But to build initial support for greater investment in the disadvantaged - and for the creation of something like a social investment institute - there would need to be a broad-based national campaign. I can imagine such a campaign having two stages.

The first stage would entail reaching and involving the ‘conscience' constituency - people motivated by compassion and a desire for social justice, people from churches, welfare agencies, unions, community organisations, green groups and some political parties, as well as other concerned citizens. This campaigning would be different from the day-to-day advocacy work of organisations within this group in two respects. First, it would be a nationally coordinated campaign with overall goals, strategies and materials, and second, it would focus on a very specific message, namely, that the right quantity and kind of spending on the disadvantaged is a form of investment that can generate net economic and social benefits for the whole society.

Members of the conscience constituency - once persuaded, activated and equipped with information and materials - would then take this campaign message to those not so motivated by social justice or compassion, but capable of appreciating the economic and social benefits that accrue to the broader society. This would constitute the campaign's second stage.

Some may think it a naïve idea that this latter sector of society could be persuaded to support such investment on these grounds. But there is the precedent of the Business Council of Australia - not an organisation known for its particular concern for the disadvantaged or its support for increased government spending - which teamed up with Dusseldorp Skills Forum to commission a report into the training needs of young people dropping out of school early, and older workers. This report predicted significant economic benefits from such investment far exceeding costs. (1) If the Business Council can see the benefits of such investment there's no reason why other Australians can't.

There's a wonderful opportunity here to demonstrate to the broader Australian community how we would all be better off in the medium to long term (and sometimes even the short term) if as a society we invested substantially in all Australians, including the most disadvantaged. We shouldn't let that opportunity slip by.

(1) Access Economics, The Economic Benefit of Increased Participation in Education and Training, Business Council of Australia & Dusseldorp Skills Forum, 2005.

Rob adds: I have written these articles as part of a project - as yet unfunded but with some institutional support - that seeks to research and disseminate the ideas discussed. I would welcome your feedback on the articles and your ideas about how this project might be advanced, supported and resourced.