Prime Minister Malcolm Turnbull’s focus on fostering innovation and enterprise, outlined in his innovation statement this week, is exciting — and needn’t be confined to the business world. This new energy in government presents an incredible opportunity to embrace innovation and agility for social as well as economic policy.
The Centre for Social Impact estimates that $420 billion is spent on social programs in Australia each year across welfare, health and education. It’s time to look seriously at how this can be invested in innovative approaches to solving the social challenges we face — like homelessness, unemployment, mental illness and Indigenous disadvantage.
There are two shifts to the way Australia approaches social policy and funding that would make an immense difference to our ability to innovate and solve these challenges; better access to data on social outcomes, and a greater willingness to fund programs and services based on the social outcomes they achieve.“It has become a case study of the potential for outcomes-based funding …”
Currently, more than three quarters of spending on social services is by governments, most of it by acquittals, outputs, number of people serviced; with very little paid on the basis of outcomes. Shifting to outcomes based contracting (or at least managing to outcomes) would enable greater innovation, and have a profound impact on the effectiveness of our social spend.
In 2013 SVA launched Australia’s first social impact bond, Newpin, in partnership with Uniting Care Burnside and the New South Wales government. It was designed to attract private capital to fund a service that reunites families when their children have been in the child protection system, a highly successful program that would have been cut without this new funding source.
The NSW government worked collaboratively with UnitingCare Burnside and SVA to agree a “payment by outcomes” structure under which taxpayers effectively share the financial benefits flowing from the social impact of the Newpin program. Investors are only paid a return if the program achieves successful outcomes.
Through this innovation, the program has safely restored over 60% of children to their families and delivered a return to investors of nearly 9%. It has become a case study of the potential for outcomes-based funding, and of what can be achieved when government works together with the private and social sector to develop new solutions to old problems.
Social impact bonds are just the beginning, there will be a multitude of other ways to manage services by outcomes if we interrogate the data.
In the age of big-data, there are big opportunities to reduce disadvantage in Australia. Access to data drives innovation, but in the social sector the data we need is currently incomplete and fragmented, making it difficult to understand and report on the impact of particular interventions.
The government should be congratulated for releasing proposals last week to link data across Commonwealth and state governments to develop better supports for vulnerable families at risk of long term welfare dependency, as well as programs to better target mental health services and early childhood education interventions for Indigenous Australians.
It’s a fantastic start, but we also need to link in local community services.
A “data lab” initiative could help with this, by opening up de-identified data on client outcomes from a range of different service types and enabling comparison with similar population groups in government data sets. Experience overseas suggest this will improve the outcomes of government funded service delivery, help identify best practice and shift government procurement over time towards the most effective service models.
Finally, if we are to make sure that the inequity that exists today isn’t passed on to future generations we must invest in building an education system that prepares all children to thrive in an increasingly complex and adaptive world.
While funding is important, funding the right things is more important.
Developing new programs for schools, testing them to determine what’s effective, sharing that knowledge with teachers and then supporting teachers to make evidence informed decisions will boost our education performance.
We currently underinvest on this front, with less than 0.3% of a total of $9.2 billion in research funding from the government going into education research.
I am optimistic that Australia can grasp the opportunities that come from swift technological change. If we can innovate in our social as well as economic policy, our increasing prosperity can be shaped and enjoyed by everyone in our community.