Keep the Investment Approach

From my column in last week's print NBR($), in which I hope that Labour makes the Investment Approach its own rather than ditching it.

National focused on how the investment approach could reduce the government’s long-term fiscal burden. Mr English rightly understood, and often pointed out, that the reason people wind up costing the state a lot in benefits is because they are living miserable lives.

If targeted effective interventions can improve people’s lives so they need not rely on state support, then the fiscal savings are just a proxy measure for what is really being targeted: the improvements in quality of life among the most vulnerable.

But where the focus is on the savings rather than the saved, the message is lost. And too much of the discussion was framed around minimising future costs.

It is too easy to imagine evil ways of minimising future fiscal liabilities – and doubly so for those who were not inclined to give National the benefit of the doubt.

Normal politics would rule out evil ways of reducing the government’s long-term fiscal burden. But relying on politics can be risky, and it is unnecessary. Instead, we can use better metrics. Measuring a programme’s likely effects on the long-term fiscal burden is important but so too is broader monitoring to make sure that programmes are not doing harm along the way.

That provides Labour with an opportunity to put its own stamp onto the investment approach. Continuing to measure the long-term fiscal burden facing government, and the contribution of new programmes to reducing that burden are important. But so too is adding the right additional measures for any programme to check and to demonstrate that the programmes really do good.