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Insights 16: 6 May 2016
Auckland - Dinner Lecture with Stephen Jennings
The Health of the State - download PDF
New Zealand's housing crisis

Remember social bonds?
Jenesa Jeram | Policy Analyst |
Remember social bonds? Or Social Impact Bonds (SIBs) as they are known internationally?

Social bonds are an innovative way of funding and delivering social services, involving the private sector.
The New Zealand Initiative published a report on the model and came to the tentative conclusion that while promising, their success would depend on the contractual details.
Well, it has been almost a year since it was first publicly announced that the Government would be implementing four social bonds. At the time, there was a fair amount of protest and outrage from the Opposition. The Labour Party called it “a disaster in the making, tantamount to gambling on New Zealanders' mental health.”
Health professionals too challenged the implication that the private sector would be profiting off the most vulnerable – perhaps momentarily forgetting that doctors and surgeons do not exactly work for free.
Boy have things changed during the course of a year. Social bonds have still yet to be implemented, but public attitudes towards reforms like the social investment approach seem to be warming.
The implementation of social bonds logically follows from the investment approach. Data collection is a good first step. But the real value of the social investment approach is how it can improve services.
Over the weekend, an interview on The Nation demonstrated just that. Lance Norman, chief executive of the National Urban Maori Authority (NUMA), described the social bond they have pitched to government. NUMA have calculated the fiscal cost of failing a struggling child ($145k), and have proposed a programme to address this.
Of course, it is not just about saving the government money. It is pretty hard to argue against social bonds when community service providers welcome the alternative funding, and recognise the change they can make to people’s wellbeing.
Media coverage of other proposed social bond programmes have been equally optimistic, featuring passionate community providers offering creative and clever alternatives to the state system.
The big question around social bonds now is not whether they should be implemented, but how?
And that is no small issue. Radio New Zealand has reported that contractual negotiations for New Zealand’s first social bond have stalled. They cite “uncertainty over whether the government would guarantee the security of the private funding” as a major obstacle.
But it is an unfortunate state of affairs: just as the idea gains public enthusiasm, the pilot could still be held back by its own contractual complexities.

Signalling changes at the chalkface
Martine Udahemuka | Research Fellow |
Many of New Zealand’s future surgeons, scientists and teachers are right now sitting in front of an adult charged with teaching them the skills and knowledge that will help them in their post-school careers.

In this way, would it be far-fetched to conclude that teachers have one of the most important jobs in New Zealand?

Laureate Professor John Hattie, for example, has shown that when it comes to what schools can control, teachers have the most power to influence student achievement.

Yet, for many reasons, teaching in New Zealand is not held in the high-esteem position that it should. In their series on primary schools the Herald this week reported that for many prospective teachers, teaching was indeed plan B and a very small percentage of our young adults want to become teachers.

The Initiative’s research on teacher quality pointed to some of the reasons why the profession is not a magnet career. Our World Class Education? report found that “many educators are demoralised by the structures in which they work, the low social status of the job, and the lack of talent recognition within the system”.

In 2014 the Initiative made key recommendations for New Zealand to seriously consider its policies on attracting, training and developing talent within the teaching profession.

We acknowledged that Investing in the Education Success (IES) initiative as a step in the right direction. IES responds to our recommendations in two ways: it recognises and rewards talent but perhaps most importantly it facilitates the sharing of effective teaching practices within schools and across schools. But this mostly benefits those who are already in the profession.

So how can price signals be improved for those still on the career-decision fence?  Lowering the entry criteria for a teaching qualification is not it. All it does is signal to observers that this career is not all that important and is indeed an easier route to a job. We had then recommended that entry be more stringent and focused on quality candidates.

Our report also highlighted that just over half of schools were not satisfied with the quality of applicants for teaching roles. What if schools publicly rated the quality of the graduates by ITE provider? This would raise standards and ultimately improve the calibre of graduates.  

Those at the chalkface need to be recognised as the giants whose shoulders our young generation stand on. 

A clown prince of ignorance
Dr Eric Crampton | Head of Research |
Donald Trump is a demagogue and a proud ignoramus. Knowing nothing of the detail of policy, even in its broadest take, would be bad enough. But Trump takes it that one step further by making up facts on the spot to suit the mood of whatever crowd he currently faces.

If you’ve wondered how a demagogue like Donald Trump could ever be appealing to voters, you probably have not spent enough time wading through the data on just how little voters themselves know – really about anything.

Each voter faces the same sad calculus. Any time spent researching candidates, policies, or parties in order to cast a more informed vote is an hour that could be better spent doing, well, anything else.

Meanwhile, the same voter could spend a great deal of time and effort in choosing among car options when, in the grand scheme of things, who becomes President matters a great deal more than whether one buys a Honda or a Toyota.

The key difference is that a person as a shopper takes home the car she decides on, while the same person as a voter marks an X on a ballot and goes home – knowing that that one vote does nothing to affect the outcome.

And when too many people act that way, Donald Trump wins the GOP nomination.

Ilya Somin, Professor of Law at George Mason University, takes on the problem in his recent book Democracy and Political Ignorance; a second edition is forthcoming this June. And the compilation of facts is staggering. Voters routinely overestimate the fraction of the government budget devoted to foreign aid while underestimating the proportion of the budget to Medicare, Medicaid and social security. They also know little about the basic structure of government. In 2006, only 42 percent of voters could name the three branches of the American government.

Once you know a bit about how little voters do know, you start being amazed that government works as well as it does.

And before Kiwis get too smug, note that New Zealanders do not fare much better in similar surveys.

Next Wednesday, 11 May, Ilya Somin will be speaking at the University of Victoria at Wellington. He’ll walk us through the sad facts about voter knowledge, and the implications of it. I hope you’ll join us at 12:30 in GBLT4 for a bit of enlightenment. 

On The Record
All Things Considered
  • Infographic of the week: The evolution of video game controllers - how many can you name?
  • "Dead Ringer": A New York City pay phone's spirited farewell.
  • Internet in "real life": Residents of a small Italian village are showing us how the social media channels we rely on so heavily these days, have always existed.
  • Here's your degree. Now go defeat Demagogues: Why keeping an open mind is important.
  • Foul smell: This week Greenpeace trucked in six tonnes of cow waste to protest the Ruataniwha irrigation scheme, but raised a stink at the wrong building.
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