Unpacking social investment


A few years back, the South Australian Housing Trust conducted a pilot
scheme entitled the ‘Mental Health Supported Housing Project’, in which ten
homeless, mentally ill adults were provided with housing and casework support
for one year. The entire project cost $220 000, which was four times what
probably would have been spent on temporary accommodation and support for these
people over this period. But at the same
time, $1.16 million was saved because they fronted up to hospital much less
often, with hospitalisation rates dropping from 9.7 days per client per month
to half a day a month. Thus, for that year and those ten people alone, there
was a net reduction in spending of around one million dollars.

Many people are familiar with the argument that if we take a ‘social
investment’ approach to spending on the disadvantaged, it will pay off for the
whole of society in the longer term. Such an approach can have a number of
elements: an emphasis on prevention and early intervention; a willingness to
spend more and to work with people over a longer period; and the application of
a well-coordinated suite of measures to bring about change – measures such as
counselling, stable housing, education, employment programs, mentoring and the
building of social connection. It is based on a belief that everyone has
strengths and the potential to develop and contribute to society.

There is, for example, the well-known Perry Preschool Project which ran in
the US
in the 1960s. In a poor black community,
struggling preschoolers were given extra help in the classroom and their
parents were given advice at home. The subjects were then tracked (along with a
control group) until they turned forty, and it was found that for every dollar
spent on the project, the state saved seventeen dollars through higher
employment and home-ownership levels, reduced crime and so on.

But the outcomes of the Mental Health Supported Housing Project put an
interesting spin on the social investment argument.

For a start, the benefits to the wider society were immediate, in
contrast to the long-term Perry Preschool Project. The savings in
hospitalisation costs occurred straight away, whereas the social investment
argument usually stresses future
savings to be gained from current spending (and in politicians’ and economists’
minds, future benefits tend to be heavily discounted).

Rather than assuming that this case is exceptional, perhaps we should
look more closely at other cases to see if there are benefits from the
investment (or costs from non-investment) occurring much earlier than we tend
to think. After all, this makes intuitive sense: if people have serious
unresolved issues in their lives, there are likely to be resultant costs from
the time these issues emerge.

So returning to the example of interventions to help children who are
struggling at preschool or early school age, a closer look at immediate costs
to society of not intervening might
reveal the following. For a start, if such students get little out of their
schooling from that point on, the thousands of dollars the state spends each year on each
student are substantially wasted. And given that a large proportion of failing
students become angry and disruptive, there are also likely to be significant
costs to other students and their learning – from class disruption, bullying
and negative peer modelling – as well as costs to staff and the system from
teacher stress and sick-leave. (And these are just the school-related costs;
there may be others, such as family stress and childhood crime.)

such costs within schools tend to get lost in the everyday complexities of
school life, and the students’ failure to learn only surfaces as a public issue
when they drop out of school early or fail to move on to further education,
training or employment.

second factor that the housing project highlights is that the benefits to
society from social investment don’t just occur when the direct beneficiaries
are young, malleable and less ‘damaged’. There may be a higher ‘return’ on
investment in the very young, but an absolute saving is just that – an absolute
saving – and it isn’t any less so, or less worthy of implementation, because
the returns in another area are greater.

beneficiaries of the housing project are probably at the other end of the
spectrum from five-year-olds receiving assistance and, even with the provision
of housing and casework support, their lives are unlikely to be highly
productive according to conventional measures (for example, being employed, raising
families or being active in community life). But despite this, the case still
demonstrates the substantial savings accruing to society from such an
investment. If it were extended to the whole homelessness sector, it would generate
savings of hundreds of millions of dollars on health costs alone. And this is
aside from the most important benefits from such interventions – reduced
stress, injury and illness and increased happiness for the homeless themselves.

this case starkly illustrates how, when society has to deal with the adverse
life circumstances of a particular disadvantaged sector, it usually doesn’t
have a choice between spending or not spending on them. Rather it’s a choice
between deliberate, considered spending and automatic, somewhat ‘accidental’
spending. In this case, the accidental spending (on hospital costs) was not
only far greater than the deliberate spending, it was also much more limited in
its benefits to both the people concerned and the wider society.

yet it’s still likely that the response of many people to the idea of investing
more in the disadvantaged will be: yes, that all makes sense, but at the moment
we can’t afford this spending because we need to keep inflation in check, or
invest in physical infrastructure, or whatever the focus may be. But ‘not
spending’ is not an option: we either spend it deliberately (and more
effectively) or we spend it accidentally (and less effectively). A problem
doesn’t just go away because it’s not a budget priority.

whether the issue is homelessness or mental illness, substance abuse or
unemployment, domestic violence or educational failure – or most likely a
combination of these and other factors – our failure to invest in sustainable
solutions to such issues faced by the most disadvantaged members of our society
not only means suffering and lost opportunities for these people, it also
saddles society with substantial, continuing, avoidable costs in areas like
health care, crisis assistance, welfare payments, police, courts and prisons,
as well as foregone tax payments.

a nation, we can be smarter than this.




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