Obstacles to Social Investment

A strong case can be made that, if we as a society invest in sustained, co-ordinated programs to assist the disadvantaged to overcome problems they face and to develop their capacities, this will not only benefit those so assisted but will also generate net benefits for society as a whole.

But of course a lot more than simply making the general case is needed to get a social investment approach adopted as the public policy norm. In this article I consider some further tasks to be undertaken and obstacles to be overcome.

Firstly, one major obstacle relates to the fragmentation of government, divided as it is into multiple departments and
agencies and multiple levels in our federal system. This leads to the often-noted ‘silo’ approach, in which departments only deal with one aspect of a person’s life – such as their health, housing or education – in isolation from interventions (or non-interventions) by other agencies or parts of government, even though all these aspects are causally connected. Fortunately
governments are increasingly recognising this problem and committing to a whole-of-government approach, although, as on other matters, practice usually lags far behind intent.

But this fragmentation also means that the part of government that incurs the costs of a particular investment in the disadvantaged is not likely to be the part that reaps the benefits. For example, money spent on education does not generate financial returns for education departments, and officials and teachers responsible for successful educational programs won’t be recognised for all the benefits generated. In fact, they’re unlikely to even know themselves the range and extent of these

On top of this there are the problems that stem from changes of government, which not only cause further policy fragmentation
and discontinuity, but also lead to situations in which governments inappropriately take credit for the policies of their predecessors, or avoid the blame for the consequences of their own policies once they are out of office. This reduces the motivation of governments to pay the financial and political costs of investing in the disadvantaged if the returns are not likely to be immediate, because there’s an even chance that their opponents will be in power when these benefits are realised and will naturally take credit for them. Alternatively, there’s an even chance that the adverse consequences of the failure of a
government to so invest are blamed on its opponents when they are in government.

Secondly, there’s a great need for further research into the benefits of social investment, particularly in Australia. While there’s a not insignificant body of research from Australia and overseas that supports the social investment case (1), in total it still falls
short of what is necessary. For a start, more longitudinal studies are needed. The fact that the Perry Preschool Project is the most celebrated case demonstrating returns on investment in the disadvantaged is probably not a result of an exceptionally different or efficacious project, but rather of a very long study that recorded the benefits accruing until project beneficiaries were forty years old (2). So we clearly need more such studies.

But longitudinal research is expensive, and it also delays action, because a long time elapses before there are research results to act on. In many cases we could achieve similar results by simply ‘joining up the research dots’. For example, if we are researching the whole of life benefits to wards of state from continuing government support beyond the age of eighteen, we can study the extent of early benefits (such as improved educational retention or more stable housing) and then look at other research examining causal relationships between these milestones and others for similar populations. This may not give quite the same degree of research certainty, but it would be a decided improvement on the knowledge base that currently informs most policy decisions.

Research is also very unevenly distributed across different issue areas. For example, there is reportedly no Australian research into the longer term benefits of interventions in early childhood education. Furthermore, studies of programs addressing
disadvantage usually focus on one kind of intervention only, whereas there would be much to be gained from analysing the benefits of multi-pronged interventions, particularly as these are usually necessary.

For example, research analysing the most effective ways of re-engaging in education or employment young people who
have dropped out of school might look at young people’s engagement in any number or combination of in-school or out-of-school programs, alternative school or TAFE programs, mentoring, counselling, whole family approaches, programs addressing specific issues like anger management, intermediate labour market programs, those combining education and employment, and so on.

Thirdly, we need to go beyond just generating research results and communicating them to the usual audiences. We need to be telling the broader Australian community the story of what can be gained from more substantial social investment in the disadvantaged. While it’s good for citizens to be informed about all areas of public policy, there are some areas of policy where it matters more than others, and this is one. A substantial increase in spending on the disadvantaged would be something that –
until it started to pay off financially – would need to be funded from somewhere, so it couldn’t happen behind people’s backs. Rather, it would need broad support from Australian voters.

So research results would need to be communicated broadly, as would journalistic accounts of projects that really make a difference to people’s lives. For example, there are some inspiring stories of interventions in demoralised public housing estates that have brought about dramatic individual and community change – for example, estates like Claymore in New South
Wales, Bridgewater in Tasmania and Long Gully in Victoria. The story of the difference we can make to Australia
by investing properly in the currently disadvantaged should be as prominent in the public mind as is the issue of climate change and the actions it requires.

Finally, there needs to be more public debate about ways of raising the necessary funds, particularly examining the case for taxes increases and government borrowing. While some economists – such as Fred Argy and John Langmore (3) – advocate such measures, there seems to be a near consensus among politicians, journalists and most economists that such measures are undesirable either politically or economically. But it’s never explained how other developed countries can manage to have healthy, growing economies and very sound social indicators while at the same time having government debt and higher taxes than Australia has (4), or why it’s sound practice for business to borrow to invest, but unsound for governments to do the same.

So as a result of all of the above – the fragmentation of government and the resulting lack of policy coordination or motivation to invest, the insufficient level of research and of community awareness of the benefits of investment in the disadvantaged, and the impasse over how such investment might be funded – government spending on the disadvantaged has just muddled along. It reflects the limited resources that the community sector can devote to campaigning, and it is just enough to spare governments the embarrassment of too high a level of obvious social malaise.

This is a recipe for half-measures, for the recycling of people through the system, for the continuation of problems and incapacity.

We can do better.


1) See:

2) The 17 to 1 benefit-cost ratio for the Perry Project cited in the first article was based on results prior to a minor recalculation of this figure included in the link provided here.

3) Fred Argy, Where to From Here? Australian egalitarianism under threat, Allen & Unwin, Crows Nest NSW, 2003, Ch 2;
John Langmore, To Firmer Ground: Restoring hope in Australia, University of NSW Press, Sydney, 2007, Ch 5.

4) As is clear from the data in Rodney Tiffen & Ross Gittins, How Australia Compares, Cambridge University Press, Cambridge, 2004.

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