Research report urges greater business role in setting social investment priorities

Saturday 5 February 2011, 1:15PM
By New Zealand Business Council for Sustainable Development

A major research project finds business can play a greater role in setting priorities for New Zealand’s social investment spending.

This would involve investing in programmes which help prevent social problems, like child and health neglect, unemployment and crime, or stop them escalating, at higher cost to taxpayers.

The report is released today by the New Zealand Business Council for Sustainable Development after nearly two years of research.

It says the Government is spending about 75% of the $43 billion a year social sector spending on “social protection”, providing income support and services for those unable to look after themselves. But business should join the Government and not for profit groups to help develop and implement “social investment” policies.

The Business Council – which includes some of the country’s largest businesses – says business helps pay through taxes when the country’s social fabric is torn – and has a major interest in making sure society does not fail.

It says business’ involvement in the community can be significantly leveraged – to help deliver a more prosperous society.

It says this can be achieved by better aligning Government, not for profit group (FP) and business activities – and setting and delivering on social investment priorities.

The report recommends:

• Business, the Government and the not for profit (NFP) sector should create a shared view on “social investment” priorities for action
• Decide the roles each should play in social investment and develop innovative new programmes, and
• Agree how progress should be measured and monitored.

It also recommends the Business Council, with a development partner, look at forming a new business-led social organisation or activity, similar to those in some other countries, to:

• Put business at the table when social issues and priorities are discussed with Government
• Provide a sounding board for business ideas on social innovation or engagement with the community
• Help broker relationships among multiple businesses and other service providers and funders to
• Help align efforts for greater effectiveness of donor dollar spending and volunteer effort
• Cut the duplication of effort and cost of multiple businesses and agencies all operating in the same space, and
• Develop tools to measure the effectiveness of business and community engagement activities and
• Mentor corporate social responsibility professionals.

The report points out that:

• The cost to society of a chronic adolescent anti-social male has been estimated at $3 million – “demonstrating the wasted potential and productivity of under-participating members of society”. Not treating deep-seated antisocial behaviour is even more expensive

• While average education achievement in New Zealand is among the best in developed countries, the variation in performance is greater: There is a widening gap between top and bottom performance rates

• The number of people of working age on a benefit has risen from 2% in 1960 to 13% in 2010, New Zealand ranks 29th of 30 OECD countries for youth unemployment and almost 30% of the jobless here are aged 15 to 19, compared with 12% of OECD countries. Yet people moving from benefits to work enjoy real earnings growth over time.

• New Zealand ranks bottom in the OECD on child poverty: nearly 60% of all children in households where adults do not have work are impoverished, and a shrinking economy will make this worse

• While New Zealanders’ health and life expectancy are good, males in least deprived areas could expect to live 8.9 years longer than those in the most deprived areas and the single most important determinant of health is income: A child growing up in poverty is three times more likely to get sick.

Business recognises the waste when a school leaver who could have learnt to read and measure lacks the skills to undertake trade training. There is a cost of employees becoming unreliable attendees because their homes are unhealthy and make them or their families regularly sick.

The report says New Zealand’s charities and volunteer sector are playing a huge role: they make a 4.9% contribution to gross domestic product, valued at about $7 billion a year, when volunteering time is taken into account. This is about the same as tourism.

But while businesses have a big stake in ensuring people are well educated, cared for and healthy, the country takes a “one size fits all” approach to public policy.

“It is increasingly inadequate to ensure equality of opportunity and a fair go for all New Zealanders,” the report says.

The Government was spending about $75 in every $100 of its about $43 billion annual budget on “social protection”, including income maintenance, when an extra focus was needed on “social investment”, specially to prevent unemployment and sickness.

Social protection spending included areas like health, welfare, and prisons, and was not affordable long term. Some of this spending might be avoided if more were invested in high quality, “future focused” ways to prevent the escalation and entrenchment of problems, particularly for those most at risk.

Social investment is needed - providing resources and support for individuals, families and communities to build on their strengths and improve their social and economic wellbeing over time.

The report says “business is part of the answer”: It has people, skills, scale and capability to develop capacity in the community and build “social capital”.

“Business should be part of the answer, particularly when employment is likely to be part of the solution.”

The Business Council’s chairman, Bob Field, says sustainability for business is about achieving profits while looking after people and the planet.

“Businesses cannot succeed in societies that fail. Nor can it financially contribute much unless it is profitable.

“Business has a direct interest, as an employer, taxpayer and citizen in how well our society meets the needs of its members. Business directly benefits from the performance of our schools and youth organisations and pays when the social fabric is torn and the ability to do business is compromised

“The mutual interest and benefits of business and society in success has always been front of mind for our Business Council members in New Zealand.
“We hope the reports, advice and recommendations will help both business and the community to get more value and impact for their community partnerships: for us all as a nation to achieve a happier and more prosperous community”.

The Business Council is discussing its report with Ministers and officials and community organisations.

The Minister for Social Development, Hon Paula Bennett, meets with and speaks to members on March 11.

The Minister in November 2010 conducted a five week study tour of the United States, including looking at how business gets involved in social development.