Government to pilot ‘outcomes contracts’ in social investment push; Finance Minister Nicola Willis to speak

Finance and Public Service Minister Nicola Willis. Photo / Mark Mitchell

Finance Minister Nicola Willis will today announce “outcomes contracts” to change the focus of the way some social services contracts are procured and to shift the public service’s thinking into ensuring money spent delivers the outcomes the Government seeks.

In the annual Finance Minister’s speech to the Institute of Public Administration New Zealand (IPANZ), a tradition inaugurated by Willis’ National Party predecessor Sir Bill English, Willis will set out further detail about how she would like the public service to deliver better outcomes, the Herald understands.

The news is not all rosy. Willis will also warn the public service that it will need to steel itself to axe initiatives that are no longer working or delivering value.

“If we are serious about making a difference to the lives of our most vulnerable, we have to be rigorous about directing resources away from initiatives that are not making a difference towards initiatives that are,” Willis will say, according to an early version of the speech seen by the Herald.

Willis, who is also Social Investment Minister, will say that feedback from both users and providers of social services has a common complaint: “multiple overlapping contracts that they have with different agencies who do not seem to be talking to each other”.

Providers complain that the Government “ties their hands by requiring specific outputs that prevent them from innovating to provide services more effectively” and some providers are forced to “‘contract farm’ to secure piecemeal funding across multiple contracts in order to ensure they can stay afloat and serve their communities”.

Willis will argue that her social investment model suggests a solution to this is to change the way the Government contracts with providers of social services, switching from “outputs” to “outcomes”.

“That means that once contracts have been negotiated, providers can choose how best to achieve the outcomes everyone wants.

“Outcomes-based contracts allow providers to flex their services around the needs of the people they are working with and to develop new solutions. To move away from a focus on serving the needs of a government department and instead taking radical accountability for the results they deliver for the people they serve,” Willis will say.

The other benefit, Willis will argue, is that this kind of contracting will create “data-rich feedback loops” that will help providers and the Government work out what works and what doesn’t.

Willis has directed the Social Investment Agency to lead work with other agencies to develop prototype outcomes contracts to replace the current set outputs-focused contracts.

Willis wants this to be part of a broader pivot from outputs to outcomes across the public service. She will say this will require the public service to think tactically about what it wants to achieve, who it needs to target, and what services should be prioritised to target them.

She provided an update on the Social Investment Fund, announced at the Budget. Willis will say she wants it to be a “testing ground for innovation which – when successful – can be applied more broadly to the social sector”.

“Not every initiative it funds will be successful, but that is the point of a testing ground, to identify what works and, just as importantly, what does not. Better to fail fast in a test environment and learn from the results than to keep doing the same thing that history has shown does not deliver results,” she will say.

Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.