6. Social Investment Approach—PolicyCHRIS BISHOP (National) to the Minister of FinanceSocial Investment Approach—Policy6. CHRIS BISHOP (National) to the Minister of Finance: How is the Government using a social investment approach that aims to improve the lives of vulnerable New Zealanders and reduce costs for taxpayers?Hon AMY ADAMS (Associate Minister of Finance) on behalf of the Minister of Finance: The social investment approach involves the Government better understanding the New Zealanders we support what services will best improve their lives and where that intervention will make the biggest difference to reduce the numbers showing up in hospitals or prisons not succeeding at school or stuck on welfare. We are building a world-class data analytics system to support this and we are now able to identify for example a group of high-risk young people who will cost taxpayers on average $320000 each by the age of 35—some of them over $1 million each. By looking at the evidence for what the best interventions are for each member of that group we have the opportunity to deliver services that may involve a higher upfront cost but that will reduce the long-term costs and most importantly improve those people's lives.Chris Bishop: How is this different to previous approaches to social spending?Hon AMY ADAMS: We spend approximately $61 billion each year on social sector spending; however we know the specific effectiveness of only a very small proportion of this. The public sector has also traditionally struggled to understand the impact of spending in one area on results in another area. We have to change this. Social investment is different because Ministers agencies and those delivering services will be better informed and better aligned through advances in our use of technology and data to understand the areas of greatest need and how the Government can best direct our efforts and do more of what works.Grant Robertson: Does the social investment approach offer anything to the 400 workers and their families in Dunedin who today discovered that with Cadbury's manufacturing operations closing they will be out of work or is the Government's form of investment just in theoretical ideas and not practical regional development?Hon AMY ADAMS: The social investment approach is about targeting how our social services best support those New Zealanders when they find themselves in times of need—so that if people are out of a job we are comfortable and confident that our welfare system is best targeted to support them in a meaningful way to get back to the independence that we know New Zealanders want.Chris Bishop: What examples are there of how this could reduce future costs for the Government?Hon AMY ADAMS: The work that the Ministry of Social Development did on the welfare liability showed that the future lifetime cost has reduced by $12 billion over the last 4 years as a result of our welfare reforms based on this approach. The justice sector is another good example of where social investment can make a real difference. For example we now know that a 9-year-old boy who is known to Child Youth and Family and whose parents are on a benefit is likely to offend on average 3.3 times before he is 24. However applying a social investment approach and the right interventions with his parents can lead to a more than 90 percent reduction in his predicted offending. This reduces costs to the taxpayer improves lives and means fewer victims.