The Post: The power of ideas – why I helped launch a think tank

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Just over a year ago, I was one of the group of hardy souls who embarked on what might seem, in this country, a risky endeavour: the launch of a new think-tank.

We chose the name Idea – short for the Institute for Democratic and Economic Analysis – partly because we were in the ideas business and partly because we were deeply troubled by the intersection of economic and political disparities. When a country allows poverty and political exclusion to combine, it creates the conditions in which marginalisation, disaffection and polarisation can breed.

This line of thought came directly from the Nobel prize-winning economists Daron Acemoglu and James Robinson, whose bestselling book Why Nations Fail set out the recipe for social success (or disaster). In high-functioning societies, political and economic systems are inclusive: because everyone has a say in how that society is run, the economic system delivers widespread benefits.

In failed states, by contrast, those systems are extractive: elites use their political power to skew the distribution of wealth in their favour. While New Zealand succeeds in many ways, it is far from fully inclusive: one child in eight lives in serious hardship, and a million people feel so disenfranchised they don’t even vote.

That dynamic, left unchecked, could haul the country downwards; we want to ensure that it stays on an upward path. We decided to make that contribution via a think-tank, an organisation that unearths solutions to pressing problems and then shares those solutions with politicians and the general public. We also decided to act in a spirit of open dialogue, taking up good ideas regardless of where they originate and trying to foster respectful debate.

I describe this as a risky endeavour because, in a country of our size, there’s seldom enough funding for public-good research. Hence only a handful of think-tanks exist here – the McGuinness Institute, Maxim, the Helen Clark Foundation, the New Zealand Initiative, perhaps a few others.

Still, we thought it was worth having a go. And this week marked a big milestone: the launch of our first-ever report.

Entitled The Pipeline of Potential, it looks at how Work and Income could better invest in jobseekers so as to provide companies with a steady stream of work-ready employees.

Currently, New Zealand spends around half the developed-country average on the schemes – vocational training, wraparound health support, wage subsidies and so on – that help people make a sustainable welfare-to-work transition. Instead we push people into the first job available.

This system doesn’t work for firms any more than it does for job seekers. One employer I met, a courier company owner in New Plymouth, spoke of Work and Income sending her job applicants who weren’t fitted for the role and who’d frankly say, “I don’t know what I’m doing here”. That wasted precious business time.

On the job seeker side, I spoke to a 60-year-old woman in Nelson who’d previously been a cleaner but, following serious health struggles, could no longer clean at a commercial pace. What kinds of jobs did Work and Income push her towards? Cleaning jobs, of course.

The solution is to put the employer-job seeker relationship back at the heart of the system. Work and Income should better understand what local firms are looking for in potential employees. Then its case managers should be given the time – and mandate – to get to know job seekers deeply, understanding their histories, needs and aspirations. And they should build a tailored plan that addresses the job seekers’ barriers and matches them with the right employer.

We applaud the steps the Government has already taken in this direction, but more must be done. Of those who leave benefits, just 40% are still in employment 18 months later. If you push people into the first job going, they don’t stick at it. Matching them to the right employer is crucial.

Our report also recommends bigger interventions, like a circuit-breaker job guarantee that provides a work placement for every young person at risk of long-term unemployment. It would give those young people confidence, work habits and skills learnt on the job. Participants in such schemes overseas are 27% more likely to end up in permanent private-sector employment than their peers.

Well-designed welfare-to-work schemes more generally are proven to boost employment rates, lower benefit costs, raise incomes, and cut overall unemployment. And they have an impressive payback in financial terms, let alone wider social benefits. Better investment in these schemes is, for us, a key building block of a new and more dynamic economy – one that’s built on maximising everyone’s potential.

We can’t say for sure that our ideas will be adopted. But so far they’re getting a good hearing across the political spectrum. And if ideas start life there, breathing the oxygen of open debate, they have a fighting chance of effecting the kind of change that endures.