1. This inquiry

The Government asked the Productivity Commission (the Commission) to examine economic inclusion and social mobility – a fair chance for all – with a focus on helping people experiencing persistent disadvantage. The Commission published an interim report in September 2022. That report set out our inquiry approach, along with interim findings and recommendations. It also provided preliminary findings from our quantitative analysis and an in-depth discussion of the nature and causes of persistent disadvantage.

This inquiry joins the call from many in our communities and from within the public sector, advocating for bold and innovative approaches to shape a future without persistent disadvantage.

Our final report, while acknowledging and drawing from many international experiences, recognises Aotearoa New Zealand’s place in the world – with our own unique historical and cultural context.

The Commission recognises the importance of te Tiriti o Waitangi (te Tiriti)⁴ as a founding document of Aotearoa New Zealand.

Although our terms of reference did not make a distinction, we note there are critical differences between the Māori and English language versions of te Tiriti. We acknowledge these differences, and that the Māori text best reflects what was discussed with, and understood and agreed to by Māori (Waitangi Tribunal, 2014a).⁵

Our interim recommendations were focused on the overall settings of the “public management system” – particularly those “macro”, or national-level system settings that embed persistent disadvantage, and the macro-level shifts needed to empower people and communities to live well.

This final report brings together our findings and recommendations on this important and complex topic, building on our earlier findings of the nature and causes of persistent disadvantage and focusing on recommended solutions. It should be read alongside our quantitative report.

A quantitative analysis of disadvantage and how it persists in Aotearoa New Zealand (NZPC, forthcoming), which provides detailed definitions for how we have measured persistent disadvantage, as well as in-depth empirical findings. Our qualitative insights from literature, workshops, submissions and interviews are summarised in Causal diagrams to support ‘A fair chance for all’ (Connolly, 2023).

The terms of reference for this inquiry asked the Commission to “undertake an inquiry into economic inclusion and social mobility, focusing on the drivers and underlying dynamics of persistent disadvantage”. We define persistent disadvantage as disadvantage that is ongoing, whether for two or more years, over a life course, or intergenerationally. Our definition of persistent disadvantage sets out three domains:

• being left out (excluded or lacking identity, belonging and connection);
• doing without (deprived or lacking the means to achieve their aspirations); and
• being income poor (income poverty or lacking prosperity).

Rather than seeking to define economic inclusion and social mobility separately, the interim report concluded both terms can be integrated in the concept of “social inclusion”.

Social inclusion was defined as “for all New Zealanders to live fulfilling lives where individuals, their families, whānau and communities have a strong sense of identity, can contribute to their families and communities, have the things they need to realise their aspirations, and nourish the next generation” (NZPC, 2022a, p. 17). In doing so, the Commission drew from earlier Royal Commissions on social inclusion, Treasury’s Living Standards Framework, the All-of-Government Pacific Wellbeing Strategy, and He Ara Waiora – a tikanga framework that conceptualises a Māori perspective on wellbeing.

We worked with Treasury and Ngā Pūkenga, a group of Māori thought leaders, to adapt He Ara Waiora, using mauri ora as the central concept to describe the wellbeing and productivity outcomes we are seeking for New Zealanders in this inquiry (Figure 1).⁶ According to Durie (2017) mauri ora is a state of being healthy, vital and in balance. The opposite of mauri ora is mauri noho – “languishing” or “sitting dormant” – in other words, disadvantage. Mauri noho is an apt description of people living in disadvantage, and who are experiencing barriers to living the lives they want to live.

Our mauri ora approach is multi-dimensional and includes the four dimensions of human wellbeing from He Ara Waiora. These dimensions are reflected in our definition of persistent disadvantage, and in the subsequent analysis in this report, which seeks to enhance the mana and wellbeing of people experiencing disadvantage. Working in a mana-enhancing way is a central theme of He Ara Waiora and is emphasised in manaakitanga (showing proper care and respect). Throughout this report we refer to enhancing “mana and wellbeing”, or just “wellbeing” as shorthand.

In embracing te Tiriti, we see He Ara Waiora as being both complementary to a broader understanding of wellbeing, and a distinct Māori perspective on wellbeing. For example, we see the explicitly holistic and intergenerational approach as complementary to other wellbeing frameworks such as the Living Standards Framework, while recognising the underlying concepts and principles as distinctly Māori. As noted by Treasury, “many of its elements are relevant to lifting the intergenerational wellbeing of all New Zealanders” (The Treasury, 2022, p. 19).

He Ara Waiora is also the source of the five values we propose for how the Government and public management system should act to enhance the mana and wellbeing of individuals, their families, whānau and communities (McMeeking et al., 2019). These values are listed below and described in more detail in Chapter 4 (Box 6).⁷

• Kotahitanga – working in an aligned, coordinated way.
• Tikanga – making decisions in accordance with the right values and processes including in partnership with te Tiriti partners.
• Whanaungatanga – fostering strong relationships through kinship and/or shared experience that provide a shared sense of wellbeing.
• Manaakitanga – enhancing the mana of others through a process of showing proper care and respect.
• Tiakitanga – guardianship, stewardship (for example, of the environment, particular taonga or other important processes and systems).

Disadvantage has a temporal dimension. Our terms of reference directed us to focus on “persistent disadvantage”, which we have defined as being ongoing or recurrent over two or more years, or over a life course. Intergenerational disadvantage is persistent disadvantage that occurs across generations. The companion report to this report provides more discussion on various forms and definitions of disadvantage, including examining patterns of persistence, recurrence and temporary disadvantage (of less than two years).

Drawing on several studies, our interim report highlighted factors with an intergenerational impact on wellbeing and disadvantage. These factors included maternal education, cultural disconnection, adverse early life experiences, housing quality and the toxic stress that results from a lack of material resources.

Although these factors are symptoms of disadvantage, they also generate further disadvantage through their impacts on childhood development and educational achievement, which flow into adult employment, health and economic outcomes, which then impact the next generation (NZPC, 2022a, pp. 52–54).

The Treasury’s recent wellbeing report highlighted that our current generation of younger New Zealanders fare worse than older people on mental health, educational achievement and housing affordability measures (The Treasury, 2022, p. 2).

In recognising the complexity of the world and the factors that cause and sustain persistent disadvantage, we have taken a systems approach to understand how to address root causes of persistent disadvantage.

Although the causes of disadvantage often lie outside the public management system, policy choices can directly and indirectly affect people’s ability to thrive. The public management system has a powerful influence on determining whose voices are heard and acted on during policy development, what information and evidence is drawn on, what frameworks and tools are used to inform advice and decision making (including funding decisions), what eligibility criteria may be set, and how people in the system are held to account.

Further, public service leaders and the public service as an institution have both a duty of care to “strive to make a difference to the well-being of New Zealand and all its people” (State Service Commission, 2007) and a stewardship obligation.

The focus of this inquiry is on how the public management system can shift to enhance the wellbeing of New Zealanders and better achieve a fair chance for all, especially people experiencing persistent disadvantage.

The relationship between productivity and wellbeing

Productivity and wellbeing are interrelated in a complex way. Wellbeing has multiple influences, with productivity being just one of them. Greater wellbeing can also lead to higher productivity.

For the Commission, the primary purpose of increasing productivity is to lift the wellbeing of New Zealanders. Understanding the relationship between the two allows us to approach our work in a way that makes productivity meaningful and not merely an end in itself. This allows us to focus on what is beneficial for the people of Aotearoa New Zealand.

Our terms of reference called on us to “explore how realising people’s potential (through reducing persistent disadvantage) translates into direct increases in wellbeing, as well as higher productivity and better economic performance”. This is a large area of research and would require substantial time and resources to comprehensively quantify. Although the economic benefits are likely to be large (see Box 1 and the Commission’s supporting paper that draws on available literature (NZPC, 2022b), we consider that the human rights and public good arguments are just as important, if not more so.

Our approach emphasised research evidence and broad engagement. In developing our findings and recommendations, the Commission has drawn on evidence from many sources including:

• conducting more than 140 meetings or other engagements with individuals and organisations;
• hearing from over 1,000 people on the terms of reference and interim report;
• reviewing government agency reports and data, relevant academic and other research, and previous inquiries into, and reviews of, social services;
• engagement with 32 government organisations, including through a series of six policy workshops;
• commissioning nine research reports and reviews (Table 1); and
• referring to the Commission’s More Effective Social Services (2015a) inquiry report.

We also undertook significant quantitative research as part of this inquiry. Our companion report, A quantitative analysis of disadvantage and how it persists in Aotearoa New Zealand (NZPC, forthcoming), uses existing data to quantify and explore factors contributing to persistent disadvantage and how it impacts on wellbeing.

Table 1 lists the internal and external research undertaken for the inquiry. All supporting research publications can be found on the Commission’s website.

Table 1 Inquiry research reports

We honoured what people experiencing persistent disadvantage have already shared

We did not want people to have to repeat their stories to this inquiry or become another government agency “car up the driveway”. Instead, we talked to people and groups with knowledge and experience of supporting individuals and whānau experiencing persistent disadvantage.

We also reviewed reports that had previously collected lived experiences of persistent disadvantage.

In addition, we worked with Haemata Limited to facilitate wānanga with Māori providers, whānau, and community members to provide feedback to the Commission on the terms of reference and interim report. We also had input from nine leaders from Pasifika organisations in Auckland at a talanoa session to provide feedback on the inquiry’s interim report.

We very much appreciate the time people took to provide input into the inquiry. We acknowledge that we were not able to hear from every community in Aotearoa New Zealand.

Chapter 2 looks at the dynamics and drivers of persistent disadvantage in Aotearoa New Zealand. The first part of the chapter presents high-level findings from our quantitative research. We then build on the systems approach taken by the interim report, discuss systemic barriers constraining the public management system, and how the system is evolving its ability to respond to complex societal challenges. This exploration of the systemic barriers and their origin provides the context for the recommendations that are introduced in Chapters 4 to 6.

In seeking to understand the nature of disadvantage, Chapter 2 undertakes a largely “deficit-framed” analysis. In Chapter 3, we then present a vision for the future and promote a strengths-based approach as directed by the scope of our terms of reference.

Chapter 3 also sets out a vision for a public management system that empowers people to lead better lives. It provides examples of how the system can embrace te Tiriti and discusses the development and application and integration of wellbeing approaches.

Chapters 4 to 6 focus on how to achieve the vision presented in Chapter 3, by setting out our recommendations and supporting analysis and discussion. Chapter 4 looks at some of the explicit and implicit assumptions underlying how government works and sets out how we can change the macro-level settings of the system to address disadvantage. Chapter 5 looks at how we can reshape our accountability system to support relational, collective, and trust-based ways of working. Chapter 6 then sets out how we can enable more effective learning and improvement within the public management system.

From a systems perspective: the macro-level provides purpose and direction for the system (Chapter 4); the meso-level centres the accountability system (Chapter 5); and the micro-level drives learning and voice (Chapter 6).

Chapter 7 lists the detailed recommendations and considers how these could be implemented over time to accelerate and reinforce the transition to a public management system that is fit for the future.