Abstract:
In 2011 the government adopted from the Accident Compensation Corporation via the Welfare Working Group a programme of actuarially estimating the cost of someone staying long-term on a benefit and using that as the basis for defining the return from "investing" in action that deflected that person from a benefit into long-term work. The Ministry of Social Development (MSD) engaged an Australian firm, Taylor Fry, to do the actuarial estimates of long-term benefit costs. It applied programmes incorporating those estimates initially to 16-17-year-olds and sole teen mothers of 16-18 in the welfare system, groups known to have a high risk of long-term benefit-dependency.
This actuarial/investment technique is known as the "forward-liability investment approach" or just the "investment approach". Including the "forward-liability" qualifier underlines that in its initial application the technique is essentially insurance against a future liability. Leaving out the "forward liability" qualifier suggests an investment approach might logically be applied to building assets in addition to avoiding liabilities and applied more widely in policy development and government decision-making.
