The Budget provides $96.1 million over four years for the
next stage of the Priority Investment Approach to welfare—the Try, Test and
Learn Fund. This builds on the first
stage of the investment approach that was announced in the 2015–16 Budget.
The investment approach to welfare
Inspired by a similar initiative in New Zealand, the
Priority Investment Approach to welfare is designed to reduce long-term
reliance on income support by people of working age. The approach has three
- Actuarial valuation: estimating the future cost to the
income support system associated with people currently receiving working age
income support payments. These valuations are produced annually to measure
- Predictive analytics: using historical data to identify
the client segments that make the largest contribution to future costs—those
most at risk of remaining on income support for long periods of time.
- Try, test and learn: developing new measures designed to
move at-risk income support recipients into employment, testing these measures
by comparing the outcomes of those who received them to the outcomes of a
comparable group of recipients who did not, and learning from the results.
The 2015–16 Budget included funding for the first two
stages. In September 2015, Scott Morrison (then Minister for Social Services)
announced that his department had awarded PricewaterhouseCoopers (PWC) a four-year
contract to ‘provide annual valuations which determine the estimated future
costs of the welfare system, looking at past evidence and how people interact
The Try, Test and Learn Fund
In this year’s Budget the Government has announced funding
for the third part of the approach:
The Government's new $96.1 million ‘Try, Test and Learn Fund’
(the Fund) will finance innovative policies to help the Government identify
groups at risk of long term welfare dependency and assist them to move off
welfare to employment. This approach aims to ensure that the Government funds
programmes that actually deliver outcomes and cease or reform programmes that
are shown to be ineffective.
The policies will be aimed at addressing barriers to
participation and supporting people with the capacity to work to do so.
This approach is sometimes known as ‘rapid cycle
Unlike more conventional evaluation approaches it focuses on measures that
produce outcomes quickly. As a result it is more useful for trialling and evaluating
measures designed to increase the rate at which recipients are placed in jobs
than on measures designed to develop skills and help recipients progress to
better jobs and more stable employment.
The income support segments identified through predictive
analytics will not necessarily be the same as the target groups currently used
by program administrators. Predictive analytics can group recipients using any
combination of variables in a government’s databases—age, gender, education,
location, number of dependents, age at which the person first started receiving
income support or had a child, and so on. The analysis can also construct
segments using rules that link variables together. 
It is not clear what kinds of measures the Government will
trial using funds from the Try, Test and Learn Fund. The Minister for Social
Services, Christian Porter, has said: ‘The Education, Health, Social Services
and Employment portfolios will develop the policies with key input from
external experts and the community sector’.
A stronger outcomes focus
The investment approach has a strong focus on outcomes and
represents a move towards targeting for impact.
Many older programs were not designed with a strong focus on
outcomes. For example, ‘work for the dole’ was initially designed as a response
to community concerns that young unemployed people should ‘give something back’
in return for income support payments. In the past, participants
in social policy interventions have been chosen because they are members of
particular ‘equity groups’, such as youth, women or people with a disability.
The focus has been on fair access to the program rather than on generating outcomes
such as changes to future income support spending.
The investment approach adopts a different approach. Instead
of using established equity groups or groups identified by stakeholders, it
encourages policymakers to segment income support recipients by how likely they
are to remain on payment and how well they respond to interventions. And
instead of asking whether particular groups are getting their fair share of
places on the program, it asks which groups are providing policymakers with the
best return on investment.
Concerns about the investment
Stakeholders, interest groups and others may have a number
of concerns about the Priority Investment Approach.
In New Zealand, there has been concern about the investment
approach’s exclusive focus on income support savings.
In Australia, Department of Social Services officials have indicated that their
approach will look ‘at a broader range of issues than just the impact on the
Because the investment approach allocates assistance
according to expected return on investment rather than level of disadvantage,
not all disadvantaged income support recipients will receive the same level of
service. Just as analysis can show that some recipients represent a good return
on investment, it can also indicate that others represent a poor return. This
was a concern that surfaced during the late 1990s when the Howard Government
was designing a new employment services system—Job Network. The Government’s
initial proposal for a ‘capacity to benefit’ test to exclude jobseekers who
were unlikely to deliver employment outcomes met with opposition from
non-government parties and the community sector.
measures: Budget paper No. 2 2016–17, p. 142.
D Arthur, ‘Investment
approach to welfare’, Budget review 2015–16, Research paper series,
2014–15, Parliamentary Library, Canberra, 2015.
S Morrison (Minister for Social Services), ‘Address
to the Committee for Economic Development of Australia, speech, 18
Australian Government, Ensuring
that the Government lives within its means: balancing the budget and reducing
the burden of long term debt, budget document, 2016.
S Cody and A Asher, ‘Proposal 14: smarter, better, faster: the
potential for predictive analytics and rapid-cycle evaluation to improve
program development and outcomes’, in M Kearney and B Harris, eds, Policies
to address poverty in America, Brookings, Washington, D.C., 2014, pp.
E Siegel, Predictive analytics: the power to predict who will click,
buy, lie, or die, Wiley, New Jersey, 2016.
C Porter (Minister for Social Services), Ensuring
the government lives within its means: a targeted welfare safety net,
media release, 3 May 2016.
D Kemp, ‘Second
reading speech: Social Security Legislation Amendment (Work for the Dole) Bill
1997’, House of Representatives, Debates, 26 May 1997, p. 4026.
New Zealand Productivity Commission, More
effective social services, August 2015, pp. 225–29.
Senate Community Affairs Legislation Committee, Official
committee Hansard, 4 June 2015, p. 104.
For example: J Macklin, ‘Second
reading speech: Commonwealth Services Delivery Agency Bill 1996’, House of
Representatives, Debates, 26 February 1997, p. 1380.
All online articles accessed May 2016.
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