Data collection is important for the Government to know whether they're improving the lives of New Zealanders, says Finance Minister Bill English.

Collecting information about New Zealanders is important because too often Government delivers policy that makes politicians feel good, but doesn't necessarily help anyone, Finance Minister Bill English says.

Speaking at the Identity Conference in Wellington on Monday, English said it was important to know "which people were where" across the country in order to tell what particular Government services were making a difference.

"The reason people hand over their PAYE at the end of the week or fortnight... is because they think we are making a difference to someone else's life. Too often we haven't."

He said: "We've delivered policy to make us feel good... that made it look like we cared, but we never went back to see whether it made any difference, and actually, we couldn't because often we didn't know, and still don't know who gets our service," he said.

It's unclear whether the people who need help the most are receiving it or whether the services they receive have an impact, English said.

There's a "moral compulsion" for Government to provide assistance and the broadening of data collection, particularly around social services, has contributed to better outcomes.

"Take a child under 5 who is known to CYFS, where at least one parent in the household is on the benefit and where either of the parents has had contact with Corrections...we can pretty much forecast now that that child under 5 with those characteristics...by the age of 35 they're five times more likely to be a beneficiary and seven times more likely to be in prison by age 21."

English calls these children the "billion dollar kids" and says the more the state knows about them, "we may be able to change the course of that life".

"If we can't know that much about them it's almost certain that we can't change the course of their life."

The fact there are 20,000 children in New Zealand with parents in prison proves "we haven't been making much impact with what we know," he said.

"The whole issue of identity sits in the middle of a broader push, that in my view compels us to be more effective in our interventions in the lives of people who most need it and having a more trusted relationship with them."