Government commended for progress on social bonds

Wellington (1 June 2015): The Government should be commended for the introduction of a social bond in the mental health sector, as announced today by Finance Minister Bill English and Minister of Health Jonathan Coleman. It is the first of four social bonds the government aims to introduce.

The $29 million set aside for social bonds has the potential to save taxpayer money whilst also improving social outcomes.

Public policy think tank The New Zealand Initiative advocated for government to utilise social impact bonds as a way of delivering more effective social services in their report Investing for Success: Social impact bonds and the future of public services released last month.

The model shifts the financial risk of funding and delivering social services to private sector service providers and investors. If successful, investors can expect to receive their principal back, plus a return.

“Social impact bonds are unique because investors are only paid if the measurable outcomes are successfully achieved” said Dr Oliver Hartwich, Executive Director at The New Zealand Initiative. “Taxpayers only pay for what works, and there is a strong incentive for service providers to perform well to improve social outcomes”.

Another benefit of the bonds is that they offer an alternative programme if the current social services system is not working for them.

The New Zealand Initiative’s report found that there are less than 100 social impact bonds worldwide, and none of these have yet reached maturity.

“We applaud Ministers Coleman and English on the launch of these social impact bonds. This is a relatively new model and it is promising to see government taking the lead on exploring new ways to secure better social outcomes for recipients,” said Dr Hartwich.

ENDS

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