While sibs are generally complex they can drive innovation and deliver sustainable and transferable benefits. In the case of this youth reoffending reduction social bond the report estimated cumulative offending reductions of around 30%, and a social return to the govt of around $9 for every dollar paid out
The notion of a social contract in the care of our needy is well and truly subordinated to the profit imperative. What could go wrong by using the coercive self-interested instruments of the marketplace to remedy the problems the marketplace has caused in the first place?
To be fair, the state uses coercive methods too. But the SIBs are only cherry-picking around the edges of the wider problem of inequality and disadvantage – which are, I agree, products of a competitive free-market economy. Cheers.
I note your comment about market growth in social bonds: of course, it's a government guaranteed income for the bond holders. The government will be hard pressed to actually pull the bond for fear of what it will do to service provision and its reputation in the money markets. Rod Carr, the then vice chancellor issued University of Canterbury Bonds (with the blessing of then Finance Minister Bill English) in 2009 suggesting that it delivered discipline on the University, and if the University didn't manage itself to pay on those bonds then if would fail. The first reason is correct. The second argument not so. Same with these bonds... Private business, particularly in NZ where there are so few sources of capital, knows government guaranteed money is worth difficult contract negotiations.
Fair comment, thanks Lindsey. I guess if there was much chance of losing, the investors wouldn't sign up. And there's almost zero risk of government insolvency!
Effective administration of a contract generally requires the person letting the contract (or her agent) having robust knowledge and skills in the area being contracted. Otherwise it is too easy for the contractor to game the system.
How does one ensure the contract administrator has the necessary skills and knowledge if it is not themselves undertaking the same sort of activity being contracted out? Which begs the question why co tract out in the first place.
Fair questions thanks Andrew. A lot of direct contracting out of social services goes on even without SIBs. Other than capital, an SIB may not contribute much beyond burnishing the reputation of a capital-rich institution. On the other hand, advocates in favour of SIBs argue that the investors have valuable expertise that can stimulate innovation. I guess it'll be up to them to convince us.
I suggest that the considerable time and cost involved in setting up and monitoring SIBs would be better spent holding the Chief Executives of the Government departments more accountable for the results that they achieve. This is supposed to be their areas of expertise.
Fair comment, thanks Derek. Government departments routinely contract out services to NGOs anyway, and there's no reason why innovation shouldn't be a part of the system without SIBs.
Well written piece- but there is an evaluation of the one NZ social bond that ran to full term- see https://www.acuo.co.nz/wp-content/uploads/2023/12/Acuo-Report-Dec-2023-revised-final.pdf
While sibs are generally complex they can drive innovation and deliver sustainable and transferable benefits. In the case of this youth reoffending reduction social bond the report estimated cumulative offending reductions of around 30%, and a social return to the govt of around $9 for every dollar paid out
Thank you, Carl. I hadn't seen that report, so will take it into account in future. Cheers.
The notion of a social contract in the care of our needy is well and truly subordinated to the profit imperative. What could go wrong by using the coercive self-interested instruments of the marketplace to remedy the problems the marketplace has caused in the first place?
To be fair, the state uses coercive methods too. But the SIBs are only cherry-picking around the edges of the wider problem of inequality and disadvantage – which are, I agree, products of a competitive free-market economy. Cheers.
I note your comment about market growth in social bonds: of course, it's a government guaranteed income for the bond holders. The government will be hard pressed to actually pull the bond for fear of what it will do to service provision and its reputation in the money markets. Rod Carr, the then vice chancellor issued University of Canterbury Bonds (with the blessing of then Finance Minister Bill English) in 2009 suggesting that it delivered discipline on the University, and if the University didn't manage itself to pay on those bonds then if would fail. The first reason is correct. The second argument not so. Same with these bonds... Private business, particularly in NZ where there are so few sources of capital, knows government guaranteed money is worth difficult contract negotiations.
Fair comment, thanks Lindsey. I guess if there was much chance of losing, the investors wouldn't sign up. And there's almost zero risk of government insolvency!
Effective administration of a contract generally requires the person letting the contract (or her agent) having robust knowledge and skills in the area being contracted. Otherwise it is too easy for the contractor to game the system.
How does one ensure the contract administrator has the necessary skills and knowledge if it is not themselves undertaking the same sort of activity being contracted out? Which begs the question why co tract out in the first place.
Fair questions thanks Andrew. A lot of direct contracting out of social services goes on even without SIBs. Other than capital, an SIB may not contribute much beyond burnishing the reputation of a capital-rich institution. On the other hand, advocates in favour of SIBs argue that the investors have valuable expertise that can stimulate innovation. I guess it'll be up to them to convince us.
I suggest that the considerable time and cost involved in setting up and monitoring SIBs would be better spent holding the Chief Executives of the Government departments more accountable for the results that they achieve. This is supposed to be their areas of expertise.
Derek
Fair comment, thanks Derek. Government departments routinely contract out services to NGOs anyway, and there's no reason why innovation shouldn't be a part of the system without SIBs.