Two years ago it was announced that the Government would investigate the provision of social bonds, a merchant banker type arrangement whereby private investors could invest in the provision of private services. The Government would contract the service out to a non government organisation, the investor would invest, and if targets were met then the bond would be repaid by the Government plus interest.
I previously called the proposal the stupidest idea this Government has had yet. The idea was as crazy as it sounds. Incentivising rich people to invest in privately run social services and paying them money if short term artificial goals were met is as barking as you can get. It shows this Government’s lack of ideas that the only motivation it thinks that works is greed.
The proposal has hit problems with talks about the rollout of the first program collapsing.
From Radio New Zealand:
The government’s first social bond has collapsed, with negotiations breaking down and the provider walking away.
The largely untested social bond model uses private investors’ money to pay a provider for a social service. If the service is successful, the government pays out.
Work started in 2013 on the bonds, which the government promoted as a way to bring innovation to social services without risking public money.
Last year nearly $29 million was put aside for the rollout of four bonds.
The first was to be a programme to help people with mental health problems get into the workforce, and the plan was to put employment consultants in GP practices.
But the provider, Wise Group, confirmed yesterday that it had withdrawn from the scheme.
It would not make any further comment saying it had been directed to refer inquiries to the Ministry of Health.
Annette King has accurately described the futility of the proposal.
Labour’s health spokesperson Annette King said the whole programme had been a waste of money and was doomed to fail.
“It was never going to fly because there was no need for them to put in another funder. All the government needs to do is to fund a group like the Wise Group direct and cut out the middle man.”
The whole thing was nonsensical as social bonds had failed in other countries, she said.
Ms King could not understand why the government had pursued it.
The Government has already spent $1.6 million and despite the failure intends to continue with the proposal. Absolutely barking.