Social bonds negotiations collapse

Written By: - Date published: 8:39 am, July 6th, 2016 - 65 comments
Categories: capitalism, john key, national, same old national - Tags:

'Privatisation in health, education and superannuation makes sense'

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.

Bill English says the government has learnt lessons from the break-down of its first social bonds negotiations.

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But the provider, Wise Group, confirmed yesterday that it had withdrawn from the scheme.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.

65 comments on “Social bonds negotiations collapse”

  1. One Anonymous Bloke 1

    Obviously the solution is to have government departments and SOEs invest in the scheme, and this time next year, we’ll all be millionaires.

  2. vto 2

    lol bill english

    what a thicko

    bill needs to get out in the real world

    so many right wing extremists live in frikkin’ la-la-land

    • Draco T Bastard 2.1

      so many right wing extremists live in frikkin’ la-la-land

      Every single National and Act member hold that their beliefs are real contrary to the facts. This is pure delusional thinking and it’s what causing the massive financial and social collapse of our society.

      • KJT 2.1.1

        I agree not all are crooks.

        Some truely have a religious belief in the “free market”.

        Some are well aware that it can make them rich.

        • Macro

          The Temples of the Hidden Hand are full of worshipers and followers every day from 8am till late at night. This is the new true religion and many delight in its bounteous gifts.

        • Macro

          The Temples of the Hidden Hand are full of worshipers and followers every day from 8am till late at night. This is the new true religion and many delight in its bounteous gifts.

      • Anno1701 2.1.2

        “beliefs are real contrary to the facts”

        its like some kind of weird cargo cult really

        but “john frum” aint ever coming…..

    • M. Gray 2.2

      Bill needs to learn how to speak proper English he mutters and mumbles a lot.
      I suppose when your telling so many porkies its hard to remember what and when you said what

    • Chris 2.3

      Like his brother on The Nation this week.

  3. One Anonymous Bloke 3

    The best thing is, the National Party will keep degrading New Zealand’s mental health. Here’s the economic case model:

    1. Attack the mental health of New Zealanders.
    2. Invest in social bonds.
    3. Profit!!!

    This is going to be huge!

  4. vto 4


    make money out of social problems


    like bankers spend so much of their lives concerned with social problems


    like social problems are resolved by the demands of self-interest


    like bill english has common sense


    too funny

    • Chris 4.1

      Money is already being made out of social problems. Has been happening for a long time now. The same arrangement the power companies operate under.

  5. Greg 5

    Typical Tory policy, to take away state capital while socializing the cost.

    Some territorial local authorities will have increasing difficulty in maintaining service levels for an ageing and possibly dwindling population, not to mention burgeoning numbers of visitors and tourists,” it said.

  6. The Chairman 6

    “Bill English says the government has learnt lessons from the break-down of its first social bonds negotiations.”

    And the lessons learnt were what exactly? It seems he wasn’t asked.

    • One Anonymous Bloke 6.1

      More bribes needed.

      • Draco T Bastard 6.1.1

        Yep, got to guarantee super-profits before the greedy arseholes will ‘invest’. It will, of course, prove to be more economical for the government simply to do it but then National’s donors won’t get their hands in the governments cookie jar.

    • M. Gray 6.2

      What do you expect with our current media he is a media bully like the rest of his colleagues he can’t stand to be challenged or questioned like he is above that. Who does he think he is. He will go down in history as one of the weakest ever Ministers of finances we have ever had and JK one of the weakest PM’s Jenny Shipley would be the weakest.

  7. shorts 7

    How the hell could the work they’ve done have cost 1.6 Million?

  8. Pasupial 8

    Frank Macskasy did a great post a couple of weeks ago about the systematic underfunding of CYF in preparation for NAct’s social bondage. He particularly focused on this Nation interview (but the whole is certainly worth reading for its meticulous research and context):

    Lisa Owen: “But one of the concerns is that there is a risk of cherry-picking. You know, if you have a private provider, are they only going to take the easier kids? Because we know… The Nation’s been told of a situation this week where a private provider wouldn’t take a particular child because they said the case was just too tough… Will you stop that happening? … So will they lose their contract if they keep refusing to take tougher cases? … one of the major concerns is that the too-hard basket will still be full and it will be CYF who deals with those people.”

    Tolley’s reply was like a bombshell – and one that Lisa Owen apparently did not pick up on. In terms that were unusually unequivocal for a politician, the Minister announced the impending demise of Child Youth and Family (CYF);

    Anne Tolley: “Well, CYF is gone. You know, it’s finished. It’s gone. It hasn’t worked and we’re changing, so we’re now going to a system that works with children from prevention right through to transition.”

    • Greg 8.1

      It begs the question of why politicians will never make great plumbers,
      when they cant fix problems that they created in the first place…

      they should have Einsteins definition of insantity printed on a plaque on their desk or on their wall.

    • maninthemiddle 8.2

      CYF’s problems date to well before National came to power. Macskasy is a conspiracy theorist, with little understanding of what has made CYFS ‘tick’ for decades.

      • KJT 8.2.1

        CYF’s has been dysfunctional for decades.

        Since National they have failed completely.

      • M. Gray 8.2.2

        Stop blaming the previous govt this lot have been in how many years now and they have created a mess unprecedented divisiveness and relative poverty everywhere in our country. And our debt has increased ten fold and we have sold some assets for what. And Max Bradfords promises of power competition bringing us lower power bills has hairs on it like everything the pnats touch they have been lying for 8 years now and it continues until the next election and NZers need to get some Guts and get rid of this lot.

  9. KJT 9

    One thing you can be sure of.

    If it has failed elsewhere it has been tried, National will do it.

    However. Has it failed under National’s terms?

    Charter schools in the USA have been hugely successful in making private providers rich on tax payer dollars.

    Similarly with private prisons.

    And public/private partnerships in building infrastructure/hospitals etc in the UK.

    If you take the indication of success as how many lucrative private positions/business opportunities politicians get after leaving parliament, they have been a huge success.

    • maninthemiddle 9.1

      Charter schools have been very successful at improving educational outcomes, and now we’re seeing that in NZ. Bring on more, I say.

      • KJT 9.1.1


        On average they have been no better than State schools, despite costing much more.

        In other words, simply resourcing State schools properly would have given much better outcomes for many more children at less cost.

        As well as taking funding which we could have used to improve State schools.

        Imagine what Tikipunga High Schools special needs classes could have done with the same Teacher/Pupil ratio as the much touted, and failing, military style academy in Whangarei.

        • Greg

          Charter schools creating doctors, etc=0

          whats the cost so far 80k per child,
          can someone do the math,

        • maninthemiddle

          “despite costing much more.”
          No, they don’t. Charter schools costs less to set up, and less to run in the long run.

          “simply resourcing State schools properly would have given much better outcomes for many more children at less cost.”
          False. You information is simply incorrect, so it’s hardly surprising your conclusions are bs.

      • dv 9.1.2

        What charter school you are you sending you children to SM?

      • Macro 9.1.3

        Charter schools have been very successful at improving educational outcomes, and now we’re seeing that in NZ. Bring on more, I say.


      • mpledger 9.1.4

        If your idea of success is buying farmland with tax dollars and getting to keep it than Charter School have been a massive success. If your idea of success is of kids getting qualifications and staying in school then no.

      • Anno1701 9.1.5

        “Charter schools have been very successful at improving educational outcomes”

        thats funny , from what i have seen they have been an abject/expensive failure

        ill have some of what maninthemiddle is smoking please !

        • KJT

          No point giving references to all the extensive evidence, from around the world, of the failure of privatising education.

          Like all good right wing “Authoritarian followers


          Will simply ignore it.

          • maninthemiddle

            Education has been ‘privatised’ for centuries, long before the state became involved.

            • KJT

              Only for those who could pay a fortune.

              Note the countries with the best educational outcomes do not have private schools.

              • maninthemiddle

                Wrong. On both points. Private citizens have funded education for the poor for centuries, as they have health care.

            • KJT

              Keep up to date.

              Just had another fail.

              And all have been found to be expelling any students which are hard to teach.

        • maninthemiddle

          You need to read more. One partnership school failed, which is proof of their accountability. The rest are successfully educating students the state system had failed.

        • maninthemiddle

          The ideological opposition to Partnership Schools is hilarious. Introduce an innovative, evidence based model, with significant overseas success, giving parents choice and targeting at risk kids, and the left oppose it because their cosy little union dominated jobs are at risk. Always good for a laugh. Meanwhile, more kids get a terrific education they weren’t getting in the public system.

  10. Peter 10

    Why do National pursue such policies? To provide opportunities for individuals to profit from the government sector.

    Placing resources in private hands is always the underlying agenda of the Right. This recent article suggests that will be a post-Brexit agenda of the conservatives:

  11. UncookedSelachimorpha 11

    The belief that profit is the *only* effective or understandable motivation for any action is utter garbage. Remember when delivering a public service was considered a worthwhile and honourable endeavour in its own right? Used to be the case, but I don’t think the nats could even understand the concept.

    Social bonds for mental health services are a shameful disgrace.

  12. Richardrawshark 12

    The only thing that will fix this National catastrophe is a change of government.

    Seriously a change of government is required because this is not the only thing they are failing on. This in an unbiased point of view is pretty hard to spot a positive on on outcomes or performance.

    Their behaviour is a separate issue and that’s pretty bad as well.

    At the end of the day as our current PM would say.

    I don’t agree with this government. On much, if at all.

  13. whateva next? 13

    White man behind a desk makes more sense than any of our government, (one again) he explains”social bonds” perfectly:

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