Social service reform should develop Social Impact Bonds

The New Zealand Initiative is calling the Productivity Commission’s draft report on effective social services a useful contribution to the debate on how government delivers more efficient services, as greater accountability is needed.

Jenesa Jeram, researcher at The New Zealand Initiative said the Productivity Commission’s report showed that around $34 billion of taxpayers’ money is spent on health, education and social services per year, yet there is currently little accountability for whether these services are achieving the outcomes they are set up to achieve.

“The weaknesses in the social service system that the Productivity Commission identifies ought to concern taxpayers,” said Jeram. “Not only is there little evidence of which social services are working and failing, but there are poor incentives to innovate and tailor services to better meet the needs of the vulnerable populations they serve.”

One of the new approaches the Productivity Commission assesses is Social Impact Bonds, a new way of financing and delivering social services.

Public policy think tank The New Zealand Initiative is due to release a more detailed report on the potential for Social Impact Bonds for improving social outcomes in mid-May. The co-authors of the report, Jenesa Jeram and Dr Bryce Wilkinson, find that Social Impact Bonds have great potential to improve social outcomes.

“Social Impact Bonds have the potential to improve social services in the area they serve, focus policymakers’ attention on developing the evidence base for effective social services, better target services, and incentivise innovation,” said Jeram.

“While Social Impact Bonds are just one tool in the policymaker’s toolkit, The New Zealand Initiative’s research finds that it could thrive in a context of wider social sector reform, as the Productivity Commission proposes.”

ENDS

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