« Back to Publications

Will social impact bonds change the world?

Mike Steketee writes in Inside Story (4.10.16) about the interest shown by some governments in Australia for implementing ‘social impact bonds’, a means of outsourcing public service and program provision to private interests, introduced in the UK a handful of years ago.

‘NSW premier Mike Baird says they have the “potential to change the world.” When he was still social services minister, Scott Morrison said he was “very keen” to explore them further. According to an OECD study, “few social policy tools have been disseminated so far and so fast”.

‘Social impact bonds, or social benefit bonds as they are called in New South Wales, are generating enough excitement to make Malcolm Turnbull proud. Not only that, they fit right into his innovation agenda, holding out the promise of a new way to tackle some of our most intractable social problems. They also tap into a growing market for investments aimed at doing good as well as earning a return.

‘The idea is to harness the resources of private investors to fund social programs at a time when governments feel increasingly constrained. The investors get a return only if the programs are successful, meaning some of the risk is transferred from taxpayers to private individuals and payments are based on outcomes rather than what the program happens to cost.

‘Pioneered in Britain six years ago, social impact bonds have spread rapidly, with sixty launched in fifteen countries. In Australia, Barry O’Farrell’s Coalition government in New South Wales was the first to announce a trial of the bonds in 2011, when Mike Baird, as treasurer, acted on a report commissioned by the former Labor government. Now Baird’s government is running two bonds aimed at reducing the rate of foster and institutional care for children. In July, it announced a third designed to reduce reoffending rates among ex-prisoners.

‘ … Labor governments may not be quite as gung-ho about the idea, but Victoria, Queensland and South Australia have all announced pilot programs, or have plans to do so, in areas including drug and alcohol treatment programs, homelessness, prisoner reoffending and out-of-home care for Indigenous children.’

The TJRyan Foundation does not guarantee the accuracy, currency or completeness of any information or material available on this website. The TJRyan Foundation reserves the right to change information or material on this website at any time without notice. Links from this site to external, non-TJRyan Foundation websites should not be construed as implying any relationship with and/or endorsement of the external site or its content by the TJR Foundation, nor any commercial relationship with the owners of any external site. Should any TJRyan research project be funded by an individual or organisation the source of funding will be stated beside the research report. In all other cases contributions are provided on a pro bono basis.
Receive the latest news

Subscribe To Our Newsletter

Get notified about new articles

This field is for validation purposes and should be left unchanged.