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Social Bonds Information Release

Page updated 28 Nov 2016

The Treasury has released its advice to Ministers, prepared jointly with the Ministry of Health, on a lessons learned review of the pilot social bonds procurement process.

Exploring new ways of delivering social services can help the government make effective use of spending on social services. Among the initiatives being investigated are social bonds, which involve providers being paid for the results that they achieve, and the raising of capital from investors. Some examples operating overseas include helping children in care return to their families, or preventing people from returning to prison.

The Ministry of Health began a social bond pilot procurement process in 2013 to test whether social bonds could work in New Zealand, and whether payment for results /outcomes-based contracting could be effective in helping people achieve better outcomes from social services. In May 2016 the Treasury engaged an independent consultant to carry out a review of the pilot to date to identify ways to improve the process. 

The Treasury then provided the report to the Ministers of Finance and Health, along with a joint report with the Ministry of Health which summarised the findings of the review and what changes would be made to the pilot programme as a result, including making roles and responsibilities across and within agencies clearer, and including more senior oversight of the programme. The review found that the procurement process itself had been well run, but a lack of commercial financial expertise lead to a focus on getting the process right rather than achieving a successful outcome. 

When the pilot is complete the Treasury and Ministry of Health will then make recommendations to Ministers on whether further work should be undertaken on social bonds.

See Social Bonds - New Zealand Pilot on the Ministry of Health website for more information about the pilot.

 

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