Thomas Scrimgeour: Maxim Institute Researcher on the push for the government to use social impact bonds

A public policy think tank is pushing the Government to take advantage of social impact bonds.

The model means the Government only pays providers when they achieve results for a particular problem.  

It had previously been used for the Genesis Youth Trust, which reduced youth reoffending by 30%.  

Maxim Institute Researcher Thomas Scrimgeour told Mike Hosking the beauty of social impact bonds is that it allows highly flexible and customisable interventions. 

He says you can target the people who are most vulnerable, not just the easy options.  

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Episode Transcript

Speaker 1 (00:00):
New report into the performance of social impact bonds. Now
what happens is the private investors they back social services.
The government only pays when the agreed outcomes are met.
This reports by the Maximum Maximum Institute. Your researcher as
Thomas Scrimmager, who is with us, Thomas Morning.

Speaker 2 (00:15):
Morning, Mike.

Speaker 1 (00:15):
Is it a bit cheery picky for the investor? In
other words, this is easy to do if you go
in thinking there's an easy outcome and some of the
crunchy stuff never gets covered or does it work for
everyone pretty much?

Speaker 2 (00:26):
Well, it's certainly something that the government as the instigator
of the contract, has to be careful about and that
they have to define the problem correctly. But essentially that's
the same problem that all social services have. Is that
some people have relatively simple challenges. They've challenges that need
government helped for, but it's reasonably straightforward, and some people
have really complex lives. I think that the beauty of

(00:48):
social impact bonds as an approach is it allows highly
flexible and customizable interventions and to actually you can target
the people who are most vulnerable and not simply the
easy options.

Speaker 1 (00:59):
The genesis youth trial or trust trial that you cite
that reduced youth offending. My thirty percent generated nine dollars
of value for every dollar invested. Is that the gold
medal or can that be standard?

Speaker 2 (01:13):
Oh? Absolutely, I think that could be standard. I mean
every bond would be unique. But that was New Zealand's
first trial instigated back in twenty sixteen under Berl English
and in the review it was both a roaring success,
but there were heaps of learnings. You know, you think
about it the same way to any sort of product
or service. The first time you do it, you're doing
it the hard way because there's all sorts of things

(01:34):
you have to figure out, there are negotiations. What are
we doing here? But they achieved a great success with
the Genesis Youth trial and it was the first time.
If you keep doing it, you learn, you get more efficient,
you get better outcomes.

Speaker 1 (01:45):
Yeah, how many of these programs are out there? I mean,
how far short of maxing this out are we?

Speaker 2 (01:51):
Oh so in New Zealand where we're sort of the
government is currently talking about doing a few more. The
previous national government set up this trial with Genesis Youth,
and I'd set up another one, but we're not currently
doing any others of these, right, but globally there's quite
a few of the UK, well, it sort of it's
a new thing since twenty ten. The UK first trialed
them and then New Zealand started making some noise towards

(02:13):
the later end of the last national government. But then
it just wasn't the work wasn't pursued, and so the
current government have a voice some interest in these, and
so we're saying we should go further, that this is
really interesting.

Speaker 1 (02:22):
So how is it that something that's fifteen years old
and the original trial worked and worked really well, and
this is a government that's looking to improve the social
outcome of New Zealander. Is that somebody somewhere hasn't gone
to tell you what, let's give this another crack.

Speaker 2 (02:35):
Well, I think they are doing some work in this space.
I mean obviously wanting to do a lot with social investment,
which is the analytical framework that sits above me. So
I can't really speak to why they're not pushing faster
with it now. They haven't, you know, they've only been
in for a few years. These are the processes to
get these going to take a bit of time, but
we really would like to see them pushing with us
further because you think they're a real opportunity.

Speaker 1 (02:54):
Yeah, you also recommend a cross party political approach. Is
that a bit dreamy really because this is ideological as now.
I can't see the Labor Party you of loving this.

Speaker 2 (03:03):
Well, you know, I think there's a room for everyone
to get on board with this because really it's simply
a way of partnering with social services, and there's broad
support with that in New Zealand that government has a role,
but also community organizations are really valuable, and so I
think it's simply one way that government can partner with
community organizations to deliver better services. So we're really hopeful

(03:24):
that actually a broad support is possible.

Speaker 1 (03:26):
All right, Thomas go Well, appreciate it. Thomas Scrimser, who's
the Maximum Institute researcher.

Speaker 2 (03:31):
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