Budget 2016: Social Sector Welcomes Innovation

Leading organisations for social investment and social business have welcomed the federal government’s approach to innovation in the budget, which includes a $96.1 million fund to test innovative policies that engage the private sector.

Social Ventures Australia (SVA) said the government’s Try, Test and Learn Fund, which aims to reduce long‑term welfare dependency, could boost Australia’s social investment strategy.  

The organisation said the four-year $96.1 million fund was an important step towards promoting a more innovative, agile and impactful social services system.

“The fund could unlock opportunities for the development of innovative service and finance models, and attract co-investment from the private sector in important social initiatives,” SVA CEO Rob Koczkar said.

“Private capital is never going to replace the need for ongoing investment by government in critical services, but there is scope for it to have significant impact in areas including affordable housing supply, social impact bonds (SIBs) and social enterprise development.

“The great strength of the SIB model is that it requires governments, community services organisations and investors to examine the data about what really works to improve the lives of people in need, to accurately cost the service and the savings it generates to government.”

Koczkar said said the fund would help inform a better understanding of the link between government spending and specific social outcomes, and how much government could save through investing in effective programs.  

The fund will also be accompanied by two pilot programs – one to improve parenting skills for vulnerable families where parents have mental health issues or are in jail and support them in the first 1,000 days of their child’s life.

The second pilot will support young people exiting out of home care and provide them with targeted support and priority access to education, housing, employment services, legal services and health assessments.

“These are the kind of programs which have the potential to have a significant social impact, by changing the life trajectory of people experiencing disadvantage and reducing the cost of welfare over time,” Koczkar said.

“SVA believes [the budget] announcements should be part of a broader strategy for social innovation. While we’ve seen a number of promising developments, we’re yet to see these pulled into a comprehensive strategy that will fully leverage the investment the government has made to date.

“A comprehensive social innovation strategy would help galvanise action and collaboration across each of the sectors of our economy with a stake in our collective prosperity and wellbeing.”

In his budget speech Treasurer Scott Morrison reiterated the federal government’s commitment to innovation.

“Harnessing the power of innovation and entrepreneurship, to create our own ideas boom, lies at the heart of our plan to support jobs and growth in a stronger new economy,” Morrison said.

“Reforms to employee share schemes and crowd-sourced equity funding will make it easier for startups to raise capital and our changes to company tax loss arrangements will make it easier for existing businesses to reinvent themselves.”

Peak body the Business Council for Cooperatives and Mutuals (BCCM) said several measures in the budget would help support co-operative and mutual enterprises (CMEs) and social businesses.

“Reducing the small business tax rate to 27.5 per cent will help 870,000 companies that employ 3.4 million employees,” BCCM CEO Melina Morrison said.

“For the tens of thousands of Australian small businesses supported by bulk purchasing and marketing supply co-operatives, tax relief will be welcomed.

“The expansion of the role of the Small Business and Family Enterprise Ombudsman will help CMEs advocate for red tape reduction reforms.”

The government will provide $16.3 million over four years from 2016/17 to expand the advocacy function of the ombudsman including working with state and territories to improve the operating environment for small businesses.

However, Melina Morrison said there were missed opportunities in the budget.

“The careless legislation and regulatory red tape that CMEs face in Australia make their job of supporting small and medium enterprises harder and more costly,” she said.

She also said that the budget measures to support self-employment and entrepreneurship among youth could have benefited from a stronger engagement with the co-operative and mutual business sector.

“The government’s investment of $840 million in a Youth Employment Package to help 120,000 young people into jobs includes $88.6 million to support young people who wish to start their own business,” she said.

“Initiatives include ‘Exploring Being My Own Boss’ workshops to connect young job seekers with the business training, finance and networks they need to develop their innovative ideas into successful businesses.

“If the focus is on the ‘hero’ entrepreneur and a narrow range of business models like sole trader, young people will miss out on the opportunity to explore proven collaborative models like co-operatives and mutuals to scale their business ideas for success.”