Victoria Unveils State’s First Social Impact Bonds
Friday, 22nd July 2016 at 10:28 am
The Victorian Government has announced its first two social impact bonds will focus on reducing deep-seated disadvantage through drug and alcohol treatment programs, and young people transitioning from out of home care.
Treasurer Tim Pallas said the government was engaging with social service providers, potential partners and investors to determine how social impact bonds could best complement services in those areas.
“The Andrews Labor government is working with the social services sector to explore the best way to get the right outcomes out of social impact bonds and tackle some significant areas of disadvantage in our communities,” Pallas said on Friday.
“Social impact bonds can be an innovative way to deliver real and hopefully lasting improvements to what are unfortunately persistent social issues.”
In the 2016/17 Victorian budget the government set aside $700,000 to trial interventions, with the Department of Treasury and Finance and other departments investigating areas where SIBs would be most effective.
In a statement the government said reaching better outcomes in those areas of disadvantage would deliver benefits for the individuals as well as relieving pressure on social services.
It also said the challenges involved in treating disadvantaged people with drug and alcohol addictions were well documented, including poorer mental and physical health outcomes and increased risk of homelessness.
Assisting disadvantaged adolescents leaving out of home care presented similar challenges, with too many experiencing unemployment, homelessness and contact with the justice system.
The government said the bonds would complement, not replace, existing services, with the outcomes evaluated and measured through “robust systems”.
On Wednesday Victoria also became the first state in Australia to issue a green bond, raising $300 million to finance projects delivering various environmental benefits.
Impact Investing Australia CEO Daniel Madhavan welcomed the Victorian Government’s social impact bonds and engagement in impact investing.
“We are pleased that Victoria is harnessing the potential of impact investing to deliver improved outcomes for individuals, communities and the environment, as well as provide better value for taxpayers,” Madhavan said.
“As we have seen in NSW and in other countries, social impact bonds are providing governments with an additional tool for tackling complex social issues that have persisted despite repeat interventions.”
The New South Wales Government, the first state to explore the model, recently announced its third social impact bond, focused on tackling prisoner recidivism, following the success of the Newpin and The Benevolent Society bonds.
Since the first social impact bond was launched in London 2010, over 60 projects have commenced in 15 countries. More than 21 of them have already reported positive social outcomes and four projects have fully repaid investor capital.
“Government has a critical role to play in growing the opportunities to harness private capital for positive social impact,” Madhavan said.
“We encourage a more active role for governments at all levels to enable and participate in impact investing. Without stronger support from government, the potential for impact investment in Australia will not be realised.”