Social impact investing, Indigenous evaluation and simpler welfare

By Stephen Easton

May 9, 2017

Prime Minister Scott Morrison and Minister for Finance and the Public Service Mathias Cormann. (AAP Image/Mick Tsikas)

The Commonwealth has come to the social impact investment party with commitments in the 2017-18 Budget to stimulate the local market for the relatively new type of finance and run trials with state and territory governments.

The federal government will spend $10.2 million over 10 years starting from this financial year on partnering with their state-level colleagues in trials of “innovative programs aimed at improving housing and welfare outcomes for young people at risk of homelessness” funded by social impact investors.

Priority groups will include young people already getting support from specialist social services that try to reduce homelessness and those leaving out-of-home care or juvenile detention.

Another $12.2 million over the same decade will go towards more trials with state and territory administrations that aim to “encourage the development of the Australian market for social impact investments”, according to the Budget papers.

The market stimulation funding also includes a further $8 million over four years to establish a new Social Impact Investment Readiness Fund.

Several of the states and territories have already gone down the path of social impact bonds as a way of attracting private funding, in hopes of being able to pay for outcomes that have proven difficult to achieve through standard social services.

Despite the growing popularity of the approach, pushed along by advocates who lobby governments and assist them to issue social impact bonds, administrative costs can be high and a lot of independent experts argue there is little evidence that these financial instruments are intrinsically better than traditional funding models.

The wording in the Budget papers — and the relatively small amount of funding — indicate the Commonwealth is cautiously dipping a toe in the water to see how warm it is on the issue of homelessness. A fact sheet provided by Treasury explains:

“It is anticipated that the first investment for youth homelessness would be ready for implementation in 2018-19. The Government will consult with States and Territories to design a process to identify partner governments.”

The budget allocations follow the release of a Treasury discussion paper in January that set out the federal government’s principles for social impact investing.

See also: Public sector underpins Turnbull’s new pragmatism

Meanwhile, in another area of social policy that is considered extremely difficult — one big wicked problem, if you will — the government is moving ahead with a new push for program evaluation, part of the policy cycle that is often missing in action.

The four-year $40m commitment to evaluation of policies that affect Indigenous people across government was announced earlier in the year, but the Budget reveals more about how it will work.

The Productivity Commission will get $2.9 million over four years to develop and implement the whole-of-government evaluation strategy, which will involve all federal agencies reporting and the appointment of a specialist commissioner with relevant experience.

A further $10 million over three years will be spent on establishing a new Indigenous Research Fund. The purpose is to build a stronger evidence base from which to develop Indigenous affairs policy. The funding all comes from the existing budget for the Indigenous Advancement Strategy.

Finally, the social security reform that forms one of the flagship measures in the Coalition’s fourth consecutive budget begins the simplification of welfare payments through consolidation and abolition, ahead of the renaming of unemployment benefits from Newstart to JobSeeker in March, 2020.

This will also simplify the massive Welfare Payments Infrastructure Transformation project, whereby the Department of Human Services is slowly upgrading the computer systems that run the huge and complex social safety net, one payment type and client group at a time.

Recent controversy over the government’s crackdown on non-compliance by welfare recipients and its semi-automated debt recovery operations have not dampened its enthusiasm for sharpening up the role of DHS in chasing up fraud and overpayments.

The reforms include a suite of measures that aim to enhance DHS’s policing role, making it easier for it to keep an eye on the behaviour of welfare recipients and what they spend their money on, sanction those who are non-compliant, and refer potential fraud to police.

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