First trial for social bond pilot

More than 1700 mental health patients in South Auckland will be the test case for the Government’s first social bonds pilot scheme.

The Government has pressed ahead with the initiative, despite Opposition criticisms that operating such a model in the mental health space would be a ‘‘disaster in the making’’.

Finance Minister Steven Joyce and Social Bonds Minister Amy Adams have announced a contract that will see the New Zealand subsidiary of private Australian firm APM help people with mild to moderate mental illness back into work.

According to its website, the company already holds a dozen contracts with the Ministry of Social Development, and a national contract with ACC to deliver work rehabilitation services.

‘‘The social bond approved by Cabinet in December 2016 has successfully raised the required finance so is now operational as New Zealand’s first social bond,’’ Joyce confirmed.

Social bonds involve private and non-profit organisations partnering with the Government to fund and deliver services to improve social outcomes.

If pre-agreed targets are met, the Government pays back the investors, and also pays a return on their investment.

The return depends on the level of results, up to an agreed maximum. It’s a relatively new model, that has been used overseas with mixed results.

‘‘Social bonds are an innovative method of providing social services for people with complex needs – where a financial incentive is offered to a consortium of providers and investors if they can achieve a result with a service which is demonstrably better than what has been previously achieved with the old way of doing things,’’ Joyce said.

It was an ‘‘innovative approach to a long-term problem’’.

But the initiative has been open to criticism, with many opponents uneasy at the thought of trialling something untested on vulnerable people.

Labour’s health spokeswoman Annette King has described the mental health bond as a ‘‘disaster in the making’’.

‘‘The risks associated with this are huge. In order to meet targets the focus is likely to be on the ‘easier-to-help’, not the more ‘difficult’ – read expensive – clients,’’ King said.

Adams said governments had struggled with the challenge of getting people off benefits and back into work long-term for a long time.

‘‘Through this social bond, we can utilise private sector skills and innovations to help participants into paid employment, so they get off welfare and improve their mental health. This leads to more independent lives, and a better outcome for them and the taxpayer.

‘‘Job seekers with a qualifying benefit and a diagnosed mental health condition may be eligible to be referred for the services,’’ Adams said.

The service would be voluntary, and available to people living in the Auckland suburbs of Manukau, Manuwera, Clendon, Papakura, Pukekohe and Waiuku.

APM Workcare is expected to deliver services to up to 1700 people over the five-year duration of the bond.

A second bond, aimed at reducing youth reoffending rates in South Auckland, was on track for a final decision to be made later this year. – Fairfax NZ