“Using social finance schemes like social impact bonds to privatize community and social services means funding that is desperately needed to help the most vulnerable people in our communities will end up in the pockets of lawyers, consultants and other intermediaries,” — Larry Brown, NUPGE President
Social Impact Bonds
The term social impact bonds refers to a new form of privatizing public services.
The report is particularly timely, given how the COVID-19 pandemic has shown both the benefits of quality public services, and the huge price we pay when services are privatized.
There are fears that the federal government's Social Finance Fund will be used to subsidize privatization schemes like Social Impact Bonds. This letter from NUPGE President Larry Brown to Jean-Yves Duclos, the Minister of Families, Children and Social Development asks the Minister to respond to comments that appear to originate with federal officials in recent media reports on the Social Finance Fund.
Unless the Minister completely rejects the idea that the Social Finance Fund will be used to "bring private funding, incentives and discipline into social services," past experience shows we need to assume that it will be used to subsidize the privatization of social services.
Those pushing social impact bonds are taking the same approach as those profiting from P3 privatization schemes – focus on the new service being provided and hope it distracts people from the problems with the way it’s being funded.
When social finance is used to privatize public services, costs go up. In addition to investor profits, using social finance to privatize public services means new layers of bureaucracy.
Making sure children aren’t hungry, making sure they can see properly in school, and making sure they get help if they lose a loved one shouldn’t depend on where wealthy individuals or corporations decide to invest.
Both projects sponsored by the Saskatchewan government show how Social Impact Bonds can be structured to exclude those who are hard to help.
What’s needed is for governments to provide community services with adequate funding. And a first step would be to ask the wealthy and large corporations to pay their share of taxes — instead of allowing them to profit from the misfortune of others by investing in social impact bonds.
"Treating social and public health services like they’re just another option for an investment portfolio is risky for everyone." — Michelle Gawronsky, MGEU President
“The subsidies that privatization schemes like social impact bonds require are eating up funds that could be spent on front-line services Manitobans need.” — Larry Brown, NUPGE President
Social Impact Bonds “exploit the most vulnerable, poorest and others dependent on public services and the welfare state” so investors can make a profit. — Dexter Whitfield
NUPGE's updated report on Social Impact Bonds explains how they work and how they will harm public services and increase costs. The report also provides information on research that found that, even if Social Impact Bonds work as claimed, the costs will exceed any possible savings. Updated October 2016.
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Along with Public Private Partnerships (P3s), Social Impact Bonds are a bit like money laundering because they allow politicians to hide debt.
Higher costs, reduced accountability and privatization are all risks in the social impact bond funding scheme for public services.
Ottawa (10 May 2012) - Even though they have yet to produce results, many governments are enthusiastic about the way social impact bonds allow them to “buy now, pay later", says the National Union of Public and General Employees (NUPGE).