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Social Investment Bonds: A further means to erode democracy?

Social Investment Bonds: A further means to erode democracy?

A number of social services in the Waikato are deeply concerned with the government’s direction towards the implementation of Social Investment Bonds. The increased involvement of the private sector in the provision of social services potentially compromises democracy and threatens the ongoing viability of the state as a protector of the common good.

Over successive generations, the pot of money that the government can draw on for social service delivery has reduced. Tax cuts for the wealthy have resulted in increased inequality and a financially bereft state.

A challenge to the ongoing privatisation of social services and dwindling state provision is being voiced strongly by people from social services in Hamilton.

“Our concern with the focus on ‘returns on investment’ is that we are commoditising the people that we are dedicated to serving. We are all becoming functionaries for the market. Hearts and minds are being co-opted to a business mentality as if there is no alternative. Are we enabling a ‘shadow state’ where the wealthy investors hold the purse that once belonged to all of us?” says Karen Morrison-Hume, Missioner, Anglican Action.

Under the new direction, private investors will be invited to invest in social services that ultimately, through the delivery of positive social outcome, reduce government expenditure. This costs saving will then be paid out to the investors as a ‘return on their investment’.

“Those with investment money get to benefit financially from the hard work and expertise of the social service sector. While we applaud the development of ethical investment, we are very concerned with the shift of power that this policy direction represents. The government has numerous policy levers available to it to achieve positive social outcomes, yet it continues to promote the market as the ultimate saviour” Dr Rose Black says.

Social Impact bonds have been highlighted as potentially favouring simplistic, mechanical responses with easily identifiable outcomes. “Are those with more complex needs going to be left on the scrap heap because positive outcomes for them are just too hard to achieve?” says Morrison-Hume.

Paying tax and contributing towards the public purse could be viewed as an ethical investment for common good that ultimately reduces the need for philanthropy.

· What if we invested in the reduction of alcohol availability – what social return would this bring?
· What if we invested in the reduction of the availability of fast food outlets – what social return would this bring?
· What if we invested in the prevention of criminal activity with good education, good wages, and adequate employment opportunities?
Are these just ‘pie in the sky’ social investments because through them wealthy investors stand to lose too much from their other investments (and businesses) which really aren’t ethical at all?

ENDS

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