Privatised mental health concerns

Laura Black.
Laura Black.
Giving private investors an opportunity to invest in the provision of mental health social services and make money from them could have disastrous consequences, the Methodist Mission says.

The Government set aside $28.8 million in Budget 2015 for four social bond programmes - the first of which would expand on a pilot delivering employment services to people with mental health conditions.

Methodist Mission Southern director Laura Black expressed grave concerns about the initiative.

''I think possible impacts range from none at all to quite disastrous. It's quite concerning.''

She said under the system, the Government would contract out social services work to non-government organisations which would provide the services using money from investors.

Investors, ranging from private individuals to banks, would provide the money by buying social bonds.

If performance targets were met, the Government would pay back investors their original investment, plus an extra amount on top, she said.

''But if the service is not successful, the investor takes a bath - the investors are essentially underwriting the service provision and if they don't meet some of the targets, the Government claws back some of the money.''

She believed it would be costly for the taxpayer as well.

The Government was introducing a profit element to social services and health funding, as well as the additional cost of having to create an intermediary that brought together what the Government wanted to purchase, and the investor who was looking to make a profit out of the delivery of the services.

''So they're adding these two costs - the cost of profit or interest for the investor, and the cost of an additional administration structure - into an environment where funding is fixed and minimal.

''. . . And here they are going to take out another chunk [of funding] for a structure that has been tried, to very mixed results, on a limited scale in the USA and the UK.''

She said there was no reliable evidence suggesting it would improve delivery.

''It just makes it loads more complicated and it adds new cost structures.

''I find it deeply frustrating when we pick up, as a country, failed ideas from overseas.''

Labour deputy leader and health spokeswoman Annette King agreed.

She said the Government was using some of the country's most vulnerable citizens as guinea pigs against official advice from the Department of Internal Affairs and in the absence of international evidence.

''The programme is likely to undermine existing NGOs and may force them to work with private equity investors in future.

''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.

''When it goes wrong, it will be the taxpayer once again picking up the tab.''

Finance Minister Bill English said social bonds would become another tool in the Government's social investment approach, which aimed to improve the lives and prospects of the most vulnerable New Zealanders.

''Where we succeed, there are opportunities to help people fulfil their potential, a chance to break intergenerational cycles of dependency and, in the long term, potential savings for taxpayers.

''So social bonds are a consistent fit with our wider social investment approach which aims to better understand both the drivers and risks of social dysfunction and where we can have the greatest impact in improving people's lives.

''If social bonds can help do that, we're willing to try them.''

Health Minister Jonathan Coleman said for some people with mental health issues, being supported and encouraged to achieve employment, was an important part of their treatment and ongoing care.

''In addition, this social bond will support the Better Public Service (BPS) target of significantly reducing long-term benefit dependency by 2017.''

Details of how the mental health social bond would be structured, and which organisations would be involved, were still to be agreed by Cabinet, he said.

The next social bond would focus on either lowering reoffending rates, or helping people manage long-term health conditions, he said.

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