Advocates say issuing social bonds for mental health services risks being an unfortunate experiment undertaken with society's most vulnerable.
The Government says better employment support for people with mental illness is the first aim of the scheme. Photo: 123RF
The Budget included $28.8 million for four social bond programmes focus on delivering employment services to people with mental health conditions. Details are scant, with Cabinet still to agree how the bond will be structured and which organisations will be involved.
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Health Minister Jonathan Coleman said it guaranteed results by pinning payment to contracted outcomes.
Britain, the United States and Australia have issued social bonds in recent years as a way to fund some social services.
Associate professor in social work at Auckland University Mike O'Brien, a member of the Child Poverty Action Group's management committee, said social bonds were an experiment.
He said it was applying market principles to the delivery of social services to vulnerable groups.
"There's a real danger and a risk that agencies provide services and undertake tasks that simply meet the outcomes which may not have too much to do with what the fundamental needs are."
Victoria University's School of Government associate professor Bill Ryan said little was known about social bonds and there was not much evidence on whether the initiative produced the benefits supporters claimed.
"I'm really quite puzzled as to why Government thinks this is a good idea. Firstly there's the, if you like, the ethical dimension of whether or not profit making should be put into the realm of social services."
Mental Health Foundation chief executive Judi Clements said it was early days as to whether it would work and there were a lot of questions about the scheme.
People with mental health problems had been in touch with her since the news of the scheme came out over the last day and were feeling very unsettled, she said.
"The biggest issue people face trying to get into work is discrimination, and whether social bonds of themselves will enable that discrimination to be eliminated or reduced I think is a stretch."
Dave Henderson was with the former Association of Non-Governmental Organisations of Aotearoa. It consultated with social service providers and produced a report for the Government when social bonds were first suggested in 2013.
Mr Henderson said people were open to social bonds "as a potential way of funding services, but everyone was also in agreement that this was not a panacea for lack of government funding for crucial services."
The executive director of the think tank The New Zealand Initiative, Oliver Hartwich, said social bonds had the potential to improve the delivery of public services.
He said it would create more competition of providers in that space and a broader range of services.
"Taxpayers only pay for what works, and there is a strong incentive for service providers to perform well to improve social outcomes."