Social Bonds – Progress to date

  • In November 2013 the Ministry of Health and Treasury presented a series of well-attended market briefings in Auckland, Wellington and Christchurch.
  • The Ministry issued two discrete Registration of Interests (ROIs) for Outcomes and Service Providers and Intermediaries, in December 2013 and April 2014 respectively. From the 54 proposals submitted, 16 organisations were pre-qualified and invited to form partnerships and provide proposals to the Government around a potential Social Bond Pilot. The types of organisations included NGOs, retail banks and specially created partnerships.
  • A Matchmaking Day, held in November 2014, provided the opportunity for these Service Providers and Intermediaries to meet and begin the process of determining if a suitable partnership could be formed. A subsequent Education Event, in December 2014, provided further information to participants included in this procurement process.
  • A Request for Solution Outline was released on 19 December 2014 to enable partnerships, which were formed as a result of the matchmaking process, to submit details of their proposed Solution Outline, which closed on 02 March 2015.
  • In July 2015 the Government announced Wise Group and ANZ Bank New Zealand were in negotiations with the Ministry as the potential partners in the first Social Bond project.
  • In early 2016 work commenced on a second Social Bond topic.
  • We are currently completing the Solution Establishment phase (Phase 3) of the procurement process.
    • 7 potential partnerships made submissions (for a Social Bonds Pilot) for evaluation, including each submitter pitching their proposal to a panel of independent experts.
    • 4 submissions have been selected as a preliminary short list for further consideration.
      • Reduction in youth offending areas of need
      • Reduction in adult reoffending
      • Management of chronic illness
      • Support for people with mental illness to secure and sustain employment
    • 2 topic areas are under active development.
  • A potential social bond in relation to mental health and employment had been investigated with the Wise Group (as lead) and ANZ (as financial arranger) but the parties involved have decided they are not able to proceed to a contract.
  • We are developing the Bonds sequentially, with the two most developed being prioritised with a view to moving to implementation in 2016/17.
  • We remain committed to progressing the Social Bonds pilot, and are looking at a range of options.
  • One of the goals of the pilot was to develop and grow knowledge in the market on outcome based contracting and establish a toolkit of templates and lessons learnt, which are being applied to subsequent bond pilots. This has been achieved.
  • In addition, the Ministry of Health recently engaged TressCox Lawyers to provide probity advice and conduct a probity audit of project processes up to June 2016. A copy of the report is available from the Downloads section of this page.
  • The Treasury has released its advice to Ministers, prepared jointly with the Ministry of Health, on a lessons learned review of the pilot social bonds procurement process.
    In May 2016 the Treasury engaged an independent consultant to carry out a review of the pilot to date to identify ways to improve the process. The Treasury then provided the report to the Ministers of Finance and Health, along with a joint report with the Ministry of Health which summarised the findings of the review and what changes would be made to the pilot programme as a result. Read more on the Treasury website.
  • New Zealand’s first Social Bond, which aims to get more people with mental health issues into employment, is now in operation.

    The bond, which runs for six years, has services provided by APM Workcare Ltd in six Auckland suburbs from February 1, 2017. Four investors, including the provider, have provided the $1.5 million finance required for the Bond.

    APM Workcare Ltd is a New Zealand registered company which is wholly owned by an Australian parent. They have been operating in New Zealand since 2011 and are an experienced and successful provider of vocational rehabilitation and disability services, currently employing about 150 FTEs in New Zealand. It is also one of the investors.

    The three other investors are a private philanthropic fund, Wilberforce Foundation, a healthcare company, Janssen, (of the Johnson & Johnson Family of Companies in New Zealand), and an investment fund, Prospect Investment Management Ltd.

    The Ministry of Social Development will oversee the outcomes contract for assisting into employment people diagnosed with a mental health condition in Manukau, Manurewa, Clendon, Papakura, Pukekohe, and Waiuku.

2017 update

A second Social Bond pilot commenced in New Zealand on 1 September 2017, which aims to reduce youth reoffending in South Auckland.

Genesis Youth Trust will provide an intensive programme to a maximum of 1,000 participants over the 60 month duration of the bond for children and young persons who reside in the Auckland suburbs of Mangere, Otahuhu, Papatoetoe, Otara, Onehunga, Mt Wellington, Glen Innes, Panmure, Orakei, Manuwera, Clendon, Takanini, Papakura and Pukekohe.

Genesis Youth Trust has extensive experience of working with youth in South Auckland. The new programme is a longer, more intensive, programme aimed at reducing reoffending

Three investors have provided the $6 million to finance the bond. The three investors are the New Zealand Superannuation Fund, Mint Asset Management (a diversified asset manager) and Wilberforce Foundation (a private philanthropic investor who also invested in the first social bond).

The Ministry for Vulnerable Children, Oranga Tamariki will oversee the outcome contract for the social bond.

Now that the two social bond pilots have been established, the pilot programme has wrapped up.

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