News broke this week that the New Zealand government’s first social impact bond pilot had collapsed leaving a bill of more than $1.5 million NZ dollars spent on the project so far, and nothing to show for it.

When essential services like NZ Lifeline are struggling for funds and have to close, it’s irresponsible for Government's to waste money by experimenting with failed funding models.  The funding would have been better used by the state to design and deliver excellent social services that work, said NZ PSA.

Overseas, social bonds are rightly being criticised as the resources directed at achieving particular outcomes is not increased. 

Resourcing responsibility is just shifted to speculators and privateers who want state underwritten monetary returns relying on difficult to define outcome measures and weak evaluation.

In reality no social bond contract has yet been paid out anywhere.

Evidence is showing that these medieval financing arrangements just create budgeting inflexibility and divert money from other projects as spending commitments are pushed years in advance.

The motivation of Governments is short term cost and risk shifting like all forms of privatisation.

In Australia, New South Wales is trialling social impact bonds, however the benevolent society SIB trial there is just business as usual (BAU) according to our analysis and with a small sample of families and fixed costs, the project has been left over its budgeted cost and any losses will certainly be socialised.

Unfortunately the South Australian, Queensland and Victorian governments have expressed interest in these shiny new toys.

The model just encourages a race to the bottom with low wages and casualisation of the workforce who become entrusted with the responsibility for looking after our most vulnerable citizens.

Hardly something any caring, mature country would wish to aspire too.