The Conservative government announced Thursday that it has begun "signing pay-for-performance agreements, which would see public dollars cover premiums to businesses that invest in social services, one of several moves being considered to push not-for-profit organizations to find new sources of funding. ... She also said it shouldn't cost taxpayers more to provide a carrot to businesses to invest in not-for-profit agencies."
Although Human Resources Minister Diane Finlay acknowledged that such a move would have been heresy only a few years ago, she argued that the social and economic problems of the Canadian economy required new solutions and that the partnership is "designed to attract capital that will complement federal investment. ...
The opposition NDP said the announcement distracted from government spending cuts to social services and didn't guarantee more spending on social services.
Interim Liberal leader Bob Rae said public-private partnerships have been successful in Canada and other countries. He said he should know: Under his watch as Ontario's NDP premier in the early 1990s, his government partnered with business to build Highway 407, the toll highway north of the Toronto."
However, the totoal cost of Rae's 407 Highway was "$1.6 billion but the amount of money spent acquiring the land in the 1970s along which it runs was over $100 billion". (http://prudentpress.com/politics/the-highway-407-hijack-how-ontario-beca...)
Furthermore, for an investment of $400 million, the value of the toll highway has been estimated at $8.53 billion (http://www.milliondollarjourney.com/cppib-and-highway-407.htm). That's very strange math you are employing to define a "successful" project, Mr. Rae.
Finley noted the Conservatives had created social impact bonds already "with some of those applying for grants through Human Resources and Skills Development Canada requiring third-party funding as a funding requirement."
David Macdonald, an economist at Canadian Centre for Policy Alternatives points out that social impact bonds are a commericalization of social values.
"One of the foremost questions about this funding model concerns how the outcomes are measured to decide whether it’s a success that leads to a payout for investors.
Macdonald said private-sector investors will learn how to arrange the project and the eventual performance assessment in a way that ensures they don’t end up holding the bag.
“What will probably end up happening is that the government will pay dramatically more for programs that 10 years ago would have been funded because they were good ideas,” he remarked. “Now they’ll run them through this bond system, whereby some private financier makes 10 per or 20 per cent on their investment rather than the government evaluating a good idea and saying, ‘Yeah, that’s a good idea, let’s fund that.’
Critics have also questioned whether the bond program will lead to reduced funding for non-profit organizations supplying valuable but hard-to-measure services."
The most infamous case of a government proposing to that the private sector and charities take care of social needs is the Irish Famine, when the British government offered only token help, saying that the private sector (in the form of wealthy Irish landlords) and charities could do the job. Most landlords balked and many private religious charities would only give out their meagre rations if the starving would convert to their Protestant religion. The result was 1/4 of the population starved to death and 1/4 emigrated to other countries with many dying on the "coffin ships" they took. Even today Ireland's population is only about 1/2 of what it was before the famine.
The Irish example illustrates several major flaws with these Con proposals. The private sector or charity providing the service can discriminate on whatever basis it deems important as to who are the 'deserving poor' and the 'undeserving poor'. In broad crises affecting large fractions of the population, the private and charitiable sectors cannot meet the overwhelming needs of the people. Finally, when the profit motive is brought into play, the private sector will only offer to support those programs that are virtually guaranteed to bring them huge profits. The result will be that these programs will, in the long run, cost more than if they had been offered through public services.