They Built
the Market.
In 2017 the Commonwealth started spending public money to build a market where investors get paid from social services.
It crossed governments. It’s still running.
Announced by Scott Morrison and Christian Porter in 2017 to develop social impact investing.[1]
Disability providers suggested as the starting point for consolidation talks.[2]
Proposed Commonwealth loan, subordinated so other lenders are repaid first.[3]
Annual investor return from NSW’s Newpin bond, tied to children going home.[4]
How It Started
- 8 August 2017Morrison and Porter announce $30 million to develop social impact investing, including $12 million for priority groups and Commonwealth–state data linkage to find more investment opportunities.[1]
- 3 April 2019Josh Frydenberg, Paul Fletcher and Jane Hume set up a $5 million taskforce, plus $14.1 million for payment-by-results trials. Michael Traill chairs it.[5][6]
- 2020The taskforce report’s appendix proposes grants and cheap finance to help disability providers make acquisitions, and an alliance of the top 20 providers to start consolidation talks.[2]
- 13 July 2020Anne Ruston announces a Commonwealth–state agreement backed by $22.3 million.[7]
- 2022Under Albanese, Traill’s panel updates its report. It recommends a $200 million subordinated Commonwealth loan, repaid after other lenders, plus $30 million for running costs.[3][6]
- 5 December 2023Banks and foundations agree in principle to help design the $100 million Outcomes Fund.[8]
Who Carries the Risk
Under the 2022 proposal, if the investment vehicle ran short of money, other lenders would get paid before the Commonwealth.[3]
That makes public money the cushion for private lenders.
In NSW, Newpin paid investors a 10% annual return over 2013 to 2020, based on children returning from out-of-home care to their families.[4]
The advice treated scale and profitability as the conditions for attracting investment. Small providers weren’t the plan.[2]
What We Want Answered
- Every taskforce member’s declared interests, and how they were managed.
- Which recommendations became funding decisions, and who got the money.
- Every outcomes contract, what triggers payment, and who carries the loss.
- What the people being measured said about whether their lives got better.
Sources
- Scott Morrison and Christian Porter, Developing Australia’s Social Impact Investing Market, 8 August 2017. https://formerministers.dss.gov.au/17344/developing-australias-social-impact-investing-market/
- Social Impact Investing Taskforce, Final Report 2020, Inside Policy appendix, printed pp. 46–48. https://treasury.gov.au/sites/default/files/2023-12/p2023-391009-taskforce-final-report-2020.pdf
- Social Impact Investing Taskforce, Updated Report 2022, printed pp. 10–11. https://treasury.gov.au/sites/default/files/2023-12/p2023-391009-taskforce-updated-report-2022.pdf
- NSW Office of Social Impact Investment, Newpin. https://www.nsw.gov.au/departments-and-agencies/osii/social-impact-investments/newpin
- Morrison Government establishes Social Impact Investing Taskforce, 3 April 2019. https://formerministers.dss.gov.au/18766/morrison-government-establishes-social-impact-investing-taskforce/
- Treasury, Social Impact Investing Taskforce chronology and reports. https://treasury.gov.au/publication/p2023-391009
- Anne Ruston, States and territories sign onto social impact investing agreement, 13 July 2020. https://formerministers.dss.gov.au/19317/states-and-territories-sign-onto-social-impact-investing-agreement/
- Jim Chalmers, Chris Bowen and Pat Conroy, Investor Roundtable to help modernise our economy and maximise our advantages, 5 December 2023. https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/investor-roundtable-help-modernise-economy-maximise-advantages