Evidence of meeting #49 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was finance.
A recording is available from Parliament.
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
Thank you very much.
And thank you to the witnesses.
I want to get a little bit more information on your comments about the large organizations having a greater capacity to realize success. Could you provide us with some examples where these intermediary organizations come in to help? Maybe you could mention some of the less-developed or smaller organizations and what areas they would help. What would their motivation be to help out with the SIBs?
Policy Director, University of Toronto, Mowat Centre
In terms of motivations, these intermediaries are often charged or mandated with that specific role, so they're kind of in place in the system to help organizations beef up their capacity. In the U.K. you have these “what works” centres, which tend to gather evidence and provide that evidence—
Liberal
Policy Director, University of Toronto, Mowat Centre
I think they're usually government-sponsored and initiated things. Washington state has a similar initiative in the U.S. northwest. Sometimes they can be in more of an academic realm. Harvard has more of a technical assistance lab on SIBs that goes out and—
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
Are there like models in Canada now? Don't you see that?
Policy Director, University of Toronto, Mowat Centre
MaRS in Toronto fills a somewhat similar role. It's kind of a quasi-government, quasi-private sector entity.
Policy Director, University of Toronto, Mowat Centre
Yes, I would definitely see the merits. If the federal government wants to move into this space, I think it's absolutely critical that it plays a role in providing that critical support of infrastructure in terms of a "what works" centre and technical assistance labs, so that we're not seeing all of these contracts and opportunities going just to the largest NFP service provider. It's not that there is anything wrong with large organizations. They obviously have capacity and are good at what they do.
But if one of the stated objectives in this area is to open things up to more competition, innovation, and opportunity for service providers, it's incumbent upon governments then to provide the necessary conditions to allow those smaller entities to enter the space.
Liberal
Professor, Department of Economics, University of Manitoba
About the efficient size of service providers, larger versus smaller ones?
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
I mean the organizations with a federal role being played to serve as an intermediary.
Professor, Department of Economics, University of Manitoba
I think, as we heard, the MaRS centre does do that. My understanding is that has support from the McConnell Foundation.
There are scale issues here, too. If these centres are small in number and they're required to assist, you might well find them assisting larger entities that can deliver more services. I think that's probably a logical thing to do.
At the moment, as Sunil mentioned, the capacity is quite limited in giving that kind of support.
Liberal
Rodger Cuzner Liberal Cape Breton—Canso, NS
I'd like to ask a question just on the information you noted. It seems that in the health sector, there's more quality information at groups' disposal through health, but for other sectors less so. Is there a template that can be used there in the health sector that could prove beneficial in other areas?
Policy Director, University of Toronto, Mowat Centre
I think in health you've seen a large focus from the federal and provincial governments over the last 15 or 20 years—for longer than that, but particularly over the last 15 or 20 years—to improve outcomes. So we've seen more investment, evidence gathering, data quality at both the federal and provincial levels. So I think that is a very good template.
It's about getting the evidence, knowing where we are spending money, and what's working and what's not working. If we want to apply those lessons in other sectors, we should be following that same model.
Conservative
Colin Mayes Conservative Okanagan—Shuswap, BC
Thank you, Mr. Chair, and thank you to the witnesses for being here.
When we started this study, the first question I asked myself was why are social financing and social impact bonds needed?
One of the conclusions I came to in my mind is that government departments are good at formulating purposes and objectives, but they're not too good at putting business plans together and implementing the things that need to be done to meet these objectives.
Would you, first of all, say that's true% Then, in saying that, you talked about our needing infrastructure accountability or something to maybe get some of those skills put into the government people who are implementing these types of social financing, or whatever they would be.
Would you say that's a good evaluation and that's the reason we're looking at this, or would you say that we're looking at it more from the private sector?
Policy Director, University of Toronto, Mowat Centre
I think first and foremost we have to recognize that we're talking about very difficult, entrenched social problems here. These aren't things that are easy to fix. If they were, we have a lot of smart people working in governments across the country and they would have fixed them already. So I think the appeal of these instruments is that they offer the opportunity to harness more innovative approaches.
I would agree that, generally speaking, governments in Canada and around the world aren't necessarily the best at piloting things, seeing if they work, and if they don't work, discarding them and trying something else. That's much more of a private sector mindset.
Governments tend to want to develop something that's going to go across the entire country or entire province. We have a lot of political capital and financial investment in the success of that initiative, and it's very difficult for us to then pull back from that and say that it didn't work, let's cut it. Our instinct in government tends to be let's keep investing in something, but we don't really have the data about whether it works or not. We've written reports about that at Mowat.
The culture of government certainly tends to be more risk adverse. It tends not to be quite as innovative. I think that's the appeal of these instruments, and that's the reason they offer an opportunity for governments.
But I think it's very important to recognize that governments still play the primus inter pares, the first among equals, role in terms of setting direction and deciding what those difficult social problems are. Governments should still be very heavily involved in this. I don't think this is an area we want to outsource, solving difficult problems, to the private sector.
Conservative
Colin Mayes Conservative Okanagan—Shuswap, BC
I'd like to give Mr. Loxley an opportunity to answer that question.
Professor, Department of Economics, University of Manitoba
I'd like to stress that many services are already provided by social service agencies. Government provides the money. Government does provide direction.
In some of these areas there's quite a bit of creativity. If you look at the main areas where social impact bonds have been established, there's recidivism among offenders, and homelessness, children, and the employed. These are the main ones. We'll look at two of them.
With children, there's an awful lot going on looking at best practice for reducing the number of children in care. It's a huge issue in Manitoba. We have 10,400 kids in care, and most of them are aboriginal. That number's just gone up from 10,000 to 10,400. We're looking at what has worked elsewhere in reducing the number of children in care and at what has worked in Manitoba, because in some parts of Manitoba the rates are going down. There is a willingness to experiment and to look at these programs. These are sometimes arms of government, but often they're social service agencies.
The same thing happens with offenders. The John Howard and Elizabeth Fry societies have all kinds of programs to try to reduce recidivism. My own feeling is that before we change to something radically different and experimental and very hard to implement, look at what's happening already in these agencies and try to adapt to best practices.
Conservative
NDP
Sadia Groguhé NDP Saint-Lambert, QC
Thank you, Mr. Chair.
Mr. Johal, do you remember my question from earlier? If so, could you answer it?
NDP
Sadia Groguhé NDP Saint-Lambert, QC
We will move on to something else.
I find your comments very interesting. It makes us aware that before moving forward, we will still have a long way to go. For the moment, we are hoping to start a real initiative, but we don't really have a compass.
However, what we have heard so far, which reflects what you are saying, is that there are apparently areas where social finance has a positive or worthwhile impact.
Mr. Loxley told us that there is no guarantee that all the problems related to using social finance would be resolved. Before going further in that direction, we need to consider what exists currently.
Do you think that the cost of borrowing in this area could harm the funding and quality of social programs?
