Human Resources Committee on May 12th, 2015

[The Chair, Conservative, Phil McColeman]

Good afternoon, ladies and gentlemen, and welcome.

This is meeting number 54 of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. We're here to continue our current study exploring the potential of social finance in Canada.

We're pleased to have a number of organizations with us today, all with valuable experience in the field of social finance. Joining us by way of video conference from Regina, we have Mr. Dale McFee, the deputy minister of corrections and policing with the Government of Saskatchewan. Welcome. Also joining us by video conference from Annapolis, Maryland and appearing as an individual, we have Dr. David Juppe. He holds the position of senior operating budget manager at Maryland's Department of Legislative Services. With us here in our committee room from the Saskatoon Downtown Youth Centre, we have Mr. Donald Meikle, the executive director.

Each of you will have up to 10 minutes to present. I will give you a warning at approximately one minute left if you are going on towards the end, and then we'll open it up to committee members for questioning of the witnesses. Let's begin with Mr. McFee.

Please start for up to 10 minutes, sir.

[Dale McFee, Deputy Minister, Corrections and Policing, Ministry of Justice, Government of Saskatchewan]

Greetings, Chair and members of Parliament.

Let me begin by thanking you for the opportunity to speak to you today about Saskatchewan's interest in and movement toward social finance. I will provide my thoughts and will advise you on some of the initiatives we are working on in our ministry, as well as in the Government of Saskatchewan, and give input on some of the areas where I think our federal government can help us on this journey. I will not speak of the Sweet Dreams project, as my colleague from Saskatchewan, Mr. Meikle, is in attendance and can speak directly to the project and its progress.

I will start by speaking about the opportunity or the reason that we started to explore social finance, or what we call “pay for success”.

Social finance is a way for the Government of Saskatchewan to ensure that we are focused on outcomes-based performance. In essence, we are trying to slow down and eventually stop funding projects and/or programs without knowing what will be achieved. A successful business would not operate in this environment, thus our government is in the process of transforming itself based on competing demands to focus on similar methodologies.

In the process of transformation, I firmly believe that social innovation will be the next competitive advantage. Social innovation is the means to connect the domestic economy with social expenditures. In turn, social expenditures are the mechanism to create another product for investors to realize a financial return in a collapsed market and to pay for success, being a way for governments to ensure that public moneys are going toward proven concepts that deliver results. The challenge is the metrics, or the ability to ensure that this value remains constant.

We have a window afforded to us by the financial market. In my field of expertise, which is the justice system, there is a long-standing relationship between policing, or the evolution of policing, and the financial markets. This relationship dates back to the premise of why traditional policing was created, which was to protect the financial market.

Two years ago, our ministry recognized the opportunity created by the current state of the financial market and the increasing need for government to create a mechanism to address social ills. In response, we formed a social finance division in the ministry. At the time, we took the first steps to research the existence of where the expertise was, what was being done, and what it could look like in Saskatchewan.

The due diligence that we undertook included phone calls with experts in the United Kingdom and Australia that were facilitated by KPMG; a trip to Ottawa to meet with our federal colleagues to determine what they were researching and to avoid redundancy; discussions with the MARS Group and an understanding of their work; and, significantly, we hosted meetings in Saskatchewan for a third-party provider in the United States of their largest social finance model. That provider is the Roca Foundation, and their project is in the range of $20 million, with a multitude of financial investors and partners. The model comprises highly detailed metrics that determine success. Roca possesses dynamic leadership, which quickly stood out for us as the model that most resembled what we were trying to work on in Saskatchewan.

From Roca we learned that leadership is the first step and that a secondary investment market is important to financiers; that metrics are critical to success and that they need to be identified from the start and must show value or savings to government.

We found that there is more than one way or one process to fund these initiatives, which made it clear to us that we were going to broaden our initiatives to pay for success that includes social impact bonds and investing for impact. This followed our thinking, in that we had to move from trying to fit people into programs and move toward creating flexible programs with metrics to meet the needs of individuals to create success. It also showed us how to take government out of the position of being an evaluator, or mired in day-to-day business, to a higher level that could drive strategic alignment and focused outcomes.

As a byproduct, with the right planning and strategy, we saw the opportunity for CBOs and NGOs to be funded on outcomes rather than inputs, and equally as important, with the right strategic investment, CBOs and NGOs might just become self-sufficient.

If we follow the premise that there is one taxpayer, we will recognize that there is an opportunity for the federal and provincial governments to work with the private sector and third parties to multiply savings. Government has responsibility for support and social programs, and equally we have the responsibility to facilitate economic growth. When we look at them in the same context, through innovation, many of the same mechanisms can be used to focus on net gains. This emulates the same type of innovative thinking we use to establish our models of community mobilization. Some of you have heard of Hub and COR, which have broken down silos and allowed us to address issues from a multi-sectoral perspective to meet targeted outcomes.

From hockey country in the middle of the Stanley Cup playoffs I offer the following, that Gretzky was a great hockey player because he knew where the puck was going. If we apply the same concept to social finance, it will now move from the 30,000-foot level that has been the focus of my statement thus far and operationalize what we are working on. We are focused on four key areas that undoubtedly have a direct impact on what is driving our work.

In the area of absenteeism in school, we have completed a mapping exercise that articulates a relationship between absenteeism and criminal activity. We have mined into the data of our troubled and complex families and are looking at options to inform how we utilize a third-party pay-for-success model to address this at the front line. Graduation rates will not increase without attendance. We are optimistic that this area of focus will have value and significant returns. We also know there's significant data supporting how we could mine for value.

If we look at bail and remand, particular to our ministry, we have undertaken significant economic analysis in this area. Saskatchewan statistics since 1998 show custody remand populations have grown by 89.1% and sentenced custody populations have grown by 2.1%. The analysis shows that, for every 100 clients who we take off remand, there's an $8.2 million savings. And further, we have evidence to support where to better target spending to ensure a return on investment. Right now, that particular part has very little return. We have almost completed the due diligence on what this could look like on the ground, while ensuring that public safety is protected in the process.

In the area of mental health and addictions in community programming, we are examining programming that takes high-needs mental health and addictions clients out of an expensive system that is not meeting their needs, and establishing a system that meets their clinical needs and presents higher opportunities for success. Statistics show that mental health clients are two times more likely to have contact with police, and are the most vulnerable population to reoffend. As well, mental health calls drive up to 40% of calls in some police services, and they are the most vulnerable population to go from non-criminal offences to criminal offences in one distinct act if not treated, cared for, or medicated. There are ample metrics in this area that could help us focus in on creating success for this client base and showing value and savings for government with better services.

The initiative of skills training connected to real jobs is targeted for those serving time in custody and reintegrating back into the community. By meeting clients’ needs for housing and skills training and putting them in the position of connecting to real jobs that are in demand in our economy, we can leverage their success. In essence, we are taking offenders and/or clients out of the system and turning them into taxpayers, which has a compounding effect in the relationship between jobs and social expenditure. We believe this will prove to be a strong business case for social finance.

The Saskatchewan government appointed current MLA and former cabinet minister June Draude as social finance legislative secretary to the premier to focus on what and where we might have the best opportunities for success. We are committed to moving these initiatives forward if they make sense for the citizens of Saskatchewan and meet the set outcomes.

As an idea for innovation, as I close, I pose the following question to the parliamentary committee: could we create a fund through legislation that is similar to a venture capital fund that expands the investment pool through incentives to drive results? If social expenditures grow faster than the domestic economy, the relationship will always be a negative number—thus, not enough money. If the relationship is studied and connected, as it can be, the number becomes net growth, which shows enhanced value. A mechanism that blends philanthropy with return in difficult financial times could leverage opportunities on new markets going forward. A fund for innovative thinking in this area could be a way to advance a relationship that focuses on balanced solutions and maximizes on investment for impact.

Economics is dictated by supply and demand. We have spent the majority of our time solely focused on supply. When we balance the focus by reducing demand, the system functions as it was designed and delivers much better results.

I thank you for the opportunity to speak with you today, and certainly, I look forward to any questions you may have after the presentations.

[The Chair, Conservative, Phil McColeman]

Thank you, Mr. McFee.

Now we move on our witness from Annapolis, Dr. Juppe.

Would you please proceed?

[Dr. David Juppe, Senior Operating Budget Manager, As an Individual]

Thank you.

Good afternoon, Mr. Chair, and members of Parliament. I appreciate the opportunity to testify before you today.

By way of a brief background, my name is Dr. David Juppe. I am the senior operating budget manager with the Department of Legislative Services in Maryland, which provides all support services for the Maryland legislature. For the past 26 years, I've been reviewing operating and capital budgets and providing fiscal policy advice for our budget committees. In addition, I teach undergraduate and graduate classes in budgeting. I spent a term as the president of the National Association of Legislative Fiscal Offices. I've provided budgetary training to the staff of the parliament in Mozambique, and in 2014 I provided some analysis and recommendations to the Government of Jordan in Amman on their budgetary processes in their review of the budget.

In 2012 my colleague, Kyle McKay, and I began examining the issue of social impact bonds, or pay for success, because of a proposal by our Department of Public Safety and Correctional Services that was designed to attempt to reduce recidivism rates below those in programs currently in place by that department. Based on our analysis, we found that the savings from the proposed program would be about $250,000 against program costs of about $4.1 million. We determined that the program would not save funding for the state, and we recommended against their adopting that program.

Turning to the concept of social impact bonds and pay for success generally, as I'm sure you're aware, a social impact bond is not in fact a bond. It's a unique form of financing program for government whereby a third party financier provides multi-year funding for non-profit or private sector service providers. They are given a multi-year source of funding, which reduces the risk they have in securing government funding each year. The concept of the social impact bonds is that this multi-year funding would help spur development of innovative ideas and ways of providing services for government. The other allure for government is that you only pay when you have successful outcomes, and no funding is required up front.

Social impact bonds have become more popular in the last few years. The first example was the Peterborough Prison in England. As the evaluations are coming in, we're starting to see that perhaps that program is not as successful as was initially hoped.

One of the reasons I think social impact bonds have become more popular recently is that since the recession of 2008 the government in the United States, and state governments especially, have not seen a robust economic recovery, as was hoped, and as we saw after the 2001 recession. Resources are limited for the providers of these services. This is one mechanism for providing additional funding for government services without government providing the funding up front.

There are a number of concerns and observations that I have drawn from our work looking at the topic, as well as looking at some other social impact bond proposals in the U.S.

One reason, and I think the most important, is that social impact bonds will result in higher costs to government. This is because you have additional costs for an intermediary to align the financing with the government and the provider. You also have to pay a rate of return to the financier once the program is completed and assuming the outcomes are successfully reached. Nothing prohibits government from directly contracting with these service providers and paying for the service directly. I think this has become an issue of government having limited resources and providers looking at other sources of funding to try to expand the pull so they can expand services.

From what I can see, the rate of return is not limited in any way. As we know, in the bond market, risk is measured by interest rates. The riskier it is that repayment may not materialize, the higher the interest rate a government is going to pay on a capital bond.

The social impact bonds or pay for success is a form of borrowing. If the program works then government will pay this rate of return, which happens to be whatever was negotiated, whether 10%, 15%, or 20%. There appear to be no limits on that amount.

In some instances the financing is guaranteed by a foundation, or at least a portion of the financing is guaranteed by a foundation to ensure that some rate of return is provided to the financiers. If that's the case, then it really obviates the entire point of transferring risk to the private sector, because you're guaranteeing some portion of the return.

Another major point I would like to make is that in our research we have found in many cases that the proposed savings are overstated. I have seen proposed reforms over many years of budgetary proposals, and in many instances, advocates have fallaciously used the fixed cost per case when evaluating the savings. For example, if it costs $30,000 per year to house an inmate, that includes both fixed costs for operating the facility and the variable cost. If you save one or two or ten inmates from returning to prison, you save a variable cost of food and supplies and medical costs and we've found that to be about $4,600 per inmate. You don't save the full $30,000 unless you close the entire facility.

In many cases, if advocates are proposing that the savings are going to be the full fixed and variable costs divided by the caseload, that's overstating the savings. In some cases advocates are suggesting that you have a cost avoidance, so you save cases from requiring more expensive care in the future. This is also very difficult to prove and doesn't result in immediate savings to the government's actual funding in the budget.

Funding logistics are also a concern that I observe in that one of the selling points for social impact bonds is that the government pays only if a program is successful. The problem I see with this is that if you have a multi-year program and the government has not been setting aside funding for this payment, then when the program is successful, you'll have to provide the entire amount of money plus the rate of return all at once, which would be difficult for governments to appropriate at one time.

Moreover if government sets aside funding in advance each year for the potential payment as we're seeing, for example, in the pay-for-success program in Massachusetts, it does not really realize those savings, because it still has to set aside those funds annually.

Because of this concept of a performance-based return on investment, I think rather than encouraging innovation, social impact bonds or pay for success will actually encourage a flight to quality. Investors are going to want to see programs that work and programs that are successful.

We've seen an example in Chicago, Illinois, where they just entered into a social impact bond in November 2014 for early education services using programs that have already proven to be effective over multiple years. Investors are not going to want to see these programs fail. So if you do have a situation in which multiple programs fail as they're trying to encourage innovation, then, getting back to our market-based model, you're going to see higher interest rates. Investors are going to demand a higher rate of return because there's higher risk.

Evaluation concerns that I have are first and foremost that, because you have this return-on-investment component, there is a greater pressure to produce results and you may have a situation where one study produces an outcome that's positive resulting in payment to the investors and to the service providers, but in many cases in public policy it can take years and sometimes multiple observations and multiple studies to determine if a program is really successful or not. In some cases I've seen it take 10 years before it was determined that a certain course of action really wasn't the best course of action, really wasn't working, and had to be ended. This places more of a premium on ensuring success early.

Also there's the question of methodologies and whether or not there's a treatment and control group and full randomization to ensure that fair and objective analysis and evaluation are completed. The U.S. Congress was considering social impact legislation last year in 2014, and I noticed in that legislation that they were considering allowing quasi-experimental designs, which may not require this sort of randomization.

In conclusion, social impact bonds are a new concept that has recently become more popular. A number of states and countries are looking at this concept, but I believe it is a more expensive way of providing services. It is essentially government by credit card. You're potentially borrowing funds, and it's not necessarily good fiscal policy. If you can pay for these services, pay for them directly. Why would you pay a third party intermediary a rate of return that is in no way limited or restricted?

Secondly, I would point out that instead of encouraging innovation, there would be a flight to quality, and so I don't see the concept of innovation there.

Finally, I would just say there are logistical issues as to whether or not government actually saves money, because you either have to set aside funds or you'll have a very large payment to make upon the completion of the proposal.

Thank you very much.

[The Chair, Conservative, Phil McColeman]

Thank you very much, Dr. Juppe.

Now we move on to Mr. Donald Meikle, the executive director of the Saskatoon Downtown Youth Centre.

Please proceed.

[Donald Meikle, Executive Director, Saskatoon Downtown Youth Centre Inc.]

Thank you.

On behalf of the Saskatoon Downtown Youth Centre, I'd like to thank you for this opportunity to present to your committee.

I am the executive director of this wonderful organization that I have been proud to be a part of for 22 years of its 25 years existence.

How did our Sweet Dreams program come about? ln 2013 we were approached to look at an issue of young people attending school and students' attendance being low to nonexistent, and, when they did come to school, they were unable to focus and stay in school for the whole day. That school requested a study to be done looking into sleep disorders. The individual completing the study came back to them and stated, “There were no sleep disorders. These young persons had no place to go.” The evaluator was so passionate about this cause that she put forward $50,000 of her own personal money if we could try to find a way to make a difference.

Over the next year we put together a group of individual front line workers representing Health, Ministry of Social Services, Education, EGADZ, and two individuals who were from the community. They were retired but still carried a passion to assist disadvantaged people.

We began meeting weekly to try to prioritize who was the most vulnerable population that needed to be served. We agreed that these mothers and their children not having a safe place to live and being provided supports put them at risk as well as having their children enter the social services system.

lt was aIso agreed that we needed to continue supporting those mothers who had worked so very hard to regain custody of their children. We needed a home that was respectful of parents so they would not have to put their children into care to receive services, while parents in an existing program would not to have their children in care any longer than need be.

During the first year of meetings and discussions we began to look at how the home would work, a business plan, and options of funding for this home. The social impact bond became an option.

During our first year of creating a business plan, we were looking at options of funding this home. We had applied for and received Services Canada funding, along with this year's $50,000. Our budget for the project was as follows: the purchase price of the home was $50,000, and renovations and legal fees were about $85,000. The total cost was a little over $1 million.

Colleen Mah had committed $25,000. The homeless partnering strategy had committed $320,000, a private donor had committed $20,000. The City of Saskatoon had committed $140,000, which left us $534,000 and left a shortfall of $500,000 capital and $500,000 operating.

There were two meetings with then Minister Draude to look at ways to fund this program. From the very first meeting it was made clear that the government would not be put in a deficit position. The minister liked the second proposal because it was creating a home for mothers and children, which we did really well.

The options for us to fund this home were to wait for up to a year and a half to get into the funding cycle with still no promises, to try to raise the needed dollars with an organization that already needs to raise about $100,000 per year to keep our doors open, or to go with a new and innovative way of funding called the social impact bond that bases funding on outcomes.

We agreed to do the funding through a SIB. We were allowed to be involved in the process of how the social impact outcomes would look. We were able to support mothers and children at time of need and not have to separate the mother and child bond. The province communicated with our board of directors and management, answering any questions that may have arisen. The social impact bond was based on outcomes, that if successful, could be cost neutral and allow added savings to be shown as the benefits of government and communities doing things differently. We've been working on outcomes reporting for the past five years and see the direct benefit to the most important people in this equation: the clients we serve.

This process allows our organization to stay true to our vision statement that every child deserves to grow up to become a contributing citizen. That includes the mother with children who remains in a home with domestic violence and physical and verbal abuse, who is often too scared to come forward because she believes her children will be taken away because she has perceived herself as a bad parent. That includes the parents who have worked hard at regaining custody of their children only to have no support to ensure that they are able to take advantage of employment and educational opportunities while having a roof over their heads.

We needed this as a part of a continuum of residential services we have created since 1997, with 16 homes providing safety and shelter to over 120 children.

Every mother will enter the home based on a motivational interview looking at the risks to the mother and the child, her willingness to be a part of the plan, and what she is willing to contribute.

We believe that the Government of Saskatchewan is interested in undertaking innovative approaches to social issues to improve the lives of its most vulnerable citizens. We believe social innovation has a number of tools that can be used and governments are interested in exploring ideas that can deliver better services to our province's most vulnerable.

Our investors in the social impact bond include Wally and Colleen Mah from North Ridge Development Corporation, with $500,000 towards this project. The Mahs have been involved in our residential services since we began, by contributing over $800,000 towards 11 of the 16 homes that we currently operate for children, mothers, and hard-to-serve youth in Saskatoon.

Expansion of our residential services, such as Baby Steps, to include two bedrooms in the home so that mothers can live with their children while the children are in the care of social services; Mah's Place; and a number of our My Homes would not have happened without the generosity of the Mahs. Colleen Mah has been a huge advocate for the mothers, looking at ways to provide long-term housing support for successful candidates.

The Conexus Credit Union is giving us $100,000 per year for five years. Credit unions are very involved in our community. They loved the concept of helping parents and their children, and they wanted to become more involved by offering educational services and financial literacy to our clients while they are in the home. They also have a huge willingness to be a part of looking at ways to assist moving forward in this project.

I'll talk about the early indicators, so far, of Sweet Dreams. We are embarking on our first anniversary of Sweet Dreams. For us, with the social impact bond, the program is able to work based on outcomes and need. Many of our clients coming into the program have lived in situations involving domestic violence and addiction, fearing that if they were to come forward, their child would be taken away. Now parents are able to leave those situations with hope and support for them and their children. Young moms can now continue loving bonds with their children and have the opportunity to break the cycles that have kept them in poverty for years.

We have a process-driven program that is now based on a partnership including government, community and, most importantly, our client. For years, there has been a gap. Once the parents had their children returned to them, the supports stopped. Now, with Sweet Dreams, we are able to continue the support until the parents are strong enough to move on in their lives.

Outcomes to date include the following: mothers have transitioned into independent living; a mother is working at regaining two of her children, who have been made long-term wards of the government, while caring for two children currently in her care; a mother has moved out and found employment in a career she loves; and we were able to provide housing support to a pregnant mom until she could find a safe and supportive family to live with.

Thanks to the SIB, we are able to meet the need of our community, which was previously seen as out-of-the-norm for government. We have received requests from all over the province from mothers wanting a chance to make a better life for themselves and their children with support and guidance. This process has allowed our organization the ability to support mothers and their children, keeping them out of social services.

[The Chair, Conservative, Phil McColeman]

You have approximately one minute left, sir.

[Donald Meikle]

I just want to quickly go over the myths of program delivery.

We will take the easiest clients to make the program successful. I want to say that's false. Every client entering the Sweet Dreams program completes a motivational interview to look at risk factors, such as violence, addiction, and mental health. A case plan is created with the client to ensure that it is the client's plan. Motivational interviews are the most reliable, as they are first-hand from the clients about where they see themselves and the shortcomings in supports needed.

Business makes money off the backs of poor people. I say that's false. The Mahs, as well as the Conexus Credit Union, are reinvesting the money back into vulnerable people. We all make money off disadvantaged people by working in this field. By working in justice, health, education, social services, and many other organizations in the community, we all make money off disadvantaged people. What this is saying is that vulnerable people are a big business. My challenge back is this. Do we want to be open to change? I know for a fact that the Mahs and the Conexus Credit Union want disadvantaged people to be able to contribute to the economy. For them, it's a win-win investment.

[The Chair, Conservative, Phil McColeman]

Thank you very much.

We appreciate that testimony from all three witnesses. Now we'll move on to questions from our committee members. We'll have five-minute rounds because we have two panels today.

We'll begin with Madam Sims.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

I want to thank all of you for coming here to put forward your perspectives.

I'd like to know what each of you thinks of the idea of “[m]odifying the Income Tax Act to allow non-profits to generate revenues not directly related to their core mission”. In the brief we received from the Credit Union Central of Canada, this is one of their recommendations. It has been suggested that:

Current income tax interpretation significantly restricts the ability of non-profits to earn such income and, instead, requires any such revenues to be unintentional, unanticipated and incidental to carrying out its core purposes. This makes it difficult to generate revenues to put back into a non-profit's mission, and it restricts the cash reserves they can build and maintain.

Who would like to start? What are your thoughts on modifying the Income Tax Act in this way?

[The Chair, Conservative, Phil McColeman]

Would you like to choose one of the witnesses?

[Jinny Sims, NDP, Newton—North Delta, BC]

Let's start with Donald Meikle first, please.

[Donald Meikle]

Thank you.

I think any way that allows non-profits to be able to do their business more efficiently is always an option that should be looked at. As I was saying in my presentation, we have to fundraise in the amount of $100,000 a year just to keep our doors open. It would be nice to be able to invest money in times when we have extra.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

Would one of you gentlemen like to jump in?

[Dale McFee]

Yes, I can't see any problem with that. As long as it is lawful, obviously, which we're taking for granted, why would we restrict not-for-profits? Obviously, they're governed. There's governance in charge and there are reporting requirements, including how they report and how they get back to their stakeholders or their board.

I think it would give them the ability to be more sustainable. I think we'd be remiss if we didn't give our CBOs and our not-for-profits the ability to be sustainable. I think that's one of the biggest challenges they face today. Let's face it: a lot of them do some very good work that's paramount to success in relation to human services delivery across this country.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you.

Did you have anything to add?

[Dr. David Juppe]

I'm not sure I can fully understand the proposal. It sounds like it's some sort of a tax credit based on income earned by the non-profits.

[Jinny Sims, NDP, Newton—North Delta, BC]

It's the ability for them to be able to raise funds and then get a tax break for those funds they raise, beyond their core mandate.

[Dr. David Juppe]

It certainly sounds like an attractive proposal for the non-profits. I guess the question would be, what's the magnitude of the revenue loss that your government would realize? I don't really have a context for that.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

We've been hearing a lot about social impact bonds and their potential, but we also have some concerns around the potential for incurring new costs in the delivery of social services, including higher borrowing costs and increased upfront costs in establishing a social impact bond administrative structure to begin with. Do you have any comments to make on that?

Once again, could we start with Mr. Meikle, please?

[Donald Meikle]

On our social impact bond, we didn't have the intermediary. It was a one-million-dollar bond so we didn't have an intermediary. Deloitte will be doing the independent audit of the program.

That's it, unless you would like me to expand further on that. That's what we did. It was very respectful. I think this is one way to fund programs and base them on outcomes.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

Did you have anything to add, sir?

[Dale McFee]

I would add that anything we're looking at in relation to it right now is costed back in the formula going forward, as Don said, if it's small enough and the intermediary is not involved.

I think, in something like this, the other thing we haven't really spoken about but could go on at length about here is the status quo in relation to social costs and social services costs. They're not affordable. It doesn't matter if the government is trying to make them affordable or not, unless we connect these two economies together.... Some of the data analysis that we give on that.... We did the mining in relation to the economy in my ministry and in relation to social expenditures. As a long-time police chief, and an entrepreneur, and business person, right now the economy is growing at $2 and we're spending $4.

When I try to explain that to people who work in my correctional centre, I explain it in terms of jobs. Our government wants to create 60,000 jobs by 2020. If you break that down, if those are $50,000 jobs and it's the only way you had to take in revenue as a government—we know there's more, but if it's a job—it takes the revenue of 12 of those jobs based on provincial income tax to house one inmate, without any other costs.

If we were going to grow by 195 inmates, we need 23,040 jobs annually to pay for inmate growth. You forecast that out to the year 2020, that's 60,000 jobs, and 16,230 of those jobs pay for inmate growth. I'm not talking about health costs, social service costs, or education costs; I'm talking about room and board at our correctional facilities. When we cost that further and realize that remanded offenders cost $80,000, and sentenced offenders cost $43,000, it doubles it. So 33,000 of those jobs will be needed today if it's based on income tax to pay for inmate growth in Saskatchewan. We don't need to go into the whole preamble upstream about what that means because I think that's ultimately what we're talking about.

[The Chair, Conservative, Phil McColeman]

Thank you very much.

Way over time there, but we'll continue on with Mr. Armstrong.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you, Mr. Chair.

I want to thank our witnesses for being here today.

I'm going to start with Mr. Meikle to get a few points of clarity on how his program operates on the ground.

I think it's clear that the children who are coming into your home are already in care. This gives the opportunity for the mothers of these children to live with them in a structured environment. Am I accurate in saying that?