Human Resources Committee on May 12th, 2015

[The Chair, Conservative, Phil McColeman]

That's fine. If you want to yield your time, we're good to go with that.

Mr. Cuzner normally has the next slot but he had to exit the meeting, so we're going to move on to Mr. Butt.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Thank you very much, Mr. Chair, and thank you to everyone for joining us today.

I have a different view of social enterprise and social finance. My view is that I've never seen it as a replacement for services that governments are mandated to provide, whether they at the federal, the provincial, or even the municipal level. My experience with social enterprise is usually that some very creative people in the community have recognized a niche need for something to support, often a vulnerable population that probably is already served through basic social services. We already have those networks in place, but because of the unique circumstances they are in, they are participating in a social enterprise model that is perhaps providing job training, vocational support, and some educational opportunities.

I'll give you an example that I'm familiar with in the city of Mississauga. It's called “destination café” where a group came together that is providing housing for persons with mental illness issues, while having those people work in a café. They're getting a job and they're getting housing, and they're still getting basic supports through the Ontario disability support program, which provides direct income support. This supplements and provides a bit of a training opportunity and some permanent housing for them. We all know how important secure housing is for people to be able to get their lives turned around. I want to get both groups' feedback on that. Am I getting it right? Is that not the real idea and model of social enterprise? Are these kinds of niche or specific grounded type programs not a replacement for services that are being provided and mandated by government?

Maybe we'll start with Mr. Voyer, and then Dr. Weber you can comment, and that will probably be my five minutes, Mr. Chairman.

Thank you.

[Jean-Pierre Voyer]

This is an opinion, and I guess I share your view in large part. My basic starting point is that the welfare state is under pressure everywhere, and whether you come from the left or the right, it's a fact, if you look at the trends. The instruments of social enterprise, social finance, social impact bonds all fulfill different objectives, but in general if the thinking is to use them to replace an established government program whose specific objective is to serve the population I think that's the wrong point to start with. But if these tools are used to trigger innovation in social policy—and God knows, we'll need some because the needs are growing more and more—and if they trigger more efficient service delivery...government or even non-profit organizations are not always a model of efficient service delivery.

If we can find ways to improve that without depriving them of funding, but if they're funded differently, so be it. The literature isn't conclusive. That doesn't mean that it's a bad way to go. We just have to go there with caution, and as we advocated a minute ago, you have to evaluate the best means of doing that as you go forward. There will be trial and error and there will be more errors at the beginning than successes, but eventually it may trigger inspiring moves from non-profit organizations that would otherwise not happen if they stayed with the traditional funding process.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Dr. Weber.

[Dr. Barret Weber]

I agree with the general idea there, that social innovation and social enterprises are not necessarily a bad thing, and I certainly wouldn't want my remarks to be misunderstood in that respect.

As I said, our focus is quite narrowly on the social service area, and I think part of what my talk would indicate is that we should be placing some pretty firm limits around what it is we are talking about, and what it is we are not talking about, because at the end of the day, when there is this kind of broad speculation going on, it impacts these grassroots organizations. The number one thing, I would say, is to keep an eye out as to how this affects not-for-profits, which now have to figure out how they are going to play in this new regulatory regime and how they can get up to speed.

One thing I would definitely advise—and this is something that comes out of the U.K. as well—is to make sure this sort of thing isn't understood to be mandatory, that you have to use some sort of social financing mechanism if you are going to receive the coupled government funds. That would be one of the big points I would make, because that truly undermines not-for-profits.

I have spoken with people in Alberta who have worked in the not-for-profit sector their entire careers as social workers, consultants, and so on. They are very much concerned that this kind of model changes the focus of not-for-profits from one that is, as I said, less bureaucratic and actually based on serving community needs, to one where all of a sudden you have not-for-profits that are concerned about delivering a profit to for-profit organizations that are involved in these arrangements in one form or another. That changes the fundamental mission.

I would say, again, look at the history of not-for-profits in Alberta. It's a unique one. It's not built around this idea of “let's see how big we can build the state” and all these sorts of things. In some ways, we've had a really interesting mutual back-and-forth between the government and these organizations that created a unique history in Canada. That is one of the ways we can justify saying that we focused almost exclusively on Alberta, because Alberta has a unique history in terms of delivering social services or preventative social services through groups like these. Our concern is very much Alberta-based. Whether there are implications elsewhere....

The last thing I would say in terms of the welfare state is that I just don't see governments doing a good enough job of securing the revenues needed to actually support these sorts of programs. The sky has been falling in Alberta for a long time. Why? It is because the case for proper taxation policies that would be able to deliver on the promises that are made to everyday Albertans has not been made. I think the current government change is an example of that, where the NDP was able to make a case for why increasing the corporate taxes could be beneficial to the average Albertan.

[The Chair, Conservative, Phil McColeman]

Thank you very much.

Now we move on to Madame Morin for five minutes.

[Marie-Claude Morin, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

I want to thank the witnesses for being here. Their testimony was very interesting.

Mr. Weber I thought what you shared about your own concerns with social finance was especially interesting. I would like to give you the chance to elaborate on that. Social finance is something that might be very interesting to community organizations and governments. I understand the principle, but I would like to know the other side of the story.

[Dr. Barret Weber]

Actually, the question is not clear to me.

[Marie-Claude Morin, NDP, Saint-Hyacinthe—Bagot, QC]

Yes, I can clarify my question.

I would just like you to go into more detail about your organization's concerns with social finance. Perhaps you could present both sides of the coin. There are positive aspects to this. I see that there are, anyway.

[Dr. Barret Weber]

Certainly. The positives are the promise that it brings in new money. That is enticing to everyone, whether you are a government, a not-for-profit, or a community. Everyone wants to bring in new moneys, so I understand that. If that's possible, great. Wonderful.

However, not to be gloomy or anything of the sort, but I think we should look at the real way this affects organizations. You are basically moving to a model where you have non-profits that look a lot more like for-profit organizations than perhaps they should. When you do that, you lose a lot of the distinctive features of the not-for-profits, especially their less bureaucratic nature, which I think is really important. Organizations become a lot more bureaucratic and have to learn all of this stuff.

I talk to a lot of people in the field who are concerned about all of the training this involves. Who is paying for this training? How are your local communities supposed to get educated in this when governments are threatening to earmark certain moneys only if they are attached to outside money. When that kind of stuff happens, that's concerning.

[Marie-Claude Morin, NDP, Saint-Hyacinthe—Bagot, QC]

Do you think we should be concerned about the community groups' autonomy?

[Dr. Barret Weber]

Certainly. No question about it, but the other side of it, in terms of this point of the current system not working very well, is that we have a larger conversation going on in what's called outcome service delivery. There are also some problems attached to that, in that the contracts from the Government of Alberta are coming with more and more strings attached. Organizations are also having issues in terms of having the accountants on staff and all of the technical services required to show you are measuring an outcome and that you've reached this outcome. Whether we go into social finance or not, even if we stick to what has become the traditional model in Alberta, it also has problems. That's a topic for another day.

There are also a series of issues organizations are facing with outcome service delivery, even if we just stick with the status quo. I readily admit that people are talking like that as well out here.

[Marie-Claude Morin, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you very much.

That is all. I have no further questions.

[The Chair, Conservative, Phil McColeman]

Thank you.

Thank you.

Now we move on to Mr. Armstrong.

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

Thank you, Mr. Chair, and I want to thank our witnesses for being here.

I'm going to start with Mr. Voyer. On the pilot project, can you give us an update on what has been accomplished so far? Could you focus on how we evaluate it. We set the goals and the private investor has some investment. There has to be some achievement. Also, we have the outside evaluator. What criteria are set? How do the outside evaluators investigate and get the data they need to say we're achieving the goals the project was supposed to achieve?

[Jean-Pierre Voyer]

Thank you. I'll let my colleague answer the first part of the question of where we're at.

[Sheila Currie, Principal Research Associate, Social Research and Demonstration Corporation]

For the project that Colleges and Institutes Canada is the proponent and the intermediary for, we're at the point where they have, as Jean-Pierre mentioned earlier, created a special purpose entity with which to administer the funds for the social impact bond. They have selected service delivery partners in the name of four colleges across the country. They're on the cusp of being able to make an offering to private investors for this social impact bond.

In getting there—and this is part of the complexity of social impact bonds—we needed to work together to determine benchmark levels upon which success would be measured. We did that based on evidence from previous essential skills training programs. Then we set graduated payment schemes so it gets paid, or it doesn't get paid. It gets paid at different levels based on varying degrees of success.

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

With the four separate institutions you've been working with, I'm assuming they were heavily involved in designing the evaluative process for this, were they not?

[Sheila Currie]

SRDC, as the evaluator, is designing the evaluation. We've been at the table with them from the start to talk about that.

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

Right. They've had some input at the front end because they're the ones who deliver the program. If they're going to be evaluating then they have to understand how the evaluation is going to work. Have they been contacted about that?

[Sheila Currie]

Yes. We were on board a long time before they were because they're a subcontractor to the proponents to the intermediary.

In terms of the success criteria, that was established by the funder. There's a standard scale for measuring literacy, and it's a 25-point gain on that scale. It's a very technical process determining the benchmarks and the graduated scheme, but that's a lot of the work that SRDC has been helping Colleges and Institutes Canada with up until this point.

[Jean-Pierre Voyer]

If I may add, we have three roles. That is a bit unusual, because if you look at the U.K. model, or other U.S. models, in the crime area the evaluator is more of an outsider presently. We have been playing the role of helping to set the framework and supporting the leaders. We have a second role of auditing whether the outcomes have been measured and reporting to the funder, so we're relied upon in that way. The third role you alluded to is the evaluation of the old initiative. What's the question here? The key question is whether this way of doing things is better than another way. This is hard to answer without running similar projects side by side, one that would be governed by a social impact bond and another one that would be governed by a traditional funding scheme.

In the absence of that, we're relying on our long experience evaluating the traditional way to provide comments on how well and how suitable the SIB model will be and how it performs. A lot of our report will consist of documenting the implementation—some have difficulties in raising the funds, or things like that—and what the investor expects. We hope that at the end our report will provide a lot of lessons learned, but it will not be a definitive type of report that says you are better off from now on offering these sorts of services with a SIB.

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

Right, so it's almost like a quasi-experimental study where you're going up against the previous data from the traditional way of implementing this type of training.

Moving forward, if you maintain the timeline that you've projected out, when are you going to be finished the pilot project? When can we expect that report?

[Sheila Currie]

I think the training will probably finish in early 2017 for the Colleges and Institutes Canada project, and then will come our evaluation. There's a longer term follow-up that we're required to do by our funding agreement 12 months after the end of the training, in order to determine whether or not the skill gains have been maintained over the longer term. So, it will be about a year after that before the final report is in.

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

Are we looking at the final report coming sometime in 2018, probably the fall of 2018?