Thank you very much. I'm at a slight disadvantage in that I'm not fully aware of what you've covered in past hearings, but I will try to build on what I've heard.

My interest is in social impact bonds and their rationale. I think the appeal of social impact bonds is fairly straightforward for service delivery agencies, which if they're fortunate enough to participate, could have fairly guaranteed funding for the length of time of the so-called bond. There's also an appeal to the financing agencies because, if deliverables are met, then there is a rate of return to those financing agencies, whether they be social or private.

The key to government interest, I think, comes from a number of directions. One is that with fiscal austerity, governments are looking for alternative sources of funding. In the longer term, however, if social impact bonds are successful, the government will be on the hook to pay for five or seven years of services, so there are fiscal implications in providing that upfront. These have not yet been worked out in any great detail, to my knowledge, so there may be fiscal constraints in even entering into these agreements.

The real question to me is why government would not require performance of all the services it delivers, and why we need to enter into these fairly complicated arrangements, as we've heard, to achieve those savings and improvements in efficiency. My own approach is somewhat skeptical. I can see the attraction, especially to social service agencies. In terms of charitable foundations that are simply moving money from one approach to service delivery to another approach to service delivery, I don't believe there's any net increase in resources from doing that.

I think there are serious questions, as we've heard earlier today, about how you lay out the requirements for performance and get that right in terms of the incentive. I think that's probably the most important and difficult area, because savings can take many forms. They can take the form of additional revenue or they can take the form of reduced costs, and costs could be operating or overhead costs. These can be quite difficult to deal with.

I think the people who are skeptical of social impact bonds often argue that they could be used to undermine public sector employment and public sector wages, and they're quite cautious about that.

There's been a fairly slow start to the launch of the bonds. There may be between 30 and 60 globally; it is difficult to know how many. The last data I had put them at about 30 at the end of last year, with 30 in the works. That slow start, I think, points to a number of difficulties in terms of risks of financing and in terms of governments being able to successfully negotiate performance indicators.

So my conclusion would be that they make promises that are very attractive, especially to social service agencies, if they do deliver. They could be attractive to government. Many of those claims are made anyway by regular government spending. If you put money into early childhood intervention and you're successful, you save many times the money you've invested, whether or not you've used social impact bonds.

I would argue that the first priority should be improving the funding and delivery of services in and by the public sector, and that should be a priority over pursuing and creating enabling environments for social impact bonds.

Thank you.

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