The Federal Government announced in the 2017-18 Budget context a number of initiatives to encourage the continued development of the SII market in Australia, including funding of $30 million.
By pure coincidence, the Government also gifted $30m to Foxtel. The difference between this and Foxtel’s $30m is that Foxtel will get it over two years, while SII will have to wait ten years – Ed.
The government’s package includes funding of $30 million over ten years, the release of a set of principles to guide the Australian government’s involvement in the SII market, and notes that the government will continue to separately consider ways to reduce regulatory barriers inhibiting the growth of the SII market.
Social Impact Investing, the government says, is an emerging, outcomes‑based approach that brings together governments, service providers, investors and communities to tackle a range of policy (social and environmental) issues. It provides governments with an alternative mechanism to address social and environmental issues whilst also leveraging government and private sector capital, building a stronger culture of robust evaluation and evidenced-based decision making, and creating a heightened focus on outcomes.
It is important to note that social impact investing is not suitable for funding every type of Australian government outcome. Rather, it provides an alternative opportunity to address problems where existing policy interventions and service delivery are not achieving the desired outcomes. Determining whether these opportunities exist is a key step in deciding whether social impact investing might be suitable for delivering better outcomes for the government and community. Government agencies involved in social impact investments should also ensure they have the capability (e.g. contract and relationship management skills, and access to data and analytic capability) to manage that investment.
The principles (available in full here) acknowledge that social impact investing can take many forms, including but not limited to, Payment by Results contracts, outcomes-focused grants, and debt and equity financing.
The principles reflect the role of the Australian Government as an enabler and developer of this nascent market. They acknowledge that as a new approach, adjustments may be needed. They also acknowledge and encourage the continued involvement of the community and private sector in developing this market, with the aim of ensuring that the market can become sustainable into the future.
Finally, the principles are not limited by geographical or sectoral boundaries. They can be considered in any circumstance where the Australian Government seeks to increase and leverage stakeholder interest in achieving improved social and environmental outcomes (where those outcomes can be financial, but are also non‑financial).
Accordingly, where the Australian Government is involved in social impact investments, it should take into account the following principles:
- Government as market enabler and developer.
- Value for money.
- Robust outcomes-based measurement and evaluation.
- Fair sharing of risk and return.
- Outcomes that align with the Australian Government’s policy priorities.