Ottawa looks to private sector to help fund social programs

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Diane Finley (CP)

OTTAWA -- The federal government wants to tap into a "gold mine" of private-sector funding to finance its social programs -- a new approach the New Democrats are dismissing as little more than budget cuts in disguise.

Human Resources Minister Diane Finley launched a "call for concepts" on Thursday, asking businesses, not-for-profits and the volunteer sector to come up with fundamentally new ideas for jointly financing improvements in the lives of the needy.

The launch is a tentative step into the realm of social financing -- an approach that is being tested in the United Kingdom and the United States. It invites private-sector investors to provide up-front money and then collect a return on projects government traditionally pays for, such as homelessness or hunger.

"It's our first official step in inviting your ideas to the table that can help shape future social policy in Canada -- in a new way," Finley told a Toronto forum.

"It's time for us to unleash individual initiative so that those who are motivated can help others, and those who need help are given the opportunity to take more responsibility for themselves."

The government wants to collect ideas until the end of the year and then, if all goes well, put out a call for proposals or identify pilot projects. Eventually, Finley foresees a broader "social partnerships" strategy.

"It's really community leaders who can best understand their local challenges, identify solutions and get results," Finley said.

"This is why it is so important for us to work better with business and voluntary sectors, foundations and not-for-profit groups. That's the gold mine I'm talking about -- and the one we need to tap into."

The Opposition NDP immediately attacked the idea, accusing the Conservatives of privatizing social services for ideological reasons, based on a model that has flopped in other countries.

"What they're proposing is a public relations exercise to justify new cuts to services for Canadians," said party whip Nycole Turmel.

Interim Liberal Leader Bob Rae, however -- who as Ontario premier approved the private-sector construction of the province's first toll road, Highway 407 -- was less quick to dismiss the idea of public-private partnerships, or P3s.

Indeed, he described the NDP's reaction as "ideological claptrap."

"You have to look at the circumstances under which it's done and look at it from a practical perspective," Rae said. Highway 407, which was eventually sold off and is now privately run, was a good example, he added.

"P3s have had a pattern of success in different provinces in different situations."

Finley has repeatedly rebuffed pleas for a national approach to housing and poverty, arguing the federal government is not best placed to deal with issues that often have local nuances.

But at the same time, since the federal government provides significant funding for affordable housing, homelessness initiatives and other key social programs, Ottawa is deeply implicated in social policy whether it likes it or not.

Finley suggested she was frustrated with the lack of progress in social programs, and wants to dramatically re-arrange the system so there are incentives to deliver better results.

Social-impact bonds are one approach, she said. Such bonds are backed by the government and would raise financing for money-saving solutions for local social problems.

The theory is the private sector would provide the capital, a not-for-profit organization would do the actual work and the government would pay the bill at the end of the day. If the program's objectives are met, the government would pay a premium.

Finley said officials are now at work identifying barriers to social-impact bonds, with the intent of tearing them down. They are also assessing the appetite of the private sector to bankroll such an effort.

Finley is open to other ideas as well -- proposals that would see the private sector and charities providing expertise and funding for solutions that can deliver concrete returns.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition November 9, 2012 A17