Weatherill government appoints committee to drive push for private social welfare via investment bonds TOUGH social welfare problems which drain taxpayers' money will be targeted using private sector money and services in a policy being developed by the State Government. Children at risk and elderly people who want to stay out of hospital are among the groups which would benefit from the innovative scheme. The children would be helped to remain with their families instead of going into expensive government-funded care. while the aged would receive services so they can live longer in their own homes. In the scheme, so-called social investment bonds are purchased by investors who want an ethical outcome as well as a decent return from their money - in a move designed to simultaneously create savings for the government. The concept is similar to the public-private partnerships used for infrastructure but with the cash used for social services instead of bricks and bitumen. The idea has recently been trialled in other parts of the world, including NSW, and the State Government has now established a committee to advise on how to bring the scheme to South Australia. "The cost of putting a child in alternative care can be upwards of $250,000 a year," Premier Jay Weatherill said. By keeping children out of that alternative care, the Government would make significant budget savings over time - part of which would be paid back to investors. There's plenty of scope, if you get a better social outcome, for saving quite a lot of money. Some of those solutions will require up-front investment which is where the private investor comes in. If we can bring private money into helping us solve some difficult social policy issues, then we think that's a very positive thing. The concept began in 2010 in Britain where there was a problem of criminals reoffending when they left Peterborough prison in Cambridgeshire. The bonds funded recognised charities to work intensively with prisoners to reduce the 60 per cent recidivism. Last year in New York, Goldman Sachs ran a $US9.6 million program funding services to prisoners from Rikers Island prison. If the four-year project works, investors will gain more than $US2 million but if it fails they will lose $US2.4 million. In Australia, the NSW Government was first to move, setting up what they called social benefit bonds. A Uniting Care program to help break cycles of destructive family abuse and neglect raised $7 million in April. Investor returns will be determined by whether the project successfully keeps families together as measured against the independent decisions of the NSW Children's Court. A second bond program has raised $10 million to help 400 families over four years in a project involving Westpac and Commonwealth banks and the Benevolent Society. In Adelaide, the Wyatt Trust has been instrumental in advancing the concept. The trust, established in 1886 by surgeon, public servant, land speculator and benefactor William Wyatt, sees the bonds as a way of making its money go further. Chief executive Paul Madden said giving grants was always limited because the trust could not afford to erode its capital. "There's a groundswell internationally around investments which have the potential to pay good financial returns but also produce good social dividends," he said. In NSW, part of the investor funds can generate returns of up to 30 per cent. Mr Weatherill said the scheme needs criteria to be agreed at the outset and be reliably measured independently. The scheme, which will be guided by Health Minister Jack Snelling, would not involve privatising existing government services but would have to be new programs, he said. Former public servant Brenton Wright, who is on the advisory committee, said private enterprise had more flexibility than government to trial projects. SA Council of Social Service executive director Ross Womersley said the concept was well worth exploring provided it did not detract from services the government should provide. Mr Weatherill anticipates having a policy ready before the March election and the first project running within a year.