Cross-Examination: Social Bonds - The Final Frontier?

Rebecca Hallas, leading contributor

IntroductionOne in six New Zealand adults have been diagnosed with a common mental disorder at some point in their lives. Depression and anxiety are particularly prominent. In the 2011/2012 New Zealand Health Survey, over half a million New Zealanders reported being diagnosed with these disorders.[1]12166509_10153734431733420_649895392_nThe use of anti-depressants has accordingly spiked in recent years, with the drug being prescribed to over 400,000 patients between 2012 and 2013. This is more than a 20% increase since 2008.[2]It is unclear whether these illnesses are spiking due to pressures of modern life, or whether the increased research in the area and general awareness is convincing people to come forward and seek help. Regardless, our health system is under unprecedented pressures to meet the demand. Consecutive governments have attempted to meet this problem, with the latest suggestion being National’s proposal to implement an unfamiliar concept: social bonds.National’s ProposalSocial bonds allow private investors such as banks, businesses, or philanthropists, to invest money into any specific public service (in this case, mental health services). They are given targets to meet by the government: returning a particular number of people into the workforce, for instance. Should they meet these targets, they will be paid back their investment, plus a return (up to a certain amount of money) depending on how much they have achieved.The idea behind this specific social bonds scheme is to get more people with mental illnesses healthy again, and into employment. There is clearly a need for this. The World Health Organisation (WHO) has found that “mental and psychosocial disabilities are associated with rates of unemployment as high as 90%”.[3]The GoodThere are benefits to this new idea. It is a risk-lite approach, as noted by National Party Minister for Health, Jonathan Coleman: [4]

One of the benefits of social bonds is that they protect service providers by shifting financial risk away from the providers and on to investors who provide the funding and who are better placed to absorb risk. This allows the Government to pay for results and to access the expertise and local knowledge of NGOs and service providers without exposing them to financial risk that they cannot necessarily bear.

Since taking office, the National government has increased total spending on mental health by over $200 million.[5] The Minister of Finance has expressed no qualms about the potential increase in costs if it produces results — especially considering that the success of social bonds could save taxpayers money in the long-term: [6]

We don’t mind it being more expensive if we get results. … If we can get a handful of people — 5% of people — off the track they are on to 20 years on a very low income, socially isolated, their mental condition getting worse, if we can change that, then we are willing for it to be a bit expensive, because we save an awful lot in the long run.

The Not So GoodThere have been adverse responses to the level of government control over Non-Governmental Organisation (NGO) decision-making in recent years. In exchange for their finances, the government has formed often rigid contracts with NGOs to procure results. Constant requests for reports, as well as audit regimes, have left NGOs frustrated, and this has further inhibited innovation.[7] In spite of this, NGOs have continued to formulate innovative ideas within the restrictions of their contracts and NGOs in New Zealand have been praised abroad.It begs the question: why would we introduce a middle-man? This baffled Annette King, the Labour Party’s Health Spokesperson:[8]

What they’re saying is, they’re going to get banks… to stump up the funding to these NGOs, to provide the services. And if the NGOs meet the targets set for the social bonds, then the reward goes to the banks. It doesn’t go to the NGO provider. They get the money, they are required to meet particular outcomes. Why would we not just fund the NGOs and the public health sector that provides services, directly? Why have a middle-man making a profit off of them? Every bit of money that’s paid to them as a profit, is money that’s not paid to health. Of course you can get innovation, and I’ve seen huge innovation in health, and in mental health, but you don’t get it if you starve them of funding, and you keep retrenching, and that’s what the mental health sector has faced.

With social bonds, a new form of paternalism is being introduced. Instead of the government consistently requesting reports and monitoring progress, it will now be private investors, who have money at stake and profits to be made. The desire for profits could potentially lead to serious pressure, restrictions, and monitoring by investors —the complete opposite of what apparently drives innovation.Further, it removes the control over mental health services from those who actually have experience and expertise in the area. Of all the people who should be making decisions about how to help the mentally ill, it should surely be trained professionals with the qualifications to do so.Of course, mental health support providers themselves could embark on social bond contracts with the government. However, in contrast to banks and businesses, they have less of a financial safety net to fall on if they fail to meet targets. Additionally, when asked by Green party MP Jan Logie if he could guarantee no NGO embarking on a social bond contract would go under as a result of not meeting targets, Mr Coleman simply stated the Government could not provide any guarantees to service providers.[9]How is success measured?The current aim is to get more people into the workforce. Certainly, if increased numbers of those struggling with mental illness begin entering the workforce, it would appear the scheme has been a success. But what of those who enter the workforce, only to quickly leave again?Annette King noted Mr Coleman’s insistence that the government would only pay private investors if their ventures were successful, and questioned how this success would be measured:[10]

What will be the measure of success? Now, for mental health this is getting people who are mentally unwell, into work. Now what is the measure of that? Is it for a week? Is it for a year? When do they pay the bonus back to the bank? Is it after five years?

Another issue highlighted by King was that private investors may attempt to target more easily-assisted mental health patients, while ignoring those in need of more serious care.This sentiment was echoed by Kevin Hague, the Green party’s spokesman for health, who noted that this problem is “well-established and frequently observed” in the context of full-profit providers/funders associated with the provision of health services:[11]

With social bonds, where there is a profit motivation, you almost always will find that there’ll be versions of cherry-picking or cream-skinning going on. And of course, that’s the last thing we need in mental health services where people’s needs tend to be very individual and often idiosyncratic. So doing as many of whatever ‘thing’ the contractors are contracted to provide, as possible, will tend to be an approach that mitigates against quality and mitigates against those with the most complex needs.

Mr Coleman has insisted that this will not be the case, stating that the government will have control over the targets, and ensure they are met.[12] However, he did not elaborate on how they would do this. It is likely control over cherry-picking would require a form of compliance monitoring, which has been abhorred by Mr Hague:[13]

You end up with a sort of cat and mouse game, where the providers tweak their systems to be able to cherry-pick some more around the rules, and then regulators have to up their game in terms of regulations, to outlaw that particular method, and then the providers do it again, and what you see is an enormous amount of wasted effort and resource going into compliance monitoring.

Similarly, Mike O’Brien, Auckland University Associate Professor of Social Work and member of the Child Poverty Action Group’s management committee, was concerned with the concept of applying market principles to the delivery of social services:[14] 

There's a real danger and a risk that agencies provide services and undertake tasks that simply meet the outcomes which may not have too much to do with what the fundamental needs are.

Discrimination12167400_10153734431393420_72283857_nIn spite of improvements, negative public attitudes towards mental health are still prevalent within society. While roughly 75% of Kiwis would be comfortable living next to those of different races, religions, and sexual orientations, almost half of New Zealanders would not feel comfortable living next to someone with a mental illness.[15]Mr Coleman stated that the first social bond will insert employment experts into general medical practices, in order to help mental health patients enter the workforce.[16] However, it is unclear if this will assist the deeper issue of discrimination already present in the workplace.Natalie Khin-Carter, a clinical psychologist who has previously worked at Counties Manukau District Health Board, has noted how the workplace can adversely affect mental health:[17]

A lot of people with anxiety, often are affected by anxiety due to pressures at work. I’ve seen it so many times, where a lot of the people that I do see are high-functioning and in high positions in work, and then as soon as they show weakness, or need time off of work to get themselves back in place, all of a sudden they’re kind of tarred with a brush of not being able to cope. Unfortunately, I think for people that come to therapy sessions, [they] also have this sense of being weaker in some way. So what happens is, with the transition back into work, they’re still a little wobbly, so it’s a real knock to the confidence. And always the concern for a lot of people is – ‘what do I tell people when I go back to work, people are going to want to know what’s wrong with me. I think it’s improving, but I don’t think it’s improving as much as it could be. Certainly, I try and say to my clients, you know, if you had a broken leg, would you have any problem about having time off work? No. Because it’s visually there, and people can see it and it’s okay to have a broken leg. But because mental health isn’t physical, and people might seem like they’re coping okay, which is masking it, then it’s more difficult for people to understand.

And this fear of appearing ‘weak’ at work is not gender-specific:[18]

For women… I think their battle is more… being out of the workforce because they’ve had children, getting back into the workforce, and then struggling a bit, and having to go out… [And also] not being able to say no, so they’re probably taking more on than they should. And I think that’s the biggest issue for women particularly, often they’ll go into the workforce part-time, and they’ll end up doing more than part-time, but can’t say no because they feel like, you know: ‘I’m lucky to be here, I need to prove myself’, that worthiness. And so they get burnt out really fast.Particularly for males I think, there is that sign of weakness. You know that, ‘what’s wrong with me? I can’t pull myself together’ kind of thing. [Men] don’t want any letters sent to their workplace that’s got ‘depression’ or ‘anxiety’ or ‘mental health’ mentioned in it.

Similarly, Kevin Hague was dismissive of the notion that social bonds would be effective in relieving mental health-based discrimination in the workplace:

You could probably imagine that you could use social bonds to run a campaign [such as] Like Minds Like Mine. But, I find it hard to imagine that the social bond funded program would provide that service sufficiently more efficiently than a public service orientation of that program, to actually provide the return on the bond. So in other words, the sort of basic assumption on which social bonds are advanced, essentially fails, and certainly, addressing discrimination in a social bond funded program around employment, would be a classic case of something that’s really hard to measure. Sure you could write it into a service, but how would you know if they’ve done it or not, or how effectively they’ve done it. So you know, anything that’s about quality of service is going to be compromised in a social bond funded program.

12167787_10153734431723420_1478989388_nInternational ComparisonsJonathan Coleman has insisted that the profit-based scheme will “sharpen everyone’s minds” and procure results.[19] However, this suggestion has been heavily criticised by opponents.Kevin Hague noted that the United States’ healthcare system was a system “more or less entirely profit-motivated” and was “arguably the least effective health system in the world”.The statistics reflect this. According to a World Mental Health (WHO) survey, the United States had the highest prevalence of mental disorders out of the 17 countries surveyed.[20]New Zealand had the second highest prevalence of mental disorders. If we are to improve our position, it appears that following the American method of making healthcare profit-motivated might only worsen the situation for those with mental illnesses within New Zealand.Further, Annette King noted there has been a lack of overseas evidence to demonstrate that social bonds are a prominent instrument in delivering social outcomes:[21]

I spoke with The King’s Fund, which is the foremost health research organisation in Britain. And I asked them what research they’ve done into social bonds, because, as you know, social bonds have been tried in the UK, and they replied that they’d done none, because it had not become a major tool for the provision of social services.

Similarly, the Red Cross withdrew as a potential investor, citing a lack of available data on social bonds.[22]Furthermore, a report by the New Zealand Initiative has noted the ambiguous results of international trials of social bonds, stating it is not yet established whether social bonds can achieve better social outcomes.[23] They also drew attention to the fact that investors in social bonds schemes in the UK were “dominated” by philanthropic foundations, investing in projects similar to their previous work.[24]In New Zealand, rumoured investors have been ANZ and Westpac. When questioned on this, Mr Coleman would not confirm anything and referred to commercial confidentiality.[25] Should New Zealand embark on a social bonds scheme, following the approach taken in the UK may be more beneficial than engaging in contracts with banks. Many UK philanthropist organisations that have embarked on social bonds were already coming from a place of charity and compassion, and also had previous experience in dealing with the social problems they attempted to rectify.[26]Indeed, Kevin Hague noted that the ethos of mental health programs such as Like Minds, Like Mine are “antithetical to profit motivation”.The Public Mental Health SystemAdverse childhood experiences, such as socio-economic disadvantage, abuse, and social isolation, have all been associated with a higher risk of depression. The link between socio-economic disadvantage and mental illness is further demonstrated by adults living in deprived areas, who are more likely to be diagnosed with a common mental disorder.If those from lower socioeconomic backgrounds are more prone to suffering from mental illness, then we need an affordable yet efficient public health system to assist them. Unfortunately, our public health system is currently under enormous pressure.Between 2010 and 2011, 137,346 New Zealanders accessed mental health and addiction services.[27] District Health Boards were the largest providers of mental health services, demonstrating a high demand for assistance with mental health problems from the public sector.[28]There are two ways in which individuals in New Zealand can access non-private healthcare: [29]

  1. The public health system. There is limited therapy available through the public system, and it is often only accessible by those with serious mental illnesses. For less severe cases, people are often put on waiting lists for long periods of time. Waiting lists appears to be the main problem with the public health system.
  1. Non-governmental organisations. These organisations often have their own eligibility criteria. They also sometimes have limitations on how much help can be accessed. For example, the University of Auckland provides 12 one-hour sessions of counselling services to a limited amount of students per year, at a lower cost than that of private healthcare.[30]

What is wrong with our public mental health resources?Amongst the Parliamentary debates between politicians, there has been a notable lack of input from those who directly work in the field of mental health.Khin-Carter explained the process of entering the public mental health system:[31]

When you get committed into a community mental health service, you get triaged depending on the severity of what your problem is. Initially you’ll go through a social worker or a nurse, that will do some kind of assessment, and then you’ll see a psychiatrist who will do the meds, and then depending on what they think your needs are, you might be given a clinical psychologist for a certain amount of time – so maybe six to ten sessions if you’re really lucky, at a push. And then, depending on the needs outside, it might mean that you have a social worker to help you perhaps look at jobs, just day-to-day stuff that’s really hard, particularly for people that are really depressed. And OT – occupational therapists, if there’s some physical, special needs that you need as well. So basically they are very well looked after, because you have all these different professionals looking after you.

So far so good. But she noted the high threshold required to access the system:[32]

First off, it’s really hard to get into a mental health service, you have to be quite chronically unwellthey wouldn’t meet mental health service criteria unless they were suicidal, and quite badly so. That means that a lot of people will not meet that threshold. Secondly… there’s maybe two clinical psychologists in the whole mental health service, so you can imagine the workload from a psychological perspective. You can only take on so many people. So there’s a big wait-list. So it might mean that they get on meds by the psychiatrist, but therapeutic interventions are not going to happen straight away.

Essentially, those accessing the public health system need to be extraordinarily ill in order to get help immediately, and even then they may have to wait before therapeutic intervention begins. Additionally, the number of counselling sessions available is limited.What of those who are not chronically ill, but still struggling? Do those in the middle slip through the cracks? According to the National government’s policy information: “nine out of ten young people, under twenty, who need non-urgent mental health or addiction treatment are being seen within eight weeks”.[33] While this is apparently an improvement, the two month wait for treatment is somewhat startling. Further enhancement of the speed at which people are seen for mental health problems is necessary.Room for ImprovementPrevention was heavily emphasized by Khin-Cater. She pointed to the “Friends” program that was rolled out in schools across Auckland:[34]

They were delivering cognitive behavioural therapy through phones. So seeing if there’s any help with, I guess, prevention of depression in young kids and adolescents, by getting in there first before anything sort of, falls apart… It also was really useful in picking up people that were, could have, potentially, slipped through the gaps.

What of those who are already ill? At the heart of the issue is the heavy workload sustained by those in the public sector. The amount of people entering clinical psychology is heavily restricted: the University of Auckland only accepts eleven applicants at the most into their clinical psychology program every year.[35] The University of Otago accepts only ten.[36] Furthermore, psychiatrists and clinical psychologists must attend a certain amount of annual workshops are compulsory in order to ensure they remain aware of developments in their field. And while, as Natalie notes, they get “good, intensive training”, the limited numbers accepted mean there are few of these highly-skilled clinicians within New Zealand. Comparatively, other workers in mental health have no further training requirements past their initial degree:[37]

Occupational therapy and social work, particularly social work, I think they could tighten up. They’ve got a lot to cover, social workers that work in the mental health sector, they probably need some tighter training in mental health. [They] sort of get thrown into the deep end with people who are suicidal, people with crises, and they don’t know how to manage. They get thrown in, because we’re really short of people – and that’s the other thing, mental health services are really short on workforce. And that’s the problem. So I would go for the workforce first. Because if you’ve got a good tight workforce, then mental health in itself is going to be treated better.

She notes the Werry Centre, aimed at improving child and adolescent mental health, is making strong improvements:[38]

“The Werry Centre, which is a child and adolescent workforce development, they’re working really hard and that’s being funded by the Ministry to tighten up, and upgrade the training that the child and adolescent mental health services are having.”

However, these types of improvements are costly:[39]

There is a massive need for funding in mental health. And when I say funding I mean for training mental health professionals, for upskilling mental health professionals, for research in the area. And I certainly know from my university days, to get a grant, to get funding to roll out some useful research project was really difficult. You know, [the “Friends” program] that was expensive. I think it was the Ministry that funded that. But certainly it required ongoing funding for a long time. But it had some really positive effects.

Similarly, a report by the Platform Trust, a national network of mental health and addiction support service NGOs, discussed the dwindling clinical mental health and addictions workforce.[40] They noted the inability of the current New Zealand clinical workforce to respond to the public need: [41]

In the mental health and addiction arena, community services receive one-third of the sector’s funding. Greater investment in a frontline community workforce is needed if New Zealand is to have a sustainable mental health and addictions service into the future.

An area that causes so much harm to New Zealanders should surely receive more funding: mental disorders are the third leading cause of health loss for New Zealanders, just behind cancers, and blood disorders.[42]Increased funding directly into services is appears to be the Labour party’s approach; Annette King notes that they believe money going into mental health should be ring-fenced.Similarly, the Green Party is against any introduction of social bonds into the health sector, and instead aim to approach health from all aspects of an individual’s life:

It’s a very holistic way of seeing people’s needs. It’s client-centric, or person-centric. So what that particular person needs is what we aim to provide. And it’s kind of cross-central, so it would involve public policy in all realms – so income support, housing, and a bunch of other things, not just health services. It also aims to improve the social environment that people with mental illness experience. So Like Minds Like Mine, and other programs like that.

ConclusionThe jury is still out on social bonds — the relative newness of the idea makes it unclear as to whether it would be beneficial to the health sector. However, it is clear that there are some serious potential issues with the scheme that would need to be addressed prior to implementation, should the government go ahead with social bonds.Furthermore, there is a desperate need for increased funding in the mental health sector – whether that be through social bonds or direct government funding is still unknown. Up-skilling of the professionals in the public health sector, as well as increased numbers of clinical psychologists available to assist those who cannot afford private healthcare would be hugely beneficial in improving treatment and lessening waiting times. As noted above, mental health problems are the third leading cause of health loss for New Zealanders. Such a dominant problem in the health of New Zealander’s deserves more attention.


[1] “Quick Facts and States 2014” Mental Health Foundation New Zealand <>.[2] “Quick Facts and States 2014”.[3] World Health Organisation “People with mental disabilities cannot be forgotten” (press release, 16 September 2010).[4] (2 June 2015) 706 NZPD 4165.[5] National “Health: Mental Health” <> at 1.[6] TVNZ “Bill English: Social Bonds may cost taxpayers more” (press release, 7 June 2015).[7] Janet Peters “Frontline: The community mental health and addiction sector at work in New Zealand” (February 2010) Platform <> at 11.[8] Interview with Annette King, Health Spokesperson for Labour Party (Rebecca Hallas, Equal Justice Project, 11 September 2015).[9] (2 June 2015) 706 NZPD 4165.[10] Interview with Annette King, above n 10.[11] Interview with Kevin Hague, Health Spokesperson for Green Party (Rebecca Hallas, Equal Justice Project, 25 August 2015).[12] Isaac Davison “No cherry-picking in mental health bonds – Coleman” The New Zealand Herald (online ed, New Zealand, 2 June 2015).[13] Interview with Kevin Hague, above n 13.[14] Kate Gudsell “Social bonds: dangerous experiment or better services?” Radio New Zealand News (online ed, New Zealand, 2 June 2015).[15] Regan Schoultz “New Zealanders accepting of race, religion but not mental illness” The New Zealand Herald (online ed, New Zealand, 26 May 2015).[16] (2 June 2015) 706 NZPD 4162.[17] Interview with Natalie Khin-Carter, clinical psychologist (Rebecca Hallas, Equal Justice Project, 22 September 2015).[18] Interview with Natalie Khin-Carter.[19] Davison, above n 14.[20] Ronald Kessler and others “The global burden of mental disorders: An update from the WHO world Mental Health (WMH) Surveys” US National Library of Medicine <>.[21] Interview with Annette King, above n 10.[22] Stacey Kirk “Controversial social bonds pilot could take seven years to deliver results” Stuff (online ed, New Zealand, 1 July 2015).[23] Jenesa Jeram and Bryce Wilkinson “Investing for Success: Social Impact Bonds and the Future of Public Services” The New Zealand Initiative 2015 <> at 15.[24] At 15.[25](1 July 2015) 706 NZPD 4978.[26] Jeram and Wilkinson, above n 25, at 15.[27] “Quick Facts and States 2014”, above n 1.[28] “Quick Facts and States 2014”.[29] “Funding Sources” Talking Works <>.[30] “Our services” The University of Auckland Clinics <>.[31] Interview with Natalie Khin-Carter, above n 19.[32] Interview with Natalie Khin-Carter.[33] “Health: Mental Health”, above n 4, at 2.[34] Interview with Natalie Khin-Carter, above n 19.[35] “Clinical Psychology” University of Auckland <>.[36] “Clinical Psychology Program” University of Otago <>.[37] Interview with Natalie Khin-Carter, above n 19.[38] Interview with Natalie Khin-Carter.[39] Interview with Natalie Khin-Carter.[40] Peters, above n 9, at 8.[41] At 8.[42] “Quick Facts and States 2014”, above n 1.


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