By Canadian Press

Liberals set to unveil social-finance strategy, including $755M in new fund

Jun 12, 2019 | 2:07 AM

OTTAWA — The federal government is to unveil its promised strategy today, planning to use hundreds of millions of dollars in federal funding to finance new, experimental ways to deliver social services.

Social Development Minister Jean-Yves Duclos is scheduled to make a mid-day announcement in Montreal.

The Liberals have been crafting a strategy for social finance, as it’s known, for years, hoping to bring private money into social services governments provide themselves or directly fund.

Under the concept, private backers partner with a group or organization to fund new ways of helping people improve their job skills or health, for instance, with public dollars flowing in if the partnership produces measurable results.

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What makes the approach attractive to governments is that it shifts financial risk from taxpayers to investors and can turn up more efficient ways of providing social services.

Finance Minister Bill Morneau’s fall update included $755 million over 10 years to be seed money for groups that provide services such as housing the homeless or training hard-to-employ people with new skills.

The idea is that as loans seeded with federal money are repaid, local intermediaries could hand out more loans and entice traditional lenders to open their wallets. And some of the money will come back to federal coffers.

The Liberals hope the spending blossoms into $2 billion in economic activity and creates or maintains up to 100,000 jobs over the next decade.

But the development of the strategy appears to have been more rocky than efficient, according to multiple sources with knowledge of the behind-the-scenes talk who have spoken to The Canadian Press under condition of anonymity in order to detail private events.

Problems appeared to arise late last year when officials from Employment and Social Development Canada, which Duclos oversees, and the Finance Department disagreed sharply about how the government should use the $755 million.

The last version of the plan suggested a fund manager and secretariat be housed inside ESDC with an advisory council of external experts making funding recommendations. Sources say the first bit of money — $50 million to help groups learn how to gain access to larger government sums — was expected to roll out this summer.

Less clear is whether the strategy will include changes to the tax system that an expert panel called for last summer.

The government-struck panel called in its final report last August for a rewrite of tax rules to help non-profits set up socially motivated companies or take part in social-finance initiatives without fear of losing their tax-exempt status.

The Canadian Press