Payment by Outcomes Trials

The Government has committed $15.7 million from 2019-20 to 2026-27 to co-develop, implement and evaluate 3 Payment by Outcomes (PBO) Trials in the social services sector.

PBO is a form of social impact investing (SII) contract, between a funder and service provider. In the PBO Trials, the contract funder is the Government. In the PBO Trial contracts, service providers are paid part of the contract fees upfront and part on achievement of agreed outcomes.

As such, the service provider takes on more of the risk for achieving the outcomes than under a traditional grant arrangement.

The objectives of the PBO Trials are to inform:

  • the appropriateness and efficiency of PBO contracts 
  • how to improve the design and use of robust outcome measurement
  • whether the PBO Trial contracts are suitable funding tools in social services
  • whether the policy focus areas tested are suitable for PBO contracts.

The learnings will inform future potential funding arrangements and community sector reform.

The three PBO Trials were co-developed and are being implemented and evaluated with service provider partners. 

PBO Trial 1 - Many Rivers Microenterprise

Many Rivers Microenterprise aims to support unemployed or underemployed persons into employment. They foster this by supporting microenterprise development and self-employment. PBO1 aims to improve outcomes in: 

  • workforce skills 
  • business planning and development
  • employment opportunities.

The PBO1 payment model was co-developed between July 2020 to early 2021. It outlines the program requirements, including:

  • service delivery will occur from July 2021 to December 2025
  • participants will include up to 390 unemployed or underemployed people who have recently been receiving income support and aim to establish their own business
  • funding of up to $3.8 million can be earned - Many Rivers must achieve outcomes well above what is expected based on co-development modelling
  • final outcome measurements will occur six months after project delivery, to June 2026
  • outcome payments will be made against Business establishment and Welfare reduction.

PBO Trial 2 – 54 Reasons – Save the Children Australia

54 Reasons - Save the Children Australia aims to support families to improve school readiness and increase school participation.

The PBO2 payment model was co-developed between March to July 2021. It outlines the program requirements, including:

  • service delivery will occur from December 2021 to 31 March 2026
  • participants will include up to 300 eligible 3-4 year old children from families in Tasmania that hold a Concession Card and who are not engaged in early learning
  • funding of up to $3.8 million can be earned - 54 Reasons must achieve outcomes well above what is expected based on co-development modelling
  • final outcome measurements will occur after project delivery has ended, to 30 September 2026
  • outcome payments will be made against engagement in the program, attendance at the Launching into Learning activity, and Kindergarten Development Check achievement.

The following report, Tasmanian Play2Learn+ Trial: Evidence Review outlines existing evidence relating to the long-term impacts of early childhood education on health and wellbeing outcomes as well as potential savings for state and federal governments in avoided costs (as a result of school readiness and improved school participation), and increased revenue (as a result of improved lifelong outcomes for children). The report was commissioned to provide an evidence base for the PBO Trial 2 Project.

PBO Trial 3 – White Box Enterprises

White Box Enterprises aims to deliver long-term employment outcomes for jobseekers experiencing significant barriers to employment through Work Integrated Social Enterprises (WISEs). Three private sector investors are supporting PBO3.

Up to 17 WISEs provide wrap-around support services to help job seekers, mainly those with a disability,  overcome barriers to employment. The program will help participants gain and maintain stable employment, with the aim to transition to the open job market. 

The PBO3 payment model was co-developed between March to November 2021. It outlines the program requirements, including:

  • service delivery will occur from July 2022 to September 2025
  • participants will include up to 170 people with significant barriers to employment, including disability, currently receiving income support and experiencing unemployment
  • funding of up to $3.8 million can be earned - White Box must achieve outcomes well above what is expected based on co-development modelling
  • final outcome measurements will occur after project delivery has ended, to March 2026
  • outcome payments will be made against employment retention in the WISE, and transition from the WISE to competitive employment.

Contact:

SocialImpactInvesting@dss.gov.au

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