Failing to help a struggling child costs New Zealand hundreds of thousands of dollars more per person than preventative measures would, according to new research.
The National Urban Maori Authority (NUMA) conducted the research and chief executive, Lance Norman, told The Nation the cost of failing a struggling child was $145,000 per year.
This compares to $28,000 per child each year in up-front investments that Mr Norman says, if put into the right programmes, could stop children going off the rails.
The NUMA processed data from the Ministry of Justice and says savings could potentially be as high as $50 million a year.
The NUMA is proposing a social bond which is where investors make a profit from the Government if a social service agency meets certain targets. This means the Government pays for outcomes rather than just providing services.
The NUMA social bond is designed to combat truancy, which Mr Norman says is linked to incarceration. At least 90 percent of prisoners have a significant history of truancy.
"There's international and New Zealand evidence that says if you're a truant, you're more likely to have a negative pathway in terms of employment and potentially incarceration," says Mr Norman.
"Not everybody, but there's a high likelihood you'll end up in prison."
He says the returns investors receive on government social bonds needs to be at least 15 percent to be viable, and calls for "a robust conversation" on profit-sharing.
"This could be, potentially, a $50 million saving to the Government. Now as I say, I'm not for profit, but I'm not for loss, so how do we share those savings across the people that have actually done the work?"
Mr Norman says people who argue social bonds put a price tag on children's heads don't realise that already happens.
"They [the state] put a $100,000 price tag on their head when they go to prison. They put a price on their head when they're going through the justice system, and they put a price on their head through truancy and social workers."
He argues the private sector is doing a better job than the public sector, and many people have "adverse" experiences with state agencies, so private service providers are better placed to do the work.