A group of 12 services from across the sector have written to the Auditor-General requesting an urgent enquiry into MSD's tender process. Photo: 123RF
- The Ministry of Social Development will no longer fund 44 of the 132 budgeting services funded last financial year, due to a change in the funding model.
- Services that missed out on funding face closing their doors and some want the Auditor-General to investigate the tender process.
- Funding available has decreased due to the end of a cash boost given during the pandemic.
- Despite some complaints that suggested otherwise, MSD is satisfied the procurement process was robust and followed government procurement policies.
An Auckland budgeting service that missed out on the latest government funding round says it is still getting referrals from the department that cut its lifeline.
The Ministry of Social Development is no longer funding 44 of the 132 budgeting services it supported last financial year, due to a change in the funding model.
MSD ran a tender process for these services to re-apply for contracts, leaving a third scrambling for other avenues of funding to keep their doors open from July.
They were funded to offer free financial mentoring.
A group of 12 services from across the sector have written to the Auditor-General requesting an urgent enquiry into MSD's tender process.
Among them is Papakura Budgeting Services chair Trevor Harrison who said the service had been running for 50 years but missed out on the latest MSD funding after receiving $302,000 last financial year.
But he said the service was still receiving client referrals from MSD.
"Basically we're doing it for free, we're getting government departments sending us clients... MSD itself, Kāinga Ora, which is great because that's all there is in Papakura at the moment," he said.
"Although other organisations have been contracted to work in the area, they haven't got a base in the area."
Harrison said he had tried to refer a client to a service MSD was now funding to serve Papakura but their budgeting advisors were based in Greenlane.
He said that appeared to contradict MSD's tender document requiring applicants for the funding to be based in their areas and have close contact with other social services in the area.
"The big concern is they're not geared up to handle the volume that's out there workwise and they haven't got the skills. You can't just get a financial mentor off the street."
The cost of living had increased their workload and there was a two week wait to see one of their eight financial mentors, he said.
Despite missing out on government funding, Harrison said the service was running on reserves and continued to receive referrals from various government departments.
In their letter to the Auditor General, the group of budgeting services asked for an urgent enquiry into MSD's tender process.
"We believe there have been a series of systemic failures in the tender process, how those processes were applied and, together with inadequate planning and resourcing of the tender process, resulted in poor outcomes for the BFC sector and our clients," they wrote.
"Protection of the integrity of the Building Financial Capability sector is important as we are exclusively made up of charities who deal with thousands of people and their whānau at a time in their lives where they are under severe financial hardship and distress.
"The proper funding and support of this sector is paramount for a caring society."
The Ministry of Social Development is no longer funding 44 of the 132 budgeting services it supported last financial year, due to a change in the funding model. Photo: RNZ / Rebekah Parsons-King
North Harbour Budgeting Service chair Rob Collins said they were concerned natural justice principles had not been examined at a time when the cost of living was causing more people to sink into financial hardship.
"In this case we believe they've been marched through. There has been very little evidence of the principles of natural justice being applied and we think some of the government's own procurement rules have been breached."
Collins said the budgeting service was running on rainy day reserves after missing out on its $253,000 annual funding contract, in place for two decades.
"What I think MSD has missed in all this is that we are exclusively charities dealing with people at a time in their lives when they are financially distressed."
He said the tender document required budgeting services to be physically domiciled in the area they are providing services but some services had no budgeting advisors in the communities they are now contracted for.
"The purpose of the tender explained by MSD was to bring the services closer to the communities in which they resided. This has done the exact opposite," Collins said.
"We have a service, for example, based on the North Shore that got a contract for 11 local body areas from Manurewa to Rodney. How can you expect somebody in financial distress to go from Manurewa to Takapuna to meet a financial mentor? It's not being fair on the clients."
He said it appeared the terms and conditions of the tender had changed part-way through the process but applicants had not been advised.
Collins said there would be fewer providers if budgeting services without government funding closed - North Harbour Budgeting Service could survive on reserves for six months.
"We're facing a desperate need for money. We've got applications out to various funders to try and replace some of that money."
MSD's response
MSD general manager for service and contracts Rebecca Brew-Harper said they were satisfied the procurement was robust and followed government procurement policies.
"The Building Financial Capability Procurement was a significant procurement which attracted 250 responses and set out to provide sustainable funding for this important service."
She said they had five complaints from providers, which was 2 percent of the 250 respondents.
"We are always open to feedback we've received and building that into future procurement," Brew-Harper said.
"We engaged with the sector as part of the development of the new funding model and received overwhelming positive feedback."
She said MSD's procurement processes followed the 'All of Government Procurement Rules' which were embedded in MSD's procurement policy, processes and practice and its procurement board provided additional oversight for significant procurement processes.
"MSD committed significant resource to support the procurement and we continue to engage with providers to confirm they are meeting or are on track to meet our expectations," Brew-Harper said.
"We appreciate there is disappointment among services that were unsuccessful in securing funding for these services."
She said the criteria to have a physical presence in the local community was a key part of the assessment.
Brew-Harper said the North Shore service mentioned above that MSD funding runs clinics across Auckland including at community organisations in South Auckland.
"In our communication to the minister we were clear that successful providers would be required to have a physical presence in the community they serve."
MSD general manager safe strong communities and families Mark Henderson said the funding model for budgeting providers changed from paying for client sessions to paying for full time equivalent (FTE) staff.
"We know a number of providers who missed out in our re-contracting of Building Financial Capability services around the country are disappointed, however we're confident our procurement process went through the right steps," he said.
"We have taken care to ensure that clients across regions will continue to have access to services, even if the actual providers have changed in some places."
Henderson said the ending of time limited Covid-19 funding meant funding dropped 12.5 percent to $19.5 million for these contracts from July.
For Auckland, MSD said although the number of budgeting services it funds had dropped from 32 to 20, the funding had risen from $800,000 to $6.5 million a year.
"The FTE model provides greater flexibility for providers to tailor services to client need, rather than delivering a specified number of sessions," he said.
"It also enables increasing workforce capability and career pathways. We talked to providers about this and there was great support."
Henderson said the national helpline, Money Talks, would continue to refer clients to budgeting services.