2 Nov 2016

Budget service says it's been hit in pocket for helping working poor

8:08 am on 2 November 2016

A budgeting service that has missed out on government funding says it lost the contract because it deals with the working poor rather than beneficiaries.

Various denominations of coins

Budgeting services say an overhaul of the sector has moved funding from the regions to wards Auckland. Photo: 123RF

The Christchurch Budget Service is one of 60 budgeting providers who failed to secure contracts yesterday.

The new contracts are part of a major overhaul of the budgeting sector, with the government shifting the focus from teaching people how to budget to what it calls "financial capability".

Budget advisors are now called financial mentors.

The Christchurch Budget Service has provided provided financial advice for 50 years. It is one of about half a dozen budgeting services in Christchurch that receive annual government funding.

Its chairman, Don Johnson, said last year was one of its busiest, dealing with 400 clients.

"We deal with anybody ... probably 30 percent of them were beneficiaries and that's probably what counted against us," he said.

"But a large majority of our clients would be what we would call the 'working poor' which is a terrible expression, but people who are on the bare minimum wage."

Mr Johnson said it was clear from discussions with the Ministry where the new funding was going.

"The criteria in the contracts was beneficiaries, clients of MSD [Ministry of Social Development], victims of family violence, and sole parents."

The budgeting service would remain open, he said.

Funding moved from the South Island to Auckland - Raewyn Fox

Federation of Family Budgeting Services chief executive Raewyn Fox said the names of the successful budgeting services would not be known until 30 days after the last contact was signed, which could be after Christmas.

But she thought the funding had been targeted to those areas of high need, while those with low deprivation got less money.

"How it looks to me is that the money's been lost from the South Island, and Auckland seems to have more money."

Money going to regions that need it most - MSD

The Ministry of Social Development said in a statement that of the 177 applications it received from new and existing providers, 117 were successful.

It's deputy chief executive, Murray Edridge, said funding for the sector remained at $15 million, $10m of which would be spent on frontline services.

He said some regions would get less money under the new system, but those regions with the greatest need would get more.

"We have identified the providers who are best able to deliver the new services, and are finalising the new contracts.

"Some existing providers have missed out, either because they did not submit a tender, or because others were considered to be more suitable, or better qualified, to deliver services in the areas of greater need," Mr Edridge said.

Get the RNZ app

for ad-free news and current affairs