7 Jun 2016

Budgeting service funding to be slashed

6:29 pm on 7 June 2016

New contracts for the country's budgeting services require them to deal with the same number of clients, despite slashing frontline funding by 25 percent.

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Photo: 123rf

The government also intends to cap the number of sessions it funds, and wants budgeting providers to share clients' personal information with Work and Income.

The changes are part of a new system, which launches in November, designed to make people more financially capable.

Jo Goodhew.

Social Development Associate Minister Jo Goodhew Photo: NATIONAL PARTY

A fortnight ago, Social Development Associate Minister Jo Goodhew told Morning Report the changes wouldn't result in a cut in funding.

"We're not lessening the amount of money that will be spent here, but we're certainly taking a very different approach," she said.

But a copy of the new contract, obtained by RNZ News, showed annual funding for core budgeting services would drop from $13 million to $10m.

And the contract said, because the new funding model wouldn't meet demand, it suggested budget providers look elsewhere for support, such as to the voluntary sector.

Social policy researcher Charles Waldegrave said budgeting services relied heavily on volunteers and operated differently to the public service.

He said the copy of the contract he'd seen was too prescriptive, and he warned against imposing public service standards on the voluntary sector.

"When you start imposing that on volunteers, and you push the paperwork too far and the requirements too far, and you start saying, 'Well, we'll take this budgeting service but we're going to fail that one', then the danger is you lose the goodwill of volunteers.

"They can't be bothered with trying to meet a whole lot of unnecessary paperwork," he said.

More collaboration with Work and Income

The new contract also calls for more collaboration with Work and Income case managers, including the handing over of personal information.

One budget advisor, who RNZ agreed not to name, said people sought her provider's services because it offered independence and confidentiality.

She said, in her experience, Work and Income's case managers could be very judgemental, and she questioned why Work and Income would want more information.

"In the past, they haven't had a lot of time to even peruse over the budget that we provide for the client to show to the case manager. They often just grab it and put it aside without actually looking at it. Now they want more information and I don't understand why," she said.

Under the terms of the new contract, providers would be funded for three-hour sessions - rather than the number of clients they see - and the Ministry of Social Development would only pay for 100,000 sessions a year, which would be about two per client.

The contract said providers would be paid $95.23 for a three-hour session, about $50 less than what the ministry currently paid per client visit.

However, the budget advisor said, the new contract was demanding a lot more work.

"They're wanting us to encourage their clients, to inspire their clients, to motivate their clients when I feel that that's the work that they should be doing. We've always done a three-hour session with Work and Income clients who really want to make a change.

"But the kind of clients that comes to us, generally, just wants to satisfy the obligation of getting a budget so they can receive assistance from Work and Income," she said.

Mr Waldegrave said he was skeptical about restricting the number of funded sessions, as budgeting was an ongoing process.

"The way we spend money is a learned behaviour and people will fall back and they'll need help again. It sounds like the funding isn't there for that.

"And when you see that the overall figures are actually saving money considerably, and yet using more language about how they're operating more closely with people and trying to take client's needs into account, the two things don't add up quite frankly," he said.

No cut to overall budget, minister says

In a statement, Ms Goodhew said there had been no cut to the total budget, with the remaining $5m set aside to fund the development and provision of further specialist services.

The details of those services were still being finalised but they wouldn't come into force until next July, she said.

But Labour Party social development spokesperson Carmel Sepuloni said the change in the contract definitely represented a cut.

"It's a reduction of about $3m to the front-line services and more money going into what seems to be backroom administration. That seems to be at odds with the government's rhetoric, which has been about trying to put more money into front-line services," she said.

Budgeting providers have until the end of the month to tender for the new contract.