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Budgeting Services changes

19 October 2016.

To be attributed to Murray Edridge, Ministry of Social Development Deputy Chief Executive:

The Ministry of Social Development is undertaking a major shift in how it funds and supports budgeting services that are delivered to the public.

This is not about cutting funding. The Government will still be investing the same overall level of funding ($14.9 million) in financial capability once the new service is rolled out, but the money will be used in a more effective way.

The changes come in response to concerns expressed by the budgeting services sector and clients that services were not always of sufficient quality.

The sector has also told us that clients’ needs are more diverse and complex than simply requiring help with managing budgets.

Further, the previous approach to budgeting did not give us the data we need to ensure that the services we fund are actually effective.

A comprehensive redesign of budgeting services was needed.

The new Building Financial Capability (BFC) model was arrived at after consultation with more than 450 people, including clients, providers, sector partners, staff and government agencies.

The BFC model is designed to ensure a fair, consistent and transparent approach, with funding being targeted at the most vulnerable New Zealanders.

On 1 June 2016 the Ministry opened a nationwide tender process so providers could apply for funding to deliver the new services.

More than 200 proposals were received from both existing and new providers

We have identified the providers who are best able to deliver the new services, and we have spent the past week contacting them.

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 greatest need.

There will be no gap in the provision of budgeting services. Providers with current budgeting services contracts have had their contracts continued until 31 October 2016. The implementation of new services will start from 1 November.

We are committed to ensuring clients do not miss out and are safely transferred to alternative providers where necessary.

We are considering transitional funding to help providers whose tenders are unsuccessful. We are working to ensure that no region is left without a budgeting service.

The shift from budgeting services to building financial capability aims to work collaboratively to improve the wellbeing of families, whānau and communities, help reduce hardship, and increase investment and economic growth. We recognise that budgeting is only one component of financial wellbeing.

The shift in service focus is also in line with MSD’s Community Investment Strategy, which aims to better target funding to those with the highest needs, through programmes and providers who demonstrate they are meeting these needs, with evidence about what works.

Funding structure

The Ministry is taking a phased approach to allocating the $14.9 million as follows:

  • We have applied $10 million to frontline services which is being contracted for through the current process.
  • The remaining $4.9 million will be invested in a mix of other BFC service components that are being developed. These components will support and enhance the ability of frontline providers to focus on provision of the core face-to-face services, and will include transition support.

As we are contracting for a portion of the total BFC budget through this process ($10 million), the amount contracted in each region will be less than the amount previously contracted. However because we've allocated funding based on need, the proportion of total funding for places where need is greatest has increased.

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