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Purchasing and pricing model for core components

The purchasing model

The way we fund Building Financial Capability (BFC) was considered and built in 2016 following the re-design process.

Prior to then, historic influences had led to a range of rates for each unit for the existing budget services purchasing model, with no transparency to enable confidence that these rates were fair and equitable across the providers in the sector.

Feedback from the sector revealed that the rate paid ‘per unit of client’ did not capture a fair cost of the service as some clients require one hour of support, while others could require up to ten hours. Historically, this led to some providers being significantly over or under funded, per client.

Furthermore the sector feedback revealed the importance of acknowledging both the contact time spent with clients, and the time spent completing non-contact back-office functions on behalf of clients. Research and recommendations from sector representatives advised that for every face to face hour, between one to two hours of non-contact time was required.

The purchase unit

We developed a purchasing model using 'a session' as the purchase unit. The session is defined as an indicative three hour unit of time that can be applied to financial mentor sessions with clients and MoneyMates group/peer-led sessions.

Each time a client has a substantial face to face or virtual meeting with a financial mentor this should be counted as a session regardless of the varying non-contact time required. This session purchase unit has greater flexibility to allow for variability than the old model.

Each MoneyMates group is counted as one session, regardless of the number of clients who attend. If the group requires two or more facilitators, this can be counted as two or more sessions.

The following table illustrates examples of how sessions can be used.

Sessions Explanation

One session is indicatively 3 hours of time.

1 hour, more or less, of client facing work (as defined in the Building Financial Capability Services Guidelines) + 2 hours, more or less, of non-contact work

4 An individual client was expected, on average, to use 4 sessions
8 Group programme with one facilitator running for 8 weeks = 8 sessions

The unit price

Sessions (the purchase unit) are funded at a universal rate to ensure consistency and fairness across the sector.

The session rate is primarily based on benchmarked salaries for budget advisors, which was sourced from a commercial supplier. Other costs such as direct employee oncosts like ACC and superannuation, other direct costs of service delivery, and overheads were calculated based on research and consultation to create a Full Time Equivalent (FTE) rate. In 2016, the rate calculated was $95.23 per session.

Changes in the unit price

The unit price increased to $98.80 per session in 2019.

Budget 2020 provided two areas of additional funding for BFC services:

  • $9.7 million over four years to increase funding for Financial Mentoring, MoneyMates and BFC Plus; and
  • $25.2 million over two years, as part of the Covid Response and Recovery Fund (CRRF) to support BFC providers to be more financially sustainable and respond more readily to increased demand resulting from COVID-19. This funding is for Financial Mentoring, MoneyMates, BFC Plus and microfinance services.

Budget 2022 provided further funding for BFC services:

  • $21.0 million over two years for continuing support for Financial Mentoring, MoneyMates, BFC Plus, Debt Solutions and microfinance.

The current session rate for financial mentors and MoneyMates is $170.50 per session.

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