Richard Wood: Relationships Aotearoa demise could be just the start

From the client perspective, NGO services are more trusted, accessible and private. Photo / Thinkstock

The current news media attention on Relationships Aotearoa and its dire financial situation highlights the state of many community-based organisations contracted to supply essential social services on behalf of the Government.

Relationships Aotearoa is one of around 2000 non-government organisations or NGOs directly funded by the Government, through the Ministry of Social Development.

The government-funded services delivered by NGOs are categorised variously as essential or critical social services, but most are only part-funded. Moreover, none have been inflation- adjusted since 2009.

An effective, properly funded social services sector is crucial for the support of vulnerable children and their families. Most of the social services we need to achieve Government priorities are services best delivered by NGOs. There are many good reasons for this.

From the client perspective, NGO services are more trusted, accessible and private. From the community perspective NGOs are better networked into the community, both at agency and front line worker levels, and more likely to collaborate with others in the community.

From the Government perspective, using NGOs allows it to control the money it invests in social services while reducing the need for the employment of public servants who are not only more highly paid but get annual pay rises.

In addition to these perspectives, the Productivity Commission observed, in its draft report last month on Effective Social Services, that government agencies generally know too little about the services that work well and those that do not, and that the Government's contracts for social services are so highly prescriptive that this works against effective responses to client needs.

When National first came to power in 2008 it talked about how it wanted to see more services delivered by non-government agencies. This suggested a faith in the capacity of community organisations to deliver effective services. However, the reality behind the rhetoric was simply that it wanted to get the services provided more cheaply.

In 2008 it cancelled an initiative put in place by the Labour Government to compensate social support agencies (for the impact of inflation in excess of 30 per cent which for most of them had not been provided over the previous 12 years).

Despite the fact that since 2008 the population has increased by 400,000 and inflation increased by around 16 per cent, the Government has taken no steps to compensate pressured NGOs. In fact, last year, the Government commissioned the commission to look at how government contracted with community agencies, it would seem with an eye to reducing its obligations even further. The terms of reference excluded any consideration of whether contractors received a fair rate for the job.

Ironically, the commission in its draft report noted that NGOs were being underfunded for those social services that are fully specified. The delivery of essential social services is vital to maintaining the social fabric of New Zealand and the support of vulnerable New Zealanders, yet the Government is doing little to support the viability of those that deliver them.

Coincidental with National's signalled disinclination to recognise the impact of inflation by its cancellation of the Labour Government's initiative, the philanthropic sector advised it that the responsibility for funding critical social services was the Government's, not theirs. Financially strapped NGOs have nowhere else to go if the Government does not pay a fair rate for the job. Expect to see more NGOs share the plight of Relationships Aotearoa.

Richard Wood is a former deputy chief executive for the Ministry of Social Development. Before retiring three years ago he oversaw the Government's contracting of essential social services