Government’s Gumboot Friday funding found to be ‘unusual and inconsistent’
Wednesday, 9 October 2024
The Government in May announced the I Am Hope charity founded by Mike King would be funded $24m over four years to provide counselling services.
But questions were asked about the charity’s close ties with National, and whether there was enough transparency over the contract process.
The Auditor General on Wednesday released a letter outlining issues with the funding.
The $24 million contract awarded to Mike King’s mental health charity by the National-led Government was “inconsistent and unusual” and the Ministry of Health did not fully inform ministers of the risks, the auditor general’s report has found.
John Ryan, who as the auditor general oversees every public entity and public spending, sent the Ministry of Health a letter on Wednesday outlining his concerns with the processes around the charity’s contract, noting the “challenging situation” it created for officials, and warned he would be monitoring the contract.
He wrote public money must be spent prudently and with due attention to transparency, integrity, accountability and value for money - and asserted that “several aspects” of the contract’s process were “unusual and inconsistent with these principles”.
He pointed out the selection of the supplier - Gumboot Friday - and the amount of funding was decided “without an open and transparent process to assess which type of service would best meet the policy objective, which providers might be able to deliver that service, and the appropriate amount to pay”.
Also among his concerns was that there was “no opportunity for a fair, open, or competitive procurement process,” and that funding was tied to a supplier, rather than a policy initiative.
Funding the charity $6m a year was in the National-NZ First coalition agreement. It has been in the spotlight since Stuff revealed its chair had donated to the National Party, and its former chief executive in 2019 had sought the National Party candidacy for Botany, in Auckland.
King also changed the title of one of his most senior staff after Stuff revealed the woman was not qualified for such a role, nor was it a suitable job title for the counselling work.
Ryan said while the Ministry of Health felt it had been “directed” to engage directly with Gumboot Friday, “the usual rules and conventions … on the use of public money ought to have been followed”.
“It is for Ministers to make overarching policy decisions (such as an intention to fund counselling services for young people), but it is for the public service to ensure robust, fair, and transparent spending of public money – including selecting a supplier and ensuring value for money,” he wrote.
“Ideally, we would have seen evidence that the Ministry had advised Ministers that the procurement departed from established practice and raised the risks inherent in the decision to spend public money without a fair, transparent, and competitive procurement process … the documents I have seen do not reassure me that the full range of risks associated with the procurement were communicated to Ministers.”
Labour’s mental health spokesperson Ingrid Leary said the letter showed National had “bent all sorts of rules” to fund Gumboot Friday, as set out in its coalition agreement with NZ First.
“The Government talks a big game about spending public money wisely yet used a loophole to get Gumboot Friday funding across the line without a fair and transparent process,” she said.
A spokesperson for Matt Doocey, the mental health minister, did not respond to Leary’s comments but said an increased focus on prevention and early intervention is one of his key priorities.
A spokesperson for the Office of the Auditor General said it would not disclose who had asked it to look into the issue, for confidentiality reasons.