Launch of Community Response Fund

Good morning everyone, and thank you for coming along today.

I've invited you all here today because I want to explain the Government's plans for funding community and voluntary sector organisations through this global economic downturn.

I'm doing this today because I know how difficult it has been waiting for the Government to make a decision on funding for the sector. Certainty about your funding arrangements is a topic of the utmost importance to you all.

To start with, can I say how strongly I believe in the crucial role that organisations like yours play in delivering services to our most vulnerable families, the elderly, children and young people.

I meet regularly with representatives from your organisations, and I've been getting out in our communities to see first-hand the good work you are doing. I know that you are making a difference to our communities every day, and we are all better off for it.

So while I am aware you have been very keen to know what direction the Government is taking, I have taken the time to get out into communities and talk to as many people as possible about what it's like at the coal-face.

In addition, over the past two months or so I've been working alongside seven representatives from your sector, discussing ideas, developing proposals and talking about what would really work to strengthen the sector.

I have to say it's been a fantastic experience, and I have really valued the commitment of time and their thoughtful input. I can honestly say they have done a service to the sector with their involvement in this process.

I don't have to tell you that demand for your services is likely to grow in the months ahead - I know many of you are dealing with this already. The world is going through the worst economic downturn in more than a generation, and the effects are hitting home here.

We're seeing much lower economic growth, falling business profits and rising unemployment - and of course, the human casualties behind those economic trends very often end up on your doorsteps.

The global recession is hitting all of us. Some philanthropic trusts and foundations face declining incomes and capital. This is forcing them to scale back their grant making, or at least to consider doing so in the future.

Many of our larger corporates are reducing their donations and sponsorships, and the traditionally generous private giving from individual New Zealanders is also likely to be affected. And of course, the Government has less income from taxation to distribute.

Meanwhile, families face job losses and financial uncertainty, and there will be more demand for the social and community services that your organisations provide.

Together we are going to have to do more with the funding we currently have. Some other parts of government will have to do more with reduced funding.

As you know, there is no magic lever the Government can pull to suddenly turn our economy around. We're in tough times, and the Government has to spend responsibly like everyone else. But there are a series of things we are doing, which, taken together, will make a difference.

I am delighted to announce that we will establish a Community Response Fund. This will make available up to $40 million in additional government support in this coming year to community and voluntary sector organisations.

The Fund, which we expect will operate for two years, has been developed in consultation with your sector representatives to respond to the increased demand for services and the reduced philanthropic funding.

There are two elements to the Fund.

First, it will provide crisis funding to providers of critical services that are having real trouble maintaining their services because of the impact of the economic downturn on their non-government funding. 

Second, it will provide funding to providers of critical services that are experiencing big increases in demand for their services from families, children, young or older people because of the economic downturn. For example, this might include budget advice services dealing with more families seeking help to manage their finances.

The Community Response Fund uses the unallocated funding from the Pathway to Partnership programme, plus an additional $20 million, and consolidates it into one fund, which will be available from 1 July.

The Community Response Fund is focused on community outcomes. It will support spending on services that communities value and see as priorities themselves, rather than the Government making those choices for them.

The Fund will help your sector and government to work together to come up with creative solutions to deliver real help to those who need it most, and will help social services deal with the extra demand for services caused by the economic downturn.

It will support community-based services facing funding crisis because the economic downturn is causing their non-government funding to dry up.

We anticipate that the Fund will encourage organisations to combine their resources to meet the needs of people in their communities. There are a lot of organisations out there that are doing good work individually, though I believe that there is scope for some better coordination between services to avoid double-ups.

The Community Response Fund is designed to support critical community-based social services including services for family violence, child abuse and neglect, budget and financial advice, sexual violence, early intervention for vulnerable and at-risk children and families, families under stress, and vulnerable and at-risk people, whether old or young.

The main priority will be given to supporting the delivery of extra services, while some funding will support innovative responses to demand.

I want to see a community-based approach to decision making on how the Fund can best support services to meet needs.

I would like the funding to be administered by the Ministry of Social Development, but with up to 12 regional panels to consider and approve applications. These panels will include community representation and will help us direct funding to organisations that communities value and are relying on.

We expect these panels will start considering applications in July and then once every four months over the next two years. The panels will include representatives from the Ministry of Social Development, Non-Government Organisations, and, where appropriate, representatives from the Ministry of Youth Development, Te Puni Kokiri, the Ministry of Pacific Island Affairs and local government.

Further details on how the panels will operate will be available in the next few weeks. We will be monitoring the effectiveness of the Fund carefully and the criteria for the fund can be fine-tuned by Cabinet in response to the rapidly-changing economic situation.

It's important to remember that the Community Response Fund will be a short-term response to immediate pressures. One of the risks with this scheme for us is that organisations begin to rely on this Fund once the crisis has passed. 

Every day I see examples of organisations that are given access to funding for a fixed period "to enable them to secure sustainable funding sources" or to "reshape themselves for self-sufficiency," but once the deadline arrives they have come to expect that the money will continue. 

I want to be quite clear with you all: this is short-term, crisis funding. It's not a permanent top-up.

Let me talk briefly about the long-term funding for the sector.

I want to confirm that the Government will be maintaining the P2P funding for community and voluntary sector organisations - but we will be reshaping the model.

We're making that commitment to you despite the many other funding pressures across the Government's programme - and believe me, those pressures are very real at the moment.

Our commitment to maintain funding is a major win for the sector in a time when many other areas of Government spending are being severely curtailed. 

There has also been much debate about the 100% funding model. Whilst some NGO's have been grateful to receive extra funding so have not questioned the funding model, the truth is that P2P does not fund innovation, and it raises questions about what 100% funding means. 100% of what exactly?

We are proposing this reshaping for two reasons. First, we needed a new means of supporting the sector through this crisis period. Second, in these tough economic times, there was no certainty that delivering the additional P2P funding along the original lines would give best value for the taxpayer.

And you will understand that it is especially important in such difficult financial conditions for Government to make sure it gets full value for money for every single dollar it spends.

This Fund is a good example of the need to vary from the original P2P distribution model - we needed to find a new means of supporting the sector through this crisis period. If we had stuck strictly with the P2P model, we would not have been able to make this Fund available.

However, we will not be charging off making changes unilaterally - let me assure you that we will work alongside the sector over the next 18 months or so to reshape this model.

This approach will reflect the policy priorities of this Government, though it will also reflect what we expect to be a different New Zealand emerging from the downturn. I believe it will be a stronger, smarter New Zealand, and I'm sure that your sector will need to adapt to meet some new needs too.

To conclude, I want to make it clear that I am absolutely committed to working with the Sector on developing solutions that work.

This Government is about fresh thinking and delivery that adds both social and economic value. We want services that support people to reach their potential and, where necessary, change their lives for the better; not just allowing them to continue on in the same old way.

In short, we can't carry on doing the same thing on steroids. We need to think differently, act differently and work differently. These are extraordinary times, and they call for extraordinary measures.

This Community Response Fund is just one example of how this Government is putting its money where its mouth is to achieve that. We've introduced tax relief for hard pressed families and businesses. It was our idea, picked up by Labour before the election, to abolish the cap on tax refunds for charitable donations and to extend the company deduction for charitable donations to a wider range of businesses.

May I just finish by thanking the sector representatives who have worked alongside me developing this concept. Having their experience has been extremely valuable throughout the process, and I appreciate the time and effort they have dedicated to the development of the Fund.

Thank You