New Zealand’s Auditor-General has questioned the way a $24 million contract was handled after it was written in to the coalition agreement.
A contract awarded to a charity run by a well-known New Zealand comedian has been questioned by the Auditor-General, who found it “unusual and inconsistent,” saying it 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.”
Usually, the government would specify a service it wanted delivered, and the expected outcomes from that service—in this case, the delivery of youth mental health programmes—and then invite organisations to tender for its delivery.
But this process was not followed when, shortly after the Coalition government was formed, it was announced that the “I Am Hope” charity would receive a $24 million (US$14.6 million) contract to deliver the service.
The charity, best known for its fundraising event “Gumboot Friday” is headed by comedian and media personality Mike King, who is also a long-time mental health advocate and in 2009 started a nationwide radio show called “The Nutters Club” to discuss related topics.
He has also regularly advocated for better resourcing for the sector. In 2019, in recognition of his work in the field, he was appointed an Officer of the New Zealand Order of Merit but returned it in 2021 as a protest over what he said was a lack of progress in the mental health system.
“I was given that medal in 2019 [when] the government announced $1.9 billion to spend on mental health in this country,” he said at the time, but nothing had changed. “I want to know where the $1.9 billion they were given two years ago has gone.”
Before the last election, NZ First Leader Winston Peters came out in support of King, and the party later released a policy that included a commitment to provide him with $10 million over three years.
But, when the coalition agreement between National and NZ First was made public, it featured an agreement to fund King’s organisation at $6 million a year for four years. That commitment subsequently made it into the Coalition’s first Budget despite it also containing significant cuts to the health sector.
On Oct. 9, Auditor-General John Ryan sent the Ministry of Health a letter outlining his concerns with the process. He noted the “challenging situation” it created for officials, who would typically have assessed multiple tenders and then advised ministers on the best choice.
Instead, officials submitted a “Budget bid” for a direct contract with I Am Hope while noting some risks associated with this procurement method, such as potential concerns about the process from other mental health service providers.
“Ministry staff advised the Director-General of Health … that there were no grounds to apply an exemption from open advertising under the New Zealand Government Procurement Rules as there were other organisations that deliver youth mental health services,” Ryan’s letter said.
Instead, the Ministry sought to use an “opt-out” provision of the rules. The way this was presented led the Auditor-General to conclude that it “appeared designed to retrospectively justify an outcome that had already been decided, rather than provide a balanced assessment of the procurement process.”He acknowledged that officials were placed in a “difficult position, given that the Coalition agreement had included a commitment to provide $24 million of public money … and that the Ministry did not have a chance to advise on that commitment before it was made.”
And while he lacked the authority to comment on the coalition negotiations or their outcome, the Auditor General noted, “There are established conventions that generally discourage ministers from directing the public service in relation to financial, operational, and contractual decisions … 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 added that the supplier selection and funding amount 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.”
Ryan said he intends to monitor the initiative’s progress, including whether the contract is appropriately managed and delivers value for money.