Budgeting services are facing cuts and New Zealand's only hostel for asylum seekers may have to close because of the ending of a government scheme that kept social services running through the downturn.
The Salvation Army says it may have to sack a third of its 60 paid budget advisers after June 30, when the Ministry of Social Development's Community Response Fund formally ends.
The Auckland Refugee Council, which received $55,000 from the fund last year, said it faced an $80,000 deficit and would have to shut its hostel for asylum seekers by the end of this year unless it finds a new source of funding.
Two Iranian families and six individual asylum-seekers are living in the Blockhouse Bay hostel. Two families from Pakistan and Sri Lanka, and a single man waiting for his family to join him, are in the council's other three houses which also face closure.
"What will happen to those families and children if we close?" asked the council's executive officer, Marian Kleist.
"They are not eligible for Housing NZ accommodation and just can't afford [private sector] accommodation at the cost of what it is in the city at the moment."
The Community Response Fund was set up in 2009 to help social services affected by the recession. It approved grants of $12 million in last year's Budget.
Budget services got $1.3 million. Family Budgeting Services Federation chief executive Raewyn Fox said her members always knew the fund was temporary but expected something to replace it.
"There are several things they are working on, but the concern is that those things don't seem to be happening. I expect yes, there will be a lot of people out of work," she said.
Last year's Budget said the fund would be replaced from last July by a new $32 million "capability investment resource" fund that would be driven by government decisions on what services to fund, rather than by an open application process.
But Ms Fox said applications for the new fund did not open until January this year and the first stage would only fund a "mentor" to help agencies develop a plan to meet the Government's objectives.
Successful applications for mentor funding are due to be notified by late May, and any substantive funding for services will be later.
A Social Development Ministry spokesman said any announcements about funding beyond that would follow the Budget on May 16.
Ms Kleist said the Refugee Council's funding from Immigration NZ stopped in recent years and Immigration Minister Michael Woodhouse wrote to Auckland Central MP Nikki Kaye last month saying his agency was "not able to provide financial assistance" to the council.
Ms Kleist said the council's Community Response Fund money ran out in December and it had also lost another $15,000 grant from another part of the Social Development Ministry. "So effectively, as of January 1 this year, we received no funding from any public source whatsoever."
The council still aims to raise about $90,000 a year from philanthropic sources and about $30,000 in rents from asylum seekers, but Ms Kleist said the loss of public funding was a tipping point.
Ms Kaye, who is also Associate Immigration Minister, has invited the council to meet her on Wednesday to look for ways to resolve the funding problem.
Demand for food parcels rockets in Auckland and Northland
About 600 more families had to ask the Salvation Army for food parcels in Auckland and Northland in the first quarter of this year than in the same period last year.
Food parcels given out in the region jumped almost 22 per cent over the year, in contrast to slight declines in the rest of the country.
The church's Manukau community ministries director, Pam Hughes, said the main factor driving the continued need in Auckland was "a critical shortage of housing and accommodation".
"Housing NZ only has a certain number of houses and people are trying to pay for private rentals and often the private rental can be about 60 per cent of your income for a week."
The number of families receiving Salvation Army food parcels in Auckland and Northland rose from 2762 in the first quarter of 2008, just before the recession, to 4507 in the same period of 2011.
Numbers dropped slightly to 4226 in the first quarter of last year but rose again by 603 to 4829 families this year.
South Auckland Christian Foodbank trustee Ian Foster said his numbers were also up. His agency normally delivered about 50 food parcels a week but on Friday alone he gave out 44.
"This month alone has been really busy for us. I'd put that down to ... the whole issue of rent."
Mr Foster, who is also a landlord, said a one-bedroom unit in Otahuhu that cost $180-$190 a week a year ago now cost $220-$240. Two-bedroom units in Papatoetoe that were $305 a week a year ago were now renting at $330-$340.
Statistics NZ says rents increased in the year to March by 2.7 per cent in Auckland and 2.2 per cent across the country, with the biggest increase in Canterbury (3.7 per cent).
Salvation Army food parcels, change in year to March 2013
* Auckland/Northland+ 21.8%
* Lower North Island2.5%
* South Island3.8%
* Total NZ+3.4%.