Social service agencies say they may have to lay off staff and cut services because of a funding crunch expected in Thursday's Budget.

A fund set up three years ago to help agencies through the recession was extended last year until next month, but ministers' talk of a "zero Budget" this year means it is almost certain to end.

But agencies say recession-related need is undiminished. Salvation Army food parcels jumped nationally from 7900 in the first quarter of 2008 to a peak of 13,800 in the same period last year. In the same period, the unemployment rate has jumped from 3.9 per cent to 6.7 per cent, and is now at the highest first-quarter level since 1999.

Council of Christian Social Services chief executive Trevor McGlinchey said the pressure is enormous.


"After four years of recession, responding to huge increases in demand, organisations don't have a lot of reserves."

Mangere Budgeting Service head Darryl Evans said he has given his staff notice that their jobs could end on June 30 unless new funding is found.

"I understand that [the Government] want us to be entrepreneurial and find money, and I have always tried to do that. "But the reality is that if I don't get any support from other avenues, at least two staff may well be gone by June 30."

Budgeting agencies collectively have been the biggest recipients from the $20 million Community Response Fund, set up in 2009.

Federation of Family Budgeting Services head Raewyn Fox said families seeking advice jumped from 31,000 to more than 40,000 last year, partly because of Work and Income rules requiring families to seek help after applying for three food grants.

She expects some extra funding out of welfare reforms.

Heather Hayden of Refugee Services Aotearoa, which got the biggest single grant of $500,000 from the fund last year, said it would be harder to help unemployed refugees into jobs.

"We are not looking at staff cuts at this stage but what we are signalling is that it's very, very tight."


The Government has introduced a new "Community Response Model" using regional panels to distribute funds according to local need, with $14 million set aside for the year to June.

It has also put $30 million a year into Whanau Ora, and last week announced $288 million over four years for youth services, childcare and extra Work and Income staff to implement welfare reforms.