Budgeting agencies are "in shock" after a radical shakeup which has ended state funding for a third of all previously funded budget services.

The shakeup, aimed at targeting state funds to the most effective agencies in the most needy areas, will throw many budget advisers out of work - but also boosts funding in low-income areas such as South Auckland.

Only 120 agencies will be funded from November 1, down from 174 at present.

In Auckland alone, 15 out of 37 previously funded agencies have missed out including Christian Assist in Avondale, Christian Care in Papakura, Te Manawanui in Mt Roskill and NZ Ethnic Social Services in Te Atatu.


Raewyn Fox of the Federation of Family Budgeting Services said government funding provided about 60 per cent of all budget service income, so the reshuffle would affect a lot of budgeters.

"Some people are in shock out there," she said.

Christian Assist manager Ken Ogden said his trust would probably give up its current office in Avondale and revert to the way it started in 1991 as a volunteer-based agency operating from a local church.

Ken Ogden of Christian Assist has lost his state funding but believes the Lord has sent him a message to carry on. Photo / Supplied
Ken Ogden of Christian Assist has lost his state funding but believes the Lord has sent him a message to carry on. Photo / Supplied

"I'm not surprised, I knew our service was at risk," he said. "It's a small service. It's scary, to be honest, but we have to get on and do the work.

"Ten minutes before we got the news we were not getting funded, a guy walked in off the street and said, 'Keep up the good work, you should continue doing the good work.' I believe that was the Lord sending someone in to say we should carry on."

North Shore Budget Service manager Brian Pethybridge said his funding had been halved, apparently because he was in a rich area.

"They used the ruler of you are not in a deprived area," he said.

But Mangere Budgeting Service chief executive Darryl Evans said he had won a $4000-$5000 funding increase for a new collaboration he has formed with Care Waitakere, Franklin Family Support Services and the Otara Budgeting Service which he took over in January.


"Government are telling us collaborations are the way to go because you can reduce your back-room costs," he said.

Salvation Army community ministries head Major Pam Waugh said her church lost all its funding for budgeting in the South Island but was funded for all North Island areas, including new services in Napier and Palmerston North.

Ministry of Social Development deputy chief executive Murray Edridge said decisions were based on population-based funding for all areas "in a way that is fair and reflects deprivation and demographics".

Budgeting will now be called "Building Financial Capability services". Budgeters will be required to work with clients to develop "strengths-based financial plans" aiming to achieve people's "hopes and dreams", not just balance their immediate budgets.

Edridge said the current tender had allocated $9.7 million out of a total $14.9 million a year tagged for budgeting, covering one-to-one "financial mentoring" and new group courses called "MoneyMates".

He said some of the remaining money would be used for "transitional funding" until January 31 for services which have lost funding, and would be reallocated next year for new financial capability services which were still being developed.