School lunch programme: Local jobs to go as Government hands $85m catering contract to overseas company

One of the new meals for the $3 school lunches – butter chicken and rice. Photo / Mark Mitchell

• Local suppliers across the country were told last week that their Ka Ora Ka Ako school lunch contracts would not be renewed.
• The lunches will instead be supplied by School Lunch Collective, led by British company Compass Group.
• Associate Education Minister David Seymour defended the decision, saying it would save taxpayer dollars.

The owner of a company that supplies school lunches in Auckland says 30 of 37 staff members could lose their jobs as a result of the Government’s reforms to the Ka Ora, Ka Ako catering programme.

Lunch with Crunch owner Claire Kelly said the changes mean her business will go from catering for nine Auckland schools down to three next year.

“Our staff are really sad, we’ve got 37 staff, and we’ll probably go down to about seven after this,” Kelly said.

More than 150 food suppliers and up to 2000 people across the country could lose their jobs as a result of the changes.

Associate Education Minister David Seymour announced in May he would reform the free school lunches programme, known as Ka Ora, Ka Ako, saying it was too expensive and amounted to “wasteful spending”.

The new lunch programme directives follow a strict budget of $3 per meal, about $5 cheaper than the current model.

The $85 million annual contract was won by the School Lunch Collective, led by global catering company Compass Group.

During the announcement of the new menu, Seymour said the Government was “leveraging private sector expertise” by contracting firms like Compass Group NZ, Libelle and Gilmours.

Kelly said her company made “significant improvements” to the business because she thought existing contracts would continue until the end of 2026.

“Based on this information, we made significant improvements to our kitchen, costing around $70k. We would not have made these improvements had these confirmations not been made.”

While the prices of the lunches may have reduced for the Government and taxpayers, the change would also cost some schools money, Kelly said.

Lunch with Crunch owner Claire Kelly.

“Three of the schools we’re losing, we rent kitchen space off, so they’ll no longer receive money from us, so it will impact them financially.”

Kelly started her catering business after she and her husband were made redundant and saw a gap in the market for healthy lunches for her four children.

Despite government promises, Kelly didn’t believe the $3 cost per meal would be sustainable in the long run with rising food, staff and infrastructure costs.

Compass and Libelle both lost free school lunch contracts after a performance management plan by the Ministry of Education this year, following complaints about food quality and service, BusinessDesk reported.

“How can we lose a contract, when we did a good job, we were never under performance management, and all our schools liked us ... to companies that have done such a terrible job?” Kelly asked.

“They’ve created a monopoly.”

When asked about the impact the decision would have on small businesses, Seymour said his priority was a cheaper programme.

“I acknowledge some businesses will lose contracts as part of the new model. However, the priority has to be delivering lunches at a cost affordable to the taxpayer,” Seymour said.

David Seymour. Photo / Michael Craig

“We can’t justify keeping the old model when it’s possible to deliver the programme at half the cost.

“It’s also important to acknowledge many businesses and their supplier partners, nearly 20, who make up the School Lunch collective who will be contracted to supply lunches from now on.”

Seymour had previously opposed the free lunch scheme, saying in March that the programme was “a huge waste of money and it should be gone”.

Responding to questions about current contractors being surprised to have their work suddenly cancelled, Seymour said “robust” processes had been followed.

“All current contracts between the ministry and suppliers will expire on 24 December, 2024, as per the terms of the current agreement.

“The Ministry of Education completed a robust registration of interest (ROI) process. The process included giving advanced notice that business could be impacted in the transition to the new model, and so allowing them time to prepare for any changes ahead.”

FreshChoice Westport has held contracts for local schools in Buller and Grey, making and delivering about 1700 meals a day for the past four years, Westport News has reported.

The change means between 15 and 17 FreshChoice staff will lose their jobs.

Who is Compass Group?

Global catering business Compass Group has attracted criticism in the past for its work in New Zealand and across the world.

Compass lost free school lunch contracts after this year’s Education Ministry performance management plan, BusinessDesk reported.

Compass Group NZ contracts with DHBs have caused controversy in the past, with protests outside Dunedin Hospital over what some patients called “disgusting slop”.

The multinational faced a serious issue over its contract with Auckland health authorities in 2018 – one patient suffered an allergic reaction after the wrong meal was delivered and there were 25 near-misses at Starship children’s hospital in one year.

At the time of the incident, Compass said it worked closely with the Auckland District Health Board to make sure all meals were safe and nutritious and any issues were quickly addressed.

In Europe, Compass Group faced scrutiny for being one of the companies involved in a 2013 horse-meat scandal.

Jaime Lyth is a multimedia journalist for the New Zealand Herald, focusing on crime and breaking news. Lyth began working under the NZ Herald masthead in 2021 as a reporter for the Northern Advocate in Whangārei.