Oranga Tamariki is discontinuing more than 330 service contracts and reducing its service provider spend by $139 million following its annual review of contracted provider funding.

One of the agency’s deputy chief executives, Darrin Haimona, is also hitting out at “misinformation” shared about the review that reportedly inferred changes to contracts would “directly lead to the death of children”, which in his view amounted to “scaremongering”.

It preceded Haimona’s claim public funding had been “sitting idle in the individual bank accounts of providers” which led to “under-performance” and “under-utilisation”.

It follows concern expressed by service providers about the future of services like those that aid vulnerable families and children after contracts ended on July 1 without confirmation from Oranga Tamariki they would continue.

Children’s Minister Karen Chhour is welcoming the review’s outcome, claiming the agency has been a “cash cow for community service providers” for many years.

In an extensive statement, Haimona confirmed the agency’s review had led to a reduction from the $577m paid in contracts with 554 providers in the 2024 financial year to a “minimum of $438m with 480 providers” in the current financial year.

Through the review, 337 services conducted by 190 providers had been discontinued due to “a change in prioritised need, under-performance, and or under-utilisation in previous years”.

A total of 269 services would be reduced based on “forecasted utilisation and need”. Fifty services ended as their contract dictated.

A total of 1470 services from 451 providers were contracted in the coming year or were being re-contracted. A further 50 new services were in the procurement process.

The review also included a funding recovery process, which assessed “under-delivery” based on contract requirements.

Through this process, $22m had been recovered and Haimona said more was expected.

“We expect this to increase as we continue to work with remaining providers over their under-spend.”

He claimed in previous years, providers had been able to “accumulate significant surpluses and this is unacceptable”.

“Every cent of funding we give providers needs to be reaching the children and young people for which it was intended, not sitting idle in the individual bank accounts of providers.”

Service providers had publicly criticised Oranga Tamariki for how it had communicated how contract renewal would take place and expressed concern about the suspected level of cuts.

One such provider, Family Start Nelson manager Rebecca Ravenscroft, told RNZ she was facing the loss of up to six of their 16 whānau workers - and there were about 50 vulnerable whānau they will no longer be able to support.

Haimona took the extraordinary step to name certain providers, including Nelson’s Family Start, and explain why their funding has been cut.

“[Family Start Nelson] have stated that they are one of the top four performing Family Start providers in the country,” he said.

“Based on their own quarterly reports and our internal review of all Family Start contracts between June 2022 and January 2024, they achieved on average 80 percent of the whānau volumes and lower numbers of home visits than were expected.

“Based on this information, we have reduced their FTE (fulltime equivalent workers) from 12.75 to 10.

“At one point, He Matapuna Ora [Family Start Nelson] reported in the previous financial year that they had 17 FTE despite being contracted for 12.75.”

He also criticised those who he claimed were “scaremongering” about the impact of the cuts.

However, Haimona did accept the agency could improve its communication and would do so next year.

“Since undertaking this exercise there has been misinformation shared, and incorrect statements made suggesting that the work we are doing, to better care for and protect our tamariki and rangatahi, will somehow directly lead to the death of children. These assertions amount to scaremongering.

Chhour, as minister, had been adamant that services receiving public funding met their contractual obligations and supporting cutting those that weren’t.

In a statement, she said Oranga Tamariki had been a “cash cow” for many years and claimed a “lack of rigour” had been applied to contract management.

“There has been no reduction in frontline services. Oranga Tamariki is simply funding those who do the work, and not those who don’t.

“Oranga Tamariki’s service providers are expected to regularly report back about the work they do, and the children in care they work with.”

Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the NZ Herald in Auckland, covering Covid-19 and crime.