Thursday, September 19, 2013

F&P win preferred supplier contract to beneficiaries

This is an interesting development:

Paula Bennett

18 September, 2013

Whiteware initiative good deal for beneficiaries and taxpayers

The Government has finalised a whiteware purchasing agreement which will provide a good deal for both beneficiaries and taxpayers.
“In this year’s Budget I announced we would work to get better value for beneficiaries and taxpayers in the way we help people purchase fridges, freezers and washing machines,” Social Development Minister Paula Bennett said.
Hardship grants are available to beneficiaries and people on low incomes to purchase whiteware products. These grants have to be repaid.
Over $10.5 million was spent over the last year in assistance for these purchases, however second-hand products are commonly bought which can ultimately cost hundreds of dollars extra in repair and maintenance costs, increasing debt for beneficiaries.
Whiteware will be provided under the Haier brand, by Fisher & Paykel Appliances Ltd, the sole distributor of the brand in New Zealand.
The initiative will see the Ministry of Social Development enter into a preferred supplier agreement with Fisher & Paykel Appliances Ltd. Beneficiaries will continue to apply for hardship assistance and if they qualify, will be provided with a high quality appliance which they will repay MSD for.
MSD are anticipating the arrangement will result in a $10 million reduction in hardship assistance for whiteware over five years.
“For people on low incomes, paying to get the fridge or washing machine fixed can often mean going without other essentials,” Mrs Bennett said.

It is estimated the new units will cost around the same as an average second-hand unit to buy, but maintenance costs over five years will be more than halved.
“We are ensuring people needing whiteware products are able to buy a quality, reliable product, which will come with at least a two-year warranty.”
“Fisher & Paykel is a company well trusted in New Zealand, and along with a strong distribution network already in place, also operate a 24/7 customer support service.”
“This means beneficiaries purchasing whiteware through the arrangement can have confidence in the product they’re buying.”
The rollout will begin in the South Island later this month, with the whole country covered by early next year.
As part of this agreement MSD and Fisher & Paykel are also working together to identify employment opportunities in the company for beneficiaries, another positive outcome of awarding the contract to a single supplier.

 Some observations:

This is good news for beneficiaries. But if F&P is giving a preferential price, someone else is paying for it. That'll be other F&P customers.

Certainly it's very bad news for second-hand dealers who are already struggling to compete with Trade Me.

A "good deal for taxpayers?" If the grants are repayable I can't see why. It should be neutral to the taxpayer.  Unless the debt is not being repaid. The more likely issue.

A good marketing/ PR move for F & P? You tell me.


Anonymous said...

"Unless the debt is not being repaid."

Well, who would have thought.


Anonymous said...

other customers ... or the shareholders... or it might be that this backs out other advertising expenditure - i.e. the publicity and "street cred" they get by being sole supplier to the government is worth more to get from a TV ad and so it is a transfer of expenditure.

There is no real way of telling between these options but I suspect the last is the right one.

Shane Pleasance said...

I know several characters who could provide preferential rates for some other 'products' for beneficiaries, too.

Anonymous said...

It seems to be following the pattern of the Key gov't favouring cronies. (I've just read the NOT PC item on 2 faces of Muldoon. I've never voted labour, and never will, but appalling by National)

S.Beast said...

B/c advances are provided to low wage earners + those on a primary benefit it is beneficial long term because many of those who apply for second hand whiteware end up reapplying later on for the same type of appliance. It creates a situation where a low income earner/beneficiary essentially ends up paying repeatedly.

Most secondhand dealers only offer 3-6 months warranty. The price of a brand new modern, power efficient fridge is usually a couple of hundred more.

This is a really good move by MSD/PaulaB.

Hopefully they do something similar asap with other types of SNGs and disability related costs which I note the new legislation allows them to do.