Watchdog warns about problems with government school lunch contracts

The Auditor-General has raised concerns about how the government is running its school lunch programme, specifically about deals made with two catering companies, RNZ reports.

The warning came out on 30 June 2026. It covers two contracts: one with Compass Group, a large catering company, and another with the School Lunch Collective, which got an extra $18 million added to its deal after signing.

What is the school lunch programme?

The government started providing free school lunches to students at low-decile schools (those with less funding) in 2020 through a scheme called Ka Ora, Ka Ako. Schools have reported that the programme helps — it cuts hunger and helps students attend school and feel better. An official check published in 2022 found similar results.

In last year's Budget, the government gave the programme $478 million. Ministers said this would pay for more meals while spending less money through a new way of doing things.

What did the Auditor-General find?

The Auditor-General's job is to check whether public money is spent properly and fairly. When they issue a formal warning like this, it means they've found something that needs fixing.

Two issues stood out. First, Compass Group was chosen to supply meals despite having a "controversial history," though the Auditor-General hasn't said publicly what that means. Second, the School Lunch Collective got an $18 million extra payment after the contract was already signed — money that was supposed to help meet nutrition standards.

Both of these suggest the government may not have done its homework properly when picking suppliers or managing the deals afterward.

Why does this matter?

When a government contract gets an $18 million top-up after it's signed, it raises a basic question: should those costs have been worked out before the contract started? If nutrition standards changed after the deal was done, that's one thing. But if they were never worked out properly in the first place, that's a problem with how the contract was set up.

The broader context here is that when ministers announce spending plans in Budgets, saying they'll deliver more for less, the actual contracts still have to be handled by the rulebook. The Auditor-General's warning says that didn't happen. This will likely mean Parliament's Finance and Expenditure Committee or Education and Workforce Committee will call in officials from the Ministry of Education and Treasury to explain how these contracts were structured and why they needed fixing after the fact.