Beneficiaries owe record $2.1b to Govt as cost of living soars

Low income New Zealanders now owe more than $2 billion to the Ministry of Social Development as they continue to have to borrow money to survive.

Social Development Minister Carmel Sepuloni.

The latest figures show beneficiaries owe MSD a record $2.1b, $200 million more than the same time last year.

In this year’s Budget, the Government gave those over 18 and earning $70,000 or less a $350 cost of living payment to help them with the effects of rising prices, but it refused to extend the payment to beneficiaries and superannuants, saying they already receive the Winter Energy Payment.

Benefit and pension rates also rose in April.

In a recent 1News Kantar Public Poll, nearly two thirds of New Zealanders (63%) said they believed pensioners and beneficiaries should also have received the cost of living payment.

Social Development Minister Carmel Sepuloni told Parliament recently that the Government acknowledged "New Zealanders are feeling the bite in regards to the cost of living increases".

Green Party social development spokesperson Ricardo Menéndez March said it’s clear that those on benefits are unable to meet the basic costs of living.

“It just feels like a smack in the face for so many families to publicly acknowledge that families are doing it tough and not include them in the cost of living payment,” he said.

Auckland beneficiary advocate Kathleen Paraha told 1News she’s never seen so many people struggling as she does today.

“It is really, really difficult out there, there’s more poverty than I’ve ever known in my 65 years.”

The average debt repayment for someone who owes MSD money effectively cancels out the Winter Energy Payment – for many their repayments far exceed the value of the Winter Energy Payment.

"It’s getting worse, the Government gives you $20 with one hand and takes it away with the other," Paraha said.

A recent Cabinet document showed that New Zealanders on low incomes owe MSD, Inland Revenue and the Justice Department more than $3.5 billion and warned the debt was harming physical and mental wellbeings and fuelling violence in society.

Sepuloni said while work is underway to try to make debt repayments fairer, the Government has no plans to wipe the debt.