A coalition of anti-poverty groups is calling for the Government to wipe all debt owed to the Ministry of Social Development (MSD).
Currently, one in 10 Kiwis owe money to MSD, which is usually borrowed to help pay for things like dental care, healthcare and school uniforms.
As the cost of living bites, paying off this debt has become hard for many.
A report exposing the heavy burden of debt owed to MSD on families in Aotearoa struggling with multiple economic pressures will be released today. The report tells the stories of seven people who owe money to MSD.
Anti-poverty campaigner Brooke Stanley Pao told Breakfast that wiping all MSD debt is the best way to support those struggling with the cost of living.
She called the debt “debilitating” when highlighting some of the report's stories.
“Within those, there's talk of how debilitating debt is for people and families.
“Often how support from work and income isn’t enough.
“The stress of not being able to move on, but also the stress of not being able to pay for their essential needs."
She said MSD debt is tough to pay off, as many who owe are on benefits or low wages.
“For a lot of people, they exist of benefits and low wages; they don’t have the means to pay that back.
“People and families, through separation or their solo parents who are having to care for children with disabilities, people who are just a few steps away from experiencing this hardship and this poverty need to go to MSD for support, and they're finding that it’s just not there.”
The Work and Income system is hard to navigate, Pao said. She wants to see structural change.
“The way the world works is how we’ve designed it, and I think it’s important to ensure that we look at how we’ve designed it.
“These people and for many people actually, we need to consider what’s important.
“The house that's been built here in Aotearoa doesn't actually allow a lot of our communities to thrive.”
She also said MSD operates on a “low trust” model, which makes it hard for people to get the support they need.
“It doesn’t allow our communities to have the self-determination to ensure they have everything they need.”
Through the report, the groups are asking the Government to wipe all MSD debt, ensure that supplementary assistance is easy to obtain for people with disabilities, remove sanctions and individualise support from Work and Income.
She also asked that they start to operate from a higher trust model.
Green Party social development spokesperson Ricardo Menéndez March said wiping MSD debt would "help people cover the essentials" and "protect against predatory lenders".
He said it would give people "the freedom and resources to do what is right for their communities".
“Right now thousands of people are struggling to pay bills and put food on the table. Even pre-pandemic people struggling to make ends meet were already trapped in a cycle of debt with the very agencies that are supposed to support them."
He called for benefits to be increased, the civil defence payment to be doubled and grants for unexpected essentials instead of loans.
“This would put money back into the hands of people on the lowest incomes and give them the dignity to live without unnecessary debt holding them back,” he said.
Currently, 461,000 Kiwis are struggling with MSD debt, with the average amount owed being $3,550.
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