Auckland Action Against Poverty is calling on all debt to the Ministry of Social Development to be cancelled to stop people from missing out on essentials such as rent, food and bills.
Official Information Act figures acquired by Auckland Action Against Poverty show that as of December 2019 a total of 224,479 people have debt to Work and Income as a result from receiving assistance via special needs grants, up from 169,888 five years ago.
The total amount owed by New Zealanders to Work and Income has almost tripled from $117 million to $307 million. The average outstanding debt people have with Work and Income has doubled, from $690 to 1,368.
The weekly repayment amounts are set at the discretion of Work and Income case managers, with women and Māori being made to repay Work and Income debt at a rate of around 30% higher than other groups.
“Low benefit levels compounded by an increase in rents have led to more people entering debt with Work and Income to cover things like rent arrears, power bills and other expenses. The offset on benefit payments created from this debt means people then have even less money to cover basic expenses and require further special needs grants. This creates a vicious debt trap with Work and Income and loan companies”, says Brooke Fiafia, Auckland Action Against Poverty Spokesperson.
“We work with families that have offsets ranging Cancelling debt to MSD would give low-income families a reprieve and enable them to get back on their feet. The cancellation of debt to the Ministry of Social Development wouldn’t put the Government’s books at risk but would ensure less families are having to sacrifice putting enough food on the table because of the offsets.
“Work and Income is systemically discriminating against women and Māori by setting offsets at a higher rate compared to the rest of the population. People on the benefit can have these offset amounts reviewed but people often do not because they are not proactively told they have the right to ask for a reduction.
“The Government’s lack of action on benefit levels is creating unnecessary hardship for low-income communities. Until benefits are increased to liveable levels more families will continue to rely on special needs grants to cover basic expenses and be trapped in debt.
“The Government has the tools to free 224,479 people from debt incurred as a result of our broken welfare system, the only thing standing in the way is political will”.