Beneficiaries owe record $2.1 billion to government as cost of living soars
Low-income New Zealanders now owe more than $2 billion to the Department of Social Development as they continue to have to borrow money to survive.
The latest figures show that beneficiaries owe MSD a record $2.1 billion, up $200 million from the same period last year.
In this year’s budget, the government gave people over 18 and earning $70,000 or less a cost-of-living payment of $350 to help them deal with the effects of rising prices, but he declined to extend the payment to beneficiaries and retirees, saying they were already receiving the Winter Energy Payment.
Benefit and pension rates also increased in April.
In a recent public 1News Kantar poll, nearly two-thirds of New Zealanders (63%) said they believed pensioners and beneficiaries should have also received the cost of living payment.
Social Development Minister Carmel Sepuloni recently told parliament that the government recognizes that “New Zealanders are feeling the pinch of the rising cost of living”.
Green Party spokesman for social development Ricardo Menéndez March said it was clear benefit recipients were unable to meet the basic cost of living.
“It’s like a slap in the face for so many families to publicly acknowledge that families are trying hard and not include them in paying the cost of living,” he said.
Auckland beneficiaries’ lawyer, Kathleen Paraha, told 1News she has never seen so many people in trouble as she does today.
“It’s really, really tough there, there’s more poverty than I’ve ever seen in 65 years.”
The average debt repayment of someone who owes money to MSD effectively negates the winter power payment – for many, their repayments far exceed the value of the winter power payment.
“It gets worse, the government gives you $20 with one hand and takes it away with the other,” Paraha said.
A recent Cabinet document showed low-income New Zealanders owed more than $3.5billion to the MSD, Inland Revenue and Department of Justice and warned the debt was hurting physical well-being and mental and fueled violence in society.
Sepuloni said while work is underway to try to make debt repayments fairer, the government has no plans to erase the debt.