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Beneficiaries borrowing more and falling deeper into debt

Greater numbers of beneficiaries are borrowing money from Work and Income NZ to stay afloat – and they’re falling deeper into debt.

A bitterly cold winter is making matters worse for beneficiaries in debt Source: 1 NEWS

ONE News can reveal the percentage of beneficiaries in debt to WINZ has risen from 49 per cent in 2008 to 58 per cent last year, while the average debt owed has increased nearly $400 to $2410.

And those on the front line say a particularly cold winter is adding to low-income families' woes, with soaring power bills putting added pressure on already-tight budgets.

"I would say [debt] is about fifty per cent worse this year that it was last year", Mangere Budgeting Services chief executive Darryl Evans told ONE News.

Mr Evans believes families are taking out loans to pay for everyday necessities, rather than the one-off emergencies they're designed for.

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"People are not borrowing to go on holiday. They're borrowing to keep cars on the road, they're borrowing because often they're two to three weeks behind in the rent, these days it's also power", he said.

The Green Party, which requested the figures through parliamentary questions, says they show the government's hardship package announced in the budget won't go far enough.

"We need to make sure there are more grants and not loans for these essentials," Greens co-leader Metiria Turei told ONE News.

"Power bills should be provided as grants so that over this winter, families can heat their homes to keep their kids well."

Social Development Minister Anne Tolley says the government is working with families to keep them out of debt in the first place.

"We've introduced a microfinance pilot with Good Shepherd, Salvation Army and the BNZ has provided no interest and low interest loans to people with low incomes, alongside one-to-one financial literacy support", she said.

"I encourage anyone struggling to get in touch with Work and Income to see what assistance they may be eligible for."

The government also pledged an extra $34m in May's budget to help get more people into work, she said.