The $1.5 billion debt Kiwis owe to the Ministry of Social Development for loans shows "how low benefits are and how we desperately need to put the heart back into our social support system", say the Green Party.
Green Party Co-leader Marama Davidson called the system "fundamentally cruel and harsh".
"People are surviving from day to day and then having to take out a loan from MSD just to go to the dentist”.
It comes after 1 NEWS found the Ministry of Social Development handed out $1.5b in loans, interest free, to 509,571 people for necessities such as dentistry, school supplies and housing.
Social Development Minister Carmel Sepuloni said a large amount of that money is over payments, "and then it's also hardship and then it's also fraud".
Ms Davidson said the criteria for debt write-offs needed to be reviewed.
"At the moment that criteria is too harsh and people living in desperation are trying to cover the basics whilst paying off a debt. This is cruel and unnecessary and just entrenching poverty."
She said benefit levels needed to increase "so people aren't getting into further debt or turning to loan sharks".
"Current benefit rates are not enough for people to save money for unexpected expenses, and we know that going into debt compounds existing hardship. It is vital that we put our heart back into our social support system and fix these issues properly".