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Economist believes more beneficiaries will end up in debt after Government loans total revealed

A leading economist believes more beneficiaries will end up in debt, after 1 NEWS revealed almost $2 billion is now owed to taxpayers.

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Infometrics’ Brad Olsen says it's a sign more people are struggling to meet their day-to-day costs. Source: 1 NEWS

Figures released under the Official Information Act show almost 560,000 people now owe $1.9 billion to the Ministry of Social Development, after taking out interest-free loans for things like school uniforms, the dentist, electricity and car repairs.

Each person owes almost $500 more than three years ago, with the average amount being $3420.

Infometrics director and senior economist Brad Olsen said the increase shows that people are “really struggling to meet their day-to-day costs”.

He said that the loans are not easy to get and are only covering the basic necessities.

“The reason we've got such a high number of them going out does highlight that there are severe concerns for those who are doing it tough across the country.”

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Government putting more beneficiaries into greater debt, with loans totalling almost $2 billion

He said those at the lowest end who were already struggling before Covid-19 are doing it even tougher now.

“We've had expert advice over the last few years to show the benefit isn’t fully enough to live on. I think we need to start taking those experts seriously.

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1 NEWS has obtained figures showing thousands more people are borrowing money from the Ministry of Social Development to get by and it's now owed close to $2 billion. Source: 1 NEWS

“These problems are not going to go away they’re only going to get worse. The money will have to be repaid to the Government at some point,” Olsen said.

The cost of living has been increasing in the last six months, and it’s expected to get worse with supply chain disruption driving up costs.