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

The Government is putting more beneficiaries further into debt, with loans totalling almost $2 billion.

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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

Figures released to 1 NEWS under the Official Information Act show almost 560,000 people now owe $1.9 billion to the Ministry of Social Development.

It’s 50,000 more people than in 2018, when $1.5 billion worth of interest-free loans were handed out 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.

Social Development Minister Carmel Sepuloni told 1 NEWS that it’s much better than families going to get high interest loans “to cover some of these basics”.

Auckland Action Against Poverty spokeswoman Brooke Fiafia Pao said it shows that benefits are too low and “people cannot actually pay for these things”.

Some of the debt is due to over payments by the Ministry, and welfare advocates want the debt wiped.

Green Party social development spokesman Ricardo Menéndez March said the Crown has the ability to wipe the debt that beneficiaries have.

“This would enable people to have a reset and get back on their feet, and not to have to lose $20, $30 or $40 of the weekly income,” said Menéndez March.

Sepuloni said wiping the debt was “not up for consideration”.

ACT leader David Seymour argued the loan scheme is creating a culture of entitlement.

“There’s a lack of long term thinking and it's actually long term cruelty,” said Seymour.

“The fastest way to repay these loans is get a job but the Government’s policy is to continue a culture of dependency and we cannot afford it.”

Sepuloni argues the goal is to find people jobs, but she was not backing away from the Government’s support initiatives.

She pointed to her multibillion-dollar families package, her decision to index benefits to wage growth, and the new winter energy payment.

Sepuloni also said she would responded to income adequacy this term.

But beneficiary Kafa Mamaia, who is close to $10,000 in debt with the Ministry, said she doesn’t hold out much hope.

Each week she has to repay $46 out of her $386 benefit, and said she needs every cent to take care of herself and her four children.

“It’s a big difference 'cause we need that money. It’s not enough, even the benefits not enough.

“If they cannot do anything then we’re going to need a new Government that cares,” Mamaia said.