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Beneficiary debt

Subject: Beneficiary debt

Press Release Wellington People's Centre
24 March 2008

Beneficiary advocate, Ms Kay Brereton of the Wellington People's Centre,

Opposition Welfare Spokesperson Judith Collins is apparently shocked at the high level of benefit debt, and made calls for a return to compulsory budget advice for beneficiaries. The Benefit Rights Service is opposed to moves which blame people with debt, as it is the inadequacy of income for day to day needs that drives people into debt.

Ms Brereton states that "For beneficiaries it is not so much a budgeting problem as an issue of income adequacy. The daily choices beneficiaries face are how to juggle paying for the rent, electricity, food, or going to the doctor. Soaring beneficiary debt, be it to Work and Income, banks, finance companies, loan sharks, or family and friends is caused by benefits falling behind the real cost of living. CPI just does not square the price increases beneficiaries face. Benefit levels need to be sufficient so that debt is not a forced reality."

It is one thing for people to think they could live on an sickness or unemployment benefit of $178.49 plus $74 accommodation supplement, with rent of $150pw in Wellington; for a week or even a month, but what if it is long term? Many people find that it is unforeseen illness which leads them to needing social security. On 1 April this will increase to $184.17 plus $73 accommodation supplement; an effective increase of 1.85%

A further problem exacerbating the debt situation is the government's supplementary assistance systems. Beneficiaries now face a system reminiscent of what was present immediately after National's benefit cuts of 1991 when beneficiaries with very high rental costs, needing third tier hardship assistance had to find the first $20 before Work and Income can even consider helping. This drives people to borrow to survive.


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