Debt must be tackled as a social ill, like gambling and alcohol addiction

A local credit union in South Auckland is calling on the Government to extend the same level of help it does to quit smoking initiatives, gambling helplines and addiction support to people who are trapped by consumer debt.

Education and Development Manager at Westforce Credit Union, Tu Nuualiitia, said today that debt is just as destructive as other social ills like smoking and gambling, but remains largely neglected as a social issue.

“Spending money gives people a lift, a temporary high, but unfortunately when they crash it is not only painful and destructive, but punitive interest rates and fees charged by loan sharks make sure that it is also prolonged.

“The damage debt does is well documented. It is a cycle and a culture that is inherited by children and compromises their access to nutrition, education and decent living conditions, not to mention its contribution to relationship break-ups, domestic violence and alcoholism.

“New Zealand families will be trapped in this vicious cycle of debt so long as broader society and the Government of the day continues to view the credit industry from a purely consumer ‘business’ perspective, instead of as the social ill that it is.”

Mr Nuualiitia said that while work on the consumer finance act is a small step in the right direction – though its failure to cap interest rates is a serious shortcoming – the finance industry and government need to consider ways to address debt as a social problem and not an economic one.

“Many borrowers tell us that they are wary of mainstream financial providers because they fear they will be judged and rejected – in effect they are intimidated by mainstream services, so they always end up with bad debt.”

He said in the same way that Government is moving to address plain packaging on cigarette boxes, attention needed to be focussed on eliminating loan shark messages like ‘bad credit is no problem’, ‘no credit checks,’ ‘approval in two minutes,’ ‘unsecured loans,’ ‘$50 a day gets you $5,000’ and ‘low interest’ (which promotes 3 per cent per day interest rates that actually amount to 21 per cent a week).

Mr Nuualiitia called on the Government and authorities to legislate for a cap on interest rates, responsible advertising and to fund some form of debt rehabilitation service.

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