Prime Minister John Key said the Government were working hard to deliver jobs and opportunities for young Pasifika people after news Pacific people have been the worst hit in the recession in New Zealand.
A report released by the Salvation Army called, More than churches, rugby and festivals, finds Pacific people have been severely hit and not have the highest unemployment, the lowest incomes and a widened income gap.
Salvation Army say the average income is $479 a week compared with $721 for non-Pacific adults - a $2 a week increase over five years, compared with $54 for the rest of adult workers.
the report shows a spike in demand for food parcels and budgeting advice
At the end of last year, 16 per cent of Pacific Islanders were unemployed.
Almost 13 per cent of working-age Pacific people received a Work and Income benefit in 2012, a year in which the Salvation Army provided Pasifika clients with 6429 food parcels - a dramatic rise from 1140 in 2007.
There were 983 Pasifika people who accepted help from the Army's budgeting service, up from 241 in 2007.
Labour Pacific Island affairs spokesman Su'a William Sio said $861,000 worth of funding had been cut from the ministry.
He said it was poor timing, as it would hurt Pasifika people already suffering high unemployment, low incomes and growing inequality.
He said the funding cut was a significant reduction for a small agency.
"It comes at a time when Pacific underachievement is at its most severe."
Mr Key refuted there had been a cut to funding for the Ministry of Pacific Island Affairs.
"There is a group of Pacific people who are lower income workers - so it's not surprising that they have been more badly effected as a group.
"There's no question that the last four or five years have been very tough on lower income New Zealanders - not withstanding the Government doing everything it can to support them through programmes like Working For Families and entitlements," Mr Key said.
Mr Sio said too many Pacific Island people were "unskilled" and "unsupported".
"Pacific Island Affairs Minister, Hekia Parata, has failed to stem growing inequality and Pacific people are losing out as a result.
"Hekia Parata's $330,000 cut to community and stakeholder engagement activities [in last week's Budget] will also undermine efforts in areas like education and ECE participation where significant gains have been made.
"Cancelling $253,000 in funding for business and skills training is short-sighted considering the Pacific community desperately needs to up-skill," he said.
But Ms Parata said there had been no cut to the baseline funding of the ministry.
"It has been reported that the ministry's funding has been reduced by $861,000 in this year's Budget. This is incorrect. Last year's Budget included $653,000 of underspends from the previous two years' Budgets that were transferred forward to 2012/2013 due to delays in some projects.
"In addition it included $208,000 for special one-off projects funded by other agencies,'' she said.