Hard-hit survive on advance payments

Tauranga Budget Advisory Service co-ordinator Diane Bruin said Work and Income legislation changes introduced last year were proving constructive.

Cash-strapped Bay of Plenty beneficiaries are receiving millions of dollars in advance welfare payments, mostly to cover bond, rent or outstanding power bills.

Beneficiaries can request multiple advance payments to cover emergency expenses each year. But they must pay the money back from their weekly welfare payments - unlike hardship grants offered by Work and Income.

Ministry of Social Development figures released under the Official Information Act show Work and Income processed 26,043 advance payment applications for the Bay in the 2012-13 financial year. This was down from 28,391 in 2011-12 and 34,783 in 2010-11.

Most applications were to cover rent and bond, followed by electricity, gas, whiteware and accommodation.

Although the number of applications had dropped, 21,750 were approved and 4293 declined last year.

The average amount advanced was $438, while the largest advance payment was $4037 for urgent house repairs.

In total, $9,520,629 was paid out in advance payments to Bay of Plenty beneficiaries last year, down from $9,375,471 in 2011-2012 and $10,372,982 in 2010-11.

Tauranga Budget Advisory Service co-ordinator Diane Bruin said Work and Income legislation changes introduced last year, which required beneficiaries to seek budgeting advice if seeking repeated advance payments or food parcels, were proving constructive. "The outcomes are better. With [the client] working with a budgeter they've been able to restructure all of their debts so they're actually managing it better."

If a client's advance payment application was denied, the service would refer them on to other agencies for support, often finding a way to get assistance, such as money for a power bill or a two-week food parcel.

Nationwide, Work and Income gave out 306,528 advance payments last year totalling more than $113 million, down from 403,828 payments in 2010-11 totalling nearly $129 million.

The money was mostly needed to cover bond or rent, followed by accommodation and electricity or gas. Other expenses included whiteware, car repairs and school uniforms.

Federation of Family Budgeting Services chief executive Raewyn Fox said the drop in applications was partly due to the corresponding drop in unemployment.

But it also reflected that many beneficiaries had already had several advances during the global financial crisis.

"If you get any more advances you can't afford to live."

Ms Fox was not surprised tenancy costs were the most commonly cited advance expenses. "It's a big lump of money that you have to try to save up to get yourself into a house."

Some beneficiaries had to forfeit a bond if they fell behind in rent and had to leave a property, which meant they needed help to raise a new bond.

"If somebody's on the benefit or really low income it's quite likely that they struggle with their rent anyway, particularly in areas where the rent's high."

After rent, power was the most expensive essential household item, she said.

Power companies were becoming "more strict" about timely bill payments.

"If you're on a limited income per week and you get a bill of $300 or $400, you just don't have enough money to pay for it.

"Sometimes [beneficiaries] choose to feed their families instead of paying their bills - they don't have easy choices."