Beneficiaries owed more than $627 million to Work and Income at the end of the financial year, according to official figures.
As of June 30, beneficiaries owed $627,780,079 to the Ministry of Social Development, the umbrella organisation of Work and Income.
Jobseeker support and sole parent support beneficiaries owed $417,333,640.95. The debtors -- 59.1 per cent of total main benefit recipients -- owed an average of $2475.90.
Debt can occur as a result of overpayment, "recoverable assistance" and fraud. Recoverable assistance helps people pay for things they need urgently, such as school uniforms or rent arrears.
Budget advisors and beneficiary advocates in areas such as Northland, Rotorua, Hawke's Bay and Wairarapa say they often meet beneficiaries who have racked up large debts for essential costs.
Shelly Fischer, of Rotorua Salvation Army community ministries, said many beneficiaries received advanced payments for necessities such as washing machines, school supplies, and rent and power arrears.
"A smaller number have debt because they commit benefit fraud by living with a partner without telling [Work and Income] so they both receive single benefits, or because they were working and claiming a benefit," she said.
Beneficiaries often lapsed into rent and power bill arrears because they were juggling other debts, she said.
Ms Fischer and Wairarapa Advocate Service co-ordinator Trevor Mackiewicz often saw beneficiaries with truck shop debt.
"The trucks go around to areas where the most vulnerable people live and sell them really over-priced goods on layby so it doesn't seem like much when you first get it," Mr Mackiewicz said.
"We tell people they're not worth it and give out 'do not knock on this door' signs but it's hard to say no, especially when you see things that would make nice presents for your kids. [Beneficiaries] want their kids to have a good Christmas, just like everyone else."
Ministry of Social Development spokesman Carl Crafar said the ministry worked hard to "protect the integrity of the system to ensure it remains fair to all New Zealanders.
"The ministry has a dedicated team of approximately 110 specialist fraud investigators throughout the country, and an intelligence unit that identifies emerging fraud risks and trends.
"We work with other government agencies to identify and reduce the incidence of fraud and also investigate cases which arise through allegations from members of the public."
Each year the ministry pays out $23 billion to more than one million New Zealanders.
Benefit debt as of June 30
• Number of clients: 285,349
• Number with debt: 168,553
• Percentage 59.1 per cent
• Average debt: $2475.90
• Total debt: $627,780,079
• Benefits include: Jobseeker Support, Sole Parent Support, Supported Living Payment, Youth Payment, Young Parent Payment, Emergency Maintenance Allowance, Emergency Benefit and Jobseeker Support Student Hardship.
Source: Ministry of Social Development
