Beneficiaries owe more than $27m

Hastings Budget Advisory Service co-ordinator Kristal Leach is not surprised by the number of debtors.

East Coast beneficiaries owed more than $27million to Work and Income at the end of the financial year, according to official figures.

As of June 30, 10,999 recipients of a main benefit in Gisborne and Hawke's Bay owed a total of $27,644,666.60 to the Ministry of Social Development, the umbrella organisation of Work and Income. Main benefits included Jobseeker and Sole Parent support but didn't include Superannuitants.

The debtors - 63.5 per cent of total main benefit recipients on the East Coast - owed an average of $2513.38. This was slightly below the national average of $2532.86.

Hastings Budget Advisory Service co-ordinator Kristal Leach wasn't surprised by the number.

"If you have rent arrears, or power arrears, or a medical bill, and you're on a benefit, getting an advanced payment from Work and Income is the best way to pay those bills," she said. "They're basically an interest free loan. Work and Income normally take out 10 per cent of the benefit for repayments, which might be $5 a week or perhaps $20 a week.

"Clients can also talk to their [Work and Income] case managers about reviewing the debt so it's manageable for people struggling to afford necessities."

Most beneficiaries who owed money to the ministry also had other debt. Christmas wasn't an excuse to add to those debts, Ms Leach said.

"Our advice is to only buy things in cash. If you haven't got the cash, don't buy it. If you buy something on your credit card come January you'll be looking at a big bill."

Nationally, a total of $627,780,079 was owed by beneficiaries at the end of the financial year. Almost 60 per cent of 18 to 64-year-olds on a main benefit were in debt, with an average individual debt of $2532.86. Main 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.

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".

Clients could owe money to the ministry because of overpayment, "recoverable assistance" or as a result of being prosecuted for fraud.

Recoverable assistance was a payment which helped people pay for something they needed urgently when they had no other way of paying for it, for example school uniforms or rent arrears.

Most overpayments occurred because clients failed to inform Work and Income of a change in their circumstances, such as accommodation costs, Mr Crafar said.

"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," Mr Crafar said.