Debts crippling school leavers

Teenagers are coming out of school already thousands of dollars in debt. Photo / Jason Dorday

Teenagers are coming out of school already thousands of dollars in debt, a welfare forum was told yesterday.

Social workers from the Taonga teen parent unit attached to James Cook High School in Manurewa said young girls were being sold clothing on credit by mobile trucks and stores.

In one case, a former teen mother who is now a grandmother, aged 35, has racked up debts to eight finance companies totalling more than $50,000.

Social worker Rhonda Tautari said many young mothers were getting into debt as young as 16, when they qualify for the emergency maintenance allowance. "We have girls that sign up to about four [clothing] trucks when they're 16," she said. "There should be an age limit of 18."

Clothing trucks and "loan sharks" were a prime target at the Manurewa forum held by the Alternative Welfare Working Group, which is holding hearings to provide an alternative to the Government's official working group aiming to reduce welfare dependency, chaired by economist Paula Rebstock.

Former Green MP Sue Bradford, one of six members on the alternative group, said Labour and National had both failed to regulate either the interest rates charged by many loan sharks or the methods used to lend money to vulnerable people.

"I frankly hope National might understand the depth of the problem in places like Manukau and do something about it," she said.

Taonga manager Erana Doolan said teenagers from low-income families who had never had money before were being tempted by clothing trucks offering the latest designer-label clothing and other services. "Our girls are coming out of school with huge debts at 16, 17 or 18. They have huge debts before they even start."

Ms Tautari said some teenagers were borrowing money to buy cars.

"One had a window smashed but couldn't afford to get it fixed. They are driving around with no registration or warrant because they can't afford to get things fixed," she said.

She said the 35-year-old grandmother was paying off three cars even though two had been repossessed because she could not meet the payments on them.

"When you look in her cupboards, she's got nothing."

The alternative group will be in Hamilton and Rotorua next week and is taking submissions until the end of this month.