The Greens are calling for the Government to wipe beneficiary debt as new figures show in the past four years more than $110 million has been loaned to cover dental bills alone and repayments are eating away at living costs.
The Government recently increased the grant cap from $300 to $1000 - which does not need to be paid back - and says it is taking a much more careful approach to overall beneficiary debt.
But the Greens are concerned about the existing debt owed to the Ministry of Social Development. Recoverable grants for dental treatment increased from $12.3m in 2015 to $31.8m last year and $27.2m in the first nine months of this year. And that’s part of growing overall debt owed to MSD of more than $2 billion.
Green Party spokesman for social development and employment Ricardo Menéndez March said raising the grant cap was a step in the right direction but the current system still meant people would be accumulating debt, meaning repayments would be eating away at their benefits.
Even with the grant cap rising, it only just covers the average dental loan, up to $835 as of September - up from just over $500 when Labour came into Government in 2017.
At the current rate, the average bill would surpass the $1000 grant cap in a few years, something anti-poverty campaigners and medical experts have pointed out in calling for universal dental care.
Currently, those on low incomes or on a benefit can access up to $1000 in grants to pay for emergency oral care, but anything on top of that they have to pay back, known as recoverable grants.
Increasing the cap was one of Labour’s manifesto commitments from 2017 and was the first time it had been raised in 25 years. Prior to the grant cap rising, anything over $300 had to be paid back.
Answers to Written Parliamentary Questions from Menéndez March showed since 2017 annual dental loans had doubled from just under $15m to nearly $32m last year, and $27.2m in just the first nine months of this year.
The number of recoverable grants rose from about 29,000 in 2017 to just over 41,000 in 2021.
The average value of those grants rose from $512 in 2017 to $835 in the first nine months of this year.
Menéndez March said existing debt and the repayments would be eating into the salaries and benefits of those in most need.
“People are repaying on average $27 a week. The agency supposed to be supporting people is supporting people getting into debt and into further hardship.”
The dental debt was part of the ballooning $2.2b owed to MSD by more than half a million people - up from just under $2b the year before, an increase of 10 per cent.
“MSD needs to wipe that and ensure people are not getting into debt in the first place. All grants should be non-recoverable,” Menéndez March said.
“It is a political choice to create this debt to the agency that is supposed to support them. You should not have to choose between paying rent or getting treatment for rotting teeth.”
Social Development and Employment Minister Carmel Sepuloni did not respond directly to questions about wiping Government debt.
She said by increasing the dental grant to $1000 through this year’s Budget it was estimated the amount of client debt to MSD would reduce by $95 million over four years, as more of the cost would be covered by the grant.
The Government also removed the previous grant requirement for the need to have arisen from an emergency, which in reality meant people waiting until they were in pain before seeking treatment.
The Government was also undertaking a cross-agency programme focused on reducing the impact of problem government debt for people in hardship, she said.
“The work programme aims to improve coherence and consistency across Government, ensure debt recovery is fair, effective, and avoids exacerbating hardship, and prevents problem debt from occurring, so that it does not create future problems for those in hardship.”
Initially this involved understanding and defining the problem, and working across agencies’ policy and operational teams to identify the different approaches to debt generation and recovery.”
Budget 2022 also permanently increased the income limits for Special Needs Grants, Recoverable Assistance payments, and Advance Payments of benefit, all indexed to average wage growth from April 1 next year.
Increasing the dental grant cap was estimated to cost $125.8m over four years.