Beneficiaries' debt piling up

As of June 30, 15,767 Bay of Plenty recipients of a main benefit owed more than $38 million to the Ministry of Social Development.

Rotorua beneficiaries are piling up large Work and Income bills to cover essential costs, a local budget adviser says.

As of June 30, 15,767 Bay of Plenty recipients of a main benefit owed more than $38 million to the Ministry of Social Development, the umbrella organisation of Work and Income. Main benefits included welfare such as Jobseeker and Sole Parent support but didn't include superannuitants.

The debtors - 60.8 per cent of total main benefit recipients in the Bay - owed an average of $2412.41. This was slightly below the national average of $2532.86. Rotorua-specific data was unavailable.

Rotorua Salvation Army community ministries manager and budget adviser Shelly Fischer said 99 per cent of beneficiaries she dealt with owed money to Work and Income. "Most end up in debt because they get advance payments for essentials like washing machines, school supplies, rent arrears and power arrears," she said. "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."

Beneficiaries often lapsed into rent and power bill arrears because they were juggling other debts, she said. Ms Fischer also often met people with considerable debt from payday loans which were available online without credit checks.

Christmas wasn't the time to build those debts even further, she said.

"Christmas doesn't have to be over the top and expensive. Kids remember traditions like making gingerbread every year and always having the family together; they won't remember getting an Xbox when they were four."

Nationally, $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.

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.

Each year the ministry administers $23 billion to provide income assistance to more than one million New Zealanders.

Bay of Plenty benefit debt as of June 30:

* Number of clients: 25,926

* Number with debt: 15,767

* Percentage: 60.8%

* Total debt: $38,036,468.50

* Clients on main benefits including 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