A financial mentor says the removal of Ministry of Social Development funding for some budgeting services will have a “knock-on effect” for the most financially vulnerable.
Around a third of free budgeting services — 44 — are losing Ministry of Social Development funding, while others have had funding reduced.
New data from credit agency Centrix showed 16,000 more New Zealanders fell behind on their mortgage and credit card payments in May and arrears were more than 8% higher year-on-year.
Not-for-profit debt solution service Debtfix was granted a contract with MSD during Covid-19 but will now no longer be funded.
Co-founder Christine Liggins described the move as “quite shocking” given the challenging economic climate.
“Sixteen thousand more in May and yet we’re losing funding. It just seems quite incredible really,” she told Breakfast.
She said she’s concerned removing budget services from communities would have a “wider impact on whānau”.
Around a third of free budgeting services – 44 – are losing Ministry of Social Development funding, while others have had funding reduced.
“It has impacts on mental health, we’re concerned about an increase in domestic violence, financial abuse.
“We’re really concerned because it takes a lot of time and effort for people to come to us in the first place because of the shame … so they’ve already fallen off the cliff when they come to us. And now, I don’t know where they’re going to go for help because we’re already experiencing in some areas a four to six week wait.”
Liggins said in some cases the removal of the service could see people have to wait up to three months for financial help, which she described as “quite frightening”.
“What’s going to happen is we’re going to see an increase in health issues, mental health issues, maybe even bankruptcies as well because they have nowhere else to turn.
“It’s really quite hard and it’s hard for us to imagine what’s going to happen.”
‘Those services are important’ – PM
Speaking to Breakfast, Prime Minister Christopher Luxon said he understood it was a very tough time for Kiwi families.
“Better times are ahead I promise, but the bottom line is I have sat with families who are at risk of losing their home in one of those budgeting sessions, I’ve done a couple of them, and it is incredibly tough and challenging.”
He said he could not comment on budgeting services support, but that there would be “an MSD decision around that”.
“But what I can say is I know those services are important, I’ve been with families as they’ve gone through them. There is a range of them up and down the country and they are important services.”
The Ministry of Social Development has been contacted for comment.