Help for those on low incomes must target struggling budget services in high need areas

Open letter to: Hon Anne Tolley, Minister of Social Development

Dear Minister

Nga Tangata Microfinance welcomes the financial help for low-income earners signalled in the Government’s 2016 Budget. Funding to support budgeting advice to low-income earners is urgently needed, and it is vital to expand the capacity of budget services who address the financial challenges of the most desperate families and individuals.

With loan capital provided by Kiwibank, Nga Tangata Microfinance (NTM) works in partnership with local budget services to strengthen financial education and capability, promote financial inclusion and protect clients against predatory high interest lenders. NTM’s safe fair and affordable, nil interest loans are most effective in building family assets and tackling high interest debt.

The Ministry of Social Development has signalled a major shift in how it funds and supports budget services. We urge that the evaluation of agencies considers the expansion of budget services and capacity in areas where extreme need and urgency exists, such as in south Auckland.

NTM began offering nil interest loans in south Auckland in 2011, partnering with 6 Budget Services at that time. We regularly hear of waiting times of 2-3 weeks or more to see a budget advisor, and there is no capacity for emergencies. Advisors themselves are put under increasing stress due to the pressure. A budget advisor in Manurewa said "I often see 8-9 families per day, which I have been told will cause burn-out…you cannot turn people away as they need help that is timely."

Social Services in south Auckland conveying support to this letter’s petition include Family Start in Manurewa, Mangere East Family Service Centre, Taonga Educational Centre Trust, Manurewa Marae, Finlayson Park School, Te Tai Awa o Te Ora and Whanau o Tumanako.They frequently encounter families confronting deep social issues or crises, financial stress, high debt, and budget difficulties. As one senior staff comments "Clients are at the end of their tether and then face having to wait for an appointment, often up to 3 weeks, with a budget advisor …this is often too late to deal with urgent demands for payment or threats of repossession". It is essential that such clients be offered not only effective wrap around social services, but timely budgeting advice and support, financial education, and ethical lending alternatives.

The financial capability of all New Zealanders, especially those facing hardship, will remain a distant hope unless priority is given to the resourcing and expansion of budgeting services situated in localities of high need, such as south Auckland.

Yours Sincerely

Robert Choy

Executive Officer, Nga Tangata Microfinance

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