Many families facing newfound financial hardship due to COVID-19 may not be seeking help – believing they should be able to manage on their own or unaware they qualify for support, according to Good Shepherd NZ.

The charitable organisation provides ‘Good Loans’ – no interest and low interest loans to people on limited incomes, alongside financial coaching support. Good Shepherd NZ is becoming increasingly concerned that New Zealanders newly struggling to make ends meet might not be accessing the help available to them.

This is supported by new research released yesterday by the Commission for Financial Capability that shows free financial guidance is being underutilised.

The Commission’s survey found that a quarter of New Zealanders are now in arrears on at least one of their household bills, and a staggering 70 percent are either experiencing financial difficulty or at risk of tipping into hardship.

Good Shepherd NZ’s chief executive Fleur Howard cites “optimism bias” as a contributing factor to people not seeking help – meaning that many people who are usually in paid employment won’t identify with needing support.

“Before COVID-19, we saw employed people who thought that they were doing OK financially because they had jobs and wages coming in. In reality their situation was more dire than they realised, particularly for those living in private rental accommodation,” says Fleur.

“We are concerned that this same optimism is keeping people from accessing support now. At Good Shepherd NZ we use the same income thresholds as the Community Services Card ­– for example, we can help a family of four earning less than $75,900 a year. We estimate a lot of families will now qualify for this support but don’t realise it, and will try and struggle through on their own.

“Our message to these people is that help is available and now is the time to give us a call – we’ll do our very best to support you through this and to stop your situation from spiralling.”

Good Shepherd NZ predicts that the ongoing effects of COVID-19 will mean many more people need help for the first time.

One of these people is Gisborne solo mother Sarah (name changed for privacy reasons). Her pay was reduced due to COVID-19, and the wage subsidy is just enough to cover her rent.

“Things were getting pretty tight, and I didn’t have anything to lean on. It was only by chance that I saw the no interest loans on a Work and Income Facebook thread and decided to apply – unsure that I would be eligible,” says Sarah, who has used the money to pay household bills.

“The loan was a huge relief and made me realise that we can get through this. I really don’t know what I would have done. I would have considered payday loans.”

Fleur says, “We know that almost half of those who accessed the Jobseeker benefit during the lockdown period had never received welfare support before.

“Our community loan workers also tell us that many working families on reduced incomes due to COVID-19 are now struggling to pay for food, medical bills, transport and other essentials.”

Community loan worker Lloyd Maole, who delivers Good Shepherd NZ’s loans to Otago residents via Presbyterian Support Otago, says half of his clients are in full-time employment.

“The majority of them have never experienced significant financial hardship before. Kiwis want to stand on their own two feet, and it is hard for them to bite their ego and ask for help,” says Lloyd.

“We expect the situation to get worse in the coming months once the wage subsidies run out, which might result in a wave of redundancies. We are actively working with employers so they can communicate to their staff the various support services available.

“People don’t need to do it on their own.”

In response to COVID-19, Good Shepherd NZ has changed its loan criteria so people impacted by the pandemic can now access urgent financial relief for bills and debts. The loans are usually reserved for purchasing essential household goods or services.

Flexible payment arrangements like deferred first payments and longer loan terms are available, alongside financial coaching support. Good Loans can now also be accessed by migrants on working visas who might not qualify for other forms of support.

Additionally, Good Shepherd NZ’s loans are available over the phone as well as in the community – making affordable credit more accessible to people throughout New Zealand. People can also access support from financial mentors over the phone through Money Talks.

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