Accommodation crunch sees emergency grants double to $33.1m in two years
Sunday, 2 September 2018
Spiralling accommodation costs are driving more people to ask for Ministry of Social Development (MSD) emergency grants than ever before.
The total value of Special Needs Grants (SNGs) has almost doubled from $16.7 million - in the year to June 2016 - to a whopping $33.1m in just two years.
Over the same period, the level of hardship assistance - which includes SNGs and at least two other grants has surged from $58.3m to $88.1m, a 51 per cent increase.
At a meeting of budget advisers on the Kāpiti Coast, a story emerged of a Paraparaumu family whose rental costs were $10 more a week than their total weekly earnings.
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National Building Financial Capability Charitable Trust chief executive Tim Barnett, said the family's financial dire predicament was far from unique.
'Their whole income is being taken up by rent. We're hearing more and more cases like that which is the impact of rapidly-increasing rentals in certain communities,' Barnett said.
'The striking thing for us is that in every community - because we've got services just about everywhere - in every community, there are people with these struggles.
'There are very few places in the country where rents haven't gone up much faster than income rates in the last few years,' Barnett explained.
It has come less than a week after the Government unveiled proposed tenancy reforms which could restrict landlords from increasing rents to once a year from the present six-monthly restriction in place now.
SNGs are untaxed financial assistance designed to help people meet immediate needs, and the recipient does not need to receive a main benefit to qualify.
The number of SNGs - which can either be given out as a loan or on a non-recoverable basis - has increased by 26,882 since the June 2017 quarter to 185,914 in the year to June.
'We are seeing a material increase in demand for emergency SNGs (25.5 per cent since 2014/15) due to the corresponding demand for housing.
'People are spending more and more money on rent so need a hand to pay for other necessities like food and other bills,' said MSD's group general manager client service delivery, Kay Read.
Geoff Curson is a manager at Wellington's Newtown Budgeting and Advocacy Service and said rents can 'be enormous' for some beneficiaries.
He said many of his agency's clients have their financial woes compounded by health costs, including mental health and addiction.
The stress of failing to make ends meet leads many to seek out short-term, high-interest loans to bridge the gap - some also struggle to find affordable, private rentals because of bad debts.
'I think these things become worse when people are stressed and they're not managing to pay their rent.
'Unfortunately, it can spiral into something worse and people may be borrowing from lenders who, frankly, should not be lending to them,' Curson said.
Demand for food grants was a major contributor to the spike in SNGs, rising from 90,111 in June 2016 to 137,424 in the year to June.
'Food is the main reason for increase in hardship assistance, which shows that families do not have enough left over after other weekly expenses such as rent,' said Minister for Social Development Carmel Sepuloni.
'Many people were deterred from seeking support under National, and we have made a real commitment to making sure New Zealanders in need are accessing the supports they are eligible for.'