Govt must wipe debt to MSD as part of ‘cost of living’ response

The Government needs to clear the debt that MSD has forced hundreds of thousands of low income people to take on, says the Green Party.

The Government’s ‘Cost of Living Payment’ will begin on 1 August for those earning less than $70,000, but people on the benefit and pensioners are not eligible. Alongside the Fairer Futures Collective, the Green Party is calling on the Government to clear debt to MSD to support people on the lowest incomes who need it the most.

“The Cost of Living Payment should be available to those on the lowest incomes who are feeling the impacts of high inflation the most,” says Ricardo Menéndez March, spokesperson for social development.

“But the Government won’t extend the payment because it wrongly believes the Winter Energy Payment is enough to alleviate the cost of living pressures people face.

“MSD’s own data proves the Government wrong. More than half a million people rely on hardship grants, and more importantly the amount they need simply to cover essentials has gone up. 

“The reason this extra support is needed is simple: because people’s benefits are insufficient.

“Much of this support provided by the Government is just a loan. When people are forced to repay this loan, it reduces their weekly income even further, which pushes them into a vicious cycle of more debt. Data also shows women and Māori are disproportionately trapped in this cycle. 

“No one should have to take on debt simply because they ask for additional support to help make ends meet and put food on the table.

“MSD says it does not have the ability to write off most of this debt, but the government could easily change that, and relieve this pressure on so many beneficiaries - especially Māori and women.

“This could put money back into the hands of people on the lowest incomes and give them dignity to live without debt holding them back,” says Ricardo Menéndez March. 

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