Government must erase debt to MSD as part of ‘cost of living’ response

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The government must erase the debt that the 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 start on August 1 for those earning less than $70,000, but people on the payroll and pensioners are not eligible. Alongside the Fairer Futures Collective, the Green Party is calling on the government to write off the debt to MSD to support those on the lowest incomes who need it most.

“Payment for the cost of living should be available to those on the lowest incomes who feel the effects of high inflation the most,” said Ricardo Menéndez March, spokesman for social development.

“But the government will not extend the payment because it mistakenly believes that the winter energy payment is sufficient to alleviate the cost of living pressures people are facing.

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

“The reason why 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 further reduces their weekly income, which pushes them into a vicious cycle of more debt. The data also shows that women and Maori are disproportionately trapped in this cycle.

“No one should have to go into debt just because they want extra support to make ends meet and put food on the table.

“MSD says it doesn’t have the capacity to write off most of this debt, but the government could easily change that and relieve this pressure on so many recipients – especially Maori and women.

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

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