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Government funding cuts to budgeting services and financial mentors couldn’t have come at a worse time, according to a national debt solution charity based in Warkworth.
Debtfix Foundation chief executive Christine Liggins says the Ministry of Social Development (MSD) cuts that came in on July 1 will not only hit the worst-off hardest, but will also have far wider implications.
“By helping people with their finances, you reduce mental health issues, crime, stress, increase productivity – we’re the starting point,” she says. “I agree with some of the cuts, but in a cost-of-living crisis, this seems the wrong area to be cutting back. This will have a ripple effect.”
MSD has cut funding from 44 budget services – around a third of them – across the country, as well as stopping funding for debt solution organisations such as Debtfix.
Liggins says this is a hard hit for the service, which employs 16 people.
“We only got the funding through covid for four years, but they haven’t thought to replace it with anything. It leaves us out of pocket by a lot of money,” she says.
“We’ve had to give notice on our office and we’re going to have to look at staff levels and service levels.”
But it’s the knock-on effect on clients that is the bigger issue, Liggins says.
“We worked with 3000 clients last year and have so many waiting and wanting our help. It’s really hard, we’re going to have to turn people away, and waiting times for budget services are just going to increase.”
Liggins is one of more than 50 financial mentors and budget service operators who have sent a joint letter to government ministers, urging them to review and reconsider funding for the sector.
“Food, housing and other essentials have become increasingly unaffordable. Many whānau are not able to put food on the table or a roof over their heads,” they say. “Financial hardship, stress and mental health issues are inextricably linked, and the link between family violence and economic stress is well documented. The fear is that without the vital support of a financial mentor, these issues will be exacerbated.”
They add that the impact of the cuts will likely not be reported by clients.
“They already feel shame asking for help, and are not likely to complain or report that no one is there to help them. But it will show in the statistics, more mental health issues and other negative outcomes,” they warn.
They urged the government to restore funding so they can help whanau in need.
