Gisborne's debt mountain on the rise

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Gisborne’s debt mountain continues to grow with budgeting advice service clients owing a combined $11 million and spending more money repaying debt than on food or rent.

For the year ended June 2023, the average debt presented by clients to Moni Ora - Gisborne Budget was $38,595 — up $11,300 from the previous year.

“Overall, the cases have increased in complexity as shown by an increase in the Kahukura cases (intensive support service),” says Moni Ora financial mentor Lynda Markie.

“Although we are a budget service, we do support people with all the other things that come along with the finances.

“Sometimes that support can simply be helping people find the information they need to make a decision on how to move forward. Other times, more support is needed.

“People are finding it tough, with inflation high and having to make adjustments to keep up with the bills,” she said.

“Any drop in income can be difficult to manage and we have seen those who have lost incomes due to the devastating weather events of cyclones Hale and Gabrielle, which left some homeless and/or jobless and struggling.

“Many whānau lost property, vehicles etcetera, and did not have insurance to cover losses.”

Mrs Markie said for the year 2022, 262 clients presented with a combined debt of $8,431,994.73.

For the year 2023, client cases fell to 253 but the combined debt grew to $11,084,595.31 — a rise of over $2.65m on 2022.

The same period saw the amount of mortgage debt increase from $3m to $4.9m, with debts ranging from $4000 to $520,000.

“That’s a big jump in mortgage debt and reflects the increased cost of housing,” she said.

“With increases in the cost of housing and food, people are struggling with all the other normal living costs.”

The extent of the problem was highlighted further in a comprehensive report by FinCap — a non-government organisation which supports 200 free financial mentoring services.

'Gisborne had the highest number of debts per client case'

The FinCap report showed that in 2022 Gisborne had the highest median number of debts per client — five — and the highest expenditure on debt at 21.6 percent of income.

The report showed that servicing that debt was the biggest weekly outgoing for households — more than rent (19.5 percent) and groceries (17.5 percent).

Gisborne was also one of three regions with the highest proportion of clients with a home loan.

“A higher number of debts for a whānau results in more creditors to deal with and more repayments to keep track of,” the report said.

“Across most regions in Aotearoa, the median number of debts per client was four in both 2021 and 2022.

“The significant exceptions were in Gisborne, where the median number of debts per client was five for both years. Gisborne had the highest number of debts per client case.”

Mrs Markie said the service had a changing dynamic of clients with more mortgages than it had seen before.

“We have more workers, more homeowners, more men, more superannuitants and more people in general who are motivated to solve their financial problems.

“Local incomes tend to be less than the average in New Zealand but the cost of living in Gisborne is the same. So we are seeing people struggling with the basics of housing, groceries and keeping up with creditor payments.

“People are making ends meet with easy credit options such as Buy Now Pay Later (BNPL).

“With BNPL being offered at most retail outlets, we are seeing more basics items, including food, being purchased this way.”