More and more people are seeking budget advice. Photo / Laura Smith
More and more people are seeking budget advice. Photo / Laura Smith
A Foxton man helping people make ends meet has slammed Government cutbacks to budgeting services around the country, fearing it will drive more people deeper into poverty.
The Foxton Districts Budgeting Service (FDBS) is one of 44 budgeting services nationwide faced with a loss of government funding and has joined the sector in calling on an urgent government review of the decision.
FDBS chairman John Girling said it was a massive setback.
“This is a slap in the face,” he said.
“There are people in our community that are genuinely struggling to make ends meet.”
Girling was responding to a Ministry of Social Development (MSD) contract review of budgeting services. Funding available for Building Financial Capability core services from July 1, 2024, is $19.5 million, down from $22.3m the previous financial year.
Girling said the funding cutback came at a time when more people than ever were seeking budgeting advice. The Foxton service held 236 individual mentoring sessions last year, compared with 173 the previous year.
The service was able to facilitate 52 six-month interest-free loans of up to $500 last year, up from 33 for the previous period ending March.
“That tells us the need is accelerating,” he said.
John Girling.
He said the return on investment was value for money.
While sound budgeting advice as a tool for social good was hard to quantify, in the last financial year the Foxton-based service was presented with clients facing a total of $1,376,852, helping them retire debt totalling $1,069,535.
There was no free lunch. Anyone wanting money from the service had to sit down with an adviser and complete a robust budget before any loan could be approved.
Girling said the circumstances in which people sought budgeting advice varied, but with so many people living from “pay cheque to pay cheque” it was the arrival of an unforeseen expense that could prove the tipping point in any ledger.
“It’s a hand-up, not a handout. A helping hand can stop the rot,” he said.
“Debt has massive social implications.”
Clients often presented with a variety of unexpected expenses, such as car tyres for a warrant of fitness for a family vehicle, or a car breakdown, school uniforms and fees, hospital visits, funeral expenses or power bills.
Ignoring bills had the potential to create a cycle of debt, where fines might be incurred or a loss of licence in the absence of a WOF for example, which could then impact employment.
“Most of the people we see aren’t buying new cars,” he said.
By offering budget advice for two months before any loans were given out, it helped clients navigate a path out of debt.
MSD spokeswoman Karin Dalgleish said people in need could still access services to improve their financial wellbeing.
National helpline Money Talks would still be available to direct clients’ inquiries to a financial capability service and ensure referrals were made to local services, she said.
Dalgleish said Levin Budget Service had been contracted for the equivalent of 1.75 fulltime staff members, while two other providers in Levin and Foxton had their funding cut.
“The reason for the reduction is the expiry of the time-limited funding that was put in place for the Covid-19 response that ended on June 30. While funding for BFC core services is decreasing, funding levels will still be above pre-Covid levels,” she said.
FDBS received $25,000 annually from the Government and funded the rest through grant applications and donations. The cuts represent a loss of almost 50% of its annual operating budget.
FDBS has been operating in Foxton since 2008, trading as Personal Money Coaches. In 2022, the service established E-Funding, providing small interest-free loans to clients in times of need, with sponsorship from Westpac Bank.
FDBS has enough in reserves to continue operating for the remainder of the year.
Girling has joined a group of budget advisers from around the country calling for an urgent funding review and asking for a funding increase. There are fears some of the 44 services will shut their doors.
In an open letter to the Government and MSD officials, the group said there were 800 trained financial mentors working within the sector, but funding had been allocated for 180 fulltime equivalent mentors.
“We provide essential support, hope and guidance to whānau experiencing financial hardship and distress,” the letter said.
“These services are well-established in their communities and have long-standing trusted relationships with the people that they serve, but they may have to shut their doors or operate at reduced capacity from July 1.
“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 head. Financial hardship, stress and mental health issues are inextricably linked, and the link between family violence and economic stress is well-documented.
“The impact of this decision will not be reported on by our 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 statistics - more mental health issues and other negative outcomes.”
