Social Development Minister Paula Bennett announced today a new community finance partnership that will see interest free and low interest loans made available to New Zealanders who need them.
The Government is partnering with Bank of New Zealand, Good Shepherd NZ and The Salvation Army to develop a finance initiative that will offer people on low incomes affordable and sustainable credit. Good Shepherd will bring many years of delivering community finance programmes in Australia to the table.
“People on low incomes are vulnerable in their credit options with many tempted by easy finance. The initiative will see sustainable loans available for some people that might not otherwise be able to service a loan with high interest rates and hidden fees,” says Mrs Bennett.
Beginning with a one-year pilot, BNZ is committing $10 million to the initiative for up to five years that provides a real alternative to loan sharks and pay day lenders.
Today’s announcement honours commitments made in last year’s Budget to boost practical support for people on low incomes.
Mrs Bennett says this is the latest in a string of initiatives by the Government to help people access everyday necessities.
“We’re already helping beneficiaries and people on low incomes buy whiteware and more children are being fed in schools. Now we’re focused on increasing the wellbeing of families by assisting them to avoid unscrupulous lenders and their crippling interest rates,” said Mrs Bennett.
Loan sharks and pay-day lenders pray on the poor.
This initiative will give people a safer and much more affordable alternative to the usurious loans they resort to now.
The government also announced new operating funding of $22 million over four years for non-government organisations delivering community budgeting services to families.
“Budgeting services are providing critical help to thousands of Kiwis who are able to make a real difference in their lives with new money management skills,” Mrs Bennett says.
“This new investment sees baseline funding rise by 61 per cent from $9 million a year to $15 million a year by 2015/16 and will ensure the services are able to keep up with demand.
“Being able to manage your money is vital to be able to improve your living standards.
“This Government is committed to helping people to help themselves. It’s far better for people to learn and develop budgeting skills and avoid being caught in a constant cycle of bills and debts.
“Budgeting services have helped to reduce repeat hardship assistance requests. The work of providers in this sector deserves our recognition and support,” Mrs Bennett says.
Sustainable loans and budgeting advice are two great initiatives to help people manage their money.
It’s not only poor people who have problems budgeting.
Apropos of that a suggestion from the Young Nats at National’s Northern conference at the weekend for financial literacy education has merit.