Govt’s own data shows low income driving more benefits

(Headline abbreviated, original headline: Govt’s own data shows low income, not poor spending choices, is driving need for increased benefits)

People on benefits are spending more responsibly than most according to a new analysis of the Government’s Household Living Cost Price Index.

The analysis shows people who receive benefits spend an average of 59% of their income on housing, electricity, and food. That compares to 36% of income spent on these three essentials by median income households, and only 26% by the wealthiest 20%.

Financial Mentor and Manager of the Nelson Budgeting Service, Rosalie Grant, says the data confirms that low benefit rates, not irresponsibility is driving families into hardship. “Nearly all of the people we see who are on benefits are spending as carefully as they can, but the truth is no matter how carefully you spend you can’t make ends meet if you don’t have enough income.”

A further breakdown of spending shows that people relying on a benefit spend just 4.9% of their income on eating out, takeaways, and alcohol compared to 8% being spent by median income earners and 11% for people in the top 20% of earners. Families that rely on a benefit spend just $12 a week on alcohol, compared to $39 for the median household, and $97 a week for the wealthiest 20%.

“There’s this myth out there that people on benefits are frittering away their money, but the truth is that when kids in these families are going to school hungry or without decent shoes it’s because there simply isn’t enough money to start with.

“There is only one way to fix the poverty and the hardship it causes, that is to stop blaming people for not spending wisely when they quite clearly are making every cent count, and start increasing their incomes. We urgently need to see benefits increase.

“The Government has committed to lifting children out of poverty and their own Expert Advisory Group has said that means increasing benefits by between 12% and 47% depending on the benefit.

“Looking at the hard numbers behind how benefits are spent and based on the people we see come through our doors every day, it is obvious this rise in core benefits is needed ASAP” says Grant.

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