Hardship Payments Factsheet

Work and Income can provide one-off payments to people who are in financial hardship to pay for essential costs including food, power, clothing, furniture and other costs. This covers Special Needs Grants, which do not need to be repaid, and Advance Payments of Benefit and Recoverable Assistance Payments, which must be repaid.

During 2009 the Ministry spent $254 million on these payments - $173 million on Advances, and $81 million on Special Needs Grants.

Why are we changing the way hardship payments are managed?

The number of hardship payments made has increased from 684,000 during 2007, to 819,000 in 2008, and 1,084,000 in 2009

The new approach is about making sure that people who apply for payments are genuinely in need, and are taking steps to improve their situation.

What's new for people receiving hardship payments?

Payments received one or two times

• Many people only receive hardship payments once or twice each year.
• People applying for hardship payments on the first or second occasion in a 12 month period will be able to make these applications over the phone if they have a Payment Card.
• This will reduce the time spent administering these grants, allowing Work and Income to work more intensively with people who receive hardship payments more often.
• The current eligibility criteria for payments will still apply - the financial need must be both immediate and essential. Case managers must consider the effect on the person if they cannot pay for the item immediately.

Payments received three or more times

• People who receive hardship payments on three or more occasions in a twelve month period will be required to:
• come into a Service Centre to apply
• show they have taken reasonable steps to increase their income, reduce their costs, or improve their financial management, and
• complete budgeting activities.
• People who fail to meet these additional requirements may be declined further payments.
• The reasonable steps people are required to complete will vary depending on the client and their situation but these could include arranging automatic payments for bills, consolidating debt to reduce repayment costs and cancelling non-essential services.
• Budgeting activities will be varied and range from simple self-directed activities (e.g. a person completing their own budget) to attending budgeting seminars and seeking advice from budgeting services.
• The activities people are required to complete will depend on their particular needs.

 Payments received six or more times

• People who apply for hardship assistance on a sixth occasion in a 12 month period will have a comprehensive interview with a case manager and any grants they receive will be signed off by a Service Centre Manager.

Key Facts about Hardship Assistance

Of the 962,000 people who received benefits, Superannuation, Veteran's Pension or other assistance from Work and Income at the end of February 2010:

• 119,000 received payments on one or two occasions in the last 12 months
• 66,000 received payments on three to five occasions during the previous 12 months
• 37,000 received payments on six or more occasions during the previous 12 months.

Payment Card

• The Payment Card was introduced in November 2009 to improve the efficiency of Work and Income payment systems for hardship assistance.
• The card replaces some hologram letters that people take to suppliers.
• So far the card has only been introduced for food payments but it will be extended to cover other types of payments within the next year.

Eligibility rules

Anyone who applies for hardship payments must:

• meet an income and asset test
• have a need that is both immediate and essential (or an emergency need for certain Special Needs Grants)
• be a New Zealand citizen or permanent resident.