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The Impact of COVID-19 on one-off hardship assistance grants

One-off hardship assistance is available from MSD to help eligible people meet immediate and essential costs that cannot be met from any other income or assets.

There are several factors that can impact the number of one-off hardship grants made by MSD, including changes in material and financial hardship as well as changes in public awareness, acceptance and the accessibility of hardship assistance.

Stats NZ have reported that filled jobs fell by a record 40,000 in April 2020, as the impacts of COVID-19 and restricted trading began to impact on the economy. The number of main benefit recipients increased by 47,000 between the end of February 2020 and May 2020. The scale of the increase in benefit numbers is much larger and faster than what we have seen before, including after the Global Financial Crisis.

Immediately prior to the lockdown period, around 30,000 Special Needs Grants were made weekly by MSD. This increased significantly in late March and early April, peaking at around 72,000 grants for the week ending 10 April 2020. The number of Special Needs Grants made has since declined gradually, remaining elevated but closer to pre COVID-19 levels. This increase in hardship grants reflects the impacts of the factors below.

  • Increase in underlying demand for one-off hardship assistance
    • The lockdown period presented some additional challenges to low-income individuals and families, many of whom were already struggling to meet essential living costs prior to COVID-19. Low-income individuals and families were adversely affected by movement restrictions reducing access to lower cost food sources (e.g. friends and family, school and community food providers) and bulk purchases of food due to fears of supply chain disruptions increasing food costs.
    • Reduced income from reduced employment income or sudden unemployment has meant a new group of people are in financial stress.
  • Increased awareness, acceptance and accessibility of hardship assistance
    • Due to the exceptional circumstances presented by COVID-19, MSD temporarily increased accessibility to hardship assistance on 1 April 2020 by increasing the guideline limits for how much people could receive in food grants over a six-month period by $400. This change simplified access to financial assistance for people who had an immediate and essential need for food costs and contributed to the sudden rise in grant numbers in early April 2020.
    • Increased foodbank distribution networks and the normalisation of foodbank use may have also contributed to wider community acceptance of seeking food grants from MSD and accessing foodbanks from NGO’s and other community food service providers.

There is less evidence of widespread increases in need amongst existing beneficiaries now that the lockdown period is over, and the country has returned to level one. The introduction of wage indexation of main benefits, the $25 per week main benefit increases and the temporary doubling of the Winter Energy Payment is likely to relieve some pressure on family budgets, particularly for those already under financial stress prior to COVID-19.

There may be some increased hardship for a new group of households experiencing financial stress due to increased job losses or reduced income because of the economic impacts of COVID-19.

It is not possible to determine the relative or absolute size of the impact of each of the factors described above on hardship assistance.