Pandemic fans flames of poverty plague

Aotearoa New Zealand is synonymous with terms such as ‘The Paradise of the Pacific’ or ‘The Land of Plenty,’ but more recently, we have witnessed its steady metamorphosis into a land of disparity.

Today, we are seeing plenty of people heading into 2022 demoralised, debt-ridden and desperate. While the former is not an entirely new phenomenon, recent statistics demonstrate how severe this crisis truly is. 

The 2020-2021 Zero Hunger Collective Report states that “current incomes and income support are inadequate to enable people to thrive”. Among other basic needs, “thriving requires sufficient income.”

Without urgent action to address low incomes and improve financial wellbeing, the plague of poverty will outlive the covid pandemic, and a bleak future will continue for many. Some in the team of five million will feel the pain of that hardship for years to come.

Hardship and poverty are not new to Aotearoa; it has been a slippery slope for some years now, but we know the pandemic has exacerbated poverty and its impacts. We know this because new applicants to Ngā Tāngata Microfinance, who bare their souls in the hope of support, tell us so. They tell us of their lost jobs, reduced hours, increased living costs, and the stress of paying their bills and feeding their families. They tell us of their indebtedness to high-cost lenders when they have had no other options for help. Over half of Ngā Tāngata’s current clients have told us their household finances have been directly affected by the pandemic; and they tell us of their fear for the future.

We know the pandemic has wreaked havoc on many of those who were already struggling to keep their heads above water, and we know many have found themselves newly plunged into hardship.

We have seen a 34% increase in applications for microfinance in the past year. A large number of New Zealanders do not have enough income to survive, let alone thrive. The pandemic has fanned the flames of the poverty plague. Low-income families living in deficit, week after week, cannot get ahead, and this deficiency creates a spiral of unsustainable debt.

The New Zealand Government is providing funding support for relief to many social agencies and community organisations. However, this funding does not offer a long-term, sustainable solution structure. It does not allow individuals to heal themselves from poverty, nor does it lift them out of hardship.Major global events, such as pandemics or recessions, add more pressure on to already fragile foundations. In the case of Covid-19, we are seeing a sharp increase in homelessness, unemployment, stress-related illnesses, and the inability to meet financial obligations.

Recently announced family tax credit increases on top of previously promised benefit increases for April 2022 are welcome, but further rises are needed, and they are needed now. Immediate action is necessary now to give New Zealanders what they need to begin to thrive and live with dignity.

Financial wellbeing is an issue we should care about deeply. It is essential to the overall health and infrastructure of a nation, and it is never too early to start having discussions about finances with young people. Financial, governmental, and educational institutions can all contribute towards a prosperous economic future by integrating strategies and programmes that introduce, explore and expand the financial capabilities of young people. Finance is the commercial language we use worldwide, and like any language, the earlier we begin learning, the more proficient we will become.

So, what are some more long-term solutions? First, financial skills should be promoted for what they are, a necessary and non-negotiable skill set. Young people do not attend school to be ‘sorta’ literate in their respective subjects. Second, all educational institutions set standards to manage and assess students’ success to prevent sub-par capabilities. We must normalise similar tactics to students’ financial competency by integrating financially-friendly topics into the curriculum. Third, we need to support teachers and their ability to teach students financial skills and prioritise a more cohesive, comprehensive understanding of the socioeconomic barriers that prevent young people’s ability to fluently navigate our current financial ecosystem.

In doing so, young people will no longer be ‘kind of’ ready for the workforce or possess a lacklustre knowledge of loans, taxes, credit, and interest. Instead, students will be able to make decisions that will afford them a higher quality of life, avoid financial disaster, and have a fighting chance at breaking the often intergenerational shackles of poverty.

As long as conversations around wealth feel like unfamiliar, uncharted territory, wealth disparities will continue to worsen. Knowledge and resources should not feel exclusive.

We all have a role to play when it comes to mobilising financially-fit future generations, protecting the vulnerable from financial exploitation, and allowing all individuals, regardless of background, a chance to participate in an ever-evolving financial ecosystem. Therefore, it is crucial we commit to inclusive collaboration and the integration of strategies that incorporate the economic interests of all members of our society.

Natalie Vincent, Chief Executive Officer, Ngā Tāngata Microfinance and Irihapeti Edwards, Financial Literacy Champion, Financial Activist & Global Youth Leader