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Social Development Ministry documents released under the Official Information Act reveal that Work and Income (Winz) referrals of Dunedin beneficiaries applying for more than five hardship grants in a year had created a ''huge'' demand for budget advice.
In the three months ended December 2010, Work and Income referred one Dunedin beneficiary for budgeting advice after they applied for more than five hardship grants. However, there were 503 referrals for the three months ended June 2012.
Work and Income deputy chief executive Debbie Power said the Future Focus legislation change in September 2010 required repeat hardship payment applicants to go for budgeting advice to break the cycle of welfare dependency.
Between October 2010 and September 2012, there were 1987 beneficiaries referred in Dunedin - 1092 from Dunedin Central and 895 from South Dunedin.
Dunedin Budgeting Advisory Service executive officer Shirley Woodrow said the longest wait for budget advice from the service was a month and then the beneficiary had to return to Winz to get payment of the grant.
''What's the point of that? When somebody's desperate for food and they then have to make an appointment to go back to Work and Income, it just makes a mockery of the whole thing.''
The ''absolutely horrendous'' long waiting lists forced beneficiaries to borrow money, Mrs Woodrow said.
''Money that they can't afford to repay, so they just dig a bigger hole for themselves.''
If budgeting services had more funding, they could employ more staff and process referrals faster, she said.
The service had two paid staff and 63 volunteers, Mrs Woodrow said.
''Ideally, I need 90 volunteers or another full-time paid person, but we don't have the money to pay anyone else.''
The ministry provided $9.5 million funding to more than 150 budgeting services in New Zealand in the 2011-12 financial year.
Mrs Woodrow said the funding was insufficient for the number of referrals.
''I know some places were absolutely swamped and had [referral] increases of over 1000%.''
Anglican Family Care director Nicola Taylor said the legislation change put the centre's budget service under pressure.
The intent of the legislation was understood but there was a lack of resources to respond to the increase in demand, Mrs Taylor said.
Social Development Minister Paula Bennett said the ministry spent $13 million supporting budgeting service organisations in New Zealand in the past year.
''Which is a substantial increase in funding, and while I appreciate they are very busy dealing with demand, I think the policy is working because people are getting the advice they need.''
The Dunedin Budget Advisory Service received $122,270 in funding for the past financial year and a one-off boost in funding of $6450 on top of an extra Community Response Fund grant of $20,000, Ms Bennett said.