Social Development Minister Paula Bennett announced today a new community finance partnership that will see interest free and low interest loans made available to New Zealanders who need them.
The Government is partnering with Bank of New Zealand, Good Shepherd NZ and The Salvation Army to develop a finance initiative that will offer people on low incomes affordable and sustainable credit. Good Shepherd will bring many years of delivering community finance programmes in Australia to the table.
“People on low incomes are vulnerable in their credit options with many tempted by easy finance. The initiative will see sustainable loans available for some people that might not otherwise be able to service a loan with high interest rates and hidden fees,” says Mrs Bennett.
Beginning with a one-year pilot, BNZ is committing $10 million to the initiative for up to five years that provides a real alternative to loan sharks and pay day lenders.
Hard to comment without detail beyond the obvious observation of more subsidy. In terms of moral hazard, not the worst sort of subsidy though.
And they can claim to be promoting choice...
There's a chance the expenditure might be budget neutral. When beneficiaries get into financial trouble the state ultimately wears it (or shares it) even if paltry repayments are deducted from benefits.
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There was a Women's Loan Fund here in Wellington that was set up for people as an alternative to loan sharks.
It ended up with no money left to loan.
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