Work and Income staff are wasting people's time by referring them to budgeting services as they just don't have enough money to cover the cost of living, it's been claimed.
MoneyTalks, a financial services helpline run by FinCap - itself supported by the Ministry of Social Development - says they get calls "daily" from people who've been told to get in touch, but simply can't be helped.
"When people on benefits ring up it's not because they have wasted their money, it's because they don't have enough to begin with," said financial mentor Adrienne Gallie.
"We need recognition that you can't budget your way out of not having enough income, and that because of this people and their children are suffering significant hardship. The only way to fix this is to raise benefits."
The Child Poverty Action Group (CPAG) says Work and Income refers "many people" to budgeting services despite their budgeting skills not being the problem.
"Those at the coalface of these services are very clear that it is lack of income, not lack of ability to budget that is causing the hardship," said economics advisor Susan St John.
"It is a destructive, frustrating, time-consuming and unacceptable situation."
And once beneficiaries have been to the budgeting services and are eligible for advance payments, they're made to pay this money back out of future benefit payments, which St John says reinforces "hardship in a vicious cycle of hopelessness".
"We urge Prime Minister Jacinda Ardern, who has made reducing child poverty a major aim of her Government, to make the bold changes children desperately need."
"Just this last week a woman called who had been directed to undertake a budgeting activity so she could get an advance on her benefit to buy her kids a bed," said Gallie, "and another woman called who needed budgeting advice to get a food grant - these are basic needs that people simply cannot afford for themselves or their families."
The Welfare Expert Advisory Group in May last year made 42 recommendations on improving the lives of New Zealand's poorest - such as boosting benefits by up to 47 percent. Only three were adopted, including indexing increases to wages rather than inflation. Social Development Minister Carmel Sepuloni defended the Government's reluctance to go further, asking, "Will it ever be enough?"
"We never said everything was going to be able to be done in one year or even one term," she told Newshub Nation in November. "There are decades of neglect here, and we are in the process of going through that transformational change."
St John said that wasn't good enough.
"It is not good enough to wait for Budget 2020 decisions that will take another full year to come into effect, and only if the Government is re-elected. Action is needed right now."
CPAG reiterated its call for beneficiaries to get access to Working for Families tax credits, saying there was "no justification" for kids missing out. It estimates the cost would be $500 million per year.