It began with a recitation of the first part of the Our Father.

But Two Cents worth is advertised as being "Stories that make sense of business and the economy... and how they affect your back pocket."

"Practising what Jesus preached might help us today as we face huge local and global debt in the wake of Covid-19," said the presenter Bernard Hickey.

The title of the podcast was The case for a modern debt jubilee.

A debt jubilee

On Easter Sunday Pope Francis called for international sanctions to be "relaxed" and for a "reduction, if not the forgiveness" of debt for poor countries.

The Pope seems to have at least some economists in agreement with him.

The Two Cents Worth podcast asked: "Why don't we have a modern debt jubilee?"

Central banks they said are printing trillions of dollars to lower interest rates and make asset owners feel richer so they will spend more.

"But that strategy hasn't unleashed economic growth for over a decade because the rich are parking most of that new money in existing assets."

It goes back for 500 years

The podcast traced the history of debt jubilee back over 5000 years.

Sometimes after a disaster loss of income was followed by the incurring of debt with high-interest rates.

In many cases, the debt was cancelled - in what we would now describe as a debt jubilee.

It was noted that Jewish tradition around the time when Jesus was alive, also had strict conditions around lending and interest rates which helped protect poor debtors.

"Debt relief was also an important moral principle to the point where the Apostle Matthew's version of the Lord's Prayer says 'forgive us our debts, as we have also forgiven our debtors', rather than forgive us our sins."

Source

• newsroom.co.nz
• euronews.com
• Image: releaseinternational.org

But action in the area of debt and financial hardship has been quite muted and lacks strategy the Salvation Army says.

In a report published last Thursday, they say: "This must change quickly, especially if the lockdown drags on and other related areas are impacted (e.g. job losses, income support payments), which will cause overall financial hardship for many New Zealanders."

The report notes that the Ministry of Social Development (MSD) has been proactive in working with community groups and NGOs: "but government agencies' own ability to respond seems limited and is taking time to scale up to meet the level of need."

"The Government action in this area of debt and financial hardship has been quite muted and lacks strategy."

"They say most Government action has involved banks. Still, other critical parts of the financial sector must also be given attention to ensure the most vulnerable do not fall into greater financial hardship."

They are concerned that there has been little Government guidance around car loans, payday lenders or credit cards.

Last week the Salvation Army joined 14 other NGOs in calling for urgent action to combat financial hardship during the lockdown.

The key elements of this joint call include:

• No disconnections or service cessations
• Pausing debt collection and bankruptcy proceedings
• Waiving penalty and late fees including additional interest charges
• All payday lenders and providers of high-cost, short-term loans should immediately be de-categorised as an essential service so that
  vulnerable families do not quickly turn to these high-interest loan options for help
• Further guidance around debt relief for car loans, credit card and loans to mobile traders to protect vulnerable consumers.

Source

• salvationarmy.org.nz
• stuff.co.nz
• Image: screenshot msd.govt.nz

The Bill amends the Credit Contracts and Consumer Finance Act by strengthening requirements to lend responsibly.

It is designed to clamp down on predatory lending practices and stop borrowers being caught in a spiral of unaffordable debt.

Writing in The SpinOff, business editor Maria Slade notes:

"The Catholic Archdiocese of Wellington points out that most borrowers use payday loans to cover ordinary living costs such as power bills, not one-off or unexpected expenses as many financiers claim."

In a submission on the Bill, the Archdiocese quotes Pope Francis. "Usury [excessive interest] is an ancient and unfortunately still concealed evil that, like a snake, strangles its victims.

"It tramples on the dignity of people, is a vehicle for corruption and hampers the common good.

"It also weakens the social and economic foundations of a country."

The proposed changes in the law cap the amount financiers such as Moola and NeedCashNow can charge by limiting total interest and fees to no more than 100% of the original amount borrowed.

Moola can charge annualised interest rates of up to 620% plus fees.

Slade says church, community and budgeting agencies are almost universally in support of an interest rate cap.

Many are calling for other restrictions such as a ban on shopping trucks, equal protection for loan guarantors as for borrowers, and a ban on the use of direct debit authorities by high-cost lenders.

Steve Brooks, the businessman behind a bizarre unauthorised ad for the National Party, runs a payday lending operation that has opposed government efforts to limit the amount vulnerable borrowers must pay.

Brooks is a director and co-owner of NZ FinTech which runs fringe lenders Moola and NeedCashToday and the car finance firm Zooma.

Source

• parliament.nz
• thespinoff.co.nz
• Image: pacific.scoop.co.nz Nicholas Jones

The loan from the was taken out to assist with the building of their $17.39 million Jubilee Church and for and other developments.

The Church's Komiti o Feau Eseese (Works Committee) has recommended to the Church's General Assembly, meeting at Malua, that steps be taken to reduce the debt more rapidly.

According to their report, the loan taken out in 2015 was for $15,116,760.17 with the annual payment of $1,743,300.

The first payment was made on 9 December 2016 but by that time the loan had increased to 15,209,955.68 because of the accrued interest.

So the first payment reduced the loan only to $13,466,655.68.

The second payment of $1,743.300 was made on 13 November 2017.

At that time the additional interest had brought the balance up to $14,426,357.69.

According to the committee's report, if the annual payments continue rather than monthly payments, the Church is looking at paying $23 million and payments will be completed by the year 2029.

They have recommended that church make monthly payments of $145,275.

The committee also recommended that the church's investments in Unit Trust of Samoa should be withdrawn and allocated to help pay for the Church's loan at SNFP.

The Komiti o Feau Eseese has also asked the General Assembly for an additional $2 million to complete the renovations of the John Williams building.

The committee made two recommendations related to decreasing the electricity bill of the Malua compound:

• Hire an engineer to evaluate all the electrical aspects of the compound and, whatever the results of the assessment, recommendations should be followed.
• Convert to cash power each building, including offices and residential, to assure the electricity is well managed."

They also made suggestions about measures to reduce power consumption.

Source

• sobserver.ws
• sobserver.ws
• Image: samoaobserver.ws

Many of the service providers and informants stated that belonging to, and fully participating in, churches was important to their Pacific clients. This included making financial contributions to the church.

A few participants commented that some churches encourage members to give what they can. The majority of participants, however, noted that church organisations and ministers can exacerbate the debt problem. Some churches publicly announce the amounts that were donated by family groups. This places pressure on families who do not want to lose face in front of their church members, and therefore aim to give more than they can afford. Some churches, however, are sensitive to their members' needs, as the following examples demonstrate.

The research indicated that participants did not share a common view on the extent to which giving to churches exacerbated financial problems. Although there was some consensus - particularly in the Good Cents Porirua case - that giving to churches contributed to hardship, none of the families had directly found it a problem themselves.

The report found that Pacific peoples are more vulnerable to problem debt, but that there was little known about how Pacific families manage their finances.

It says that the churches can play an important role is helping Pacific Island families address problem debt by:

Education about budgeting and money management could be done by adapting styles of education, through families, schools, Pacific leaders, churches and communities. An example is the MIT "money management course" run by the pastors.

Leadership from the church and traditional leaders: Pacific churches are well positioned to lead initiatives, not just in financial literacy, but in many other aspects of a holistic approach to well-being (nutrition and health, careers and employment and education, for example). Churches have a role in encouraging families to give what they can afford, and discouraging them from competing when giving to the church.

Alternative ways of doing things: Better budgeting; ways of reducing costs (such as skyping the islands); in-kind rather than financial contributions to community.

Source

• Pacific Families and Problem Debt
• Image: Encyclopedia of New Zealand