Decreasing poverty without spending a cent
How the government could decrease poverty without spending a cent.
1) regulate the removal of minimum monthly fees by banks, and removal of electronic transaction fees. Remove overdraft fees and failed direct debit fees. It is easy for banks to determine if you have enough credit, and it could delay automatic payments and direct debits until funds are available. this change could improve the disposable income of the poor by 1-2%
2) regulate the reduction of prompt payment credits, and late payment fees. Companies who charge late payment fees must make an effort to contact the customer via txt, email or post and allow a further 10 days to pay before charging any penalty. Some companies offer prompt discounts of upto 25%, and others charge as much as $15 for late payment on a bill as low as $50. Such extreme variances for late payment are dangerous for the poor who may be a week late on occassions. $15 on a $50 monthly bill is equivalent to 360% interest. Although it is reasonable expectation for people to pay on time, it is also reasonable that businesses should only charge fees relevant to debt collection. The cost of communicating with customers by email / txt / post is less than $1. A larger debt collection fee can be charged after 10 days later. Please also consider that most telecomunication companies are pre billing for services, so fees for late payment are incurred before customer has even received completion of services.
3) place a limit on interest rates for short term loans of twice the average credit card debt. Also place limits on credit application fees, as these fees often far exceed the interest. If the profit is not there for loan sharks, then they wont mke the money so accessable.
4) for beneficiaries, payments for electricity and rent should be paid by the government direct to the service provider or landlord. Such payments would often be internal transfers as much of the money would move from winz to housing nz or govt owned utilities. It is crazy to tempt the poor into bad financial habbits of paying their bills late. State owned enterprises and private landlords would ensure receipt of more bad debts. This would also result in less court action for tenancy disputes or debt collection creating savings in that area.
5) make voluntary bankruptcy easier. If judges believe a person should not have been offered a loan, then it could be wiped. Lenders would thus have greater incentive to lend money only where repayment was likely. Although such a change might reduce access to loans by the poor, it would encourage them to make prudent decisions like sticking to a budget. A person on a benefit is no better off in the long term by taking a loan with expensive repayments.
6) mandate councils or private water providers provide a fixed allowance of water for every household of 100 litres per day. The cost of this could be offset by higher charges on the unit fee of water. Thus higher users would pay more, and low users pay less. Swimming pool owners more, conservationists less.
7) require all service providers such as phone, mobile, internet, visa cards, electricity etc to identify any increased patterns of usage that might indicate error, theft or fraud, within in a short a time as reasonable possible, such that person responsible for payment does not receive a scare at end of month. It is relatively easy for most service providers to identify odd patterns with 1-3 days following and communicate by text message or email.
8) mandate more energy efficient building standards.such costs would impact developers, but would produce more healthy building stock and lower long term energy consumption and health issues.
9) reduce fixed annual car/motorbike/license registration fees and increase taxes on gas and road user fees. Such changes cause big users of roads to pay greater share of costs. Reduce passport fees, and increase airport fees.
10) faster more efficient processing of non payments of fines/child support/taxes. Non payers will receive a smaller penalty fee with immediate garnishing of wages or immediate deductions from bank accounts. A maximum of 1 court fee per 6 months for court to establish identity and address and income of offender. If the offender requests defense, no further fees/deductions until court date. If court rules guilt, a further court fee is charged and deductions begin. If offender claims no defense, then they should not be further unduly punished, and total debt limited to the initial fine, plus 1 fee and interest.. Repayments set at 52 weekly payments by default. Currently non payers of fines may have incurred several hundred in additional fines/fees on an initial $30 parking fine, within a few months, without ever being notified of fine. Many low level offenders find their debt levels spiral, and they no longer see reason to act responsibly. Government may often never receive repayment if fine and be required to impliment some other form of punishment that in itself cost government. Fines and bad debts could easily be treated as a simple financial matter, where government can more easily control fine collection, and limit court resources to dealing with valid defenses only. Such true defenses could be heard more quickly.
And if the government did want to spend a bit...
A) provide financial literacy and general education via public access tv. Such education might include how to write a cv, how to apply for a job, and how to reduce finance costs. How to cook a healthy meal using locally produced and in season produce.
B) winz provide loans to beneficiaries who do get a job, and need transport. Or better yet provide better public transport.
C) mandate energywise improvements for rental properties (before any further rental increases), such as insulation, and replacement of broken windows with double glazed. Such changes would improve housing stock, improve tenants health, and such upgrades would only effect tenants rents by a portion. $3000 investment in insulation by landlord could be fully recouped in 6 years via $10 per week rent increase. The difference between single and double glazed windows is only 25%. Insurance fees might thus increase by only 5%.
Posted: Thursday 19 July 2012