Sam Orchard, who experienced Work and Income, and was so horrified he ended up collecting people's welfare horror stories.

It's expensive being poor.



Artist Sam Orchard learnt a lot about the subject during a stint out of work and drawing a benefit.



He's currently fully employed in the gig economy juggling three contracts, but he's aware there's no job security in gigging.



However, his interactions with Work and Income left Orchard so angry, he collected beneficiaries' stories compiling them in a gloriously illustrated report he delivered to MPs just before Christmas.

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But memories of the strangely high cost of being poor are still with him.

123RF When you are short on money, life becomes surprisingly expensive.

"There are all these hidden costs that punish people for being poor," Orchard says.

HOUSING

Proportionally, the poor spend more of their incomes on keeping a roof over their heads than wealthier people.



Rising rents have helped push beneficiary inflation higher than any other group in society.

SUPPLIED Artist Sam Orchard's entry in his own report compiling claims of poor treatment of people by Work and Income staff.

Poorer people relying on Working for Families and benefits find that, unlike people getting NZ Super, their payments are not indexed, or at best, go up in a staggered series of belated jumps.

Working For Families, for example, is only adjusted once CPI has moved up by 5 per cent.

At times the poor experience higher inflation than the general population, while at the same time the real value of Working for Families, and benefits, are declining.



When it comes to housing, 43 per cent of people in the lowest fifth of households by income spend more than 30 per cent of their disposable income on keeping a roof over their heads.



That compares to just 30 per cent of households in the middle fifth of the population, and only nine per cent of those in the top fifth.



Being subject to unstable rental tenancies is also costly, Orchard says.

SUPPLIED Survival debt can end up being a big source of costs to poorer people, as illustrated by this slide from Sam Orchard's report.

"One thing I keep noticing are the costs of moving. It is really expensive."

People generally get their bond back two to three weeks after they have had to hand over a bond on their next place, he says, plus several weeks rent in advance=.

That can mean having to go into debt.

Rented accommodation is more likely to be damp, cold and unhealthy.

That can lead to costs too.

One of the stories in Orchard's report is of a young woman who ended up ill as a result of the places she could afford.

Being ill is costly, but so is not being able to look after your possessions.

"My first house in Wellington was so damp I had to throw out 50 per cent of my clothes because they all went mouldy beyond repair."

MONEY

The poor pay more for their money.

Short-term finance, especially extremely short-term finance like payday loans, come with huge interest rates.

Save My Bacon's $100-$600 loans (maximum term of 43 days) come with a monthly interest rate of 45.63 per cent.

But being short of money can also mean paying more bank penalty fees.

One contributor to Orchard's report spoke of having her benefit cancelled for failing to turn up for meetings at WINZ she hadn't been told about.

"I had two automatic payments, and each failed payment would incur a $15 fee. So every time WINZ cancelled my benefit I would end up in 'unarranged overdraft' due to the $30 bank fee, and then the overdraft would incur a $15 fee too!"

FOOD

Groceries are a massive part of household budgets, but unlike those with savings and surplus incomes, the poor are not able to stockpile things like toilet rolls, or canned food, when prices are especially low.

Jeni Cartwright from Child Poverty Action Group said lower income families didn't have the money to buy in bulk when prices were attractive.

Research by Auckland University found many lower income families simply didn't have enough income to provide themselves with even a basic nutritional diet.

Professor Innes Asher said, when the report was published: "Rent is the highest cost faced by most families, closely followed by unavoidable expenses such as electricity, transport and school-related costs. This leaves little for a good diet, especially for older children who eat so much more."

POWER

Now he's in work, Orchard says he's is finding power much more affordable.

That's because he can pay promptly, and get a prompt payment discount.

At Trustpower, that's worth 15 per cent off the bill.

Prepaid power for people on very low incomes costs more per kilowatt hour, and renters, who are more likely to live in cold, poorly insulated homes, have little control over the kinds of heating they use. That can force them to rely on expensive portable electric heaters.

Having money can also mean being able to take the risk of using the likes of Flick, which sells power at the spot rate.

TAX

Higher earners pay more tax, but the effective tax rate on every extra dollar they earn is a lot, lot less than some lower income families.

The Child Poverty Action Group calculated last year that a family able to boost their incomes through extra hours and hard graft from $42,700 to $47,700 may end up seeing 84 per cent of the money being clawed back in tax, lower accommodation supplement, loss of Working for Families tax credits, student loan repayments, and KiwiSaver deductions.

INSURANCE

Insurance is a luxury.

Now he's earning, Orchard has started paying for health insurance, which is a luxury he's still getting used to after his experience on a benefit.

But contents insurance is more expensive for renters than for homeowners, especially in areas with higher burglary rates, which are often lower socio-economic areas.

"Claims data shows that customers who rent are more likely to make a contents claim related to burglary than customers who own their own home. Renters are also more likely to make more contents claims for accidental damage," says Amelia Macandrew from AA Insurance.

"Premiums are calculated accordingly, so renting customers are likely to pay more for their contents insurance than homeowners."

Funeral insurance- a form of life insurance sold to lower income people on the idea they won't end up leaving their loved ones facing a big funeral bill if they die- is extremely expensive.

Funeral cover can cost around $20 a fortnight for $10,000 of cover for a 50 year-old, non-smoking male.

$150,000 of life insurance from Pinnacle Life would cost that same man less.

TRANSPORT

The poorer you are the more likely you are to have to live in less desirable, further out suburbs in main centres.

This can mean higher transport costs, while also making it impossible to switch onto a bicycle.

Auckland Council is planning on imposing a regional fuel tax, expected to be 10 cents a litre, which will hit commuters hard, especially those forced to live in far-flung suburbs.

Fuel taxes tend to be "regressive" hitting lower income people hardest like taxes on cigarettes.

OPPORTUNITY COSTS

Orchard said one of the most striking features of the stories he collected was how "cyclical" some people's stories were.

An example he gives is: "I can't afford power, therefore I can't have a shower, therefore when I turned up for a job interview, I smelt, therefore I didn't get the job."

Bad clothes, bad teeth, bad diet.

Factors like these can end up contributing to people missing out on opportunities to increase their incomes.

It also means not being able to build a KiwiSaver nest egg. People on higher incomes contribute more to KiwiSaver than poor people, and are more likely to get the full $521.43 "member tax credit" subsidy from the government.

This is the most hidden cost of being poor.