I spoke in parliament yesterday about my November Community Summit.
Fraser Community Summit
1 November 2011
Early this morning, I convened a breakfast roundtable in Parliament House to discuss with 13 ACT community sector leaders the issues of poverty and disadvantage in Canberra. This is the second of these forums that I have arranged and the focus of today’s discussion was on financial literacy, debt and savings. Attendees emphasised that financial problems can be caused by stress factors, such as family breakdown, mental illness, substance abuse and problem gambling. Conversely, financial problems can also cause disadvantage, with money problems leading to health problems, family stress and gambling in an attempt to ‘win back’ losses. Some attendees commented that crisis services are now seeing people who they call the ‘working poor’—such as apprentices and community sector workers. They also pointed out the challenge of high housing costs in the ACT. For people caught in a debt cycle, community leaders pointed out that life is a constant juggling act. People often borrow from their friends and neighbours, and these personal debts can take priority over paying utility bills. One attendee quoted a person in crisis who said, ‘Debt makes me feel like half of me is in the grave already.’
Solutions to debt traps include access to hardship funds operated by utility companies and schools. It is important that these funds are well publicised and that people are able to access them anonymously—particularly in small school communities. And while this government recognises that short-term, small-amount loans or payday loans can be useful for helping people through a crisis, they also create the risk that too much of people’s money can be lost to interest and fees. In the ACT, payday lenders are subject to a 48 per cent interest cap, which includes all fees and charges. At a national level, this government is working through COAG to develop a national regulatory system for payday lenders. That would mean equal protection across states. And through Centrelink, income support recipients can apply for no-interest loans of up to $1,000. Other programs encourage savings, for example through matched savings schemes, to encourage people to build up a nest egg for when they need it most.
We also need to improve financial literacy. As one attendee pointed out, according to the Australian Bureau of Statistics’ 2006 Adult Literacy and Life Skills Survey, 79,000 Canberrans lacked the literacy skills to meet the complex demands of everyday life and work in a knowledge based economy. There are also gaps in financial knowledge. Attendees talked about the challenge for some households in managing budgets, as well as money management skills like paying off high-interest debts first. The Australian government runs programs to boost financial literacy, including the MoneySmart program. Many community sector groups also operate their own financial information programs, as do some schools. It is important that these programs be rigorously evaluated. Overseas experience has shown that financial literacy programs which sound good conceptually do not always perform as well as expected. I would encourage governments at all levels, as well as community organisations, to evaluate financial literacy programs, using randomised trials wherever possible.
The discussion also raised ways of reducing costs for low-income earners. Some initiatives are already being pursued, such as the ACT government’s energy outreach program and the federal government’s record investment in affordable housing. In early October, the federal government announced that the National Rental Affordability Scheme will fund more than 1,500 dwellings in Bruce, Nicholls, Harrison, Bonner, Crace and Watson. Last Friday I opened a new social housing development in O’Connor which will add to the public housing stock, including for tenants with a disability. Attendees emphasised the need for solutions to be holistic. They pointed out the challenge for community sector organisations using multiple funding streams, and the problem for clients of having to meet with many different service agencies. Providing holistic services while ensuring effectiveness and accountability is a major challenge for policymakers in the future.
Finally, I would like to thank the attendees for participating in today’s roundtable: Fiona MacGregor, YWCA ACT; Lynne Harwood, Communities @ Work; Shannon Pickles, St Vincent de Paul; Carmel Franklin, Care Financial Services; Jenny Kitchin, Anglicare ACT; Amy Kilpatrick, ACT Human Rights Office; Roslyn Dundas, ACTCOSS; Dira Home, Belconnen Community Services; Alicia Payne, ACT ALP Community Services Policy Committee; Gordon Ramsay, Uniting Care Kippax; Camilla Rowland, Karralika Programs; and Rhonda Daniell and Judith McDonnell, Gungahlin Regional Community Services. I appreciated the willingness of all attendees to work together to reduce poverty and disadvantage in the ACT.