Speech, Financial Counselling Australia 2013 Conference
Thank you for that very kind introduction and for inviting me to speak to you this morning.
I would like to start by acknowledging the traditional owners of the land on which we meet, the Gadigal people, and pay my respects to their elders, past and present.
I know this conference is a key event in your calendar and it’s great to see so many of you here today.
You don’t need me to tell you how vital the work you do is.
We know that each year around 1 in 5 Australians experience difficulties meeting their financial obligations.
You deliver critical support services to these Australians.
Your reach extends from our towns and cities to regional, rural and remote Australia.
It is always heartening to hear about the diverse range of people who are helped by the services you provide right across the nation.
This year’s conference theme says it all:
‘I will, we will…make a difference.’
Beyond the immediate crisis: a multi-pronged approach
The “no wrong door” approach is vital in the work that you do.
The people that come to you for help present for a range of reasons and often need to be connected to multiple services.
I know that it is common, for example, for you to connect clients to a counselling or related service as a first step.
And that, at the same time as they are getting appropriate professional help, you are negotiating with banks and working out how to set up realistic repayment plans.
This multi-pronged approach is essential.
Those in financial crisis need to be able to access appropriate personal help, as well as get the right financial information and support to resolve their specific issues.
Of course, I am well aware the sector is committed to doing more than “just” managing the immediate crisis at hand.
That’s why conferences like this are so important – providing the opportunity to share information and network with others.
Crisis support will always be an integral part of the service you provide.
But, as you know all too well, to break the cycle we need to be able to provide options and support people to develop skills and capabilities to improve their financial wellbeing for the longer term.
Entrenched disadvantage can mean that even the most basic of financial skills – like sound savings habits – are not learned.
But it can also mean that – out of necessity – budgeting skills are learned early.
On the other hand, higher income levels do not necessarily correlate with good financial skills.
One of our biggest challenges is to identify and address the underlying causes of financial vulnerability.
These include social inclusion, ill health, parenthood, loss of employment, relationship breakdown, credit over-commitment and poor money management – just to name a few.
We know too that it is often a combination of events that provides the trigger for a financial crisis.
And that the flow on effect of a crisis can be devastating.
The effect on physical and mental wellbeing should not be underestimated.
Nor the impact on relationships with family and friends; and with work and social networks.
Additional funding for the national telephone helpline
One of the things we do know is that early intervention works.
A recent Salvation Army report (2012) on financial counselling found that 72 per cent of people who sought help in the first year of experiencing problems were able to resolve them.
I am very pleased today to announce further Government support for an existing service that makes it possible for vulnerable Australians to get help early.
In 2010, we kicked off a national financial counselling helpline.
The 1800 007 007 service quickly proved to be a success.
It improved access to free confidential financial counselling advice for Australians in need and reduced confusion by providing people with one single, phone number to call.
In 2011, I announced additional funding to further enhance access and provide a consistent national referral service.
Today, we are investing an additional $340,000 for this vital service – a service that helped more than 20,000 Australians in 2011-12.
These funds will be directed towards states with higher call loads.
That brings the Government’s total investment in the service to $5.3 million (2011-14).
Our strong track record of support
This investment builds on this Government’s strong track record of support for your sector.
We are investing more than $490 million in the Financial Management Program to help build financial resilience and wellbeing.
Since coming to office in 2007 we have doubled Commonwealth investment in Emergency Relief to some $60 million a year.
That investment is helping some 700 organisations across Australia deliver emergency relief to people in need – from food vouchers to chemist supplies to part payment of utility bills.
We have almost tripled the funding for financial counselling from $5.5 million in 2008-09 to more than $16 million this year.
Financial counselling plays a vital role in reducing financial stress and helping to get people in crisis back on their feet.
The Government is currently supporting 99 community and local government organisations to deliver financial counselling services across the country.
As a result, more and more Australians are getting the right tools and the right support to be financially independent.
From next year, we are increasing Commonwealth Financial Counselling funding to more than $18 million.
This will include much needed support for people affected by problem gambling.
We know how important it is to help problem gamblers and their families rebuild their lives and recover from the financial consequences of problem gambling.
My colleague, Jenny Macklin, and I will have more to say about our Financial Counselling to Support People Affected by Problem Gambling Initiative later this week.
We have also targeted more than $43 million for microfinance and financial literacy projects.
In the past five years these projects have helped more than 60,000 Australians pay their bills, buy everyday household items and get out of debt.
Step-Up Loans and the No Interest Loan Scheme (NILS) are getting great take up and are a fantastic example of what can be achieved when business, government and the community sector work together.
In 2012, more than 21,000 “no interest” loans – totalling more than 18 million – were issued.
We want to extend the reach of NILS to ensure you are able to help even more Australians.
That’s why we are making it a priority to roll out NILS into regional and remote areas including Cairns, Mt Isa, Rockhampton, the Kimberley, Alice Springs, the Ananga Pitjantjatjara Yankunytjatjara Lands and in and around Darwin.
Improving financial literacy remains another top priority.
We all know that managing finances effectively in today’s complex world is no easy feat.
It has to be learned and that learning needs to start early and continue throughout a person’s life.
The National Financial Literacy Strategy is an important first step aimed at improving the financial well being of all Australians.
I encourage you to get involved as we review the strategy and identify key issues and priorities for 2014-16.
We are also investing a further $3 million to extend the Community Development Financial Institutions pilot for an additional year.
Some 2000 Australians are expected to benefit from this pilot including more than 600 Indigenous Australians.
As part of the Financial Management Program, we recently introduced the Home Energy Saver Scheme or HESS.
As many of you would be aware, this service provides support to low-income households experiencing difficulty meeting and paying for their energy needs.
In its first year it has already provided assistance to more than 10,500 households.
It is anticipated that the scheme will provide assistance to 100,000 households throughout its life.
Later this week I will be launching a new NILS initiative that will further improve the financial wellbeing of these low income households.
It is worth mentioning too, I think, that the Government’s commitment to break down financial disadvantage and social inclusion extends beyond the Financial Management Program.
As most of you would know, last year we introduced a law that placed the first ever national cap on payday loans.
It put a stop to excessive fees and charges targeted at those who could least afford them.
This was an important step to reduce the financial harm caused by lenders taking advantage of vulnerable consumers with limited credit options.
In closing, I’d like to talk briefly about this year’s Federal Budget.
It would seem remiss not to do so at a conference such as this!
As you would be well aware, earlier this month we delivered our sixth Federal Budget.
I’m sure you will have heard commentary painting this as atypical budget in an election year.
Because this is not a Budget of carefully targeted hands outs aimed at winning votes.
We’ve made hard, smart decisions to deliver a responsible, forward-looking Budget in an unprecedented economic environment.
And, at the same time, we’ve stood firm by our commitment to deliver the National Disability Insurance Scheme and to ensure that all Australian kids get the best start they can through a quality school education.
Our National Plan for School Improvement will direct an extra $14.5 billion to Australian schools over the next six years.
Our plan will see extra money focused on the things that we know work – higher teaching standards, more information for parents and more power for school principals.
The cost of not implementing this plan goes beyond dollars.
It will mean fewer teachers, larger class sizes and the risk of more and more children falling behind.
That’s not something I want for my children.
The ripple effect of an education system that doesn’t deliver is not something we, as a nation, can afford.
Similarly, as a nation, we cannot afford to turn away from the National Disability Insurance Scheme.
This is an historic reform that is long overdue for Australia.
We know our current system is letting us down.
We know people with disability and carers deserve more.
DisabilityCare Australia – the NDIS – is now law, and will support hundreds of thousands of Australians with a disability and their families.
These are fundamental Labor reforms that underpin a strong, smart and fair nation, and will take us well into the 21st century.
I think it is safe to assume that all of us here today rate social and economic equity for all Australians as a top priority.
We do not want anyone to be left behind.
We want to ensure all Australians have the opportunity to reach their potential; to live full lives and contribute to, and share in, the prosperity of our country.
To this end, there is much great work already underway – much of it being done by those of you in this room.
You are making a very real difference to vulnerable Australians who find themselves in financial crisis.
I understand that the move to three year contracts has made a big difference to the sector.
Reducing red tape and increasing funding certainty means you have more time to work with clients and are better able to forward plan and forge stronger networks.
I applaud your commitment to work collaboratively.
It is by driving stronger connections and building better partnerships that we can best tackle the multi-layered issue of financial vulnerability.
I look forward to continuing to work with you in my capacity as Minister for Community Services to deliver outcomes that make a difference to vulnerable Australians and their families.