Address to the National No Interest Loans Scheme (NILS) Conference
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“Don’t expect to see any of that money again.” I wonder how many times people in this room have heard that?
As Good Shepherd’s May edition of Microfinance Matters reported, this was precisely the reaction when the Good Shepherd Sisters first put aside $20,000 in loan capital to be lent to low income earners in inner Melbourne back in 1981.
Thirty-three years later, the resulting No Interest Loans Scheme – NILS – has reached more than 125,000 people across Australia and repayment rates have been consistently above a staggering 95 per cent.
A great example of the connection and dedication to community that this conference espouses.
So can I thank you for having me here today. I certainly enjoyed being with you last year and I am pleased to be meeting with you again.
NILS and Civil Society
The No Interest Loans Scheme, NILS, reminds me what civil society in our country can do when it puts its mind to it.
And NILS, where people have come together to find their own solutions to the problems that confront them, and where Government can empower the initiative without burdening participants, is an excellent example of civil society at work.
The work Good Shepherd Microfinance and the National Australia Bank do should be commended. Their partnership has benefited thousands of Australians.
Since 2003, this partnership has built a network of 257 providers working from more than 600 sites across Australia to provide microfinance solutions to give Australians living on low income access to fair, safe and affordable financial services.
The partnership’s shared goal of improving financial inclusion for one million people on low incomes by 2018 is a truly commendable target.
Research by the NAB and the Centre for Social Impact tells us that almost 17 per cent of Australians -that is about three million people – are excluded from key financial products and services that most of us take for granted.
This programme helps the financially excluded to buy essential goods and services and to improve their financial capability.
NILS – and the companion low interest StepUP loans – enable clients to work towards their own economic wellbeing.
Indeed, the human stories behind the programme are many and varied.
A single mother struggling to get her children to school in clean clothes each day takes out a loan for a washing machine.
An Indigenous mother has a loan for a fridge so that she can stock it with fresh food to keep her family healthy.
An elderly pensioner gets help to purchase essential household items to get him back on his feet.
As we all know, this is not just about material benefit.
Lack of finance to buy essential white goods or access basic services can cause strain within families for example.
Addressing financial exclusion helps people to manage life’s challenges.
The Centre for Social Impact’s NILS evaluation found that 82 per cent of clients surveyed experienced a net improvement in social and economic outcomes thanks to NILS.
Some 74 per cent experienced improvements in social and health outcomes due to positive changes in their standard of living, reduced stress and anxiety levels, a confidence in achievements, heightened self-esteem and participation in society.
And 47 per cent experienced improved financial capabilities – sticking to a budget, paying bills on time, saving money for emergencies and comparison shopping.
Another very important finding is that NILS is helping people avoid the pitfalls of harmful products – 42 per cent of clients who had used fringe credit providers in the past either stopped or decreased their use as a result of accessing a NILS loan.
These findings are all the more important when we remember that 94 per cent of NILS borrowers are on very low incomes.
All the research shows that building financial literacy skills makes people more resilient, empowering them to be more confident in making both financial and life decisions.
In fact, in its evaluation of the StepUP programme, the NAB listed a reduced reliance on welfare among the benefits of financial inclusion.
New British research suggests that the impacts of problem debt may undermine a person’s ability to seek work, which is a key route out of poverty.
One study found that people feared creditors would demand increased or full repayments of their debt if they had a job.
I noticed with interest Adam Mooney’s comment in relation to the NILS evaluation when he said:
…clients are less likely to need expensive government services such as emergency relief, corrections, housing, mental health, income support, and more likely to move towards income generation, self-sufficiency and broader economic contributions.
Of course you would all know that the Government allocated funds in the Budget to continue the Community Development Financial Institutions trial for another 12 months, that is, providing funding to June next year.
But today I want to particularly commend what all of you have been doing, because as I said, the Good Shepherd Microfinance and NAB Partnership is a great example of civil society at work; a community conceived, community driven and community delivered project.
This is an example of two respected institutions linking up to help solve a problem and benefit fellow Australians.
And it serves as a model to others, with Good Shepherd organising the programmes at the community level and with NAB providing the money and the banking expertise. Finally, the Government’s contribution of operational funding rounds out the team effort that is behind this successful activity.
Working in partnership is something the Government believes in and our approach is to work in tandem with the sector, to empower the sector.
Community Business Partnership
To this end, the Abbott Government will be re-establishing the Community Business Partnership because that is the type of community-corporate interaction that we want to encourage, and appropriate funding was announced in the Budget to give effect to that decision.
The Partnership, which operated under the Howard Government, will encourage leaders from the community and business sectors to work together to promote philanthropic giving and volunteering in Australia.
In recognition of the importance of this Partnership, the Prime Minister will serve as its Chair.
Once established, the Partnership will advise Government on practical innovative strategies to reinvigorate Australia’s giving and volunteering culture.
The Partnership will focus on ways to eliminate institutional barriers to giving by removing red tape and costs for example.
Productive, collaborative partnership across and between sectors are the underpinning of a healthy, empowered, self-sufficient civil society.
Corporate-community partnerships are able to address community issues and produce outcomes that governments, businesses and not-for-profit organisations cannot achieve alone.
Partnerships between the corporate, philanthropic and not-for-profit sectors are critical to mobilising private capital for the benefit of the community and driving innovative solutions to complex social issues.
ACNC, Centre for Excellence
Along with encouraging partnerships such as this very successful Good Shepherd – NAB partnership, the Abbott Government is assisting civil society in several other ways.
We committed to cutting red tape which takes up so much unproductive time. And we are doing just that.
And one way we are doing this is by abolishing the Australian Charities and Not for Profits Commission.
The ACNC was supposed to be a single reporting point for charities.
This has not happened.
The majority of charities still have to deal with multiple jurisdictions, multiple agencies.
This means they are still subject to unnecessary and time consuming red tape.
So, as I have done on so many occasions, let me be clear – we will abolish the Australian Charities and Not-for-profits Commission.
A new Centre for Excellence will replace the ACNC, and it is my intention to transition ownership of that new body, over time, to the sector itself.
The new Centre will be about creating incentives.
The focus will transfer from compliance and regulation to collaborative education, training and development.
This is about respecting your independence and minimising Government intrusion in your affairs. I plan to release more details about the National Centre for Excellence in the coming months.
In the case of NILS and StepUP, financial regulators are already in place to ensure that funds are well spent and laws adhered to.
Why do you need another layer of bureaucracy on top of that?
Well, quite simply, you don’t.
Our philosophical underpinning regarding civil society is that there should be an assumption of trust, rather than an assumption of suspicion.
And we want you to be able to get on with what you do well rather than suffer the constant distraction of red tape.
Restructure of grants programmes
On that note a major restructure of the grants programmes in my Department will likewise foster a less oppressive relationship between government and civil society.
Eighteen discretionary grants programmes will be streamlined into seven with the goal of giving funded organisations greater flexibility, a lighter administrative burden and greater control over how they organise their services to meet the needs of their communities.
Improved financial wellbeing and capability remains a priority and will sit in the Financial Counselling, Capability and Resilience subset of the Families and Communities Programme.
The objectives of the previous Financial Management Programme are retained.
That is to provide support to disadvantaged Australians, their families and communities to improve their financial capability, resilience and lifetime wellbeing.
The difference is that we will be able to respond more flexibly and more efficiently to people’s needs under the new streamlined structure.
Funded organisations themselves will have greater flexibility, less administrative burden and greater control over how they deliver services to the particular needs of their clients and communities.
Application processes will be simplified.
Where organisations deliver several services on behalf of the Government, we are moving towards implementing a single rather than a plethora of contracts.
And we are simplifying auditing processes to require only one financial report from each organisation annually.
This will mean a substantial reduction in red tape.
The restructure will also mean significant cost savings both for funded organisations and for the Government.
Budget, Inquiry into Financial System
Good financial management of course starts at the top.
That is why we have taken a strong stand to get the nation’s Budget in order.
It is also why we have set up an Inquiry into the Financial System.
I understand Good Shepherd Microfinance and the NAB, and others of you here today, have put proposals to the Inquiry.
I look forward to the findings of this Inquiry which is expected to report later this year.
From the Government’s perspective, we aim to improve the financial system so that everyone can benefit.
We want a system that removes the barriers faced by the institutions of civil society to developing their own solutions and responding to the needs of both individuals and the community; an approach not to different from that of the far-sighted Good Shepherd sisters so many years ago.
Once again, thank you for the opportunity to address you today.