A Clear and Positive Way Forward
It is tremendous to see so many of you here. What you do changes people’s lives. We all know that when people find it difficult to manage their own financial affairs that it can result in the most terrible consequences; families break up, people take their lives, children lose parents. We see a waste land that results from the inability to be able to stay on top of one’s own finances to be able to manage the decisions and the complexities around some of these things. For some people this is not a challenge, for others the inability to do it destroys their lives and the lives of those around them. So it is wonderful to come here this morning and see so many people who are so committed to changing that outcome for so many Australians.
We have more than 400 financial counsellors, financial capability workers, banking and industry representatives here for this thirtieth anniversary conference. David, the Chair, is soon going to recount the financial counselling’s remarkable story here in Australia. It is no small feat to have helped and guided your fellow Australians through financial difficulties they have faced over decades. The numbers counselled so far would add up to hundreds of thousands if not more than that.
They are people like any of us who at some time in their lives are just overwhelmed by financial pressures, often due to unexpected changes in personal circumstances. More than 70,000 Australians who had difficulty meeting their financial obligations were helped by federally funded financial counsellors last year. One of my closest friends in the Parliament is Louise Markus. Louise Markus was a social worker before she entered Parliament as the Member for Greenway in 2004. When she talks to us about these issues and how she used to help people in her role back then, which included this, she would talk about how giving people control over the small things and giving them a sense of empowerment, little by little, dealing with the first immediate needs and being able to gravitate to bigger decisions. I want to pay tribute to the work that Louise Markus has made and contributed in the Federal Parliament as someone who has come from working directly in this area and educating her colleagues about the way it can be done successfully.
Many others were assisted by state, organisational or philanthropic bodies and funding and around 135,000 were assisted by the national financial counselling Helpline 1800 007 007 – affectionately known, I am told, as the Bond line. Financial Counselling Australia plays a vital role supporting the delivery of these financial counselling services. The Government recognises that and that’s why today I am announcing that we will be continuing to support FCA with $1 million in further funding over the coming two years. We are saying thank you to you for the work that you do. We believe it’s important, we value it and that’s why we make these investments.
Financial counselling has come a long way since the days when volunteers in Victoria ran services from a bus that earned the name The Bankruptcy Bus. Financial counsellors have worked closely together over the years to implement innovative ideas and to become a highly professional sector addressing the increasingly complex issues faced by today’s consumers. Services have grown in their sophistication and reach. They demand knowledge of consumer, bankruptcy and insolvency law; banking and utility hardship programmes; and financial and personal support services. Contemporary counsellors also need well-honed advocacy and negotiating skills when they step up on behalf of their clients, and technology of course has also become incredibly important as you all well know. Online capabilities have expanded service delivery and promoted help for consumers through access to online resources such as FCA’s Debt Self-Help website.
Financial counselling services now extend across the country, helping people move out of debt, assisting individuals and families avoid the risks of entrenched financial hardship, and improving their capacity and resilience to manage their finances. I can assure you that financial counselling and financial capability services are a key priority for the Government of which I form a part. In last week’s Budget the Government announced funding of $25.6 million over two years from July for the Financial Wellbeing and Capability Services in Income Management trial sites across the country. This funding will ensure up to 340,000 Australians living in areas of particularly high disadvantage continue to receive ongoing access to financial counselling and financial capability services.
The Government brought down a Budget to incentivise the Australian economy so all Australians can benefit and particularly through the engine room of small business. I notice you had a twilight session on small business last night. Small businesses play a significant role in the Australian economy, employing around half of the nation’s workforce. You often see the personal difficulties that can arise when people who have had the spirit of “have a go” and “give it a go” and create small business enterprises, then finding the going very, very tough. That is when the guidance of trained financial counsellors through what your conference programme note vividly calls “the blurry landscape” is vitally important. This year’s Budget initiatives will give more small businesses the confidence and the cash flow for a brighter future and more resilience in their personal finances which, as your programme notes and points out, are often tied up in the business.
Many of you also will be interested in the Budget announcement of $4.9 million in commitments over three years to Community Development Financial Institutions, CDFIs, to focus on microenterprise development. This investment marks a new phase for CDFIs with the focus of the next stage on supporting people to build microenterprises. The person who introduced me to this whole notion of microfinance and microenterprises was David Bussau, who I have known since I was a small boy. He has been a friend of my family and of me for many, many years and I made particular reference to him in my first speech to Parliament because in that year he was the Senior Australian of the Year.
One of his co-founding directors of Opportunity International was a very dear friend of mine and to this day, Leigh Coleman who has probably forgotten more about microenterprise development than most of us would remember. He set up an organisation called Many Rivers, taking the learnings of Opportunity International and how this worked and worked and worked in developing countries all around the world. He started to make that same principle work here in Australia, particularly in Indigenous communities. I remember as I would sit with Leigh and he would tell me the stories of lives changed and lives changed. It was tremendously empowering to hear these stories of him showing faith through the application and provision of a small loan to help someone realise their release from a life of welfare. Many Rivers is a growing success story and is one of our pilot projects. The pilot directly supports vulnerable individuals to move from welfare to work through business ownership. Around 730 people are currently employed in Many River’s supported businesses, generating a total annual income of around $37 million. Due to its ability to leverage corporate funding, the costs to Government are actually minimised. Leigh doesn’t often come looking for money because he has been extremely successfully in being able to leverage support of the financial sector, but they will receive support for their operational costs. This is a great achievement and I particularly want to acknowledge the work of Leigh Coleman amongst his peers here today.
We have also committed $63.4 million over five years for continued support of three microfinance schemes – the No Interest Loans Scheme, the StepUP low interest loan scheme, and the Saver Plus matched savings. These schemes will continue to help hundreds of thousands of vulnerable individuals and families across Australia with finances to buy essential products such as a computer or to repair their car, enabling participation in employment and educational opportunities.
Evaluations of both NILS and StepUP suggest that providing access to a financial product, alongside financial literacy support, can substantially improve financial resilience and self-reliance. The evidence is telling us that there are significant improvements in people’s financial capabilities, including comparison shopping, 38 per cent, following a budget, 31 per cent, and paying bills on time 20 per cent. That due to these programs there is a 29 per cent reduction in their use of emergency relief. You’re in the business of improving people’s capabilities and empowering them to be everything they want to be.
Microfinance schemes like this have an outstanding track record in moving thousands of people on low incomes away from welfare dependence and towards financial resilience. It’s a life building exercise. I find it very interesting to hear the stories of the people who use these products; recently Good Sheppard microfinance shared a story with me: Kay went to the banks to get a loan but she was rejected. After recovering from issues with alcohol, she was in a bad place and felt like a failure. Kay was able to access a NILS loan from BaptistCare. Kay says that NILS gave her second chance at life. She tapped into her unique skills and strengths and used a NILS loan to start her own small business selling macadamia nuts at community festivals. You all know these stories, you have seen them, you have participated in them, and you’ve made them happen as a partner. Its little stories like this that are so empowering. The Government’s commitment to Microfinance and Small Business in this Budget will help these projects bloom. But particularly it will reach out to the most disadvantaged in our community and turn them into small business people by starting as microbusiness people.
For this reason the Government is investing $800,000 over two years towards the development of Financial Inclusion Action Plans because we firmly believe the corporate, community and government sectors have responsibility to build the financial resilience of our fellow Australians.
As a first step ten ‘trailblazing’ organisations will sign up to, and develop Action Plans to improve the financial capability of both their staff and their customers enabling them to be well prepared when facing financial difficulties.
Other major steps we are taking to improve the lives of Australians include welfare reform to help more Australians get into work and stand on their own two feet and stay in work, particularly for young people. It’s not just about getting them actually into the job, but you’ve got to get them to the starting line of being able to get a job. Once they are in that job we have to help them stick in the job and that’s what our initiatives announced in this Budget are seeking to achieve.
But no matter how healthy our economy is and no matter what leadership Government gives, the vagaries of life are sometimes beyond the control of all of us. Financial counsellors have found the main causes of financial difficulty are unemployment, relationship breakdown, illness, and poverty. But I say at the same time financial difficulty can often be the causing factor in each of those outcomes as well. When people find themselves in these circumstances, helping them get their finances on track is only part of the story. But it is a big part and it is a critical part. Helping people get on top of their financial problems reduces the potential for compounding impacts on other areas of their lives and increased dependence on other services.
Recognising this vital role, I am pleased to announce that the Government has committed more than $45 million towards financial counselling and financial capability services to the end of June 2017.
This includes around $30 million for financial counselling and financial capability services, $6 million towards the 1800 007 007 Financial Counselling Helpline, and around $8 million over the coming year towards financial counselling to help people affected by problem gambling.
This funding is being provided under the Financial Wellbeing and Capability Activity programme which is part of my Department’s new grant arrangements. This is in addition to the $25.6 million in Income Management trial sites. The new grant agreements give service providers the scope and flexibility to be responsive, innovative and creative in meeting the needs of, and achieving better outcomes for the Australian community. The new agreements are designed to reduce red tape and duplication for service providers and are creating, we believe, a more streamlined, simplified and consistent reporting processes.
Now you would all be aware of the changes that were made at the end of December – that was a very interesting time to become the Minister for Social Services. We extended the frontline service funding out to the end of June while we worked through what I feared may be service gaps on the ground. In the Budget there was additional monies provided to support me in the work, with my Department, to ensure that we are able to plug what we consider to be service gaps – frontline service gaps on the ground. We are still working through that process. I want to thank you all very much for your patience as we have worked through that process. The six month extension was done to ensure that we could go through this thoroughly. I want to commend the Department for managing what was an extremely big application of grant round process; an $800 million process which involved thousands upon thousands of applications. But it is important that once we work through the outcomes of that process that we look to see how this impacts on the ground and that’s why we have given ourselves the time to work through that and work through it with you. We will be making decisions on those issues in the not too distant future.
Another good friend of mine is Keith Garner. Keith was behind a recent report from Wesley Mission which was called the ‘Facing Financial Stress Report.’ When it was released earlier this month it found an alarming 44 per cent of households in NSW are suffering financial stress and 38 per cent are spending more than they earn. The Government is currently doing that at the moment. The report’s graphic cameos show how financial hardship and financial anxiety impact on the health, safety and wellbeing of individuals and their families. It shows in stark detail the prevalence of problems such as anxiety, homelessness, addiction and domestic violence among people experiencing financial difficulties. These of course are all issues which the Government is seeking to address.
For homelessness we have created new funding to support the continuation of the National Partnership Agreement on Homelessness to the tune of $230 million over two years. That was not an extension of funding. That was new funding that had to be found in the Budget from the various other savings that we were able to achieve through the budgetary process. There was no funding in the forward estimates for the continuation of that agreement. That $230 million has been found and we will continue to work through the Federation Review to better set up how the Commonwealth and the State Governments can work together in addressing issues of homelessness, which is primarily a State responsibility but there are roles that the Federal Government can play.
We have said in providing that funding that we are going to focus particularly on family domestic violence issues related to homelessness, as well as youth homelessness. This funding is there to add to the effort, not to subsidise the effort. We want to see new projects and new investments in these areas as a result of the Commonwealth’s additional investment.
We are also addressing the issue of family domestic violence more broadly, and if there is one issue which has united the country it has been this issue. I think regardless of whatever political hat anyone may wear I believe there is truly a national political consensus and will do to more, to do everything possible to address the issue of family domestic violence which is the darkest side of our community. Together, I believe we will overcome this in time. The initiatives that have been announced, whether it was the additional funding for the 1800 RESPECT line that we announced on the weekend or the $30 million of community awareness programmes or the broader initiatives under the Second National Action plan as we move to the next one. All of this has political will but as I said to a families conference in Melbourne yesterday, whether it is in financial counselling, whether it is in homelessness, whether it is in family domestic violence, whether it is in all of these things this morning I have announced a range of areas of funding but frankly none of that is of any use if it doesn’t work.
One of the reasons I like it when we have conferences such as this, sometimes people criticise conferences as gab-fests and all the rest of it, but frankly what people want to know out of your time here today and tomorrow and over the course of this conference is what works. Hopefully you have seen in what I have outlined this morning and the initiatives we are investing in is we want to back things that work and actually make a difference on the ground. Making announcements about funding frankly isn’t enough if the funding doesn’t have the impact on the ground. We have seen that in Indigenous communities over generations. Just shovelling money doesn’t work.
So I want to thank you for all of your efforts. I want to thank you for your commitment over 30 years and I want to finish with something Keith Garner said – the Reverend Keith Garner. He said after looking at this report which shows some of the most horrific things happening in my own home State and community of NSW and my home city of Sydney. He still said I am greatly encouraged to hear the experiences of people who have made the journey from deep distress and confusion to a clear and positive way forward.
That’s our job Keith and I look forward to working with you as we work together to get that job done.