In Financial Inclusion Week, it’s important to recognise that more than eighteen per cent of adults in Australia experience financial exclusion. These people are not able to access any form of credit, general insurance or a transaction account. Without access to these financial products and services, it can be difficult to meet unexpected costs or one-off expenses.
In fact, recent research on Financial Resilience in Australia from the Centre for Social Impact, in partnership with NAB, shows that:
- More people (2.4 million adults) now experience financial stress – financial resilience is declining.
- More people (5%) lack access to credit, and more are turning to fringe lending providers.
- 1 in 7 adults have no savings at all – half of those who do, have less than the equivalent of three months’ income saved.
- Greater financial insecurity is common amongst the young (under 35), people from non-English speaking backgrounds, renters, those experiencing mental illness and those with lower education.
These findings are echoed in recent studies from the OECD, which show that despite strong economic growth in Australia, inclusiveness has declined as households in upper income brackets have benefitted more than others. In particular, gaps in socio-economic outcomes for Indigenous people and women continue to result in disproportionate disadvantage.
For Good Shepherd Microfinance, and the network that provides our No Interest Loan Scheme and StepUP loan program, these findings are significant. It shows that our programs, products and services are both needed and relevant, as they offer safe and affordable finance to those who might otherwise be financially excluded.
Beyond our programs, the financial conversations that clients have with the provider network also helps to enhance their financial capability. Giving people information and tools to manage their own finances is important, as we can work with communities and individuals to build their financial capability. Designing more client-centred services, especially for women and Indigenous Australians, can also make an important contribution to correct the current imbalance.