Jason Clare (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That the House:

(1)

recognises the heightened importance of financial literacy and financial counselling given the global economic recession and its impact on the Australian economy;

(2)

supports the actions the Government has taken to improve financial literacy and provide additional financial counselling services for people struggling to make ends meet; and

(3)

calls on Australian banks and financial institutions to assist Australian families by providing additional support for financial literacy programs and financial counselling.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Is the motion seconded?

Amanda Rishworth (Kingston, Australian Labor Party) Share this | Link to this | Hansard source

I second the motion.

Jason Clare (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

It is going to be a tough year. It has been tough in my electorate in south-west Sydney for a number of years. We have seen house prices fall by 16 per cent, we have seen the number of home repossessions go through the roof and we have seen rents skyrocket. Interest rate cuts over the last few months have really helped, but I fear that what is happening across the rest of the world will sweep through Australia and steal away jobs from people who are already struggling to pay their mortgage. You cannot pay the mortgage if you do not have a job. Unemployment is already 50 per cent higher in Blaxland than it is across the rest of the country, and the statistics that the ABS put out indicate that it is already on the rise. Statistics that the ABS put out in December showed that more people turned up to Bankstown Centrelink seeking unemployment benefits than anywhere else in New South Wales and almost anywhere else in the country. That is why last week I asked the Minister for Human Services, Joe Ludwig, to come to Bankstown and have a look for himself and to talk to the people on the ground, on the front line. That is also why two weeks ago I, and everyone on this side of the House, voted for the $42 billion stimulus package.

But there is more that we can do than just vote for legislation. As members of parliament there is a lot more that we can do—practical, real things to help people. Members would have heard me speak in this place before about the housing stress information nights that I held across my electorate last year. They were run by experts like Paul Clitheroe, and we brought together organisations like Legal Aid and the Consumer Credit Legal Centre to give people practical advice. Here is just one example resulting from those information nights. A woman named Sophia Helene came up to me in the street last year, gave me a hug and a kiss, and said: ‘Thank you for putting that together. The information that I got that night helped to turn my life around.’ I am going to do the same thing again this year, except this year I am going to run free home budget information nights, giving people basic home budgeting skills and basic financial literacy skills.

I know there is a need for something like this because last month I put together a free home budget kit and I put some information about it in the local newspaper. In two days we had 231 phone calls to the electorate office from people asking for a copy of the kit. Next door to my office is a financial counselling service called Creating Links, and they have a waiting list of two weeks. Those are things that the government are already doing. The federal government have increased the budget for financial counselling from $10 million to $20 million, and at last we have a government that are doing something about financial literacy in our schools. But there is more that we can do.

I think there is more that Centrelink can do. Centrelink run what are called financial information seminars, which usually focus on things like pensions, superannuation or share portfolios. I think they can do some more good work here. Let us remember that one in three Australians—more than six million people—is a Centrelink customer. I think those people—in fact, all of us—could do with a helping hand, with a bit of information on how to run a home budget and basic financial literacy skills. I think there is more that we can do there.

I also think that the private sector can do more. That is the subject of this motion before the House. I know from talking to the Australian Bankers Association that banks are doing a lot of good work in this space already. We should pay particular credit to some of the programs that are being run by the ANZ, Westpac and the Commonwealth. But I think they can do more. One idea could be lending their staff to the charities and the NGOs that I am talking about to provide the sort of information that people need, financial counselling services on the ground, a little bit like the way big law firms offer pro bono services to community legal centres. I think banks could do the same or, even better, banks could fund positions in these organisations—organisations like the Smith Family, the Salvation Army, St Vincent de Paul or the organisation next door to my electorate office, Creating Links. All banks have corporate social responsibility plans and, in these tough times, I think they should be focusing these corporate social responsibility plans on financial literacy and financial counselling—not just on lending money responsibly and cutting interest rates but on lending a helping hand, on giving people the information, the advice and the skills that they need to get through these tough times ahead. (Time expired)

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

I rise to support the motion moved by the member for Blaxland, and indeed the need for financial literacy. We cannot have a sensible discussion in this House with respect to the government’s role in financial literacy without going back to 2004, when the then Howard government established a Consumer and Financial Literacy Task Force to develop a national strategy to improve consumer and financial literacy in this country.  The task force recommended that a national financial literacy body be established to take a strategic approach to the issue and to facilitate improved cooperation, efficiency and effectiveness amongst provider organisations. The then government committed $5 million to establish a National and Consumer Financial Literacy Foundation and a further $16 million over two years for an information program, a total of $21 million.

In 2006, then Minister Dutton—whom, I note, sits at the coalition table as we speak—celebrated the first year of the establishment of the Financial Literacy Foundation. He stated:

One of the key achievements of the Foundation has been to work with the States and Territories to produce a National Curriculum Framework for Financial Literacy in schools for years 3, 5, 7 and 9 …

Other achievements that then Minister Dutton should rightly be proud of include the implementation of a pilot program, in partnership with the Master Builders Association, to introduce financial literacy training to cadets, apprentices and the MBA membership; the establishment of an Education and Trainers Network; the development of working relationships with a wide range of partner organisations that deliver financial literacy; and the improvement of cooperation between the FLF and Innovations and Business Skills Australia.

The Commonwealth government’s website Understanding Money was created by this foundation. It gives all Australians the opportunity to increase their financial knowledge and better manage their money. It provides a national focus for financial literacy; builds the capacity of all Australians to better understand and manage financial risk and take advantage of increased competition; raises awareness of financial literacy and its benefits; creates opportunities for Australians of all ages to learn more about money; and provides practical support to educators and trainers to improve the availability of quality financial literacy education.

The foundation has partnered with government, industry and community sector organisations to create Understanding Money resources. Some of these include the ABA, CPA Australia, the Australian Stock Exchange, the Financial Services Institute of Australasia, the Financial Planning Association of Australia and others. The foundation’s advisory board provides guidance on these issues and has nine members, chaired by Mr Paul Clitheroe. The Howard government provided $21 million over two years.

On 1 July 2008, the functions of the foundation were transferred by the Rudd government to ASIC. On 13 May, the Treasurer stated:

The transfer of the Foundation to ASIC consolidates the Australian Government’s financial literacy response … and strengthens ASIC’s role in safeguarding Australia’s economic reputation and wellbeing.

I am a little surprised, though, that ASIC’s website says:

Full details on how the Foundation’s functions will fit in to ASIC’s overall education initiatives, using ASIC’s existing resources, are still being worked out.

This function was transferred nine months ago. If the Rudd government were serious about financial literacy—and I honour the seriousness with which the member for Blaxland views the area of financial literacy and I note the work he is doing in his electorate—then why, nine months after transferring it to ASIC, is ASIC still unsure about how it is all being worked out? In the 2008-09 budget, the Minister for Families, Housing, Community Services and Indigenous Affairs announced a $20 million commitment over four years to expand financial counselling services and support for working families under financial pressure. In 2004, then Minister Dutton committed $21 million over two years. The Rudd government committed $20 million over four years. Something does not quite fit with the Rudd government’s commitment to assistance with financial counselling and services.

Senator Sherry, in his speech on 2 July 2008, outlined the Labor government’s plans for financial literacy and financial counselling: transferring the foundation to ASIC; getting ASIC to develop and coordinate a long-term, national strategy; getting ASIC to maintain a national financial literacy hub; getting ASIC to develop and promote a range of projects; getting ASIC to develop initiatives targeted at tertiary students; and getting ASIC to address attitudinal and behavioural barriers. That is all fine in principle and fine in theory. I am just concerned that ASIC’s website says, ‘Full details on how the functions will fit in to our overall initiatives are still being worked out.’ (Time expired)

Amanda Rishworth (Kingston, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to commend the member for Blaxland’s motion to the House. In these tough economic times many residents have told me they are finding it difficult to balance the family budget. These budgets that are worked out around the kitchen table every week are under a great deal of stress and pressure. Many families are facing problems with debt, be that from phone bills, credit cards or mortgages.

In this difficult climate it is important that everyone steps up to their responsibilities, and I take this opportunity to commend the work of many financial counselling services who work tirelessly to provide financial literacy and support for families who are doing it tough. I am not entirely sure where the member for Fadden got his figures, but certainly the financial counselling services in Adelaide have welcomed our government’s increase in—in fact, doubling of—money to provide financial services. They have been very pleased that they have seen this doubling of money that allows them to provide these services. However, the demand for these services has increased. One organisation, Uniting Care Wesley Adelaide, estimates that, even with this doubling of funding, it turns away 100 people looking for financial counselling appointments every week.

In response to this evident need for assistance in our community, I took the lead from the member for Blaxland and hosted my own debt relief information forum last week, on 18 February, in the Hopgood Theatre in Noarlunga. I would like to thank the many panellists and organisations that came along: St Vincent de Paul, Uniting Care Wesley, the Financial Ombudsman Service, Legal Aid, Centrelink, the Hackham West Community Centre and Anglicare. All these panellists provided some expert information that was very much appreciated by those who attended. They also provided individual stalls at which the residents who attended, after they had got general information, were able to approach the panellists for very specific information. I know that, while some people were a little embarrassed about asking questions in front of a whole lot of people, they did take the opportunity to ask questions in private. And I would like to thank everyone who gave up their time to come along because they believed that this issue is a very important one in our community. I would also like to commend the residents who attended and took that opportunity to be proactive and learn more about how to better manage their cost-of-living pressures. Janet Scott is one of the residents who decided to take the time to come along and help herself and her family be prepared for these harder economic times.

What we all learnt that night was not just how important it is to get help but also how important it is for families facing these problems to take action early. We heard this time and time again: ‘You must take action early.’ We also heard that families need to stay in touch regularly with their creditors. This information was also emphasised over and over again. We also learnt from the Legal Services Commission of South Australia that there are options. Often people feel that there are no options. However, they should get in touch and get some information, act early and stay in touch. Debt pressures can seem overwhelming and people need support to be able to respond quickly before it is too late. I hope that the forum was useful to the residents of Kingston, and I am proud to support the many non-profit organisations that do this work in our community—like the ones I have mentioned: Uniting Care Wesley, Anglicare and St Vincent de Paul, who provide full and independent financial counselling without charging the sorts of fees that others do.

I know my time is running out, but I do want to get to the essence of the motion. I am pleased that the motion before us today calls on Australian banks and financial institutions to provide support in this area. As with many other people and many organisations within the community, banks do need to stand up and take some responsibility and to utilise, as the member for Blaxland alluded to, their expertise in this area. Australian banks have a unique opportunity to help hard-hit working families by providing additional support for financial literacy and financial counselling, and I think it is very important that they do so.

At my debt relief forum, the Noarlunga experts took their time to share their advice on dealing with debt issues and I think this is incredibly important. (Time expired)

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I certainly welcome the opportunity to speak on this motion in the House this evening. I think it is very important that we encourage financial counselling and improved financial literacy, because we live in an age which is thriving on credit—or which was, until recently, thriving on credit; now it is actually suffering a backlash from too much credit. I think we had a situation where banks and financial institutions, in competing for market share, were very aggressive in their lending practices—very aggressive: lending to 100 per cent of valuation, or 105 per cent of valuation. It really called into question the ability of the borrowers to repay. I think that many borrowers would not have got into the predicament in which they find themselves had they had the financial skills to think through for themselves their ability to repay those obligations that they were taking on.

It is very important, when we have such large loans, that we note the fact that interest rates can go up as well as down. So, whilst we have borrowers who may be quite comfortable at current interest rates, when the economic cycle turns—as it inevitably will—we will see rising interest rates again, and that will call into question the ability of many borrowers to make the repayments which they will be committed to. So I think it is a very important notion that we encourage financial literacy and that we assist people to manage their affairs as best we can.

Financial institutions certainly have a substantial community obligation to ensure that the people to whom they lend can repay the money that they have borrowed. It is in no-one’s interests—it is not in the interests of the shareholders of a financial institution—to lend money to people who cannot repay it. And that is the ridiculous nature of the subprime crisis in the US, where funds were loaned to people with no capacity to repay. They did not have the financial skills to assess the situation in which they were going to find themselves. Having proper financial education in schools, perhaps at TAFE colleges and in higher education, would give people the skills they need to operate in a financial world that is far more complex than it once was. So I very much commend this motion, in the few remaining moments I have available to me. I think it is a motion very worthy of the time of this parliament and that improved financial literacy is something that we should be encouraging.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting. The honourable member will have leave to continue speaking when the debate is resumed.