You might not know it, but one in every five Australian adults (3.3 million people) is financially excluded, unable to access safe, affordable, and appropriate financial products and services when they need them. This increases their likelihood of experiencing financial hardship and poverty. Two million people in the country also experience high to severe financial stress, reducing their resilience or ability to recover from financial shocks. Those impacted, particularly women, also experience poorer socioeconomic and health outcomes, especially lower education, employment, and income status. Whose problem is this to solve?
Against the backdrop of ongoing global financial and political uncertainty, financial inclusion challenges exacerbate the divide between the ‘haves’ and the ‘have-nots’. In Australia for example, those holding the top 20 percent of wealth have around 70 times more than those in the bottom 20 percent. The country’s growing income inequality does not reflect changes in household characteristics, rather changes in the size of persistent and transitory income shocks. Lack of inclusion and resilience via insurance, savings, credit, and payments therefore compound the impacts of growing inequalities of opportunity, stifling upward mobility between generations, increasing social tensions, and reducing economic growth.
So who’s best placed to respond to this growing problem – the government with its policy vision for financial well-being and capability; business which designs product offerings and offers employment; researchers who study inequality, gather evidence and create theories; or the community sector, which is usually the first line of defense for excluded and vulnerable Australians?
The answer, according to the Financial Inclusion Action Plan program, is all of the above!
This national program, led by Good Shepherd Microfinance on behalf of the Australian Government, partnered with EY and the Centre for Social Impact to work with key stakeholders from multiple sectors including government, industry, academia, and civil society to co-design holistic and coordinated responses to the ‘wicked’ problems of financial exclusion and lack of resilience. The program team works with organizations to create their own Financial Inclusion Action Plans (FIAPs), producing an agreed strategy of practical actions that the organizations will undertake.
On 26th November 2016, the International Day for the Elimination of Violence against Women, 12 leaders from the government, business, education, and the community sectors came together to launch their FIAPs, detailing over 240 actions they will take to improve financial inclusion and resilience for large numbers of Australians experiencing financial exclusion, especially women. New measures to assist women experiencing financial abuse and family violence are a common theme across these plans, as are the design of targeted products and education programs, and more pathways to employment for vulnerable groups.
For example, among its other actions, ANZ Banking Group is researching the role of financial literacy and the role of banks in addressing family violence and economic abuse. ANZ will ultimately publish this research, pilot a financial support program in conjunction with programs offering family violence services, and publish an evaluation report for the pilot – all with the intended outcome of bolstering financial outcomes and support for people affected by family violence.
Change takes time, as well as a longer-term commitment to invest the resources required to sustainably achieve these bold, common goals of financial inclusion. Economic modelling shows that the collective impact of the FIAP program, across the already committed 12 FIAPs, if sustained over a 10 year horizon, could contribute an estimated $2.9 billion p.a. to gross domestic product (GDP), lift household wealth by $11.8 billion, and generate government savings of $583 million. Whilst a decade seems far away, the longest journey begins with the first step, which for the FIAP program, was the recent public launch of over 240 actions.
For more on the Financial Inclusion Action Plan program, including details on the recently launched FIAPs, click here.
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