More Australians Financially Excluded -Report
Tuesday, 29th May 2012 at 9:49 am
Almost three million, or 17.2 per cent of Australians, are now either fully or severely financially excluded from affordable financial services, according to a new report.
The study measures exclusion based on lack of access to appropriate and affordable financial services and products – the key services and products being a transaction account, general insurance and a moderate amount of credit.
NAB Group chief executive Cameron Clyne says the increasing number of Australians excluded from affordable and appropriate financial services is alarming and unacceptable.
“In a country with a banking system and economy as strong as ours, it is simply unacceptable that nearly three million Australians are financially excluded from affordable financial services,” Clyne said.
“Financial inclusion has an obvious and invaluable social impact, but there is also a very strong economic case, like greater workforce participation, reduced welfare and health costs, that validate and confirm its importance.
“We are calling on all governments, community groups and other corporates to unite and help reduce the extent of financial exclusion in Australia,” he said.
NAB says it has committed more than $130-million into microfinance initiatives and anticipates its Microfinance program, provided in partnership with Good Shepherd Microfinance, will support over 20,000 low or no-interest loans (NILS) in 2012.
CSI Lead Researcher and Author, Chris Connolly says this year’s study gives an even greater insight into the extent of financial exclusion in Australia.
“This year we have delved deeper into key topics, such as the use of credit and the experiences of Indigenous consumers. We also provide a geographic analysis of financial exclusion data,” said Connolly.
“The report also shows that the list of current credit needs of consumers facing financial exclusion is dominated by regular expenses, such as food, rent and utility payments. ” he said.
Factors leading to financial exclusion:
Cost: The cost of motor vehicle and home insurance has increased at a rate higher than inflation, bringing the average premium up to $898 (compared to $855 last year). When combined with the annual cost of a credit card ($808 average) and basic bank account ($88), this represents 15 per cent of the income for 12.7 per cent of the country’s population.
Demographics: Indigenous Australians, young adult Australians, and those living in low-income outer suburban and regional areas are cited as some of the most vulnerable to financial exclusion. 43.1 per cent of Aboriginal or Torres Straight Islanders (ATSI) are considered financially excluded. 49.2 per cent of 18-24 year olds are now considered financially excluded.
Language and documents: Communication difficulties and a lack of appropriate identification documentation were also cited as key barriers to credit. Most study respondents seeking credit did so to cover basic household necessities, such as food, rent and utility bills.
The NAB/CSI Indicator research focused on a lengthy face-to-face interview with 50,000 Australians, and a ‘re-contact’ telephone survey with 661 identified in 2010 as financially excluded.