Financial distress levels dip during COVID-19 thanks to support payments
24 February 2021 at 5:15 pm
Utility bill shock and credit card debt were the leading cause of financial distress during the pandemic
Government measures such as boosts to JobSeeker and JobKeeper meant the number of people experiencing financial distress dropped significantly during COVID-19, new research shows.
A new report from Anglicare Victoria on its financial counselling clients found that in the 12 months prior to April 2020, counsellors saw an average of 1,758 clients per quarter.
Yet, in the April to June 2020 quarter, this dropped to 1,332 clients, and declined further in July through to September to 1,118 clients.
“The explanation for this seems primarily due to the introduction of the increased JobSeeker payment during the pandemic, combined with moratoriums on debt repayments, bans on evictions and other relaxations to repayment requirements during this period,” the report said.
Despite this, more than a third (36 per cent) of clients said that utility debt such as electricity was their most pressing source of financial distress.
Household debt such as store credit contracts for appliances (28 per cent) and credit card debt (28 per cent) were the next most commonly-listed debts.
More clients also reported experiencing multiple vulnerabilities such as family violence, mental illness or substance abuse at the same time as their financial difficulties during lockdown, jumping from 30.8 per cent before the pandemic to 50.9 per cent in the third quarter of 2020.
A permanent raise needed
Community sector groups have been campaigning for the JobSeeker payment to increase by $25 a day following the end of the coronavirus supplement at the end of March. This increase would take it to the national poverty line level of $457 a week.
But on Tuesday, Prime Minister Scott Morrison revealed that JobSeeker will increase permanently by $25 a week, or just $4 a day, to $615.70 per fortnight.
McDonald said that this was disappointing considering its proven effectiveness to help vulnerable people during the pandemic.
“Put simply, JobSeeker and JobKeeper worked for those affected by COVID-19. They gave people without work a better quality of life, helping them meet their debts and restore their dignity,” he said.
You can see a full copy of the report here.