Financial stress overlooked in budget debate

This week Ross Gittins from Fairfax newspapers discussed the plight of the many Australians who currently face financial exclusion but who have little say about the 2013 Budget.

Financial exclusion is a problem that doesn’t seem to be getting better.

In 2010, the ABS undertook research that found 19% of adults had one or more cash flow problems in their household, slightly higher than in 2006 (18%).

The ABS reported that more people were  “unable to pay bills on time, such as electricity, gas, telephone or car registration and that they had to pawn something to raise cash than in 2006”.

and that  “…a higher proportion of people also reported that their household undertook one or more dissaving actions (23%) compared to 2006 (19%).”

Different houses, and financial situations contributed to different kinds of financial stress

“of the 709,900 adults in one family lone parent households with dependent children, 41% reported that they lived in households that could not raise $2,000 in an emergency, compared with 11% of the 4,977,400 adults in one family couple households with dependent children.”

“…47% of adults living in one family lone parent households with dependent children reported that their households had at least one cash flow problem in the previous 12 months (21% for adults in couple households with dependent children).”

“…39% of adults living in one family lone parent households reported that their households took at least one dissaving action in the 12 months prior to the survey (27% for those in couple households with dependent children).”

It is clear that lone parent households are suffering – particularly those who are in the lowest income quartile.

Additionally, those who are affected are often stuck in a cycle of debt by having to take out a loan to pay a bill or reconnect utilities. Many end up  being stuck in  a cycle of debt with high interest loan repayments and no way to escape spending more and more of their money on interest on each subsequent loan.