Consumer Action’s financial counsellors and lawyers advise and assist people experiencing financial hardship and poverty on a daily basis. The data Consumer Action collects, as well as the reflections of our staff, reveal a large client base struggling with debts and the cost of living in Australia.
In 2022, there were 6,494 contacts to our financial counsellors via the National Debt Helpline (NDH) which represents 60% of callers from Victoria and, more recently, people from Queensland contacting the helpline through online chat. Our callers are largely recipients of income support payments, and only 24% of people who contacted our service in 2022 cited paid employment as their main source of income.
In depth analysis of Consumer Action clients with energy affordability and debt issues indicated that the average income of a caller with energy related issues in 2022 was a mere $967 per fortnight, placing the majority of these callers around or below the poverty line. Our data clearly demonstrates the strong causal relationship between Centrelink payments and financial hardship.
Not only are our clients likely to be experiencing poverty, but the nature of our service and advocacy work provides insight into the nature and structure of consumer markets and how they systemically disadvantage low-income individuals and households. Default fees, premiums, and engagement barriers all create market conditions where people experiencing financial hardship and insecurity are often forced to pay more for basic services than others. We refer to this as the ‘poverty premium’.
This premium both drives and exacerbates poverty by trapping people in financial difficulty and charging them more for services they are already struggling with, or unable to afford. There are extensive examples of the poverty premium in action, and for the purposes of this submission we will focus onthe following drivers of poverty:
- Energy prices
- Insurance premiums and pricing discrimination
- Banking fees
- Credit and the debt trap, including payday loans and
- Buy Now Pay Later
Read the full submission PDF.2302 Extent and Nature of Poverty in Australia (1)