Accessing super and increased debt during COVID will have lifelong consequences: new BSL report
While for some people COVID-19 came with a financial silver lining, others are suffering ongoing and potentially lifelong impacts, according to a new Brotherhood of St. Laurence (BSL) report released today.
The report, examining the financial impact of the pandemic on low-income earners, found that financial wellbeing decreased throughout the community as a result of unemployment, reduced work hours and income cuts.
However, those living on the lowest incomes have come out of the peak of the COVID pandemic even more financially vulnerable than before.
Many people aged over 45, disability pension recipients, women on low incomes and single parents reported being left with dwindling financial buffers after accessing savings and superannuation, and increasing debt during the pandemic, the study found.
“Opportunities to recoup these losses are likely to be limited, with the recent Federal Budget predicting continued low wage growth and a continued shift to part time work,” lead author Dr Emily Porter, ANZ Tony Nicholson Fellow at BSL, said.
As a result, ‘COVID normal’ for many is likely to mean even greater financial vulnerability in an uncertain world.
“The impacts of the crisis were uneven. This is just one of the many crises that we’ll face and the most disadvantaged will be hard hit. Put simply, those with less are not likely to bounce back,” Dr Porter said.
“Our study really highlights the importance of decent work that allows people to build savings in the event of future crises and having a fair and adequate social security system in place. We need both to support people through uncertain times.”
The report showed that temporary policies such as the Coronavirus Supplement did moderate the impacts of the crisis but they were short-term. Those who had access to the increased income support payments reported an improved ability to meet financial commitments for the COVID period. Yet many during this time still had to draw on their savings or access their superannuation leaving them now in a more precarious situation.
“Addressing these challenges requires investment in secure, well paid work and an adequate social safety net that allows people to build savings and live with dignity”, Dr Porter said.
The report is one in the series of publications that examine patterns of financial wellbeing in Australia. It incorporates data from the ANZ Roy Morgan Financial Wellbeing Indicator derived from the Roy Morgan Single Source survey, which canvases approximately 50,000 Australians annually. The ANZ Roy Morgan Financial Wellbeing Indicator has three dimensions – ability to consistently meet financial commitments such as paying bills and buying groceries; feelings of comfort; and financial resilience – the buffer in the event of a financial shock.