While the period between COVID lockdowns was a time of hope for many, it was more a case of chronic COVID than “snap back” for others who fell deeper into financial despair, according to a new Brotherhood of St Laurence (BSL) report released today.
The A Brief Reprieve? report examined the financial experience of those on low and insecure incomes as Australia emerged from COVID restrictions between October 2020 to March 2021, finding many were left in a worse financial position than pre-COVID.
Dr Emily Porter, ANZ Tony Nicholson Fellow at BSL, said what was a time of optimism and hope for many people as we emerged from the first wave of COVID lockdown, was a shocking plunge back into hardship for the nation’s most disadvantaged.
“As restrictions eased and as government supports were wound back, many felt that ‘COVID normal’ had arrived – but vulnerable Australians did not get a break between lockdowns,” Porter said.
“As economies again reopen after the resurgence of COVID-19 in mid-2021, our findings highlight the need for continued government support as people rebuild their financial wellbeing.”
The report found during the period October 2020 to March 2021 there was no respite for low-income workers struggling to make ends meet in the face of ongoing reduced working hours and employment opportunities.
The overall ability of those in the bottom 40 per cent of workers by household income to meet commitments fell by 10 per cent between the pre-COVID and low-COVID period (Oct 2020 to Mar 2021), while those in the bottom 20 per cent of workers remained 19 per cent less able to meet everyday commitments compared to pre-COVID levels.
Young workers (18 to 29 years) in part-time work were 10 per cent less likely to be able to meet their financial commitments in the low-COVID period compared to pre-COVID levels.
‘COVID normal’ ended the brief respite from financial hardship for income support recipients as the Coronavirus Supplement was wound back.
Financial stress returned for unemployed workers on JobSeeker Payment who were 19 per cent less likely to be able to meet their commitments in the low-COVID period compared to the 2020 COVID peak.
Over the same period, single parents not in employment were 17 per cent less likely to meet commitments leaving the financial position of single parents about 50 per cent lower than the Australian average.
“The reduced level of financial security and resilience among income support recipients highlights the inadequacies of the current social security system for those with care responsibilities and those without work,” Porter said.
COVID-19 will leave long term financial scars for many as debt increased and superannuation remained depleted.
Low-income workers took on increased debt during the crisis.
The percentage of male workers in the lowest 20 per cent of households who reported having one or more loans increased to 50 per cent between the pre-COVID and low-COVID periods.
The percentage of women in the same income group with any superannuation also declined by 7 points over the same period.
“The fleeting recovery actually left many low-income earners and income support recipients worse off with reduced incomes, less savings and superannuation, and increased debt that will take many years to repay,” Porter said.
“With the lifting of lockdowns in NSW and Victoria, it’s important not to overlook those who are doing it tough,” she added.
The report is one in the Financial Lives in Uncertain Times 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.