Minister for Revenue and Financial Services Kelly O’Dwyer has officially launched the 2018 National Financial Capability Strategy at an event hosted by the Australian Securities and Investments Commission (ASIC) in Canberra.
According to ASIC, the strategy is designed to help Australians “better control their financial lives” by improving their skills in:
- managing money day to day
- making informed decisions
- planning for the future
“We want all Australians to be in control of their financial lives. The Strategy guides action across the government, business, community, education and research sectors to support enhanced financial capabilities in individuals, families and communities,” Ms O’Dwyer said.
According to modelling commissioned by ASIC, if financial capability levels of all Australians were lifted “marginally above current levels”, the improved financial behaviour over the next 30 years would lead to an increase to consumer wealth and consumption of approximately $212 billion.
Chairman of ASIC James Shipton highlighted the benefits of initiatives delivered through the program.
“The 2018 National Financial Capability Strategy drives programs and initiatives that make a difference in people’s lives,” Mr Shipton said.
“We want more Australians to access information and guidance they can trust to ensure everyone can make informed decisions.
“ASIC is committed to financial inclusion and better outcomes for all Australians. People are at the heart of the financial system and at the centre of this national strategy.
“The financial sector as a financial community should be engaging in practices that promote fair consumer outcomes.”
The ASIC chair made particular note of the need to improve the financial capabilities of women, younger Australians and people in the indigenous community.
“In particular, we need to continue to encourage women to be more confident with money, young people to find the information they need when they need it, and support Indigenous Australians to access appropriate financial products and services,” Mr Shipton added.
“We want to see more Australians in control of their financial lives and I look forward to working collaboratively under the 2018 National Strategy to advance this important work.”
Also speaking at the launch was Reserve Bank governor Philip Lowe, who said that the initiative would help Australians navigate through the “myriad of possibilities” available to them.
“The strategy that is being launched today can provide that help by providing education, information and support for Australians as they manage and make decisions about their money and plan and save for the future,” Mr Lowe said.
In his address, the RBA governor also noted that the “biggest single financial decision is whether or not to borrow to buy a home”, and he urged prospective borrowers to understand the changing nature of interest rates and the housing market before making a decision.
“It is nearly eight years since the previous increase in interest rates by the RBA. This means that many borrowers have never experienced a rise in official interest rates. They have mostly experienced lower rates,” Mr Lowe continued.
“At some point, this will change. Over recent times, the Australian economy has been improving. This is good news.
“If we continue on this current improving track, as we expect we will, it is likely that the next move in official interest rates will be up, not down. This will not be welcomed by some, but it would be a sign that things are returning to normal.
“My advice here is to make sure your finances can withstand a lift in interest rates.”
Mr Lowe encouraged Australians to build a “buffer against the unexpected”.
“We all need to prepare for that rainy day. It rarely makes sense to take all the credit that you are offered, whether on a credit card or when you apply for a loan,” Mr Lower added.
“Many Australians with mortgages find the best way of building buffers is to put any spare money into their offset account. This makes a lot of sense.
“My fourth and final point is to shop around and don’t be shy to ask for a better deal, whether for your mortgage, your electricity contract or your phone plan.
“There are very good deals out there if you look. We can all play a role in making our markets more competitive by being smart and informed in our choices.”
The 2018 National Financial Capability Strategy was formed following a consultation process that included over 145 submissions from stakeholders and replaces the 2014–2017 National Financial Literacy Strategy.