04 Sep 2018
Australia is a racially diverse country with multiculturalism hard-wired into our economic, political and social spheres.
Along with national planned migration schemes and targets, there are an increasing number of humanitarian crises occurring in the world which constantly change the global patterns of migration.
" All new arrivals to Australia need to have appropriate access … and the right support … to learn to effectively use the Australian financial system.”Getting access to banking services, being able make payments, save, and have access to safe and affordable credit are critical for migrants and new arrivals to establish their new life in Australia.
Settlement support for new arrivals is required across many domains – including housing, education, employment - but critical to all these activities is having capabilities and opportunities to engage effectively and safely with the financial system.
For Australia to achieve a fully inclusive society, all new arrivals to Australia need to have appropriate access to and the right support for them to learn to effectively use the Australian financial system. This access and support then facilitates their participation both economically and socially in their new country.
Having access to financial education is a matter of equity. Every person in our monetised society has the right to learn about money and how it works. By embracing new arrivals, we are obligated to ensure they are equipped with the right financial products and services and have access to opportunities to develop the financial education that will give them the best chance to thrive in their new country.
Without the right set of capabilities, new arrivals, especially those from non-English speaking backgrounds (NESB), are vulnerable to high cost, short-term loans, scams and unsolicited selling. The consequences of this lack of capabilities relating to finances can lead to escalation in debt, poor credit ratings, long-term financial hardship and enormous stress.
Financial capabilities are needed as soon as people arrive in Australia.
Typically, new arrivals need to find housing, be able to use public transport, use the healthcare system and gain employment. Further down the settlement pathway, their goals may include starting a small business, acquiring assets and/or continuing education.
Each of these activities have a financial aspect that needs to be understood and successfully navigated. Successful achievement of these activities and goals requires the financial sector understand the new arrival’s needs at each stage of their settlement journey. This then allows the financial sector to consider how best to provide timely information, systems, resources and products to meet the needs of new arrivals at each stage of settlement.
Approximately 35 per cent of Australia’s population aged 15 and over were born overseas. Migration to Australia is predicted to continue to increase given our economic and labour needs and changing demographic profile.
There has been a particularly rapid rise in temporary migration to Australia over the last 10-15 years. In 2016, approximately 1.7 million people aged 15 years and over were recent migrants or temporary residents (including those on student visas). In the year 2017-2018 nearly 400,000 student visas were granted with a large proportion of these students from non-English speaking countries.
While long-term temporary arrivals and international student enrolments are lucrative for universities and the Australian economy, Australia in turn has an obligation to ensure these groups of people can effectively navigate the financial system.
They require access to financial information that will ensure their stay in Australia is successful and contributes to their overall wellbeing.
The financial capabilities or indicators of potential financial exclusion of migrants or new arrivals are not measured in the statistics collected by the Australian Bureau of Statistics or the Department of Home Affairs.
While information about employment, language proficiency and other economic and social indicators are captured, the ability of a new arrival to participate financially in Australia is not considered. Consequently, it is difficult to plan and provide the financial capability support needed by migrants and new arrivals.
Migrants and new arrivals face a range of challenges when arriving in a new country. Having limited financial access and capabilities tends to exacerbate all other issues.
Barriers to financial integration include:
The Australian Banking Association (ABA) in the Banking Code of Practice, while not specifically referring to people of NESB, has committed to ‘inclusive and accessible banking’ which aims to provide dedicated assistance to any customer who experiences difficulties in engaging with a banking service.
Being financially independent through employment, enterprise development or participating in education are critically important to the financial wellbeing of new arrivals and their families. Financial education can therefore be central to helping them meet their short and long-term goals.
One example of a financial education program designed to improve the financial wellbeing of new arrivals is the MoneyMinded program. The program is delivered to culturally and linguistically diverse community members either in face-to-face group workshops or as a one-to-one financial counselling service. This program has also been successfully incorporated into other settlement programs such as the Brotherhood of St Laurence’s Stepping Stones microenterprise program.
Another example of a financial education program designed with new arrivals in mind is the Australian Securities and Investments Commission’s (ASIC) MoneySmart website which provides a Money Management Kit designed for community workers who are helping new arrivals settle in Australia.
Programs will be most effective when taking account of the individual’s context and needs. Migrants and new arrivals bring their own financial experiences along with cultural characteristics and strengths that can be harnessed and adapted to their new environment. For example, culture can influence the propensity for saving and appetite for risk.
In delivering financial education, a gender lens should be applied to ensure women are provided with information that empowers them to benefit from the financial opportunities available in their new country. Cultural and religious factors and their impact on money management and financial decision-making in households should be considered.
Financial education initiatives are particularly successful in the early stages of resettlement. A better understanding of the financial lives of new arrivals at the household level would help to inform the most effective content and delivery methods.
Financial education should be offered in relevant languages within culturally and linguistically diverse communities and include topics such as utilities, insurances, consumer leases, high cost loans, debt resolution and consumer rights.
To have a lasting effect, financial education requires follow-up. Providing financial coaching or other forms of tailored individual guidance is also recommended.
Financial education can work well when integrated with other settlement programs and allows delivery services to build relationships with clients. This allows for ‘just in time’ support for when new arrivals need to make key financial decisions.
Including the whole family in financial education will promote the wellbeing of children especially through their teen years into adulthood.
For effective remittance management, financial education should be offered to recipient and sending families to enable the best use of remittances and help recipient families make effective financial decisions.
Roslyn Russell is a Professor in the School of Economics, Finance and Marketing at RMIT University
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
04 Sep 2018
24 Jan 2018
08 Nov 2018